CARBO Ceramics — Howard Weil 42nd Annual Energy Conference 2014
47 slides from CARBO Ceramics's conference presentation, Mar 25, 2014
Slide 1: Production Enhancement and Environmental Services - Howard Weil Conference
....provides industry leading technology for Production Enhancement and Environmental Services Howard Weil 42 nd Annual Energy Conference New Orleans, Louisiana March 25, 2014 Exhibit 99.1
Slide 2: Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Any written or oral statements made by the Company or on behalf of the Company in conjunction with this presentation may include forward-looking statements which reflect the Company's curren
Slide 3: Industry leading technology for Production Enhancement and Environmental Services
Production Enhancement Environmental Services ....provides industry leading technology for:
Slide 4: We increase well Production and EUR through Design, Build, Optimize
“We increase well Production and EUR through our Design, Build, and Optimize the Frac workflow” The value we create, is lower F&D costs and a higher Recovery Factor Well Cost $ Increased Production & EUR Lower F&D ($/BOE) = TM
Slide 5: A leading production enhancement company
• Frac Conductivity & Durability • Production Assurance • Production Intelligence • Flow Enhancement • Well Site Supervision • Frac Diagnostics & Optimization • Field Development Optimization • Reservoir & Formation Analysis • Frac Design • Economic Optimization • Reservoir Performance • Post Job An
Slide 6: Industry's most widely used hydraulic fracturing design software
• Is the industry’s most widely used hydraulic fracturing design software, clients include E&P Operators, Service Companies, Universities • Provides Frac Design, Economic Optimization, Reservoir Performance and Post Job Analysis. Ties all the information together during the frac process.
Slide 7: Technical consulting and best practices
Reservoir Reservoir Fracture Fracture Design Design Production Production Completion Completion Best practices Best practices Execution Execution • Experienced, industry experts working in Unconventional Reservoirs • Provide technical consulting from Well-site to Office to Full Field Analysis • Inte
Slide 8: Delivered Technology Platforms
Ceramics Proppant Delivered Technology Platforms “More Space to Flow” Higher EUR Production IRR Production Assurance Flow Enhancement Production Intelligence Proppant Delivered Proppant Delivered Proppant Delivered Resin Coated Products
Slide 9: Ultra-conductive ultra-high strength proppant technology
Ultra-conductive ultra-high strength proppant technology Developed for deep wells and ultra-high stress formations
Slide 10: More conductivity
More conductivity 100% more baseline conductivity
Slide 11: Precision-Engineered More Space to Flow
Plant produced proppant grains Precision-Engineered More Space to Flow More strength More durability More uniformity More roundness More smoothness More flow space More uniform flow paths More long-term conductivity More production, increased EUR and superior IRR
Slide 12: Highest Conductivity Proppant in the Industry
Highest Conductivity Proppant in the Industry Outstanding performance under pressure
Slide 13: Ceramic Proppant Sales vs Capacity
Lbs (Millions) Millen Line 1 est completion near end of Q2-2014 Millen Line 2 est completion near end of H1-2015 Environmental permits obtained for all 4 Millen lines Ceramic Proppant Sales vs Capacity
Slide 14: Hierarchy of Proppant Conductivity
Hierarchy of Proppant Conductivity Highest Conductivity Highest Production, EUR, ROI Ceramic - Engineered product Ultra-high strength Mono-size and spherical High strength Uniform size and shape Thermal resistant Medium strength Irregular size and shape Low strength Irregular size and shape Sand - N
Slide 15: Industry Awareness of Low Quality Chinese Ceramics
The Stakeholders - E&P Operators, Service Companies, Royalty Owners, State Agencies….. • • Industry Awareness of Low Quality Chinese Ceramics ………are becoming more aware of the losses to well Production and EUR that can occur when using low quality, low conductivity Chinese ceramic proppants, or othe
Slide 16: Proppant Quality Matters in Well Production
Proppant Quality Matters in Well Production As an E&P Operator investing $4M – $12M on a well, how much Production & EUR are you sacrificing by using low quality Chinese ceramic proppant? Chinese 20/40 IDC # 1C Chinese 20/40 IDC # 2C Chinese 20/40 IDC # 3C Field Samples #1, #2, #3 taken in North Dak
Slide 17: CARBO vs Low Quality Chinese Ceramic
CARBO vs Low Quality Chinese Ceramic Chinese 20/40 IDC # 1C CARBO LITE Chinese 20/40 IDC # 2C Chinese 20/40 IDC # 3C Bottom Row Represents Whole Pellet Cross Sections Field Samples #1, #2, #3 taken in North Dakota from 3 Chinese Suppliers Comparison of three field samples from North Dakota from low
Slide 18: CARBO vs Low Quality Chinese Ceramic
CARBO vs Low Quality Chinese Ceramic Chinese 20/40 IDC # 4C CARBO LITE Chinese 20/40 IDC # 5C Chinese 20/40 IDC # 6C Three more field samples of low quality, low Conductivity Chinese ceramic proppant suppliers, compared to CARBO LITE : Bottom Row Represents Whole Pellet Cross Sections Field Samples
Slide 19: CARBO vs Brazilian & Russian Ceramic
CARBO vs Brazilian & Russian Ceramic Brazilian 20/40 LDC # B1 CARBO LITE Two Brazilian & one Russian field samples of low quality, low Conductivity lightweight ceramic proppant suppliers, compared to CARBO LITE : Bottom Row Represents Whole Pellet Cross Sections Field Samples #B1 taken in South Texa
Slide 20: Bakken Operator: CARBO vs Chinese
+20% Bakken Operator CARBO vs Chinese +120,000 bbl 30 Day Cum Oil *EUR *Operator projected EUR 6 wells with CARBO ECONOPROP low density ceramic (LDC) 4 wells with Chinese intermediate density ceramic (IDC) Frac Design (per well) ~ 24 stages ~ 3 million lbs Average ECONOPROP Average Chinese IDC Avera
Slide 21: Effects of Pressure and Temperature on Sand
x y Effects of Pressure and Temperature on Sand Northern White Sand 20/40 Sand Crushes into fine particles Conductivity = only 215 md-ft Conditions: • Loss of frac width • Particles plug flow channels • Leads to loss of Conductivity • 9,000 psi , 250 F • Flowing 2% KCL for 30 days • Cross sections o
Slide 22: Effects of Sand Crushing at Higher Pressure
Effects of Sand Crushing at Higher Pressure W frac Less W frac White Sand @6,000 psi stress White Sand @12,000 psi stress Crushing reduces frac width and the “Space to Flow” ….most wells are conductivity limited with Sand
Slide 23: Ceramic vs Sand - Realistic Conductivity
Eagle Ford Stress Range Haynesville Stress Range Ceramic vs Sand - Realistic* Conductivity ( 20/40 mesh) Bakken Stress Range *Reduced Baseline conductivity by 60% for the effects of non-darcy flow, multi-phase flow, gel damage, etc. Md-ft Md-ft Closure Stress (psi) 1,000 1,500 2,000 2,500 3,000 3,50
Slide 24: Ceramic Success Grows Into Key Basins
Ceramic Success Grows Into Key Basins
Slide 25: Bakken Ceramic Proppant Growth Continues
50,000’ view 1,000’ view Ground view Bakken Ceramic Proppant Growth Continues SPE Paper 163827– Liberty Resources
Slide 26: SPE Paper 163827 - Liberty Resources
SPE Paper 163827– Liberty Resources Feb 2013 @ SPE Hydraulic Fracturing Conference by Dr M. Pearson 37 Wells from Williams County 90 Day Production Bubble-Plot Liberty Resources wells ( RED ) 49,100 BBLs 29,100 BBLs 19,100 BBls LR LR Bakken ( Liberty Resources ) outperform offset wells
Slide 27: Bakken (Statoil / Brigham Exploration)
Bakken ( Statoil / Brigham Exploration ) SPE Paper 134595 & 146376 – Brigham Exp/Statoil
Slide 28: Ceramic Success Grows Into Key Basins
Ceramic Success Grows Into Key Basins
Slide 29: Eagle Ford (4,000 wells)
50,000’ view 1,000’ view Ground view Eagle Ford (4,000 wells*) * Public data : Unknown proppant type not included in analysis: Ceramic proppant verified through internal CARBO data *NPI = Best 3 Months Production/Perforated Lateral Length = BOE/Ft (BOE/Ft) Ceramic completions offer a 20% - 60% impro
Slide 30: Karnes County (600 wells)
Karnes County (600 wells*) 50,000’ view 1,000’ view Ground view * Public data : Unknown proppant type not included in analysis: Ceramic proppant verified through internal CARBO data Normalized Production Indicator *NPI = Best 3 Months Production/Perforated Lateral Length = BOE/Ft (BOE/Ft) Ceramic co
Slide 31: Karnes County Operator (300 wells)
Karnes County Operator (300* wells) 50,000’ view 1,000’ view Ground view * Public data : Unknown proppant type not included in analysis: Ceramic proppant verified through internal CARBO data *NPI = Best 3 Months Production/Perforated Lateral Length = BOE/Ft (BOE/Ft) Ceramic completions offer a 30% -
Slide 32: Ceramic Success Grows Into Key Basins
Ceramic Success Grows Into Key Basins
Slide 33: Permian Basin Bone Spring
Permian Basin Bone Spring * Public data : Unknown proppant type not included in analysis: Ceramic proppant verified through internal CARBO data
Slide 34: Ceramic Success Grows Into Key Basins
Ceramic Success Grows Into Key Basins
Slide 35: How to Increase the Recovery Factor
How to Increase the Recovery Factor • In horizontal wells in resource plays, there are two critical factors that determine the level of economic success 1.) Creating large reservoir contact area, through multiple, transverse frac stages 2.) Building high conductivity, durable fracs with a “life-of-t
Slide 36: Environmental services: engineered to protect our investment
engineered to our investment protect (ass
Slide 37: We take customers from high risk containments
We take customers from high risk containments Un-lined, permeable dirt berm Tanks sitting on pea gravel & corroding Un-lined tanks corroding inside & outside High risk for spills & higher LOE:
Slide 38: Industry-leading environmental protection
To industry-leading environmental protection Lined containment, impermeable Tank bases prevent corrosion Lined tanks, prevents corrosion Minimize risk for spills & lower LOE: More than 6,000 installations, with 100% environmental success
Slide 39: Client Base is Growing & Market will Change
Client Base is Growing & Market will Change Market Segments Polymer Coatings HDPE Liners Dirt Berm Client Growth, 2009-2013 2010 2012 2011 2009 2013 We believe the industry and the regulatory bodies will continue to gain awareness of the high environmental spill risks associated with dirt berms and
Slide 40: Production. Enhanced.
Production. Enhanced.
Slide 41: CARBO Financials
CARBO Financials * Cash from operations is equal to net income plus depreciation and amortization and non-cash stock compensation 1,200 1,500 1,800 2,100 2,400 2,700 3,000 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Revenue $M NAM Total Rigcount $0 $20 $40 $60 $80 $100 $120 $140 $160 $180
Slide 42: CARBO Financials
CARBO Financials Cash Flow Per Share = Cash from operations (= net income plus depreciation and amortization and non-cash stock based compensation)/diluted shares 1.88 2.14 2.02 2.46 2.27 3.40 5.62 4.59 3.67 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 Earnings Per Share $0 $100 $200
Slide 43: Dividends
Dividends Increased - 13 Years $ Per Share Shares - Millions $0.20 $0.23 $0.24 $0.25 $0.29 $0.36 $0.44 $0.52 $0.62 $0.70 $0.76 $0.88 $1.02 $1.14 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $1.10 $1.20 Dividend Amount Paid Per Share Per Year Shares Outstanding
Slide 44: Industry Factors: First Quarter and Full Year 2014
Industry Factors First Quarter of 2014 Activity quarter-to-date impacted by harsh weather conditions in the Bakken and northern regions of NAM. Railroads’ operational issues and congestion have severely impacted the distribution of Proppant Fracturing well-site activity has been negatively impacted
Slide 45: Summary
Create value by lowering E&P Operators F&D costs and increasing the Recovery Factor Differentiate by continuing to develop industry leading technology Grow our client’s knowledge of CARBO as the leading Production Enhancement company focused on fracs, with technologies that make oil & gas wells prod
Slide 46: Production Enhancement and Environmental Services
....provides industry leading technology for Production Enhancement and Environmental Services Howard Weil nd Annual Energy Conference New Orleans, Louisiana March 25, 2014
Slide 47: Cash Flow from Operations Reconciliation
Cash Flow from Operations Reconciliation $ in 000s Results from Continuing Operations 2005 2006 2007 2008 2009 2010 2011 2012 2013 Net Income 45,463 $ 52,245 $ 49,641 $ 60,405 $ 52,810 $ 78,716 $ 130,136 $ 105,933 $ 84,886 $ Plus: depreciation and amortization 10,935 15,630 19,895 24,638 24,905 27,7
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