Carbo Ceramics Inc. reported adjusted net income of $16.1 million, or $0.70 per share, excluding certain asset write-downs and other adjustments of $15.7 million, or $0.68 per share, on revenues of $167.8 million for the quarter ended Dec. 31, 2014. Reported net income for the fourth quarter of 2014 was $0.4 million, or $0.02 per diluted share.
CEO Gary Kolstad commented, "We achieved higher proppant sales volumes in the fourth quarter of 2014 compared to the third quarter of 2014. However, we experienced a reduction in ceramic proppant demand later in the quarter due to the large drop in oil price and seasonality. During the second half of the year, we managed through a difficult environment that included both E&P operators experimenting with the increased use of raw frac sand and an oversupply of ceramic proppant. We remained focused on our mission - enhancing the production of our clients' wells through differentiated technology and quality products.
"Throughout the year, we leveraged our Design, Build, and Optimize the Frac platform to provide a holistic production enhancement solution to maximize our clients' well production and increase estimated ultimate recovery (EUR). In addition, field production studies continue to support the use of high-quality, high-conductivity ceramic proppant over lower conductivity proppants.
"The geology and geophysics of oil and gas reservoirs have not changed. Neither has the importance of finding a balance between the two main factors that optimize production: reservoir contact area and conductivity. Our STRATAGEN consulting business continues to partner with operators and help them to understand the economic benefits of developing solutions to optimize contact area and conductivity.
"During the quarter, we promoted cost-neutral frac designs in which frac costs using high conductivity ceramic proppant were designed to be similar to the frac costs using high volumes of raw frac sand. The higher volume of raw frac sand needed, combined with higher associated completion and logistical costs, offset the cost of ceramic proppant. Early production results from these cost neutral designs have been positive.
"KRYPTOSPHERE HD was successfully pumped in its first deep-water Gulf of Mexico well. In addition, a number of wells were pumped with SCALEGUARD during the quarter. Given the growing competitive landscape in proppants, successful introduction of new technology will be key to differentiating Carbo over the long term,” Kolstad said.