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CARBO® Announces Second Quarter 2016 ResultsHOUSTON, July 28, 2016 /PRNewswire/ -- CARBO Ceramics Inc. (NYSE: CRR) today reported a GAAP net loss of $20.3 million, or a loss of $0.88 per share, on revenues of $20.7 million for the quarter ended June 30, 2016. The GAAP net loss includes $8.7 million, or $0.38 per share, of after-tax costs associated with slowing and idling production. Logo - http://photos.prnewswire.com/prnh/20120503/MM00528LOGO CEO Gary Kolstad commented, "The operating environment within the oil and gas industry remained extremely challenging in the second quarter of 2016. The North American rig count declined 35% sequentially. However, we believe the second quarter likely marked the bottom for activity levels as both oil and natural gas commodity prices and the North American rig count started to recover. Sales volumes began to improve as the quarter progressed. In addition, with the increasing commodity prices, we have received increasing customer inquiries about procuring ceramic proppant for completions in the second half of 2016. "We remain committed to developing industry-leading fracture technologies that increase well production and estimated ultimate recovery (EUR). As the industry recovers, we believe that E&P operators will be even more receptive to technology that lowers their cost per Barrel of Oil Equivalent (BOE). "SCALEGUARD® and KRYPTOSPHERE® technologies continue to gain new clients. SCALEGUARD, the industry's most effective in-fracture, long-term scale prevention technology, is designed to improve the economic value of wells by both improving production and EUR, as well as lowering lease operating expense (LOE). KRYPTOSPHERE, the industry's most durable and highest conductivity proppant, is designed to improve production and EUR in the industry's most challenging, high stress well completions. We are pleased that another major E&P operator will utilize KRYPTOSPHERE HD in the prolific, but challenging, Lower Tertiary play in the Gulf of Mexico. "Some analysts have pointed out that productivity gains (production/rig) are leveling off in the U.S. Some of this is likely due to the drilling of the better prospects first, and also the leveling off of rig efficiency gains. There are still opportunities to change this trend with technology. The fact remains that over 50% of the wells drilled in the Lower 48 will see stresses that crush the best white sand. Often, the best engineered approach to maximizing EUR will not be to just pump higher volumes of sand, but rather design the fracs with a durable, high conductivity proppant that lasts the life of the well. "We significantly lowered our cost base in the quarter, and we remain focused on cost reductions and cash preservation. We were able to renegotiate contracts associated with some of our leased railcars and also reduced SG&A expenses sequentially. As announced in May, we bolstered our cash reserves through a $25 million placement of subordinated notes on attractive terms. Maintaining financial flexibility remains essential," Mr. Kolstad said. Second Quarter 2016 Results Revenues for the second quarter of 2016 decreased 72%, or $52.6 million, compared to the same period in 2015. The decrease was primarily attributable to a 53% reduction in the average North American rig count, which resulted in a decrease in proppant sales volumes (as specified in the Proppant Sales Volumes table below), associated reductions in the average proppant selling prices, and a move to lowest-cost completions. Operating loss for the second quarter of 2016 was $30.0 million as compared to $24.9 million in the same period in 2015, primarily due to the revenue decline explained above, and was partially offset by cost cutting measures implemented beginning in early 2015. Net loss for the second quarter of 2016 was $20.3 million, compared to $17.0 million in the same period in 2015.
Technology and Business Highlights
Outlook CEO Gary Kolstad commented on the outlook for CARBO stating, "We are becoming more optimistic on the industry operating environment, given recent oil and natural gas commodity price levels. Communications with our clients lead us to believe third quarter 2016 ceramic proppant sales will increase from second quarter 2016 levels. In addition, the third quarter typically sees an increase in industry activity due to coming out of Canadian spring breakup and fewer weather-associated issues in the northern regions. We anticipate an environment where E&P operators gradually step back in to using more durable, high conductivity proppants, likely concentrated on tail-in applications. "On the technology front, KRYPTOSPHERE and SCALEGUARD continue to see acceptance in this challenging market. We now have wells using SCALEGUARD producing scale-free for over two years. We also believe there is untapped value residing in other areas of our technology suite. We continue to explore ways to accelerate the value of these technologies. "Efforts to reduce our cost base continue, including the reduction of our railcar lease expense and SG&A costs. In addition, higher natural gas commodity prices provide a cash benefit relating to our excess natural gas commitments as these contracts are net settled. As a result of these cost reduction efforts, coupled with our efforts to further lower inventory levels, we anticipate our quarterly cash burn to improve next quarter. "We are looking forward to the second half of 2016 which should see improved overall industry activity levels due to the improvement in the commodity price environment from the first quarter of 2016. We will continue our focus on deriving additional value from our technology platforms and strengthening our balance sheet to afford us financial flexibility to capitalize on opportunities during the next up cycle," Mr. Kolstad concluded. Conference Call As previously announced, a conference call to discuss CARBO's second quarter 2016 results is scheduled for today at 10:30 a.m. Central Time (11:30 a.m. Eastern). Due to historical high call volume, CARBO is offering participants the opportunity to register in advance for the conference by accessing the following website: http://dpregister.com/10089017 Registered participants will immediately receive an email with a calendar reminder and a dial-in number and PIN that will allow them immediate access to the call. Participants who do not wish to pre-register for the call may dial in using (877) 232-2832 (for U.S. callers), (855) 669-9657 (for Canadian callers) or (412) 542-4138 (for international callers) and ask for the "CARBO Ceramics" call. The conference call also can be accessed through CARBO's website, www.carboceramics.com. A telephonic replay of the earnings conference call will be available through August 4, 2016 at 9:00 a.m. Eastern Time. To access the replay, please dial (877)-344-7529 (for U.S. callers), (855) 669-9658 (for Canadian callers) or (412) 317-0088 (for international callers). Please reference conference number 10089017. Interested parties may also access the archived webcast of the earnings teleconference through CARBO's website approximately two hours after the end of the call. About CARBO CARBO® focuses on integrating technologies to produce engineered solutions in its Design, Build, and Optimize the Frac® technology businesses, delivering important value to E&P operators by increasing well production and EUR. For more information, please visit www.carboceramics.com. Forward-Looking Statements The statements in this news release that are not historical statements, including statements regarding our future financial and operating performance and liquidity and capital resources, are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as "may", "will", "estimate", "intend", "continue", "believe", "expect", "anticipate", "should", "could", "potential", "opportunity", or other similar terminology. All forward-looking statements are based on management's current expectations and estimates, which involve risks and uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements. Among these factors are changes in overall economic conditions, changes in the demand for, or price of, oil and natural gas, changes in the cost of raw materials and natural gas used in manufacturing our products, risks related to our ability to access needed cash and capital, our ability to meet our current and future debt service obligations, including our ability to maintain compliance with our debt covenants, our ability to manage distribution costs effectively, changes in demand and prices charged for our products, risks of increased competition, technological, manufacturing and product development risks, our dependence on and loss of key customers and end users, changes in foreign and domestic government regulations, including environmental restrictions on operations and regulation of hydraulic fracturing, changes in foreign and domestic political and legislative risks, risks of war and international and domestic terrorism, risks associated with foreign operations and foreign currency exchange rates and controls, weather-related risks and other risks and uncertainties. Additional factors that could affect our future results or events are described from time to time in our reports filed with the Securities and Exchange Commission (the "SEC"). Please see the discussion set forth under the caption "Risk Factors" in our annual report on Form 10-K for the fiscal year ended December 31, 2015, our Form 10-Q for the fiscal quarter ended June 30, 2016, and similar disclosures in subsequently filed reports with the SEC. We assume no obligation to update forward-looking statements, except as required by law. -tables follow -
Contact: Mark Thomas, Director, Investor Relations To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/carbo-announces-second-quarter-2016-results-300305256.html SOURCE CARBO Ceramics Inc. |