CARBO Ceramics Inc. operates as an oilfield services technology company that sells products and services to the oil and gas industry. The company’s production enhancement businesses promote increased Exploration and Production (E&P) Operators’ production and Estimated Ultimate Recovery (EUR) by providing industry technology to design, build, and optimize the Frac. The company’s environmental services business is intended to protect E&P Operators’ assets, minimizes environmental risk, and lowers operating costs (LOE). The company is a provider of fracture design and consulting services, and a range of technologies for spill prevention, containment and countermeasures. It sells the majority of its products and services to operators of oil and natural gas wells and to oilfield service companies to help increase the production rates and the amount of oil and natural gas ultimately recoverable from these wells. The company primarily manufactures six distinct ceramic proppants. Its new proppant, KRYPTOSPHERE HD, is a high-performance ceramic proppant engineered to deliver increased conductivity and durability in the highest closure stress wells. CARBOHSP and CARBOPROP are high strength proppants designed primarily for use in deep oil and gas wells. CARBOLITE, CARBOECONOPROP and CARBOHYDROPROP are low-density ceramic proppants. CARBOLITE is used in medium depth oil and gas wells, where higher production rates can be achieved due to the product’s uniform size and spherical shape. CARBOECONOPROP was introduced to provide a lower cost ceramic to compete more directly with resin-coated sand and sand proppant, and CARBOHYDROPROP was introduced to improve performance in ‘slickwater’ fracture treatments. During 2010, the company began production of resin-coated ceramic (CARBOBOND LITE) and resin-coated sand (CARBOBONDRCS) proppants. CARBOBONDLITE addresses a market in which oil and natural gas wells are subject to the risk of proppant flow-back. In addition, the company manufactures CARBONRT, a detectable proppant that utilizes a non-radioactive tracer material to assist operators in determining the locations of fractures in a natural gas or oil well. In 2014, the company also began sales of SCALEGUARD, a porous ceramic proppant that is infused with scale-inhibiting chemicals and placed throughout the fracture as part of the hydraulic fracturing process. The company, through its wholly-owned subsidiary StrataGen, Inc., also sells fracture simulation software under the brand FracPro and provides fracture design and consulting services to oil and natural gas companies under the brand StrataGen. FracPro provides a suite of stimulation software solutions to the industry that have marked capabilities for on-site real-time analysis. This stimulation software is integrated with reservoir simulators, thus allowing for stimulation treatment and production optimization. StrataGen, the specialized consulting team, consults and works with operators worldwide to help optimize well placement, fracture treatment design and production enhancement. Falcon Technologies and Services, Inc., a wholly-owned subsidiary of the company, provides spill prevention, containment and countermeasure systems for the oil and gas industry. Seasonality The company has experienced higher levels of proppant sales activities during warmer weather periods and less during colder weather months. In addition, sales activities can be decreased by the spring snow and ice ‘break-up’ in Canada, North Dakota, Montana, and the Northeast U.S., as well as the winter holidays in December and January. Intellectual Property The company owns multiple U.S. and foreign patents that relate to methods for the detection of subterranean fractures. During 2014, the company obtained two U.S. patents relating to its KRYPTOSPHERE manufacturing process. It owns multiple U.S. patent applications (together with counterpart applications pending in foreign jurisdictions). Falcon Technologies and Services, Inc. owns two U.S. patents, which expire in 2026 and 2027 and relate to construction of secondary containment areas. In addition, Falcon Technologies and Services, Inc. owns a U.S. patent which expires in 2031 and relates to the construction of a polyurea-coated tank base. Falcon Technologies and Services, Inc. also owns multiple U.S patent applications (together with a number of counterpart applications pending in foreign jurisdictions), each of which relates to tank bases or methods of constructing secondary containment areas. Customers The company’s major customers are participants in the petroleum pressure pumping industry. Halliburton Energy Services, Inc. and Schlumberger Limited each accounted for more than 10% of the company’s 2014 revenues. Regulations Existing federal environmental requirements such as the Clean Air Act and the Clean Water Act, as amended, impose certain restrictions on air and water pollutants from the company’s operations via permits and regulations. Federal and state agencies, including but not limited to, The United States Environmental Protection Agency, the Texas Commission of Environmental Quality, the Louisiana Department of Environmental Quality, the Alabama Department of Environmental Management, the Wisconsin Department of Natural Resources, and the Georgia Environmental Protection Division, in states in which the company does business, have environmental regulations applicable to its operations. Competition The company’s competitors include Saint-Gobain Proppants; Mineracao Curimbaba; and Imerys, S.A. History CARBO Ceramics Inc. was founded in 1987. The company was incorporated in 1987 in Delaware.
carbo ceramics inc (CRR:New York)
Energy Center II
575 North Dairy Ashford
Houston, TX 77079
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