2015 Investor Days – Flotek Industries Inc.

Flotek Industries Inc. · Feb 2, 2015 · 139 slides

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2015 Investor Days Orlando, FL February 2, 2015 CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT
Welcome and Introductions Chris Edmonds Senior Director, Corporate Finance & Strategy CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 2
Participants John Chisholm Chairman, President, and Chief Executive Officer Chris Edmonds Senior Director, Corporate Strategy and Finance Rich Walton Chief Financial Officer Rob Schmitz Vice President and Corporate Controller…
Participants Gary Flock Vice President, International Business James Silas Research & Innovation, Flotek Industries/CESI Chemical David McMahon Vice President, Production Technologies Steve Marinello Director of Applied CnF…
Flotek Vision & Mission The Transformation Continues John Chisholm Chairman, President and Chief Executive Officer CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 6
Flotek Overview Headquarters: Houston, TX New York Stock Exchange Ticker: FTK Share Price: 16.17 Enterprise Value: 945 Million 2014 Revenue: 449.2 Million Website: www.flotekind.com Flotek is a Houston-based oilfield technologies…
Flotek Overview Drilling Production Consumer and Energy Chemical Technologies Technologies Industrial Technologies Chemical Add value in the Provide solutions Address a number of drilling, completion during the drilling…
Financial Overview Fourth Quarter and Full Year Financial Snapshot Three Months ended Year ended December 31, 2014 December 31, 2014 Consolidated Revenue 124.503mm 449.157mm EBITDA 28.051mm 98.342mm Income From Operations 23.568mm…
Financial Overview Fourth Quarter and Full Year Financial Snapshot Sequential Growth Full Year Growth Q4 2014 / Q3 2014 2014 / 2013 Consolidated Revenue 7% 21% EBITDA 11% 33% Income From Operations 13% 38% Net Income 14% 48% EPS…
Headcount Productivity Working Harder and Smarter FTK HC Productivity 1,000 933 875 900 818 835 831 828 800 700 600 500 400 300 152 156 177 200 125 145 139 100 - 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Rev. K/Empl. OI K/Emp.…
Manufacturing Productivity Overall Throughput Is Growing, While Decreasing Production Cost Gallons Marlow Productivity Unit Cost 6,000,000 0.18 0.16 5,000,000 Gallons, 4,125,691 0.14 4,000,000 0.12 0.10 3,000,000 0.08…
2014 Transformation January 2014 Announced Appointment of David McMahon as Vice President of Production Technologies Announced Closing of Purchase of EOGA, expanding Floteks chemical reach into polymer applications and enhanced…
2014 Transformation and Beyond June 2014 Introduced FracMaxTM at 2014 Investor Days October 2014 Announced New Research & Innovation Leadership Center and Creation of FracMax Analytics, LLC for Applied Data Research and Analysis…
Flotek Research & Innovation Josh Snively Executive Vice President, Chemistry Research President of Florida Chemical CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 15
What is Flotek Research & Innovation People Analytical Equipment and Methods Technological Understanding Formulation Capabilities Intellectual Property Products CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT…
What is Flotek Research & Innovation Flotek R&I 32 Team Members People Phase Behavior, Fundamental, Product Testing, IOR, SCI, Drilling Mud, Acidizing PhD 11, MS - 3, BS 18 Current Expertise: Formulation, Analytical, Colloids ,…
What is Flotek Research & Innovation Analytical Equipment FR Testing Flow loop Surface/IFT Tension/Contact Angle Spinning drop tensiometer, Kruss & DataPhysics; Kruss contact angle Permeability FRT, DualCore FRT Particle size…
What is Flotek Research & Innovation Technological Understanding Phase Behavior Particle Size Surfactancy Solvency Capillary Pressure Stability FracMax Adsorption Deliverability Fluids Compatibility 2007 (Then) 2015 (Now)…
What is Flotek Research & Innovation Formulation Capabilities Many Surfactant Formulations Oil Field Solvents Packages CnF Plus Developed in Chemical Formulated Developed Additives Conjunction Additives In-House In-house With…
What is Flotek Research & Innovation Intellectual Property 2007 (Then) 2015 (Now) CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 21
What is Flotek Research & Innovation Products Key Product Development in 2014 StemOil EN StemOil EC StemOil ENX Numerous customized, proprietary chemistries New Product Development in 2015 CnF Concentrate - this product will allow…
Flotek Research & Innovation Flotek R&I directly supports the global Energy Chemical Technology division, consisting of: CESI Chemical Sooner Energy Services Florida Chemical EOGA Flotek R&I has footprints in: The Woodlands,…
What is Flotek Research & Innovation Re- Fracture Non- mediation Emulsifiers Drilling Fluids Cementing Con- Production Acidizing Coil Tubing formance Chemicals CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I…
Chemistry Overview James Silas Research & Innovation Flotek Industries/CESI Chemical CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 25
Chemistry Overview Flotek R&I directly supports the global Energy Chemical Technology division, consisting of: CESI Chemical Sooner Energy Services Florida Chemical EOGA Flotek R&I has footprints in: The Woodlands, TX Waller,…
Chemistry Overview Re- Fracture Non- mediation Emulsifiers Drilling Fluids Cementing Con- Production Acidizing Coil Tubing formance Chemicals CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 27
Chemistry Overview Re- Fracture Non- mediation Emulsifiers Drilling Fluids Cementing Con- Production Acidizing Coil Tubing formance Chemicals CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 28
What Is a CnF Additive CnF additives are patented combinations of surfactant, solvent, and water that are designed to enhance oil and gas production. Surfactant Surfactant Surfactant: A molecule designed to modify Solvent surfaces…
Molecular Dynamics Simulations of CnF Additives I. Yucel Akkutlu, PhD: Associate Professor Khoa Bui, PhD: Research Associate A model CnF additive consisting of nonionic surfactant and d-limonene is simulated with molecular…
CnF Additive CnF additives deliver nanoscale droplets of solvent and surfactant in a water phase. The surfactant modifies the interfacial tension between oil and water. The solvent is delivered to the surface, penetrating any…
How Do CnF Additives Work CnF technology is the combination of surfactant, solvent, and the nanoscopic structure. Surfactant Lowers Interfacial Tension Changes Contact Angle Solvent Dissolves Organic Deposits Changes Wettability…
CnF Additive and Surfactant Differences CnF additives add solvency Solvent and surfactant adsorb simultaneously Solvent dissolves deposits Solvent coats surfaces Surfactant and solvent synergy Essential oils (like orange oil) are…
Excellent Solvency: d-limonene d-limonene is a natural product isolated from the rinds of citrus fruits and represents one of the most environmentally friendly, renewable solvents currently on the market.…
Excellent Solvency: d-limonene Chloroform Benzene Toluene Xylene Carbon Tetrachloride water ethanol d-limonene Non-BTEX Dispersion Forces FDA Generally Regarded as Safe (GRAS) Hansen Solubility Parameters Teas chart…
Nanodroplets 10 nm http://qutemol.sourceforge.net CnF additive droplets are much smaller than the droplets of solvent found in a normal emulsion ( 1000 nm). Since they are smaller than the pores of oil- bearing formations,…
Nanodroplets A fine dispersion of solvent droplets will lead to a more extensive and uniform coating of the surface than a single large emulsion droplet. A single 5 micron emulsion drop will deposit in one spot, while the same volume…
Global Research and Innovation Our understanding of the ways in which CnF technologies perform in different locations grows daily This is reflected by the number of analyses we perform on oil, water, cuttings, and products We use…
Practical Applications of CnF Chemistry Steve Marinello Director of Applied CnF Technology CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 39
The Interface Is Where It Happens Over my 30+ years as a professor and in the energy industry, I have always stressed that the interface is where things happen and where things make a difference. Whether it is the wellbore sandface…
Nanoporous Shale Reservoirs For over two years at Shell, I pushed to implement the targeted use of Complex nano-Fluid systems in unconventional shale wells. Why Because of the extremely small nanopores in these reservoirs, the…
Primary Fracturing The current primary CnF application is as a surfactant package during primary fracs. CnF will provide better penetration of the injected fluid and ensure that phase blockage does not develop at the fracture…
Re-Stimulation and Remediation CnF additives have a long history in remedial applications, including CBM wells. CnF treatments penetrate well and fracture interface blockage and reopen communication paths with the reservoir, as is…
Revenue and Reserve Potential The compelling evidence provided by FracMaxTM indicates that an astounding amount of revenue potential was left unrealized by operators failing to use CnF systems in completions. Based on the production…
Conventional and Deepwater Phase blockage is a known concern in producing conventional reservoirs, as well. Wherever high differential pressure conditions can develop, in the reservoir or near the wellbore interface, there is the…
Acidizing, Disposal Wells CnF penetrating capabilities enhance other applications, as well. In acidizing, they provide for enhanced delivery of the acid package. Greater penetration results, even at reduced treatment pressures,…
Conclusion Success or failure is at the interface CnF helps optimize conditions at the interface. CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 47
FracMaxTM Introduction and Demonstration John Chisholm Chairman, President and Chief Executive Officer Richard Fox Vice President, Sales & Marketing-CESI Chemical CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 48
CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT
The Data: Public Disparate Datasets FRACTURING CHEMICAL DATA PRODUCTION DATA Chemical data originates from the FracFocus Oil and gas production is public data that is acquired national hydraulic fracturing chemical registry. from the…
What It Proves: Value of CnF VISUALS OF ANALYSIS OF VALUE Lost Revenue Potential Average Monthly Production CnF vs non-CnF Cumulative Production per Lateral Foot CnF vs non-CnF Depletion Curves Comparing CnF vs non-CnF CnF…
FracMaxTM Snapshots United States Well Composition CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 52
FracMaxTM Snapshots Statewide Well Performance CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 53
FracMaxTM Snapshots Statewide Horizontal Performance Transitioning to Production Per Lateral Foot CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 54
FracMaxTM Snapshots Following Oil Production per Lateral Foot Though 18 Months CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 55
FracMaxTM Snapshots Statewide Horizontal Gas Production Transitioning to Production Per Lateral Foot CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 56
FracMaxTM Snapshots Following Gas Production Per Lateral Foot Through 18 Months CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 57
FracMaxTM Snapshots CnF Payoff in Horizontal Wells Using Real World Production Differences These variables can change and are meant to show impact & trends, not exact values CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I…
FracMaxTM Snapshots Net Present Value Comparison These variables can change and are meant to show impact & trends, not exact values CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 59
FracMaxTM Snapshots Selecting 50 Miles Radius Around BHP Wells CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 60
FracMaxTM Snapshots BHP Horizontal Oil Production Within 50 Mile Radius Transitioning to Production Per Lateral Foot CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 61
FracMaxTM Snapshots Following Oil Production Per Lateral Foot Through Year 1 CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 62
FracMaxTM Snapshots: Canadian Wells CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 63
FracMaxTM Snapshots: Canadian Well Composition CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 64
Production Technologies David McMahon Vice President, Production Technologies Larry Best Founder, International Artificial Lift, LLC CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 65
2014 Highlights Retained existing CBM accounts and attracted new customers Opened Vernal location in September Proved successful in taking share from competition Gained momentum with sales of Hydraulic Lifting Units Developed…
2015 Market Assumptions CBM ESP Maintenance activity remains flat around Gillette Rod Pump and Rod Strings Drilling activity is down across the Rockies Opportunity to increase share with operators looking to reduce expenses or…
2015 Opportunities Objectives: Domestic growth to offset international reduction Investing in the future at an acceptable rate of return Strategies: 1. Create Cap String Service Business 2. Create ESP cable spooling service. May…
Capillary Services Strategy Increase market share in niche service Provide the markets best tools and service at a fair price Tactics Accepted delivery of first trailer and hired first operator Two additional trailers on order…
Hydra-Lift Opportunities IAL acquisition closed January 27th Establish manufacturing base in US in 2015 Execute on opportunity for wellhead mounted sales domestically Exploit opportunity in Mexico (70 potential units) Dual…
International Artificial Lift Hydra-Lift WH Well Head Mounted Hydraulic Pumping Units CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 71
Characteristics and Benefits WH LONG STROKE BENEFITS REDUCED ROD FATIQUE DUE TO FEWER REVERSALS LESS ROD AND TUBING WEAR ENERGY EFFICIENT/LOW OPERATING COST LOW WEIGHT, SMALL FOOT PRINT FAST AND EASY INSTALLATION ECONOMICAL…
Characteristics and Benefits WH CYLINDER/MAST UNIT The WH mast sits atop the well head flange and tubing obviating the need for costly foundation work and is hinged to the mounting frame for fast and easy erection. Spherical…
WH Mast and Frame Mount FLOATING SPHERICAL WASHER CYLINDER MOUNT PREVENTS SIDE LOADING ON CYLINDER WH ROD AND POLISHED ROD PACKING DUE MAST TO MISALIGNMENT. INCREASES LIFE ON BOTH CYLINDER ROD AND STUFFING BOX PACKING. 2…
Hydraulic System HYDRAULIC SYSTEM FOR SINGLE AND SYNCHRONIZED DUAL WELLS The basic concept of the Hydra-Lift is a HYDRAULIC / ACCCUMULATOR or DUAL WELL SYSTEM that is a constant HP/kW regen system that provides counter balance and…
System Components HYDRAULIC POWER UNIT ENCLOSURE All units are built for hot and cold weather operation; the hydraulic components and reservoir are enclosed in an insulated enclosure with locked access doors and a temperature…
Heat Exchanger / Filter Circulation System HIGH PRESSURE 3000 PSI MAX PUMP CASE DRAIN DIRECT TO TANK HEAT EXCHANGER / FILTER CIRCULATION CYLINDER SEAL CHAMBER DRAIN ILINE 1) THERMO BYPASS VALVE (BYPASSES HEAT EX WHEN OIL TEMP IS…
Cylinder Rod Gland BRONZE FILLED PTFE ENERGIZED DOUBLE LIP ROD WIPER TWO BRONZE FILLED PTFE ENERGIZED ROD SEALS TWO RESIN GRAPHITE ROD BEARINGS DRAIN CHAMBER CONNECTS TO RESERVOIR PREVENTS EXTERNAL OIL LEAKAGE…
Microprocessor Based Controller The Hydra-Lift/Hydra-Mex control system is a microprocessor based controller with LCD Touch Screen. It monitors down hole conditions and changing rod loads to make appropriate speed adjustments to…
Microprocessor Display For Unit Operation The user friendly Touch Screen allows parameters to be easily set and on screen real-time dynamometer cards are displayed allowing easy pump-down setup. REMOTE MONITORING The IAL Remote…
Dynamometer Cards CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 81
Heavy Oil On the UP-STROKE the controller accelerates the pumping unit toward maximum speed without exceeding the allowable polished rod load. On the DOWN-STROKE: When the polished rod load is above 1500 lbs. down-stroke speed is…
Heavy Oil Control DOWN-STROKE SPEED vs POLISHED ROD LOAD 100 S 75 P E E 50 D % 25 0 0 1500 ** POLISHED ROD LOAD LBS. MAX WHEN THE POLISHED ROD LOAD IS ABOVE 1500 LBS. DOWN-STROKE SPEED IS ADJUSTABLE FROM ZERO TO 100%.…
Pumping Unit Selection MODEL NO. MAX STROKE MAX LOAD DIMENSIONS WEIGHT INCHES (M) LBS/(Kg) A B C LBS (Kg) Ft. (M) Ft. (M) Inches (mm) (MAST ONLY) 10-10 120 (1.83) 10,000 (4,536) 10 (3.05) 25(7.62) 60 (1.52) 780 (354) 20-16 168…
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Drilling Technologies Brad Reeves Senior Vice President, Drilling Technologies CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 87
Drilling Technologies CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 88
Drilling Technologies Domestic Locations CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 89
Drilling Technologies International Locations CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 90
2014 Highlights TelepulseTM Commercialized Stemulator Development of fleet to dual port Teledrift Record revenue and market growth R&I lab opened in Grand Prairie West Texas New building Nano Rider Introduction Casper Market…
2014 Top Customers CLIENTS I EMPLOYEES I SHAREHOLDERS I COMMUNITY I ENVIRONMENT 92
2015 Opportunities and Challenges Opportunities TelepulseTM New potential customers Stemulator Market Teledrift international market Teledrift domestic market share Challenges: Dropping Rig Count Slow growth in rig count even…
2015 Strategy Strategy: Aggressive package pricing Spidle/Teledrift Day rate: Pro Tools/Motors Pro Tools/Stemulator/Jars Float Equipment standardized pricing more competitive Float equipment Sales Manager Teledrift Directional…
2015 New Technologies New Technologies: Centralizers Nano Rider Centramax TelepulseTM Horizontal wells Short Hop Telemetry Satellite monitoring system In house (Tie in TelepulseTM) Stemulator and Proshot w/Gamma International…
Teledrift Origins Wireless Drift Indicator A purely Mechanical Tool Based upon Pendulum action Version 2 was typically configured to read 7 degree maximum from Vertical in 1 degree increments Strip Chart Recorder output at…
Introduction to Stemulator Last year, Flotek introduced the Stemulator, a new technology that accelerates drilling the lateral portion of a horizontal well. The Stemulator is designed to induce axial vibration in the drill string to…
Introduction to Stemulator Features and Benefits The Stemulator tool consists of a Pulse Module and Shock Tool. The flow of drilling mud through the Stemulator to the BHA operates a rotary valve mechanism in the Pulse Module…
How the Stemulator Works Flow Interruption Causes Pressure Pulses Rotating Impeller Pressure Pulses Activate the Shock Tool to Vibrate the Gear Reducer Drill String Mud Flow Rotates the Impeller CLIENTS I EMPLOYEES I…
How the Stemulator Works Characteristics of Periodic Waves Waves that repeat over time are called Periodic Waves Frequency High Frequency means shorter time between waves Amplitude Higher Amplitude means higher power or more…
Introduction to TelePulseTM TelePulseTM Through research and innovation, Flotek developed the TelePulseTM MWD tool for directional use to address the increase in both horizontal and directional drilling TelePulseTM is designed to…