CARBO Ceramics Inc. recently reported a generally accepted accounting principle (GAAP) net loss of $17.0 million, or a loss of $0.74 per share, on revenues of $73.3 million for the quarter ended June 30, 2015. This net loss includes $7.6 million, or $0.33 per share, of after-tax costs primarily associated with slowing and idling production. The company reported net income of $23 million in the second quarter of 2014.

“We are pleased to see our ceramic proppant sales volumes increased 7% sequentially, despite an average North American rig count that declined 40% sequentially,” said Gary Kolstad, CEO. “The industry environment remains extremely challenging, but we are making progress in several areas. We continue to create opportunities to help E&P operators make better wells through the application of our existing and new technologies, thereby increasing estimated ultimate recovery (EUR) and lowering their finding and development costs.

“CARBO expanded the boundaries of proppant technology as we successfully employed KRYPTOSPHERE® HD and SCALEGUARD® technologies in a challenging deep well environment, the Lower Tertiary formation in the Gulf of Mexico. Both of these technologies continue to garner interest across a number of the oil and gas plays in the industry.

“Developing and delivering leading technologies is a core focus of CARBO. Incorporating these technologies into our Design, Build, and Optimize the Frac® platform allows E&P operators to increase well production and EUR. This synergistic platform is being recognized within the E&P community as it helps lower finding and development costs, reduce costly workovers and minimize lost production. The deployment of new technologies during the second quarter is a testament of E&P operators’ desire to improve reservoir recovery.

“We continue to execute on our cash preservation and cost reduction efforts. Idling our production facilities over the last quarter to lower inventory, along with our cost reduction efforts, has reduced working capital, produced positive operating cash flows and helped maintain the strength of our balance sheet. Toward the end of the second quarter, we started bringing production back online, albeit at reduced levels. We are also pleased that we reached an agreement with our lender to amend our credit facility and believe it should provide the additional flexibility needed to navigate the downturn.”

Revenues for the second quarter of 2015 decreased 59% ($103.3 million) compared to the second quarter of 2014. The decrease was mainly attributable to a decrease in ceramic proppant and resin-coated sand sales volumes in conjunction with market-driven reductions in the average selling prices.

“As it appears the rig count may be stabilizing, and with E&P operators having seen large well cost reductions, we are cautiously optimistic on the opportunities for increases in our new technology sales,” said Kolstad. “Base ceramic proppant sales volumes may remain stable in the third quarter of 2015. Imports of the low-quality, Chinese ceramic proppant have subsided this year; however, we believe the inventory of imported ceramic proppant in the U.S. may still be at levels that keep pressure on pricing.

“As an industry, we are only recovering a minimal amount of the oil and gas in these unconventional reservoirs. We have to do better, and we believe CARBO has an integral role to play in the evolution and delivery of production enhancement technologies. We will continue our technical marketing campaign, centered on the Design, Build, and Optimize the Frac platform, which provides our clients with the technical expertise, technology products, and services to make better wells, increase production, and lower their finding and development costs and lease operating expense.

“Our efforts to date on our cash preservation and cost reduction initiatives continue to yield positive results. Going forward, we remain focused on maintaining a strong balance sheet and generating positive operating cash flows in the second half of the year.”

 For more information, visit www.carboceramics.com.