Oil and Gas Downturn Negatively Affects CARBO Ceramics’ 2015 Results
CARBO Ceramics Inc. recently reported a generally accepted accounting principles (GAAP) net loss of $50 million, or a loss of $2.17 per share, on revenues of $56.8 million for the quarter ended December 31, 2015. The GAAP net loss includes $30.5 million, or $1.32 per share, of after-tax charges and $5.7 million, or $0.25 per share, of after-tax costs associated with slowing and idling production.
“We continued to navigate through the severe oil and gas industry downturn during the fourth quarter of 2015,” said Gary Kolstad, CEO. “Our ceramic proppant sales volumes finished better than expected, declining only 9% sequentially compared to a 13% decline in the average North American rig count. U.S. imports of low-quality Chinese ceramic proppant have been virtually non-existent for the last three quarters. Our cash preservation and cost reduction strategy continues to yield positive results. We evaluate market activity and adjust our plant utilization on a regular basis to maximize cost efficiencies, in order to maintain our position as North America's highest quality, lowest cost ceramic proppant producer.”
Revenues for the fourth quarter of 2015 decreased 66%, or $111.0 million, compared to the same period last year. The decrease was primarily attributable to a 60% reduction in the average North American rig count, which resulted in a decrease in proppant sales volumes and associated reductions in the average selling prices. Operating loss for the fourth quarter of 2015 was $76.6 million compared to an operating profit of $12.3 million in the fourth quarter of 2014. In addition to the decline in revenue, the company expensed $8.6 million in unabsorbed production costs as a result of low production levels and idled facilities. The impact of these and other items was partially offset by SG&A cost cutting measures implemented in early 2015 and throughout the year.
For the year ended December 31, 2015, revenues decreased 57%, or $368.8 million, compared to 2014. The decrease was primarily attributable to a 48% reduction in the average North American rig count, which resulted in a decrease in proppant sales volumes and associated reductions in the average selling prices. The full year reported net loss for 2015 was $109.5 million, compared to reported net income of $55.6 million in 2014. CARBO’s worldwide ceramic and sand proppant sales volumes totaled 1.64 billion lbs for the full year 2015, a decrease of 40% compared to 2014.
“We remain focused on advancing our production enhancement technologies,” said Kolstad. “These technologies, which increase hydrocarbon recovery and lower finding and development costs for E&P operators, continued to result in new client gains across most of the major oil and gas basins in North America. We have completed the first line of the plant retrofit to enable production of KRYPTOSPHERE, which is another important step in driving our production enhancement technologies forward. With this retrofit, we can now produce up to 100 million lbs of KRYPTOSPHERE annually. In addition, we completed our first KRYPTOSPHERE LD job in a high profile well during the fourth quarter of 2015. We believe new production enhancement technologies will be key in CARBO’s future success. Although 2015 was a difficult year from an industry activity perspective, our new technology revenues nearly tripled in 2015 as compared to 2014. This is a testament to E&P operators’ focus on better well economics.”
For more information, visit www.carboceramics.com.