CARBO Ceramics Inc. (NYSE:CRR) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 11:30 am ET

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CARBO Ceramics Inc. (NYSE:CRR) Q4 2014 Earnings Conference Call - Final Transcript

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Operator
operator

Hello and welcome to today's CARBO Ceramics Inc. Fourth Quarter and Year-End 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's remarks, we will conduct a question-and-answer session and instructions will follow at that time. Please be advised that this call is being recorded today, January 29, 2015, and your participation implies consent to our recording this call.

If you do not agree to these terms, simply disconnect.

(Forward Looking Cautionary Statements)

Your host for today's call is Mr. Gary Kolstad, President and Chief Executive Officer of CARBO Ceramics Inc. Mr. Kolstad, please begin your call.

Executive
Gary Kolstad

Thank you and welcome everyone to our fourth quarter 2014 earnings call. This morning, I'll provide you an overview of our fourth quarter results followed by an update on the outlook for the business, and then we'll open it up to questions.

We achieved higher proppant sales volume in the fourth quarter of 2014 compared to the third quarter of 2014. However, we experienced a reduction in ceramic proppant demand later in the quarter due to the large drop in oil price and seasonality. During the second half of the year, we managed through a difficult environment that included both E&P operators experimenting with the increased use of raw sand as well as an oversupply of ceramic proppant.

We remained focused on our mission; enhancing the production of our clients wells through differentiated technology and quality products.Throughout the year, we leveraged our Design, Build, and Optimized the Frac platform to provide a holistic production enhancement solution to maximize our clients well production and increase their EURs.

In addition, field production studies continue to support the use of high quality, high conductivity ceramic proppant over lower conductivity proppant.The geology and geophysics of oil and gas reservoirs have not changed, neither has the importance of finding a balance between the two main factors that optimize production: reservoir contact area and conductivity.

Our STRATAGEN consulting business continues to partner with operators and help them to understand the economic benefits of developing solutions to optimize contact area and conductivity.

During the quarter, we promoted cost-neutral frac designs in which frac costs using high conductivity ceramic proppant were designed

Executive
Gary Kolstad

to be similar to the frac costs using high volumes of raw frac sand. The higher volume of raw frac sand needed, combined with higher associated completion and logistical costs offset the cost of ceramic proppant. The early production results from these cost-neutral designs have been positive.

KRYPTOSPHERE HD was successfully pumped in its first deep-water Gulf of Mexico well. In addition, a number of wells were pumped with SCALEGUARD during the quarter. Given the growing competitive landscape in proppants, successful introduction of new technology will be key to differentiating CARBO over the long term.

On January 28, 2015, the Company's Board of Directors authorized repurchase of up to two million shares of our common stock. The board's decision to authorize another repurchase plan speaks to the confidence in the long term business outlook.