Forward Looking Statements

Transcription

1 is the world s largest supplier of ceramic proppant, the provider of the world s most popular fracture simulation software, and a leading provider of fracture design, engineering and consulting services. January 2009

2 Forward Looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forwardlooking statements. Any written or oral statements made by the Company or on behalf of the Company in conjunction with this presentation may include forward-looking statements which reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from such statements. This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, the Company's prospects, developments and business strategies for its operations, all of which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties include, but are not limited to, changes in the demand for oil and natural gas, the development of alternative stimulation techniques and the development of alternative proppants for use in hydraulic fracturing. The words "believe", "expect", "anticipate", "project" and similar expressions identify forward-looking statements. Participants are cautioned not to place undue reliance on these forward-looking statements, each of which speaks only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

3 Our Purpose: To improve production and recovery rates in oil and natural gas reservoirs by focusing on the hydraulic fracturing process. The E&P Need The Solution The Value Increased Production Improved Recovery Increased ROI Effective Fracturing Maximize economics by creating high Conductivity fractures for oil & gas to flow Need experienced experts to Design and Evaluate fractures Economic Conductivity Broadest range of ceramic proppants Increase well production by 20%+ Consulting/Software Experienced consulting expertise FracproPT software Improved Production & Recovery = $$$

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5 Global Leadership Ceramic Market Share s growth is driven by: 16% 17% Borivichi FORES Saint Gobain Curimbaba Others 11% 9% 35% Increasing acceptance of the value proposition of our high quality ceramic proppant Increased fracture intensity in North American resource plays Increasing development of natural gas and fracturing activity outside of North America Our continuing commitment to invest in new manufacturing capacity to remain the world leader 12% Source: Company estimates and PropTesters, Inc Proppant Market Study

6 Lbs (M) 1,200 1, A Growth Business '00 '01 '02 '03 '04 '05 '06 '07 Historical Proppant Sales CAGR 18.5% 28% projected growth in 2008 Note: 2008 run rate calculated through September 30, 2008 '08 Runrate

7 US - Gas Wells Drilled vs. Gas Production Wells TCF 35,000 32,000 29,000 Gas Wells Drilled US Gas Production - TCF US Gas Consumption - TCF ,000 23,000 20, , ,000 11,000 8, , e 16 Source: EIA Dec 08 Short Term Energy Outlook est for product. and consump., Nov 08 MER gas wells drilled runrate

8 Increasing Depletion Rates % 60% First Year Well Decline Rates 55% Percentage Decline 50% 45% 52% 54% 55% 49% 40% 44% 42% 43% 42% 44% 41% 42% 46% 35% E 2007E Source: Raymond-James

9 Global Opportunities Will Increase International Natural Gas Reserves 7,000 6,000 Trillion Cubic Feet 5,000 4,000 3,000 2,000 1, Middle East Eurasia Africa Other Source: Energy Information Administration Jan 1 annual estimates

10 Total Proppant Use by Type % Lbs in millions 16,000 14,000 12,000 10,000 8,000 6,000 4,000 Sand Resin Coated Sand Ceramic 10% 18% 2, Source: Company estimates and PropTesters, Inc Proppant Market Study

11 Our Value Proposition What should an E&P Operator expect using s ceramic proppant versus sand-based proppant Improved Production and Recovery Rates In Oil & Gas Wells 20% + Increase in Initial Production Rates 20% + Increase in Estimated Ultimate Recovery Improved rates of return Rapid payout on initial investment (weeks/months) Lower finding & development costs for E&P Cos. Accelerated recovery times (in some cases by 1/3)

12 Ceramic Benefits vs. Alternatives Uniform grains provide maximum porosity and increased flow capacity Broadly sieved proppants pack more tightly, resulting in loss of fracture width, and reduced conductivity

13 E. Texas Field Trial Results Cotton Valley-Taylor, E. Texas (Ascent Operating) Benefits of ECONOPROP over Sand and Resin Coated Sand in Slickwater Fracturing SPE Permeability: 0.05 md Depth: 10,000 ft Stress on Proppant: 6000 psi Slickwater Fluid System Minden Field

14 E. Texas Field Trial Results Cumulative Gas volume vs. Days Four offset Wells - Average 305,000# per well Econoprop 18,200 $7/Mcf ($127,700) Cumulative Gas (MCF) SPE Days Since Frac'd 20-30% increase in IP 20 Offset wells - Average 398,000# per well Sand/RCS EUR increased by 30% and recovered in 1/3 the time $120,000 incremental value created in first 180 days Incremental cost of proppant ($18k) paid out in <30 days

15 Bakken Field Study Results Bakken Formation, Montana/North Dakota (Nance Petroleum) AB SK MB ND MT SD WY Benefits of LITE over Sand and Resin Coated Sand in Low Perm Oil Reservoir Low Permeability Oil Wells Depth: ,000 ft Stress on Proppant: 7500 psi Horizontal Wells SPE

16 Bakken Field Study Results Ceramic - 23 wells Sand - 91 wells Oil Rate (BOPD per lateral) Ceramics average 40% higher initial production rate After 20 months, ceramics average 90% higher production Months from Initial Production SPE

17 Ceramic Proppant Areas of Interest Horn River Alberta Shallow Gas Trend Bakken Greater Green River Basin Piceance Marcellus Anadarko Woodford Major Legacy Areas New CRR Growth Areas Possible/Probable Deep Barnett South Texas East Texas Salt Basin Haynesville Gulf of Mexico

18 Benefits of Increased Conductivity SPE paper summarizes over 80 SPE papers, representing over 70 companies Located in 35 Regions Alaska, Algeria, Angola, Appalachians, Australia, Bolivia, Borneo, Brazil, California, China, Colorado, Colombia, Europe, Germany, Gulf of Mexico, Illinois, Iowa, Indonesia, Java Sea, Louisiana, Malaysia, Nebraska, New Mexico, North Sea, Norway, Ohio, Oklahoma, Oman, Siberia, Sumatra (Indonesia), Texas, Venezuela, Vietnam, Wyoming, Zaire (W Africa), SPE Oil wells, gas wells, lean and rich condensate Carbonate, Sandstone and Coal Well Rates Well Depths 1 to 25,000 bopd 100 to 20,000 feet MMSCFD

19 Sales vs. Capacity Lbs (M) 1,600 1,500 1,400 1,300 1,200 1,100 1, Manufacturing Capacity CRR Sales Volume Run rate * Toomsboro line 3 is expected to be completed in the first quarter of E TMB3 *

20 Our Valued Brands The world s largest supplier of ceramic proppant The industry experts on fracturing design and evaluation The Frac Pros The provider of the world s most popular fracture simulation software FracproPT The provider of the broadest technology solutions for Geotechnical monitoring FracproPT Ceramic Proppant Consulting Services Frac Design Software Geotechnical

21 Financial Highlights Results from Continuing Operations Revenue $M Net Inc $M Cash From Operations '05 '06 '07 '08 TTM 0 '05 '06 '07 '08 TTM TTM data as of September 30, 2008 Cash flow from operations defined as net income plus depreciation and amortization.

22 Dividends Paid In millions $16 $14 $12 $10 $8 $6 $4 $2 $0 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 TTM TTM data as of September 30, 2008

23 Summary Balance Sheet $ in 000 s 30-Sep 2008 (Unaudited) Cash and Short-term Investments $ 31,931 Accounts Receivable 69,965 Inventories 59,495 Other Current Assets 81,874 Total Current Assets 243,265 Property, Plant and Equipment - net 247,101 Other Assets 7,219 Total Assets $ 497,585 Current Liabilities 35,411 Long Term Debt - Other Liabilities 36,618 Total Liabilities 72,029 Total Shareholders' Equity 425,556 Total Liabilities & Shareholders' Equity $ 497,585

24 Strategy Continue to Grow the ceramic proppant franchise Continue to inform E&P Operators of the value of Conductivity and increase ceramic market share Continue to produce the highest Quality proppants Continue to lead in global Capacity and Distribution to maximize efficiency Develop new products and services through increased R&D HYDROPROP and TAG are recent examples Leverage our consulting services and software businesses to help sell all of our technologies, including the benefits of ceramic proppant conductivity Invest in technology that can expand around fracturing processes, well performance, & reservoir performance

25 is the world s largest supplier of ceramic proppant, the provider of the world s most popular fracture simulation software, and a leading provider of fracture design, engineering and consulting services. January 2009

26 Cash Flow from Operations Reconciliation Results from Continuing Operations $ in 000 s For the years ended Dec 31 9/30/ TTM Net Income $ 45,332 $ 52,245 $ 49,641 $ 51,862 Plus: depreciation and amortization 10,750 15,634 19,808 24,275 Cash Flow from Continuing Operations $ 56,082 $ 67,879 $ 69,449 $ 76,137 TTM data as of September 30, 2008 Cash flow from operations equals net income plus depreciation and amortization.