HOUSTON, Jan. 19, 2016 /PRNewswire/ -- Flotek
Industries, Inc. (NYSE: FTK) (News) ("Flotek" or the "Company")
announced today that the Special Technical Committee (the "
Technical Committee") appointed to develop an independent
methodology to analyze the performance of Flotek's CnF®
chemistries has retained MHA Petroleum Consultants, LLC ("MHA") of
Denver as the principal
investigators for the project.
The Company also provided commentary on fourth quarter activity,
the creation of a special committee of independent directors to
direct the review of issues related to the Company's
FracMax® software and the efficacy of CnF®,
and notice from the U.S. Securities and Exchange Commission of an
inquiry related to FracMax® software and the efficacy of
CnF®.
Special Technical Committee Retention of MHA Petroleum
Consultants
The Technical Committee, formed to review issues surrounding the
Company's FracMax® software and the efficacy of
CnF® in completions, announced that it retained
Denver-based MHA Petroleum
Consultants as advisors to assist in its charge of independently
validating the effectiveness of CnF® and assist in the
review of the FracMax® software and associated
database.
MHA is an oil and gas consulting concern that provides a broad
range of services, such as corporate planning and reporting,
acquisition and disposition, litigation support and identification
of optimal plans for field development and depletion. MHA
conducts reserve and resource evaluations in the U.S. and
internationally, onshore and offshore. MHA has experience in
converting complex technical reservoir data, production forecasts,
and economic information into reserve and resource
valuations. Its integrated analysis incorporates the
disciplines of geophysics, geology, petrophysics, production
facility engineering, economic valuation and risk assessment. The
firm assists companies across the energy spectrum in analyzing
production and reserve data, including the evaluation of various
drilling, completion and production techniques and strategies.
Tim Hower, MHA's Chief Executive
Officer, is the principal investigator conducting the
CnF® studies. Mr. Hower has over thirty years of
petroleum engineering evaluation experience spanning a broad range
of issues including unconventional reservoir assessment and
reserves, field development planning, reservoir simulation and
enhanced recovery. He holds a BS in petroleum engineering and
an MS in petroleum engineering, both from Pennsylvania State
University. Mr. Hower is a licensed petroleum engineer in the
state of Colorado and Wyoming.
MHA's work began in November 2015
with the development of a methodology to assess the impact of
CnF® on production, including attention to data
collection focused on ensuring, as much as possible, the accuracy
of third party data to be used in the analytical model. MHA
has been tasked with reviewing CnF® performance in three
basins: The Denver-Julesburg Basin of Colorado, the Permian Basin of Texas and the South Texas Basin. It is
anticipated that the results will be released on a basin-by-basin
basis, beginning with the Denver-Julesburg Basin, once the studies
are completed and reviewed.
MHA began its investigation in the Denver-Julesburg Basin
because of readily available data for this basin, including both
input data as well as well-centric production data. As the Company
noted in its November 2015 release
regarding issues and errors in the FracMax® analytical
process, production data from Texas is aggregated by lease or unit, making
analysis of individual well production data more complex and
time-consuming.
Preliminary Fourth Quarter Activity Commentary
While the Company is still finalizing results for the quarter
and year ending December 31, 2015,
Flotek today provided the following color on select operations for
the three-months ended December 31,
2015.
While overall oilfield activity continued to see sequential
declines in the fourth quarter, the Company's CnF®
chemistry business was resilient in the three-month period.
CnF® volumes in the fourth quarter are expected to
increase by approximately 5% and, when compared to the fourth
quarter of 2014, are expected to increase by greater than 20%.
CnF® revenues are likely to be flat when compared to
third quarter revenues and down approximately 4% when compared to
year-ago levels. The expected decline in revenues is primarily a
result of a combination of previously discussed product
substitution and volume incentive pricing to large customers.
The non-CnF® chemistry business is expected to be
meaningfully weaker due to the overall deceleration in market
activity and activity curtailment by a major customer in the
quarter. Similarly, the Company anticipates the Drilling
Technologies segment to post a decline of approximately 5% in
sequential revenue and over 60% in year-over-year sales, consistent
with overall deterioration in industry activity.
"We are pleased with the strength in CnF® activity,
especially given the sharp decline in overall oilfield activity,"
said John Chisholm, Flotek's
Chairman, President and Chief Executive Officer. "We believe
continued market penetration and the positive impact on client
performance have helped us increase CnF® volumes in a
very difficult oilfield environment. While we understand the
challenges ahead, we plan to continue our strategy to build the
validation portfolio and work hard to convert those validations
into commercial clients regardless of the market environment."
Establishment of Special Committee and SEC Inquiry
As a result of issues raised in an independent report regarding
the accuracy of the Company's FracMax® software and
efficacy of the Company's CnF® completion chemistries,
the Company was named as a defendant in a number of shareholder
class action and derivative lawsuits. In addition, the Company
received notice from the U.S. Securities and Exchange Commission
("SEC") that it has opened an inquiry related to similar
issues.
The Company's Board of Directors subsequently formed a Special
Committee consisting of five independent members of the Board of
Directors to conduct an independent review of the issues as well as
any other relevant issues that may arise in connection with the
shareholder litigation or SEC inquiry.
Reaffirms Fourth Quarter and Year-End Earnings Release Date
and Conference Call Schedule
Flotek reaffirms plans to host a conference call on Thursday, January 28, 2016, at 7:00 a.m. CST (8:00am
EST) to discuss its financial and operating results for the
twelve-months ended December 31,
2015. Flotek intends to provide dial-in information through
a press release on January 27,
2016.
Flotek plans to file its 10-K after the market close on
Wednesday, January 27, 2016. In
addition, the Company intends to provide additional details
regarding operating results in a press release after the market
close on January 27, 2016.
About Flotek Industries, Inc.
Flotek is a global developer and distributor of a portfolio of
innovative oilfield technologies, including specialty chemicals and
down-hole drilling and production equipment. It serves major and
independent companies in the domestic and international oilfield
service industry. Flotek Industries, Inc. is a publicly traded
company headquartered in Houston,
Texas, and its common shares are traded on the New York
Stock Exchange under the ticker symbol "FTK."
For additional information, please visit Flotek's web site at
www.flotekind.com.
Forward-Looking Statements
Certain statements set forth in this Press Release constitute
forward-looking statements (within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934) regarding Flotek Industries, Inc.'s business,
financial condition, results of operations and prospects. Words
such as expects, anticipates, intends, plans, believes, seeks,
estimates and similar expressions or variations of such words are
intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this
Press Release.
Although forward-looking statements in this Press Release
reflect the good faith judgment of management, such statements can
only be based on facts and factors currently known to management.
Consequently, forward-looking statements are inherently subject to
risks and uncertainties, and actual results and outcomes may differ
materially from the results and outcomes discussed in the
forward-looking statements. Factors that could cause or contribute
to such differences in results and outcomes include, but are not
limited to, demand for oil and natural gas drilling services in the
areas and markets in which the Company operates, competition,
obsolescence of products and services, the Company's ability to
obtain financing to support its operations, environmental and other
casualty risks, and the impact of government regulation.
Further information about the risks and uncertainties that may
impact the Company are set forth in the Company's most recent
filings on Form 10-K (including without limitation in the "Risk
Factors" Section), and in the Company's other SEC filings and
publicly available documents. Readers are urged not to place undue
reliance on these forward-looking statements, which speak only as
of the date of this Press Release. The Company undertakes no
obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the
date of this Press Release.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/flotek-industries-announces-retention-of-mha-petroleum-consultants-by-cnf-special-technical-committee-announces-select-preliminary-fourth-quarter-results-appointment-of-independent-board-committee-and-sec-inquiry-reaffirms-fo-300206081.html
SOURCE Flotek Industries, Inc.