CARBO Ceramics' proppants (tiny alumina-based ceramic beads) are a welcome release for natural gas and oil well operators. To increase well production, operators often pump fluids down wells at high pressure to create fractures in the hydrocarbon-bearing rock formation (hydraulic fracturing). Proppants are suspended in the fluid to fill the channels and "prop" up the fissures so that natural gas and oil may flow to the surface. The company's products compete against sand-based proppants. CARBO Ceramics also offers related software, consulting services, specialty polymers, and geotechnical monitoring businesses.
CARBO Ceramicsis the world's leading supplier of ceramic proppant, the provider of the world's most popular fracture simulation software, and a supplier of fracture design and consulting services. The company also offers a broad range of technologies for spill prevention, containment and countermeasures, along with geotechnical monitoring.
The company's ceramic proppants are made from alumina-bearing ores (including clay, bauxite, bauxitic clay, and kaolin). The main deposits of these ores in the US are in Arkansas, Alabama, and Georgia; other economically viable deposits are found in Australia, Brazil, China, Gabon, India, Jamaica, Russia, and Surinam.
Its other operations include Applied Geomechanics (monitoring systems), Falcon Technologies (high performance polymers), and StrataGen (reservoir stimulation technology).
Headquartered in Houston, Texas, CARBO Ceramics manufactures its products in Eufaula, Alabama; Toomsboro and McIntyre, Georgia; Luoyang, China and Kopeysk, Russia. The company has numerous storage and distribution facilities in North America (US and Canada), Europe, and Asia (China).
Sales and Marketing
CARBO Ceramics supplies its customers with products on a just-in-time basis. Continuing sales of products depend on the company's direct customers and the well operators being satisfied with product quality, availability, and delivery performance. It also provides its software simulation products and consulting services directly to owners and/or operators of oil and gas wells and service companies.
The company's international marketing efforts are conducted through sales offices in Dubai, UAE; Aberdeen, Scotland; Beijing, China; and Moscow, Russia, and through commissioned sales agents located in South America and China.
Halliburton and Schlumberger each accounted for more than 10% of CARBO Ceramics' 2011 revenue.
The company's revenues grew by 32% in 2011 due to a 19% increase in proppant sales volume (thanks to a growth in shale play development, especially in the US), a 12% increase in the average proppant selling price as a result of price increases, and an increase in Falcon Technologies' revenues. About 79% of CARBO Ceramics' revenues are generated in the US.
CARBO Ceramics' net income jumped by 65% in 2011 thanks to higher revenues, a 19% increase in proppant sales volume, a 12% growth in the average proppant selling price, and an increase in the gross profit margin as a percentage of sales, partially offset by higher selling, general, and administrative expenses. Income tax expense in 2011 grew due to higher pretax income.
Growing its US manufacturing base, in 2011 the company acquired real estate and submitted environmental permit applications to construct a ceramic proppant plant in the Millen, Georgia area. CARBO Ceramics believes this plant (due for completion in 2013) could support a manufacturing capacity of up to 500 million pounds of ceramic proppant per year. In addition, in 2012 the company was constructing a 600 million pound-per-year resin-coating plant in Marshfield, Wisconsin.
As part of its push for innovation, in 2010 the company introduced a non-radioactive traceable ceramic proppant called CARBONNRT, as an environmentally friendly alternative to<<< </p /> the use of radioactive proppants as traceable markers in the computer monitoring of fracturing activity.
William C. Morris, Neuberger Berman, and Baron Capital Group, Inc. own 12%, 10%, and 10% of CARBO Ceramics, respectively. – less