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CARBO Announces First Quarter 2016 Results

Conference Call Scheduled for Today, 10:30 a.m. Central Time- Continued progress on cash preservation and cost reduction strategy.- Reduced debt by $23.0 million. Cash position of $41.5 million at quarter end, excludes income tax refund of $37.4 million received in late April.- Quarterly revenues of $33.1 million, with GAAP net loss of $24.7 million, or a loss of $1.07 per share.- GAAP net loss includes $5.7 million, or $0.25 per share, of after-tax charges and $6.5 million, or $0.28 per share, of after-tax costs associated with slowing and idling production.

HOUSTON, April 28, 2016 /PRNewswire/ -- CARBO Ceramics Inc. CRR, -13.10% today reported a GAAP net loss of $24.7 million, or a loss of $1.07 per share, on revenues of $33.1 million for the quarter ended March 31, 2016. The GAAP net loss includes $5.7 million, or $0.25 per share, of after-tax charges and $6.5 million, or $0.28 per share, of after-tax costs associated with slowing and idling production.

CEO Gary Kolstad commented, "Continued low commodity prices further reduced industry activity levels during the first quarter of 2016 as the North American average rig count declined 57% compared to the first quarter of 2015. Given the pressure to reduce costs during this downturn, E&P operators are currently opting for lowest-cost completions, at the risk of compromising production. In some resource plays, E&P operators are also electing not to complete the wells they drilled. These factors negatively impacted our ceramic sales volumes during the quarter.

"As oil and gas activity continued to deteriorate, we witnessed an acceleration in the inventory liquidation of stranded, low-quality Chinese ceramic proppant. Although the near-term impact is negative for our ceramic sales volume, we believe this liquidation benefits us in the long term as the inventory of imported Chinese ceramic proppant is sold off.

"Our efforts to preserve cash and reduce the cost structure of the organization continued during the first quarter. In addition to continued headcount rationalization, we are implementing programs that allow us to further reduce cash compensation.

"We remain focused on our mission to provide technology that increases production and recovery and reduces lease operating expenses. We believe the industry's bias to lowest-cost completions is a direct result of operators merely trying to survive this downturn. From a long-term standpoint, we are very excited about the increasing value our technology portfolio brings to our clients," Mr. Kolstad said.

First Quarter 2016 Results

Revenues for the first quarter of 2016 decreased 55%, or $40.6 million, compared to the first quarter of 2015. The decrease was primarily attributable to a 57% reduction in the average North American rig count, which resulted in a decrease in proppant sales volumes (as specified in the Proppant Sales Volumes table below), associated reductions in the average proppant selling prices, and a move to lowest-cost completions.

Operating loss for the first quarter of 2016 was $36.1 million compared to $42.5 million in the first quarter of 2015. The improvement was largely due to a $14.4 million decrease in miscellaneous charges and cost cutting measures implemented beginning in early 2015. These improvements were partially offset by the revenue decline explained above.

Net loss for the first quarter of 2016 was $24.7 million, compared to $28.6 million in the first quarter of 2015.

Proppant Sales Volumes

(in million lbs)

Three Months Ended

March 31,


2016

2015




Ceramic

120

177

Northern White Sand

75

343

Total

195

520

Summary of Miscellaneous Charges and Other Production Costs

Miscellaneous Charges

(In thousands)

Three Months Ended

March 31,


2016

2015




Impairment of Long-Term Bauxite Reserves

$ 1,065

$ -

Loss on Derivative Instruments

227

12,547

Severance and Inventory Charges

7,144

10,327

Tax effect

(2,775)

(6,167)

After-tax Total

$ 5,661

$ 16,707

Other Production Costs

(In thousands)

Three Months Ended

March 31,


2016

2015




Slowing and idling production

$ 9,707

$ 8,421

Tax effect

(3,194)

(2,947)

After-tax Total

$ 6,513

$ 5,474

Technology and Business Highlights

  • QUANTUM [TM] , an innovative Propped Reservoir Volume [TM] (PRV [TM] ) imaging service, has seen significant interest from E&Ps. As a result, field testing has been accelerated. QUANTUM fracs allow E&Ps to visualize the location of the PRV for the first time which will improve decision making in well spacing, perforation cluster spacing, fluid selection and proppant selection. QUANTUM will...

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