Flotek Industries, Inc. Announces Completion of Purchase of Eclipse IOR Services, LLC and Expansion of Enhanced Oil Recovery Platform
HOUSTON, Jan. 16, 2014 /PRNewswire/ -- Flotek Industries, Inc. ("Flotek" or the "Company') (NYSE: FTK - News) today announced the closing of its purchase of Eclipse IOR Services, LLC ("EOGA") and plans to expand its Enhanced Oil Recovery ("EOR") platform.
Total consideration for the purchase was $7,000,000, including $5.25 million in cash and 94,354 shares of Flotek Common Stock. The transaction is effective January 1, 2014. While final year-end financials are pending, the Company estimates EOGA's 2013 Net Income to be approximately $1.6 million.
"We are pleased to complete the acquisition of EOGA and delighted to welcome Jay Portwood, Ron Scott and the EOGA team to the Flotek family," said John Chisholm, Flotek's Chairman, President and Chief Executive Officer. "EOGA's expertise in Enhanced Oil Recovery processes and the use of polymers to improve performance of EOR projects is an important addition to Flotek's growing inventory of EOR services. Not only does EOGA add leading edge products and services to our EOR offerings, the addition of Jay, Ron and the EOGA team should allow Flotek to leverage their expertise to grow market share for our other EOR chemistry applications. With demand for EOR services expected to accelerate, we will continue to be opportunistic in growing our breadth of EOR services."
"Ron and I, along with the entire EOGA team, are excited to join Flotek and work side-by-side to create a leading, world-class EOR services company," said J.T. "Jay" Portwood, President of EOGA. "We have worked closely with Flotek and its chemistry research group for several years and believe the opportunities to offer value-added technologies to our existing EOR customers are significantly enhanced as we join forces. Flotek's chemistry expertise combined with our design and implementation services create an immediate leader in complex EOR projects, especially as it relates to water control and reservoir conformance. We look forward to being a part of the Flotek team for many years to come."
Under the terms of the Agreement, Mr. Portwood will serve as President of EOGA, a wholly-owned subsidiary of Flotek, and Mr. Scott will serve as Vice President of Operations. The Company will maintain its headquarters in Dallas with field offices in Oklahoma and Kansas.
Enhanced Oil Recovery Business Outlook
EOGA's domestic operations span from coast-to-coast with highlights of current and prospective projects including:
In the Permian Basin, EOGA has multiple gel polymer conformance projects progressing for C02 projects with multiple operators as well as opportunities to expand the use of gel polymer for conformance control in mature water floods.
In the Mid-Continent, EOGA is currently engaged in a number of polymer conformance projects in Oklahoma, Kansas and Nebraska water floods. In addition, gel polymers are being used in water shut-off treatments in Kansas. A new project is also underway to expand the use of gel polymer to shut-off water in horizontal wells in Northern Oklahoma. In addition, EOGA continues a research joint venture with the University of Kansas Tertiary Oil Recovery Project into various aspects of polymer and surfactant use in Enhanced Oil Recovery.
In the Rockies, a number of gel polymer and C02 foam projects are underway and proposed in Wyoming for water conformance. In addition, projects in North Dakota and Montana are in planning stages that involve the use of gel polymer in high temperature, deep waterdrive and waterflood applications.
In California, the Company has plans to expand the use of polymers for water control and shut-off in various onshore and offshore applications for multiple operators.
Internationally, EOGA has completed multiple projects in Canada to correct and prevent conformance problems in numerous polymer and ASP floods in high permeability, shallow heavy oil sandstone reservoirs developed with parallel alternating horizontal injectors and producers. Additional projects are likely in Canada in the coming months.
The Company is also considering opportunities in South America and the Middle East, currently partnering with Flotek's chemistry group on existing projects and additional prospects.
"Jay and his team have become recognized as one of the leading EOR design and injection firms in North America and, more recently, in international markets," added Chisholm. "Combined with our chemical technology expertise and additional resources, we believe the combined enterprise has the potential to become a global leader in EOR technology and consulting."
The Company does not anticipate any personnel changes as a result of the acquisition. Beginning on the effective date, January 1, 2014, EOGA's results will be consolidated into Flotek's financial statements. Additional financial information will be provided on the Company's year-end conference call in February.
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.
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.
SOURCE Flotek Industries, Inc.