Attached files
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| 8-K - FORM 8-K - TETRA TECHNOLOGIES INC | tti8k-20100105.htm |
Exhibit 99.1
FOR
IMMEDIATE RELEASE
TETRA
TECHNOLOGIES, INC.
ANNOUNCES
2010 EARNINGS GUIDANCE
January 5, 2010
(The Woodlands, Texas), TETRA Technologies, Inc. (TETRA or the Company)
(NYSE:TTI) today announced a 2010 earnings estimate of $0.85 to $1.05 per fully
diluted share, before discontinued operations.
Stuart M.
Brightman, President and Chief Executive Officer, stated “The 2010 guidance
reflects our expectation of earnings growth in our Fluids Division, our Maritech
segment, and our Production Enhancement Division. We have based these
forecasts of improved results on a number of factors and assumptions,
including our expectation of a modest recovery in our domestic markets, our
continuing belief that future growth in the Gulf of Mexico will be focused
toward deepwater services, and our continued commitment to international
expansion. In addition, we anticipate strong market activity in 2010 for the
Offshore Services segment.
“For our Fluids
Division, the midrange 2010 estimates of $330 million in revenues and $50
million in pretax profits would represent an improvement over our anticipated
2009 results. This forecasted improvement is driven by our expectation of an
increase in demand for our Gulf of Mexico deepwater services, a continued
increase in activity relative to our Petrobras contract in Brazil, and a
positive impact from our El Dorado plant. We have discussed our progress on each
of these key initiatives over the last several years, and I am pleased that they
are coming to fruition in 2010, in-line with our expectations. Our plant in El
Dorado commenced initial production during the fourth quarter of 2009, and
production is expected to continue to ramp-up throughout 2010. In addition, we
have successfully completed the renegotiation of several agreements relating to
our El Dorado facility with Chemtura, and the bankruptcy court approved the
amendment and assumption of these contracts on December 8, 2009.
“For the TETRA
Offshore Services segment, we are estimating midranges of $320 million in
revenues and $55.5 million in pretax profits in 2010. These estimates are lower
than the segment’s anticipated record 2009 earnings, which are expected to
exceed any prior year’s earnings by a significant amount. We anticipate that the
market for Offshore Services will continue to be very robust in 2010, but that
it will generate somewhat less activity for this segment than it did in 2009.
The main factors driving our success in 2009 were a very favorable combination
of projects secured on a discrete service basis and an integrated service basis
for repair work on structures that suffered damage during Hurricane Ike, close
to full utilization of our major assets for a significant portion of the year,
and excellent weather conditions in the Gulf of Mexico. While we expect 2010
demand to be strong, it is unlikely that each of these variables will fall into
perfect alignment as they did in 2009. We will continue to invest in this
business in order to augment our offerings, and to support ongoing demand for
the segment. In addition, we will continue to evaluate opportunities to expand
Offshore Services into markets outside the U.S.
“We are estimating
midranges of $210 million in revenues and $22 million in pretax profits for our
Maritech segment in 2010. Maritech’s 2010 production is expected to average 50
to 55 MMcfe/day (one barrel equals six Mcf), versus average production during
the first nine months of 2009 of 51 MMcfe/day. The anticipated 2010 production
is derived from our expectation of resumed production from two fields that are
currently shut-in due to downstream pipeline problems, and from the impact of
property development activities undertaken in late 2009 and planned for early
2010. Maritech currently has 20,000 MMBtu/day of natural gas hedged at a
weighted average price of $8.15 per MMBtu, and 2,000 barrels/day of oil hedged
at a weighted average price of $78.70 per barrel. Maritech’s 2010 earnings will
include $22.8 million of non-cash revenue related to oil hedge positions on its
2010 production that were sold in 2009. While the cash from the sale of the
hedges was received in 2009, under accounting rules, the revenue impact will be
matched against the sales of 2010 production to which the hedges related. In
addition, our earnings estimates for Maritech assume that unhedged oil will sell
at an average of $70.75 per barrel and that unhedged gas will sell at an average
of $5.75 per Mcf in 2010.
“We plan to
continue with our strategy of aggressively reducing Maritech’s abandonment and
decommissioning liabilities. Through September 30, 2009, we spent approximately
$72 million on this activity, and we expect to spend an additional $73 million
in 2010. We will evaluate the insurance market as we enter the 2010 hurricane
season to determine whether we continue to self-insure Maritech’s assets against
wind-storm damages. Regardless of the outcome of that evaluation, we will
continue to focus on risk mitigation, and we intend to operate Maritech within
its free cash flow in 2010.
“For the Production
Enhancement Division, which includes the Production Testing and Compressco
segments, we are estimating midranges of $190 million in revenues and $51
million in pretax profits in 2010. For the Production Testing segment, we
anticipate that our domestic testing business will slowly improve in 2010 from
2009 levels following the recent improvements in natural gas prices. The
expected increase in domestic activity will be heavily weighted toward the
various shale plays, but we do anticipate a slight recovery in traditional
segments as well. Our earnings estimates for Production Testing assume an
average price of $5.75 per Mcf for natural gas during 2010. We will continue to
invest in Production Testing’s international expansion, building on the
successes we have achieved in certain international markets over the last
several years.
“We previously
filed a preliminary Form S-1 related to the anticipated Compressco MLP, and that
filing is still active. Consequently, we cannot elaborate on our expectations
for Compressco’s 2010 performance. We will evaluate the timing of the Compressco
MLP strategy over the next several quarters based on the performance of the
capital markets and Compressco’s results.
“Similar to last
year, we are not providing quarterly earnings guidance for 2010. We do expect
that typical seasonal patterns will impact 2010 results, and that Offshore
Services will perform most strongly in the second and third quarters, and the
Fluids Division will benefit from strong demand in Europe during the second
quarter. Some of the assumptions on which we have based the 2010 guidance
are:
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·
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a normal
amount of weather-related downtime for Gulf of Mexico
operations;
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2
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·
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an average
Gulf of Mexico rig count of 42;
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·
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an average
U.S. rig count of 1,200;
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·
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an average
international rig count of 950;
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·
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an average
unhedged oil price of $70.75 per barrel;
and
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·
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an average
unhedged gas price of $5.75 per
Mcf.
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“During 2009, we
exceeded our debt reduction goals. I am very gratified that the capital
constraints and other spending controls we implemented were successful in
helping us to achieve that objective. We expect to achieve free cash flow of
approximately $100 million in 2010. A forecast of 2010 capital spending by
segment is included in the tables that follow the text portion of this release.
Our projected generation of cash will give us increased flexibility to grow,
both organically and through acquisitions, as those opportunities present
themselves,” concluded Brightman.
TETRA is an oil and
gas services company, including an integrated calcium chloride and brominated
products manufacturing operation that supplies feedstocks to energy markets, as
well as other markets.
This press release
includes certain statements that are deemed to be forward-looking statements.
Generally, the use of words such as “may,” “will,” “expect,” “intend,”
“estimate,” “projects,” “anticipate,” “believe,” “assume,” “could,” “plans,”
“targets” or similar expressions that convey the uncertainty of future events,
activities, expectations or outcomes identify forward-looking statements that we
intend to be included within the safe harbor protections provided by the federal
securities laws. These forward-looking statements include statements concerning
financial guidance, estimated revenues and earnings, estimated earnings per
share, projected growth, expected benefits from our agreements and long-term
investments, expected benefits from our cost reduction initiatives, expected
benefits from the settlement of insurance claims, expected results of
operational business segments for 2010, the expected impact of current economic
and capital market conditions on the oil and gas industry and our operations,
statements regarding our beliefs, expectations, plans, including the previously
announced plan to form a master limited partnership, goals, future events and
performance, and other statements that are not purely historical. These
forward-looking statements are based on certain assumptions and analyses made by
the Company in light of its experience and its perception of historical trends,
current conditions, expected future developments and other factors it believes
are appropriate in the circumstances. Such statements are subject to a number of
risks and uncertainties, many of which are beyond the control of the Company.
Investors are cautioned that any such statements are not guarantees of future
performances or results and that actual results or developments may differ
materially from those projected in the forward-looking statements. Some of the
factors that could affect actual results are described in the section titled
“Certain Business Risks” contained in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008, as well as other risks identified from
time to time in its reports on Form 10-Q and Form 8-K filed with the Securities
and Exchange Commission.
3
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DIVISIONAL
ESTIMATES (continuing operations)
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|||||||
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(in
millions)
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Profit
Before
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||||||
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Revenues
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Tax
(PBT)
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Cash
CapEx(1)
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DD&A(2)
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||||
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Fluids
Division
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$320.0 -
340.0
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$46.5 -
53.5
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$21.0
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$25.0
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|||
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Offshore
Services
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$305.0 -
335.0
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$52.0 -
59.0
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$22.0
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$17.0
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|||
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Maritech
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$200.0 -
220.0
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$19.0 -
25.0
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$56.0
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(3) |
$94.0
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||
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Intersegment
eliminations
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($68.0)
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-
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-
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-
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|||
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Offshore
Division
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$437.0 -
487.0
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$71.0 -
84.0
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$78.0
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$111.0
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Production
Enhancement Division
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$180.0 -
200.0
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$48.0 -
54.0
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$28.0
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$30.0
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|||
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Operating
divisions total
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$937.0 -
1,027.0
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$165.5 -
191.5
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$127.0
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$166.0
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(1) Excludes $2.7
million of Corporate.
(2) Excludes $3.4
million of Corporate.
(3) Does not include
$73.2 million of net cash for Maritech WA&D activities, which are not
classified as CapEx.
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CONSOLIDATED
ESTIMATE (continuing operations)
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|||
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(in millions,
except per share amounts)
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TETRA
Earnings Guidance Range
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Operating
profit (divisional PBT)
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$165.5
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$191.5
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Corporate
overhead
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($46.0)
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($48.0)
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Net interest
and other expenses
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($18.0)
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($18.0)
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|
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TETRA income
before taxes
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$101.5
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$125.5
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Provision for
income taxes (35.3%)
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($35.8)
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($44.3)
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Net
income
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$65.7
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$81.2
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Fully diluted
shares outstanding
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77.0
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77.0
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Per share
earnings
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$0.85
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$1.05
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Contact:
TETRA Technologies,
Inc., The Woodlands, Texas
Stuart M. Brightman,
281/367-1983
Fax:
281/364-4346
www.tetratec.com
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