FLOTEK INDUSTRIES INC/CN/ (FTK) SPO
|Company Name||FLOTEK INDUSTRIES INC/CN/|
|Company Address||10603 W. SAM HOUSTON PARKWAY N
HOUSTON, TX 77043
|CEO||John W. Chisholm|
|Employees (as of 12/31/2016)||517|
|State of Inc||DE|
|Fiscal Year End||12/31|
|Shares Over Alloted||--|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||--|
Unless otherwise specified in an accompanying prospectus supplement, we expect to use the net proceeds from the sale of the securities offered by this prospectus for general corporate purposes, which may include, among other things: • the repayment of outstanding indebtedness; • working capital needs; • capital expenditures; and • acquisitions. The actual application of proceeds from the sale of any particular offering of securities issued hereunder will be described in the applicable prospectus supplement relating to such offering. We may invest funds not required immediately for these purposes in marketable securities and short-term investments. The precise amount and timing of the application of these proceeds will depend upon our funding requirements and the availability and cost of other funds.
The ability to compete in the oilfield services industry and the consumer and industrial markets is dependent upon the Company’s ability to differentiate its products and services, provide superior quality and service, and maintain a competitive cost structure with sufficient raw material supplies. Activity levels in the oil field services industry are impacted by current and expected oil and natural gas prices, oil and natural gas drilling activity, production levels, and customer drilling and production designated capital spending. Domestic and international regions in which Flotek operates are highly competitive. The unpredictability of the energy industry and commodity price fluctuations create both increased risk and opportunity for the products and services of both the Company and its competitors. Certain oil and natural gas service companies competing with the Company are larger and have access to more resources. Such competitors could be better situated to withstand industry downturns, compete on the basis of price, and acquire and develop new equipment and technologies, all of which could affect the Company’s revenue and profitability. Oil and natural gas service companies also compete for customers and strategic business opportunities. Thus, competition could have a detrimental impact upon the Company’s business. The citrus-based terpene (d-limonene) is a major feedstock for many of the Company’s CnF® chemistries. In addition, the Company utilizes naturally derived terpenes from other sources and bio-based solvents from other natural sources when it determines the efficacy of such formulas is appropriate. The Company has the ability to purify these alternative solvents to ensure they meet Flotek’s rigorous environmental standards. The Company’s Consumer and Industrial Chemistry Technologies segment faces competition from other citrus processors, flavor companies, and other solvent sources. Other terpenes and esters can provide an effective substitute to the Company’s citrus-based terpenes, although, without refinement and enhanced formulations efforts, are generally of lower quality. Such terpenes and esters can be cheaper than citrus terpenes, but, as noted above, can contain unfavorable characteristics and compounds that have varying degrees of toxicity and performance limitations. The Company’s chemistries are intended to replace these undesirable qualities. In addition, the segment’s flavor ingredients compete with synthetic and bio-engineered substitutes that are cheaper than natural flavors derived from citrus oils. These substitutes lack complexity and impact of the Company’s natural flavors and fragrances.
We are a global diversified, technology-driven company that develops and supplies chemistry and services to the oil and gas industries, and high value compounds to companies that make cleaning products, cosmetics, food and beverages, and other products that are sold in consumer and industrial
markets. We have two strategic continuing business segments: Energy Chemistry Technologies and Consumer and Industrial Chemistry Technologies. We offer competitive products and services derived from technological advances, some of which are patented, that are responsive to industry demands in both domestic and international markets. Energy Chemistry Technologies The Energy Chemistry Technologies (“ECT”) segment designs, develops, manufactures, packages, and markets chemistries for use in oil and gas well drilling, cementing, completion, and stimulation activities designed to maximize recovery in both new and mature fields. These specialty chemistries possess enhanced performance characteristics and are manufactured to withstand a broad range of downhole pressures, temperatures and other well-specific conditions to be compliant with customer specifications. This segment has technical services laboratories and a research and innovation laboratory that focus on design improvements, development and viability testing of new chemistry formulations, and continued enhancement of existing products. Chemistries branded Complex nano-Fluid® technologies (“CnF® products”) are patented both domestically and internationally and are proven strategically cost-effective performance additives within both oil and natural gas markets. The CnF® product mixtures are environmentally friendly, stable mixtures of plant derived oils, water, and surface active agents which organize molecules into nano structures. The combined advantage of solvents, surface active agents and water, and the resultant nano structures, improve well treatment results as compared to the independent use of solvents and surface active agents. CnF® products are composed of renewable, plant derived, cleaning ingredients and oils that are certified as biodegradable. CnF® chemistries help achieve improved operational and financial results for the Company’s customers in low permeability sand and shale reservoirs. The Logistics division of the Company’s ECT segment designs, operates, and manages automated bulk material handling and loading facilities. The bulk facilities handle dry cement and additives for oil and natural gas well cementing and supply materials used in oilfield operations. Consumer and Industrial Chemistry Technologies The Consumer and Industrial Chemistry Technologies (“CICT”) segment sources citrus oil domestically and internationally and is one of the largest processors of citrus oils in the world. Products produced from processed citrus oil include (1) high value compounds used as additives by companies in the flavors and fragrances markets and (2) environmentally friendly chemistries for use in the oil and gas industry and numerous other industries around the world. The CICT segment designs, develops, and manufactures products that are sold to companies in the flavor and fragrance industries and specialty chemical industry. These technologies are used within food and beverage, fragrance, and household and industrial cleaning products industries. Discontinued Operations During the fourth quarter of 2016, we initiated a strategic restructuring of our business to enable a greater focus on our core businesses in energy chemistry and consumer and industrial chemistry. We are executing a plan to sell or otherwise dispose of our discontinued Drilling Technologies and Production Technologies segments. An investment banking advisory services firm has been engaged and is actively marketing these segments. Drilling Technologies. The Drilling Technologies segment, reported as discontinued operations, provides downhole drilling tools for use in energy and mining activities. This segment assembles, rents, sells, inspects, and markets specialized equipment used in energy, mining, and industrial drilling activities. Established tool rental operations are located throughout the United States and in a number of international markets. Production Technologies. The Production Technologies segment, reported as discontinued operations, provides pumping system components, electric submersible pumps, gas separators, production valves, and complementary services. Through the Company’s acquisition of International Artificial Lift, LLC, the Company provides a line of next generation hydraulic pumping units that serve to increase and maximize production for oil and natural gas wells. Our principal executive offices are located at 10603 W. Sam Houston Parkway N., Suite 300, Houston, Texas 77064, and our telephone number is (713) 849-9911. Our website address is www.flotekind.com.
|Auditor||Hein & Associates LLP|
|Company Counsel||Andrews Kurth Kenyon LLP, Phillips Murrah P.C. and Taylor Eng...|
|Transfer Agent||American Stock Transfer & Trust Company, LLC|
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