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Oil Should Stay In Triple Digits: Analyst

David Messler

David Messler

Mr. Messler is an oilfield veteran, recently retired from a major service company. During his thirty-eight year career he worked on six-continents in field and…

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This Oilfield Service Player Is Looking To Make A Comeback

Introduction

The collapse of deepwater drilling in the Gulf of Mexico, (GoM) beginning in 2014, with no real recovery yet in sight, has spread a lot of misery around the oilfield. Nowhere is that more evident than in the fortunes of Carbo Ceramics, NYSE: CRR. A former oilfield high flyer, Carbo, whose stock crested in 2014 at $154.30 per share, now trades under $2.00 per share.

Yahoo Financial

Their legacy is that of the provision of high technology of crush-resistant ceramic beads used to prop open fractures created in oil and gas formations by hydraulic fracking. This is referred to in the industry as “stimulation”, and is the process by which oil and gas flow is enabled from tight rock formations. The deepwater jobs in the GoM sometimes used as much as a million pounds of the stuff at a time. As in all booms, the industry players lost sight of the general up and down nature of the oil markets historically, and when the bust hit were stuck with too much inventory, and a bloated manufacturing structure. A situation that described Carbo to a T.

The question now before us is, does Carbo have a long term upside that might make a patient investor some money? Or are they a value trap, slated to slide to zero?

The problem with ceramics in the “low cost” oilfield

The onshore oilfield expansion in the shale plays has sucked most of the “oxygen” out of oil company investment coffers in recent times. The…





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  • DouglasBucklang on May 27 2019 said:
    I am confused. Apparently this firm, located in the US, was heavily involved with the manufacturing of proppant. I assume that their product was not specifically designed for offshore applications.
    With the supposedly robust shale oil industry booming in the States and the amount of hydraulic fracturing required to keep that industry viable (and therefore a booming market for proppant), how did they manage to go belly up?

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