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Elijio V Serrano
TETRA Technologies, Inc
Senior Vice-President & Chief Financial Officer
October 26, 2016
A View of the Energy Industry A Perspective From A Small Cap Oilfield Services Company
Forward Looking Statements
2
Forward-Looking Statements:
This presentation includes certain statements that are or may be deemed to be forward-looking statements. Generally, the use of words such as “may,”
“will,” “expect,” “intend,” “estimate,” “projects,” “anticipate,” “believe,” “assume,” “could,” “should,” “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 expected results of
operational business segments for 2016, anticipated benefits from our acquisitions of assets and businesses, projections concerning our business
activities in the Gulf of Mexico, including potential future benefits from increased regulatory oversight of well abandonment and decommissioning
activities, financial Guidance Mid-Point, estimated earnings, earnings per share, and statements regarding our beliefs, expectations, plans, 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 in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we
believe are appropriate in the circumstances. Such statements are subject to a number of risks and uncertainties, many of which are beyond our
control. 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 our Annual Report on Form 10-K for the year ended December 31, 2015, as well as other risks
identified from time to time in our reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
Further Disclosure Regarding the Use of Non-GAAP Measures:
TETRA and CSI Compressco LP define net debt as the sum of long-term and short-term debt on its consolidated balance sheet, less cash, excluding
restricted cash on the consolidated balance sheet and excluding the debt and cash of CSI Compressco LP. Management views net debt as a measure
of our ability to reduce debt, add to cash balances, pay dividends, repurchase stock, and fund investing and financing activities. Management views
adjusted revenue, cash from operating activities excluding Maritech, and Adjusted EBITDA as useful measures to assess our performance in prior
periods following the sale of substantially all of our Maritech segment operations. Adjusted EBITDA, a performance measure used by management, is
defined as net income (loss) plus: (1) interest expense (net of interest income), (2) income tax provision, and (3) depreciation, depletion, amortization,
accretion and impairments, all of which are calculated excluding our Maritech operations. Adjusted EBITDA is not defined under GAAP and does not
purport to be an alternative to EBITDA, net income or any other GAAP financial measures as a measure of operating performance. Because not all
companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other
companies. Management views Adjusted EBITDA as useful to investors and other external users of our consolidated financial statements as an
additional tool to evaluate and compare our operating performance, because Adjusted EBITDA is a measurement of a company’s operating
performance without regard to items such as interest expense, taxes, depreciation, depletion, and amortization, which can vary substantially from
company to company. The reconciliation included in the Financial Data Appendix to this presentation is not a substitute for financial information
prepared in accordance with GAAP, and should be considered within the context of our complete financial results for the periods indicated, which are
available on our website at tetratec.com.
Stock Market NYSE: TTI NASDAQ: CCLP
Recent Share Price(1) $6.03 $11.10
Market Capitalization(1) $559.0M $368.8M
Enterprise Value(1) $778.1M $938.0M
Number of Shares/
Units Outstanding(2) 92.7M 33.2M
Average volume (last 3 months) (1) 433,224 14,042
Distribution Annualized(3) $1.51 (0%)(4)
Distribution Yield(1) 13.6%
% Owned by TTI 44%
Headquarters The Woodlands, TX Midland, TX
Corporate Profiles
3
(1) As of 10/12/2016 (2) As of 8/4/16 (3) Q2-2016 Annualized (4) Q2-2016 increase in distribution over Q1-2016
4
TETRA Technologies & CSI Compressco L.P.
• A diversified global oilfield services company
• 2015 revenue of $1.1B & TETRA free cash flow of $120M
• Operating in all major shale plays in the United States. Internationally in Latin America, Middle East, West Africa, North Sea, Europe and Canada
OFFSHORE SERVICES$122M11%
PRODUCTION TESTING$134M12%
FLUIDS$424M37%
COMPRESSION$458M40%
• Customers include the super
majors, national oil companies,
large and small independents,
midstream and pipeline
companies.
• Onshore and offshore
TETRA Technologies Earnings Trend TETRA Only Adjusted EBITDA(1) + CSI Compressco Distributions
Trailing Twelve Months - Millions
(1) See appendix for reconciliation
5
Cumulative Impact of Many Actions Mitigating Lower Rig Count
$50
$70
$90
$110
$130
$150
$170
$190
2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2
TETRA adj. EBITDA CCLP Distributions
Fluids
Fluids
7
Chemicals/Completion Fluids
Only vertically integrated service provider globally
Seamless supply channel from manufacturing plants to CBF
blending facilities
Significant infrastructure
Strong global competitor
Introducing new technology, products and services
Advantaged cost position in non-oil and gas markets proximate to
manufacturing plants
Water Management
Treatment, transfer, automation and monitoring capabilities
Unique cost effective solutions for frac water management
Proprietary technology with an exclusive supplier agreement
Rapid deployment for shorter turnaround time between jobs
Deployed in most of the key U.S. shale basins
Deepwater Perspective
8
• Dominated by the super majors and national oil companies
o Onshore US shale plays appear to be better suited for the
independents
• Investments are over multi-cycle horizons
• Current price environment is challenging
o Super majors are focused on protecting dividends
• Expecting weaker shorter term environment in the Gulf of
Mexico
• Service suppliers are more concentrated
CSI Compressco LP
1,380 Hp Compression Service
Field Gathering
Midland County, TX
Eagle Ford
Marcellus
Utica
Permian Barnett
Haynesville
Bakken
Niobrara
Monterey
San Juan Woodford
10
CSI Compressco’s Geographic Diversity
Operating in the Most Prolific Producing Basins in the U.S.A.
(1) CSI Compressco fleet geography as of June 30, 2016
(2) Map excludes International HP
South Texas 24%
Permian Basin 26%
West 18%
Mid-Con 18%
East 10%
International 4%
HP Distribution by CCLP Region [1]
Operating Units
Basins
Shale Plays
Compression in the U. S.
11
• Concentrated number of service providers
• Infrastructure in nature, focused on gathering systems
• Less sensitive to activity levels
• Price concessions are triggered by major market changes
• Amount of hp has been rationalized
• Expansion opportunities in Delaware Basin and from
increasing associated gas production in existing fields
• Short term growth from gas lift and single dry gas well
compression
Production Testing
Production Testing
13
Frac Flowback
Remove residual sand
and debris to allow
production to sales
Optima
Offshore Rig Cooling
suppresses heat
generated by
high-rate flaring
Early Production Facilities
Deliver engineered
customized process
solutions
Production Testing
Access and evaluate
well performance
under various
conditions
Production Testing
14
• International dominated by the large service companies,
US fragmented
• Improving US market due to better oil prices
• Drilled but uncompleted wells represent first
opportunities
• Frac activity will drive volumes, but requires significant
amounts of water
• Many operators drilling to hold leases
• Larger service provider aggressively protecting and
expanding market share
• Market had been focus of private equity
Offshore Services
Offshore Service Business Model
16
Heavy Lift Downhole Services
Diving Cutting
Services Consulting Services
Ability to reduce/flex costs
#1 or #2 in all our key sectors
Light asset approach with total investment of $100 million
Offshore Decommissioning
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• Decommissioning represents last dollar spent
• Shelf operators focused on cash preservation
• Shelf properties have shifted from super majors to large
independents to small independents
• Significant regulatory oversight
• $35B of identified asset retirement obligations
• Bond requirement putting stress on an already stressed
industry
Financial Overview
Oilfield Service Providers
19
• Aggressive cost management
• Activity, infrastructure, temporary
• EBITDA does not support debt levels
• Most service providers through two rounds of debt
amendments
• Lack of consolidation due to valuation expectations
• Price increases will be required to attract resources and
support incremental capital
Closing Comments
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• Gradual recovery onshore US
• Costs adjustments forthcoming
• Deepwater will remain challenging
• International expected to increase modestly, country
specific
• Cycles will be shorter in duration
• Oilfield service providers will be quicker to react to future
changes
• Private equity capital will remain available
Elijio V Serrano
TETRA Technologies, Inc
Senior Vice-President & Chief Financial Officer
October 26, 2016
A View of the Energy Industry - A Perspective From A Small Cap Oilfield Services Company