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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

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Page 1: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 2: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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.

Page 3: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

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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

Page 5: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 6: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

Fluids

Page 7: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 8: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 9: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

CSI Compressco LP

1,380 Hp Compression Service

Field Gathering

Midland County, TX

Page 10: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 11: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 12: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

Production Testing

Page 13: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 14: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 15: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

Offshore Services

Page 16: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 17: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

Offshore Decommissioning

17

• 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

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Financial Overview

Page 19: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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

Page 20: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

Closing Comments

20

• 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

Page 21: A View of the Energy Industryweb1.amchouston.com/flexshare/001/CFA/16_Fall... · 4 TETRA Technologies & CSI Compressco L.P. •A diversified global oilfield services company •2015

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