What will happen to Flotek’s growth trajectory?
Flotek Industries’ (FTK) management expects an optimum recovery in energy reservoirs by upstream operators, which has already started to push demand for FTK’s technology higher.
In its 1Q17 conference call, Flotek Chairman and CEO (chief executive officer) John Chisholm stated: “We continue to experience increasing overall demand for our core technology as operators of all sizes look to optimize the recoverability of their reservoirs, which, in turn, maximizes the value of their operations for their shareholders. We believe increasing information sharing amongst the industry as well a growing focus on chemistry will continue to provide a runway of opportunities in the US land unconventional revolution.”
Flotek Industries’ positive growth drivers include the following:
- steady well completion activity
- strategic price increases, leading to expanding margins
- growth in the Consumer and Industrial Chemistry Technologies segment
- efficiency improvement
Flotek’s negative growth drivers include the following:
- the disadvantageous timing of international orders for CnF (complex nano-fluid) technology products
- its underperformance in commodity chemistry offerings compared to the rig count (due to certain equipment mobilization by FTK’s key customers)
Notably, FTK makes up 0.07% of the iShares Core S&P Small-Cap ETF (IJR). IJR has risen 21% in the past year, compared with the 32% decrease in FTK’s stock price. The SPX-INDEX has risen 15% in the past year.
Next, we’ll discuss FTK’s growth drivers in detail.