TTI: Misunderstood and Overlooked Due to Complex Capital Structure

The research report referenced below is authored by Jim Roumell, president of Roumell Asset Management, based in New York.

Investment Highlights

• Misunderstood and overlooked by the investment community because of a perceived complicated capital structure.
• Debt does not mature until September 2025, providing a long liquidity runway and valuable time option on recovering energy prices.
• Profitable businesses that are not entirely dependent upon the energy markets.
• Industry leader, technology innovator, key supplier agreements and vertical integration
• Management and the Board have aligned their interests with shareholders

Business Overview

TETRA Technologies (TTI) is an oil and gas services company and provider of calcium chloride and bromide products to the industrial market. TTI has three business segments as follows:

Completion Fluids & Products

Manufactures and markets clear brine fluids, additives, and associated products and services for use in completions, well drilling and workover operations. Liquid calcium chloride, calcium bromide, zinc bromide, zinc calcium bromide, sodium bromide, and blends of such products are referred to as clear brine fluids (CBFs). CBFs are solutions that have variable densities and are used to control bottom-hole pressures during oil and gas completion and workover operations. CBF services, include on-site fluids filtration, handling, and recycling; wellbore cleanup; custom fluids blending; and fluid management services. Importantly, TTI also markets calcium chloride products to markets outside the energy industry (additive in plastics, products for wastewater treatment, flame retardants, products used as a de-icer, road handling and dust control, food additives, etc.).

Water & Flowback Services

A key to the completion stage of an oil and gas well is hydraulic fracturing, which requires large quantities of water. TTI provides onshore oil and gas operators with comprehensive water management services. These services include water analysis, treatment, and recycling, blending and distribution, storage and pit lining, transfer, engineering, and environmental risk mitigation. Ten to fifty percent of the water returns as flowback during the first several weeks following the hydraulic fracturing process, and a large percentage of the remainder, as well as pre-existing water in the formation, returns to the surface as produced water over the life of the well. Both the flowback and produced water must be recovered, treated, and either recycled or transported off-site for disposal. TTI provides the specialized equipment and qualified personnel to address these impediments to production. In recent periods many operators are aggressively moving toward the re-use of produced water to reduce their dependence on fresh water to frac wells. TTI has made significant progress in providing treatment services to support this move. This move has significant positive environmental consequences to the operators given the ESG focus.

Compression

TTI’s consolidated investment in publicly traded CSI Compressco LP (CCLP) provides compression services for natural gas and oil production, gathering, artificial lift, transmission, processing, and storage. This Division provides its services and equipment to a broad base of natural gas and oil exploration and production, midstream, transmission, and storage companies operating throughout many of the onshore producing regions of the United States, as well as in a number of international locations.

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Disclosures provided by Jim Roumell and Roumell Asset Management: I am/we are long TTI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The specific security identified and described does not represent all of the securities purchased, sold, or recommended for advisory clients, and the reader should not assume that investment in the security identified and discussed was or will be profitable.