Carbo Ceramics Inc. is mothballing a proppant manufacturing facility in McIntyre, GA, due to a lack of business.
The Houston-based oilfield services provider, which specializes in higher-priced ceramic proppants to complete wells, announced its decision on Tuesday. Carbo already had cut its capital expenditures by less than half of what they were in 2014 and deferred completing a second proppant manufacturing line at its Millen, GA, facility (see Shale Daily, Feb. 2). Carbo has been struggling for some time as producers have been opting to use sand over ceramics for hydraulic fracturing (see Shale Daily, Sept. 22, 2014).
"As was mentioned in January on our fourth quarter conference call, Carbo began slowing production earlier this year to assist in managing cash and inventory levels," CEO Gary Kolstad said. "The company's actions were in direct response to a depressed commodity price for oil and the resulting negative impact on industry activity levels, which is having a negative impact on demand for ceramic proppant.
"Unfortunately, we have not seen improvement in demand for ceramic proppant, nor do we anticipate any change in the near term."
Because of the company's outlook, "we have decided to mothball our facility...until such time as market conditions warrant bringing it back online. In addition, we continue to manage the collective output of our other proppant facilities, which includes slowing down and idling production as deemed necessary. These decisions are difficult due to the impact on our employees and their families, to whom we owe much of our success over the last 36 years."