HOUSTON and MUSCAT, Sultanate of Oman, March 14, 2013 /PRNewswire/ -- Flotek Industries, Inc. ("Flotek" or the "Company") announced this morning the execution of a Letter of Intent (the "Agreement") with an affiliate of Gulf Energy, LLC ("Gulf Energy"), a leading Oman-based diversified oil and gas concern, to construct an advanced oilfield chemistry production facility and create a state-of-the-art research and development organization to address the growing need for advanced oilfield chemistry and analysis in the Middle East and North Africa.
Under the terms of the Agreement, Flotek will own 60% of two new Omani-registered limited liability companies: the first, a chemical production company that plans to construct a production facility – with capabilities similar to the Company's current facility in Marlow, Oklahoma; and the second, a research and development laboratory that will focus on the application of Flotek's leading oilfield chemistries to the challenges of drilling, completion and production in the Middle East and North Africa. Flotek and Gulf Energy will jointly market the products and services of the Company along with Flotek's international marketing partner, Basin Supply Company.
Creation of the Omani companies is subject to the execution of definitive Shareholder Agreements between Flotek and Gulf Energy.
"This partnership with Gulf Energy, which has been several months in process, is an important and significant step in establishing Flotek's leadership position in global oilfield chemistry," said John Chisholm, Flotek's Chairman, President and Chief Executive Officer. "Gulf Energy has become a leader in developing a wide range of advanced oilfield solutions throughout the Middle East and brings innovative expertise and deep relationships to this partnership. Combining Flotek's advanced oilfield chemistry solutions, Gulf Energy's existing clients and the best research minds in the region is a formula that should create a leading oilfield technology effort in the Middle East and North Africa."Gulf Energy has secured acreage near the Omani port of Sohar to construct a chemical production facility. The facility is expected to cost no more than $10 million to construct and will commence upon execution of the Shareholder Agreements and receipt of appropriate permits. Once complete, the facility will market and provide oilfield chemistry to projects throughout the region. It is anticipated that the research and development facility will be located in or near Muscat, the commercial center of Oman and headquarters of Gulf Energy. "We are pleased to be partnered with Flotek, a leader in advanced oilfield chemistry, as we work to bring new, technology-focused enhancements to hydrocarbon production in the Middle East and North Africa," said Hilal Al Busaidy, Chief Executive Officer of Gulf Energy, LLC. "Gulf Energy's continued growth as an integrated service and oilfield technology provider throughout the region brings key relationships to this partnership. There is little doubt there is a compelling need for the type of advanced chemistry solutions Flotek can provide. We look forward to developing our partnership into a leader in oilfield chemistry throughout the Middle East and North Africa." As a result of the relationship with Gulf Energy, Flotek will begin shipping certain oilfield chemistries to the region in the coming weeks, prior to the completion of the production facility. Basin Supply Company, one of Flotek's international partners, will serve as the marketing and logistics facilitator for the sales and continue to work with the joint venture once the production facility is complete. Gulf Energy believes the initial market for advanced completion chemistries in Oman and the region is robust. "We have said since we began to focus on international opportunities nearly three years ago that positive results would require patience, have longer lead times and provide lumpy outcomes," added Chisholm. "Our efforts and the resulting outcomes have been in process for over a year. However, the completion of this project will be very meaningful for Flotek. In Gulf Energy we have identified a premier partner to expand our reach to a key hydrocarbon producing region, have a partner with identical goals and a singular focus on becoming the leading advanced oilfield chemistry provider in the region. We are delighted to be partnering with Gulf Energy and look forward to a long and mutually rewarding venture."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV