CARBO Ceramics, Inc. (NYSE:CRR)

CAPS Rating: 4 out of 5

The Company is a producer and supplier of ceramic proppant and provider of fracture and reservoir diagnostic services and fracture simulation software through its subsidiary, Pinnacle Technologies, Inc.


Player Avatar Googlespooch (27.21) Submitted: 3/18/2013 5:37:36 AM : Outperform Start Price: $93.73 CRR Score: -80.27

Carbo Ceramics makes some of the best proppant in the entire industry. Unlike US Silica's sand-based proppant and Chinese low-quality sand/ceramic proppant, Carbo Ceramics makes ceramic proppant that is high in quality. In doing so, Carbo Ceramics improves the yields of the companies that it does business with (Halliburton and Schlumberger). This fact has started to greatly improve Carbo Ceramics' position with these and other drillers as drillers are starting to realize that Carbo Ceramics can provide them with a greater ROI. In addition, Carbo Ceramics is in the process of opening a new plant in the Bakken in order to be closer to its customers so that it does not have to deal with shipping its inventory to the Bakken. This should help greatly in reducing logistical costs (which I can imagine are high considering that proppant is dealt with in millions of tons). It is very important to also consider that, while rig counts are currently depressed, they will not likely stay that way in the long run. Many experts are starting to figure that there will be a large economic boom resulting from the Bakken oil drilling as well as other American drilling. Resulting from this will be increased focus on oil plays and other liquid plays. As anyone will agree, a rising ocean lifts all boats... and Carbo Ceramics is one of those lucky boats. Making an investment in Carbo Ceramics protects the investor from the commodity prices of oil to some degree since all drillers will need proppant of some kind in order to continue fracking operations. Though rig count may increase or decrease, Carbo's products will still be needed regardless. This is why I'm putting Carbo Ceramics as outperform for the long-term.

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