Flotek higher after MHA says original conclusion still valid
Flotek Industries is trading higher after disclosing that it received on December 21 a letter from MHA Petroleum Consultants responding to criticisms by FourWorld Capital Management and others of prior reports prepared by MHA for the company regarding the efficacy of the company's CnF chemical products. The letter stated in part, "The result of these reviews and revised calculations confirms our original conclusion from January 2016 that in our Focus Area 1 and Focus Area 2 of the DJ Basin in Colorado, which were the more oil-prone areas of our study, we observe a significant increase in the estimated ultimate oil recovery per foot of gross perforated interval in wells that were completed using the CnF additive. The result from Focus Area 3, which was the most gas-prone area in our original study, remains inconclusive with only a marginal increase in the EUR per foot of gross perforated interval productivity parameter... it is the opinion of MHA that our original conclusion reported in January 2016, which identified an improvement in oil productivity in wells which used the CnF additive within Focus Areas 1 and 2, is still valid. The inclusion of FDP-S1007-11 as a CnF additive, which was not included in our original analyses, does not change our conclusion. Further, if our analyses are restricted to the "sweet spot" identified by FourWorld Capital Management within Focus Area 1, or restricted further to localized well clusters, we still obtain the same conclusion using our original data set which shows a demonstrated improvement in well productivity in Focus Areas 1 and 2 through the use of the CnF additive." Shares of Flotek are up 50c to $9.85 in early trading.