THE
WOODLANDS, Texas, Aug. 7, 2024
/PRNewswire/ -- TETRA Technologies, Inc. ("TETRA" or the "Company")
(NYSE: TTI) today released on its investor relations website an S-K
1300 Bromine Definitive Feasibility Study ("DFS") containing
positive results including certain financial information on the
development of TETRA's Arkansas
bromine assets in the Evergreen Unit based on engineering studies,
reservoir analysis, certain cost and revenue assumptions, plus
quotes received on major components received or completed to
date. The Technical Report Summary ("TRS") was prepared to
update the previously reported resources presented by RESPEC
Company, LLC ("RESPEC") and incorporates the results of the
definitive feasibility study, including bromine reserve
determinations.
TETRA currently sources elemental bromine from a combination of
long-term supply agreements and open-market purchases. TETRA
uses this third-party sourced elemental bromine to manufacture at
its West Memphis, Arkansas
facility, offshore completion fluids for the oil and gas industry
and ultra-high purity zinc bromide (TETRA PureFlow) utilized in
battery electrolytes for long-duration energy storage
("LDES"). TETRA's facility uses proprietary processes for
reacting elemental bromine with various other raw materials and
refining the resultant brominated products. Development of
its Arkansas bromine assets will
allow TETRA to become vertically integrated (referred to herein as
the "Vertically Integrated Production Case") for its future
elemental bromine requirements and is expected to allow TETRA to
phase out third-party purchases of elemental bromine over time.
The highlights of the DFS report are as follows:
- Vertically Integrated Production Case Net Present Value
("NPV"), at a 10% discount rate, of $710
million and is based on the current bromine business plus
the proposed investment in this bromine project allowing TETRA to
phase out third-party sourced elemental bromine. This case compares
to TETRA's current bromine business with third-party purchases of
elemental bromine of NPV $337 million
("Third-Party Bromine Purchase Only Case"), also at a 10% discount
rate. This project is projected to create an incremental NPV of
$374 million.(1)
- Internal Rate of Return ("IRR") of 62% for the Vertically
Integrated Production Case. (1)
- 744 ktons of measured and indicated bromine resources have been
upgraded to proven and probable reserves. In addition to proven and
probable reserves, the Evergreen Unit is estimated to contain an
additional 158 ktons of measured and indicated resources and 541
ktons of inferred resources of bromine.
- 40-year projected operating life. Proven and probable bromine
reserves of 744 ktons plus measured and indicated bromine resources
of 158 ktons support at least 40 years of operations based on
reservoir studies completed by TETRA's advisors and consultants.
(1)
- Phase I plant processing is expected to have a capacity of 75
million lbs of bromine per year. The project economics reflect
initial production volumes of only 48 million pounds of elemental
bromine per year, increasing the volumes currently being sourced by
TETRA under long-term contract by over 50%.
- Post Final Investment Decision ("FID") capital expenditures of
$270 million assumes that 35% of the
upstream capital expenditures are absorbed by TETRA's partner in
the Evergreen Brine Unit and does not assume a lithium project is
constructed at the same time as the bromine project. If the lithium
project is constructed, certain upstream, common and shared capital
expenditures have the potential to be allocated to the lithium
project, materially improving the overall economics of the bromine
project. Costs incurred prior to FID are not reflected in these
economics as they are viewed as sunk costs.
- The increased volumes and enhanced margins from TETRA moving
from a Third-Party Bromine Purchase Only Case to a Vertically
Integrated Production Case are expected to position TETRA to
increase revenue from bromine-related product by between
$200 million to $250 million when the bromine plant is in full
production. Adjusted EBITDA is expected to increase by between
$90 million to $115 million as a result of the higher sales
volumes for the offshore oil and gas sector, long-duration energy
battery storage, and the lower production costs of those products
from being vertically integrated when compared against third-party
purchases of elemental bromine.(1) Once a FID is made,
plant construction is expected to be approximately 24 months.
- Payback of post-FID capital expenditures is expected to be 5.7
years reflecting the higher volumes available to TETRA from
insourcing all its elemental bromine requirements at costs lower
than what the Company is procuring today.(1)
- TETRA's approximately $400
million of United States
tax loss carryforward are expected to be utilized for this project
and are reflected in the economics.
- TETRA is expected to fund this project from borrowing under
credit facilities currently available to the Company, which
includes a $75 million delayed draw
facility, and from cash flow from the existing business. The timing
of this project will be aligned to ensure the base business free
cash flow is available to the Company. TETRA intends to maintain a
net leverage target of less than 2.5 times adjusted EBITDA on a
trailing twelve-month basis.
Because this investment is expected to enable TETRA to
vertically integrate its elemental bromine supply, the following
benefits to TETRA are anticipated:
- Enhanced Margins: TETRA expects to eventually replace the
purchase of elemental bromine from third party suppliers with lower
cost insourced elemental bromine as a result of the investment in
this project. The volatility of open market elemental bromine
purchases are also expected to be reduced from the prices TETRA
pays third parties, allowing TETRA to bid for long-term contracts
with greater certainty of input costs. Increased production volumes
manufactured through TETRA's West
Memphis plant allows for greater utilization and better
plant costs absorption.
- Provide Higher Volumes of Cost-Effective Bromine: In recent
years, TETRA has had to purchase more elemental bromine at
spot-market prices because the volumes available from TETRA's
long-term supply agreement have not been sufficient to meet overall
demand for a growing offshore oil and gas market. This increase in
offshore deepwater demand combined with an expected growth in
demand for TETRA PureFlow ultra-high purity zinc bromide-based
electrolyte will exceed TETRA's currently available third-party
supply volumes. This project is expected to allow TETRA to meet
those requirements.
TETRA Bromine Products Business
TETRA has long used elemental bromine as part of its high-value
completion fluids business, primarily in offshore applications and
especially in deepwater where TETRA estimates that approximately
70% of the Gulf of Mexico
development wells use elemental bromine-based fluids for well
completions. The offshore and deepwater markets continue to
show signs of expansion and in 2024 the Company is expected to
again exceed the elemental bromine volumes available under its
long-term supply agreement. TETRA has been supplementing its
elemental bromine supply agreement with open-market spot purchases
at costs higher than its current long-term supply agreement.
The demand in 2024 and beyond is expected to exceed prior
year levels assuming relatively constant commodity prices
reflecting the strong growth in the deepwater offshore markets.
In addition to the traditional oil and gas bromide fluids
market, in 2021 TETRA announced the introduction of a ultra-high
purity zinc bromide TETRA PureFlow fluids ("PureFlow") for use as a
key component to the full electrolyte needed to enable
long-duration energy storage. TETRA has qualified sales of
PureFlow with three zinc bromide-based electrolyte long-duration
energy storage companies based on their evaluation of the product
and to date has delivered commercial orders to Eos Energy
Enterprises with an additional customer expected in 2025. The
combined existing and potential demand for elemental bromine-based
products from a recovering offshore market and an emerging
long-duration energy storage market represents significant growth
opportunities for the Company.
(1)The economics discussed in this release
are based on a number of key assumptions, which are further
discussed in the DFS. Please read the DFS and the assumptions
discussed therein for further information. Such assumptions are
based on information known to RESPEC and TETRA as of the date of
the DFS, are subject to change and actual results may differ
materially from the economics and assumptions presented in the
DFS.
S-K 1300 Definitive Feasibility Study
TETRA has published on its web site a report titled "S-K 1300
Technical Report Summary for TETRA Technologies, Inc. Bromine Brine
Definitive Feasibility Study for the TETRA Evergreen Brine Unit in
Arkansas, United States". The study has been
prepared, reviewed and certified by RESPEC, subject to the
qualifications contained in the report. The S-K 1300
Definitive Feasibility Study can be located on TETRA's web site:
https://ir.onetetra.com/presentations
There is no certainty that the economics contained in the S-K
1300 Definitive Feasibility Study will be realized. These economics
are preliminary in nature and include proven and probable reserves.
Mineral resources that are not mineral reserves have not
demonstrated economic viability. Additional technical work and/or
production history will be required to convert remaining measured
and indicated mineral resources to reserves.
Company Overview
TETRA Technologies, Inc. is an energy services and solutions
company focused on developing environmentally conscious services
and solutions that help make people's lives better. With operations
on six continents, the Company's portfolio consists of Energy
Services, Industrial Chemicals, and Lithium Ventures. In addition
to providing products and services to the oil and gas industry and
calcium chloride for diverse applications, TETRA is expanding into
the low-carbon energy market with chemistry expertise, key mineral
acreage, and global infrastructure, helping to meet the demand for
sustainable energy in the twenty-first century. Visit the Company's
website at www.onetetra.com for more information.
Cautionary Statement Regarding Forward Looking
Statements
This news release includes certain statements that are deemed to
be forward-looking statements. Generally, the use of words
such as "may," "see," "expectation," "expect," "intend,"
"estimate," "projects," "anticipate," "believe," "assume," "could,"
"should," "plans," "targets" or similar expressions that convey the
uncertainty of future events, activities, expectations or outcomes
identify forward-looking statements that the Company intends to be
included within the safe harbor protections provided by the federal
securities laws. These forward-looking statements include
statements concerning measured, indicated and inferred mineral
resource estimates and proven and probable reserve estimates, the
potential extraction of bromine and lithium from the leased
acreage, the economic viability thereof, the demand for such
resources, the volumes to be produced and the timing and costs of
such activities, the assumptions contained in the Definitive
Feasibility Study, the ability to obtain the required capital to
develop the project, economic and operating conditions that are
outside of our control, including statements concerning demand for
our products in the oil and gas industry; potential revenue
associated with prospective long duration energy storage projects;
the ability and timing necessary to obtain an initial economic
assessment regarding our bromine and lithium acreage; the ability
to obtain contractual consents in certain circumstances;
projections concerning the Company's business activities, financial
guidance, capital expenditures, profitability, estimated revenues,
estimated adjusted EBITDA, and statements regarding the Company's
beliefs, expectations, plans, goals, future events and performance,
and other statements that are not purely historical. With
respect to the Company's disclosures of measured, indicated and
inferred mineral resources, uncertainty exists regarding whether
such resources will ever be economically developed. Investors are
cautioned that mineral resources do not have a demonstrated
economic value and further exploration may not result in the
estimation of a mineral reserve. Therefore, it cannot be assumed
that all or any part of our resources can be economically or
legally commercialized. These forward-looking statements are based
on certain assumptions and analyses made by the Company, input
received from outside expertized service providers, as well as its
experience and its perception of historical trends, current
conditions, expected future developments and other factors it
believes are appropriate in the circumstances. Such
statements are subject to a myriad of risks and uncertainties, many
of which are beyond the control of the Company. Investors are
cautioned that any such statements are not guarantees of future
performance or results and that actual results or developments may
differ materially from those projected in the forward-looking
statements. Some of the factors that could affect actual
results are described in the section titled "Risk Factors"
contained in the Company's Annual Reports on Form 10-K, as well as
other risks identified from time to time in its reports on Form
10-Q and Form 8-K filed with the Securities and Exchange
Commission.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/tetra-technologies-inc-announces-completion-of-definitive-feasibility-study-for-the-arkansas-bromine-project-and-upgrade-of-previously-announced-bromine-resources-to-reserves-302217139.html
SOURCE TETRA Technologies, Inc.