TETRA Technologies, Inc. (TTEK) Earnings Call Transcript & Summary

I'm Kurt Hallead,, Treasurer and VP, Investor Relations. In the context of our day today, -- can we roll the script here, please? Thank you. Keep going. Technical difficulty. Here we go. It's a privilege to host you. Keep going, please. Thank you. It's a privilege to host you today in this historic venue, and I couldn't be more excited to help set the stage for One TETRA 2030, the next phase in TETRA's transformation. We prepared a compelling agenda featuring presentations from members of our executive leadership team, each bringing unique insights. These sessions will conclude at 11:30, followed by a 30-minute Q&A and then lunch. Midway through the morning, we'll take a short break, so you can stretch your legs, hydrate, caffeinate and mingle with the management and our Board members, all of which are very eager to share our transformation story with you. Now some of you are long-term shareholders. Some of you may be inspired to invest after what you hear today, while others may wait us to reach certain milestones. Whatever your positioning may be, our goal is simple. We want to leave you with a clear understanding of where TETRA stands today, where we're headed over the next 5 years and how we plan to leverage our core competencies, operational excellence and financial strength to deliver long-term value. Now before we begin, I'd like to call your attention to our safe harbor statement. Some of the remarks we make today may be forward-looking and are subject to risks and uncertainties as outlined in our SEC filings. Actual results may differ materially from those expressed or implied, and for those that are joining us remotely, our Investor Day materials, all of our Investor Day materials are currently available on our Investor Relations website for your reference. Now as well, may I ask everybody please silence your phones. And with that, let's get started. Leading the charge in this transformation is Brady Murphy, our President and CEO. Brady, the floor is yours.

Well, thank you, Kurt, and good morning, everyone. We have a really exciting story to tell today. As Kurt mentioned, we call it TETRA 2030, and we again, appreciate the time for you to join us and -- so that we can share it with you. As Kurt mentioned, I'm Brady Murphy, President and CEO. Our presentations today will be really focused on some recent financial performance, but more importantly, the transformational journey that we are on and are undertaking to get us to the right place here. This is our agenda for today. As Kurt kicked things off, I'm going to give us a 15-minute overview to get us started today. Roy McNiven will cover our Energy Services. Matt Sanderson will discuss our water treatment and desalination. We'll have a short break, followed by Tim Moeller will cover our Specialty Chemicals and Minerals. And then Elijio will wrap things up with our financial summary. Our last Investor Day was over 7 years ago before I had the opportunity to serve as CEO, but the journey we're on really began in early 2021 when we announced the divestiture of our general partnership in CSI Compressco and our strategy to refocus the company on what we do exceptionally well, which is fluid chemistry. You'll hear quite a bit about that today. We identified that by leveraging our core strengths, we could develop new innovative businesses supporting new energy and critical water solutions that could create significant value. The One TETRA represents the core philosophy of leveraging our strengths and creating strong synergies between our businesses. Today, you'll hear about our progress and what it means for our future. We're starting our presentation today with the end in mind, which is sharing the main takeaway, which is the progression from what we look like today to what we plan to be in 2030. Those of you familiar with the company's history know that we're recognized as an oilfield services company. That's because 71% of our revenue today comes from traditional oilfield services with 2 external reporting segments, Completion Fluids & Products and Water Management and Flowback. An additional 23% of our revenue is from our industrial chemicals business, primarily calcium chloride and another 6% from water treatment and recycling for frac reuse. Since announcing our new strategy over 4 years ago, we've charted a clear path for significant growth outside of the traditional oilfield services sector. Our planned future segments, these paths will be outlined today, along with our future planned changes to our external reporting. Our planned future segments displayed in the upper right-hand corner of this slide will be Specialty Chemicals and Minerals, water treatment and desalination and Energy Services. As we'll detail today, these segments form a higher-value portfolio driven by substantial growth, higher margins and increased cash flow. These growth channels are expected to boost the company's revenues from just over $600 million trailing 12 months to approximately $1.25 billion by 2030, but as the charts point out, this isn't just a growth story. This is about enhancing profitability, returns and generating significant cash flow. While executing this transformation, we'll achieve a balanced mix of high-value energy services, which will still comprise about 36% of our revenue, another 36% in specialty chemicals and minerals and an additional 28% in water treatment and desalination for beneficial reuse. You'll hear detailed information behind these numbers today from the team that's responsible for executing them. But our years of solid execution and discipline to our strategic plan has us very excited and confident that we will be successful. Those familiar with our story over the past few years know that we have been directing all of our free cash flow from operations toward key investment enablers that will help us execute this strategy. This includes leveraging our extensive mineral resources in Arkansas to vertically integrate our bromine supply, which will allow for growth and margin expansion for our bromine end users. We're also investing heavily in R&D to strengthen our deepwater fluids offering, automating our sand management technology and gaining a first-mover advantage in the beneficial reuse of produced water. By 2030, we anticipate generating significant free cash flow to consider returning capital through debt repayment, share buybacks and dividends. Additionally, we'll have the cash flow needed to determine the timing for our future lithium project, which is not included in our 2030 targets that we will share with you today, but remains a highly attractive option that we continue to evaluate. Now that you know the punchline, let's step back and give those of you less familiar with the company, some background on how we got here. The company has been in business for over 40 years, and we started in the area that remains our strength, which is fluid chemistry for completion fluids. Originally, we were servicing the oil and gas industry. We gradually expanded into the industrial chemicals market, where today, we're a leading global provider of calcium chloride. Our main business is now focused on the global offshore completion fluids market, primarily deepwater, water management for the unconventional plays in the U.S. and Argentina and as mentioned, maintaining a strong position with our calcium chloride. The company's transformation is really primarily driven by 3 emerging growth areas: electrolytes for energy storage, desalination of produced water and critical minerals from our brine leases in Arkansas. We have much to share about each of these areas today. Geographically, we're well positioned where we need to operate including the deepwater markets of Gulf of America, Brazil and the North Sea, along with a growing market in the Middle East. We've recently completed the expansion investment in each of our key offshore markets. Our international footprint is now well established to meet our long-term goals. Let me introduce our executive team of whom I'm very proud, some of which you will hear from today. You'll notice that each of them has worked at and been successful in larger companies earlier in their careers. But similar to me, they chose to join TETRA because of the entrepreneurial culture that we have developed, the opportunity to have a more direct impact on the company's success and the bright future that we have in front of us. As we'll discuss, this team has delivered some excellent results over the last 4 to 5 years. Today, you'll hear from Roy on our future Energy Services, Matt on desalination, and Tim and I will jointly cover the Specialty Chemicals. I'm just as excited about our Board of Directors. As we transform the company, we have evolved the Board by adding 5 new directors over the past 5 years, while maintaining strong core strengths in our Energy Services business, which remains very important for our future. We've added executive skills in specialty chemicals, including bromine and lithium, water solutions and new energy. The depth of our executive management and financial leadership experience on our Board is substantial with 4 former CEOs and 2 former CFOs. We now have a great mix of talent and experience to support our future. As mentioned, today, we have two main segments, external reporting segments. About 55% of our revenue comes from Completion Fluids & Products and 45% from Water Management and Flowback. The chart on the right is something we're very pleased with, which shows the improvements that we've made in the business, consistently increasing margins for nearly 8 years and developing a business model that stays highly resilient during the very tough cycles that our industry often encounters. Since announcing our divestiture of CSI Compressco and our new One TETRA strategy in January of 2021, our financial performance has improved dramatically and is reflected in our share price appreciation of nearly 440% since that time. Although we forecast substantial growth in revenue, EBITDA and free cash flow through 2030, I want to highlight the exceptional performance this team has delivered over the past few years. Since 2021 and the start of our new journey, the company has increased revenue by 56%, EBITDA by 129% and cash flow from operations 544%. These results were achieved despite an overall 19% decline in the current frac crews compared to the same period in 2021. This team has a proven track record of excellent execution and delivering results aligned with our future projections. Unlike many start-ups that predict rapid hockey stick financial growth, we have a stable, positive free cash flow generating business, a strong track record and a battle-tested management team committed to achieving our results. As mentioned, we're planning to make changes to our current reporting segments, which are shown on the left-hand side of this slide. Today, our Completion Fluids business is primarily, as we mentioned, offshore and primarily deepwater, holding a well-recognized market leadership position and a strong calcium chloride business in both Europe and United States. We're also innovators in the water management space with strong positions in water treatment, recycling for frac reuse and sand management for unconventional flowback. Moving to the right-hand side of the slide represents how we plan to report in the future, which is how we will be presenting to you today. We will transition to 3 reporting segments shown on the right, Energy Services, Specialty Chemicals and Minerals and water treatment and desalination. Here are some key highlights from each of these new segments. Starting with Energy Services, we'll continue focusing on our leading and flagship business, Completion Fluids. Roy will share the bright outlook for this product line and the broader deepwater market as well. We'll also continue focusing on our market-leading flowback and sand management business by capturing additional market share, including new and emerging international opportunities. On the Water Services side, which is currently part of our Water and Flowback segment, we will transfer the water treatment for frac reuse into our newly formed water treatment and desalination segment. Matt will highlight in his presentation today. An important note to highlight is we are not including our water transfer business in our 2030 subsegments as we will likely rationalize that business sometime between now and 2030. The good news for our employees in that business is they will be part of a much faster, exciting future new segment in our desalination segment. Our newly formed Specialty Chemicals and Minerals segment will consist of 3 primary subsegments: our current calcium chloride business, electrolytes for energy storage, which Tim will highlight in his presentation, and an array of key minerals, most of which are found in high concentration in our smackover leases in Arkansas. Our third segment will focus on water treatment and desalination, which, as mentioned, includes our current treatment and recycling, combined with our first-to-market end-to-end Oasis TDS water desalination business. Again, Matt will cover this in great detail. We're also here via recorded video from the Chairman of the Texas Railroad Commission at our request, Jim Wright, and the CEO of B3 Insight, who are experts on analyzing trending subsurface disposal well pressures and their implications for the industry. I'm frequently asked, how is it that TETRA is best positioned to capture these significant growth opportunities and enable the company to achieve these substantial financial targets. The short answer is that each of these areas revolves around fluid chemistry, especially brine chemistry. Our 40-plus years of developing brine chemistry solutions, operating chemical and evaporation plants and extracting key minerals from brine is in our DNA. When considering the billions of barrels of brine water beneath the surface of the U.S. alone and the richness of minerals within that brine water containing concentrations of minerals much higher than in ocean water, and the ability to extract those minerals and desalinate that water for beneficial reuse where water scarcity is becoming even more severe, it becomes clear why TETRA is in a unique position to lead the way in this area. These synergies summarized on this slide describe the One TETRA theme for our current and future business segments and central to our message today. Here, we take a closer look at each segment, including growth targets, EBITDA margin expectations and planned maintenance CapEx. For Energy Services, we expect a steady 5% to 8% compound annual growth as the deepwater market expands through the end of this decade and our testing and flowback technology continues to gain traction and expand internationally. Our new Specialty Chemicals and Minerals segment is projected to grow to over $400 million in revenue with EBITDA margins consistent with our current Fluids & Chemicals segment. The highest growth segment is our new water treatment and desalination business. We're targeting 500,000 barrels a day of produced water desalination by 2030. We believe a very conservative estimate, especially after you hear from our experts today. You'll hear much more details in the presentations this morning on each of these targets. However, we spend considerable time modeling these financial targets and are confident that these can be achieved. So in summary, for my opening comments, TETRA has delivered exceptional financial performance since refocusing the company and establishing our One TETRA strategy. Our market-leading position in deepwater completion fluids and sand management will enable us to continue growing and expanding margins for our future Energy Services segment. Our strategic plan to leverage our fluid chemistry expertise has led to new high-growth markets for electrolytes, an industry critical solution with the desalination of produced water and the resources and capacity to bring critical minerals to the market. Thank you again for joining us this morning. You'll have a great opportunity to hear from a high-performing executive team and to meet with our Board members over lunch. I hope you find the One TETRA 2030 story as compelling as every employee at TETRA does. Thank you.

Good morning, everybody. It's a pleasure to be here today, and I appreciate everybody taking the time. I wanted to start off quickly with an introduction for myself. I'm going to go back one slide here. So my name is Roy McNiven. I'm our Senior Vice President for Energy Services. I cover our Global Completion Fluids, Water and Flowback segments. I am originally from Canada, I grew up on a cattle ranch in Southern Alberta, and I got my journeyman electrical certificate and then my MBA from Athabasca University. I joined the industry in the early 2000s. In my current role here, I've been for 3 years with TETRA. Prior to that, I was leading CSI Compressco, where TETRA was a general partner. We divested CSI Compressco, as Brady mentioned, in 2021. I spent a year with the transaction, getting things handed over, and I stayed in contact with Brady and the rest of the management team because I was really excited about this transformation story that we're going to be delivering to you guys this morning, and that's what I made the decision to come back. Prior to that, I spent the last 20 years at different various leadership roles at Nabors Industries and then in TESCO Corporation. And I'm going to spend the next 30 minutes talking to you guys about a really exciting story that Brady just introduced to you. So as TETRA continues to evolve in this transformation, our focus is going to be on transitioning to the highest performing businesses. For Energy Services, that future state is going to be us moving the calcium chloride into Tim Moeller's business that he's going to talk about on the industrial chemical side. And then our Water Treatment and Recycling segment is going to transition into our new water recycle and desalination segment, and as we look towards 2030, we're going to continue to evaluate each business within Energy Services and direct our focus and investment towards our two highest performing segments today, which are Completion Fluids and our well testing and flowback offerings, and I'm going to spend a little bit of time today talking to you about both of those in more detail. So to get started, I think most everybody here is familiar with our current reporting segments. And so on the Water & Flowback segment, that consists of our water management offerings. We provide water transfer services, water recycle and water treatment services. And on the flowback side, we provide flowback services, which consists of the sand management that Brady mentioned. And in Argentina, we also provide early production facility and temporary production facility services for our clients. We're highly regarded for the quality service, technology and automation that we offer to our customers. And one of the things that we value most within TETRA is our people. And an interesting story is in 2024, we underwent a rebranding exercise. And so some of you guys have seen the One TETRA tagline that Kurt opened with. So that started with an employee and a customer survey where we went out and asked our customers, what do you value most about TETRA? We asked our people, what do you guys hold in the highest regard. Unilaterally, the answer was our people. And so that's something that differentiates us and one of the reasons why we came across with the ONE TETRA. We're very proud of our Permian Basin operations. And today, we hold a leadership position in water recycle, where we're recycling over 800,000 barrels per day of produced water. Matt Sanderson, my counterpart, is going to talk a little bit later about how that transition us is in the tip of the spear for our new TETRA Oasis total desalination solution. So to build on our highly differentiated flowback story, I'm going to take a minute to explain what flowback is and where that operation comes into play. So as you guys will see on the slide here, this talks about the total life cycle of a well from the beginning of drilling through to the actual production. And so the flowback operation comes into play twice during the life cycle of a well, once during completion and once on the actual flowback when it's brought online for production. So in the completion process, everybody here is familiar with the term fracking, right? So you're moving sand and water down into the wellbore and it's going through perforations and it's fracturing the rock so we can recover the oil and gas from that segment. That fracturing process is completed in stages. And so as they do those stages, they're putting plugs in the well to isolate those different zones. Those plugs later need to be drilled out and recovered. And that's where the drill-out operation comes in. So the completion flowback is where they're drilling those plugs out and they're flowing that debris back, and we have to capture that. Historically, that's been done with a conventional solution. We'll talk about that a little bit more in a couple of slides. What TETRA has brought to market is the automated drill out, where we are automating this entire process, removing manpower from the operation and from hazards associated. This represents roughly a $350 million market opportunity for TETRA on U.S. land today. The next phase is on the production side. After the well has been completed, they bring it online for production. You're going to get all of that sand, that proppant that was moved down hole and some of the debris formation back in high volumes. That can be very damaging to all of the production equipment if you don't capture that sand. And so that's where sand management comes into play and TETRA's automated SandStorm solution. We have a 96.4 -- or 99.4% recovery rate on sand with this solution. This represents a $550 million market on U.S. land for TETRA today, and we have presence in all major basins. And so one thing that's in common here, TETRA's innovation, technology, automation and people. So how is TETRA applied technology solutions to improve operator economics and safety? I'm going to start by explaining a little bit more about our automated drill-out system and solution. So one of the things that we focus on here is safety. Our industry is one that's known, right, for having safety concerns. And so one of the things TETRA holds in the highest regard is keeping our people and our customers safe. And so one thing that most people might not be familiar with is the term red zone, and I'm not talking about NFL. I'm talking about the actual red zone on a rig. So if you look at the picture on the left, all of that iron, flow iron has high pressure and moving, we're moving in roughly anywhere from 2,000 to 8,000 psi. So that's a lot of pressure, a lot of iron and a fairly high-risk job. There's also overhead suspended loads that people need to be cautious of. And in a conventional setup, all of that equipment is operated manually, and so some of these wells today and some of these pads, you have as many as 80 to 90 stages. These flowback -- or these drill-out operations take 5 to 6 days. And so it's a lot of work. It's very manual and it's high exposure. Our team up in Appalachia decided there had to be a better way. And so they worked with our engineering group in Houston, leveraged our proprietary new product development process, and they came up with the automated drill-out system. We're the only people in the market with an automated solution for this today. So if you look to the right, where there was people all over that iron and everything is scattered on location on the right, we've got everything really neatly organized, a trailer that pulls on the location, we connect to and everything is operated from that command center you see on the bottom left. This has actually allowed us to reduce the CapEx to deploy this solution because it's a lot less equipment. We reduced the amount of people required to manage this operation, and so it's producing higher margins. And the payback on this is less than a year. So the returns are fantastic. Now let's talk about the SandStorm. So in 2018, TETRA introduced the SandStorm to the market, and it was rapidly adopted by our customers. The recovery rates on this are 99.4%. This is in contrast to legacy cyclonic solutions that are in the 40% to 60% range. If you take a 60% range cyclonic solution where they're having to typically put them in tandem, you're only recovering 75% of your sand production. Whereas with one unit, we're able to recover 99.4%. So our customers highly regard and highly value this solution. But we also took some time to look at the market, the way things are going and the evolution, and we identified the need for automation. So in 2023, the team used that same new product development process to develop an automated solution, which is what you see on the right-hand side of the screen. So that single unit is operated again from a command center, nobody having to manually actuate valves, nobody having to be in a high-pressure zone or a high-risk area. And we're not done yet. We have some really exciting stuff coming that's going to allow us to run this autonomously. So that's something we'll hopefully be able to announce later on in the year. So the same with the drill-out skid, right? So we've got a reduction in the capital deployed for this solution. We've got a reduction in manpower, so higher margins and higher returns. So the really exciting stuff for us. The other fact that comes in with this is this is all helping our operators achieve more efficient operations. So it's not just a benefit to TETRA. It's also a benefit to our customers. They're able to reduce the days on location. They're able to see savings, and they're able to drive more efficient and safer operations. So transitioning to talking about U.S. land. At dinner last night, I was talking to Stephen and Jay, and we're having a conversation about U.S. land and the fact that it's really hard to put a positive spin on what's happening on U.S. land this year. And it's no secret, drilling activity and frac activity is down year-to-date. I think the things that are important to note, though, is that it is stabilizing. I think we found our floor on oil, and it's starting to trend up. And the future prospect for natural gas is very positive. We've got export capacity coming online. We've got domestic demand that's here. And I'm not sure if everybody in the room saw the IEA article that came out last week. If you didn't, I took a check to write it down here, I'll quote it to you. So the article was reverses course on oil and gas investments. The world needs to develop new oil and gas resources to keep output flat amidst faster declining rates in existing fields. Now I'll say this, this didn't come as a shock to most people in this room, but it's good that somebody is finally admitting it. Oil and gas is going to be here for a long time to come, and we're excited about being part of this. In the next few slides, I'm going to talk about the fact that while wells fracked may be stabilizing at lower levels, the opportunity for TETRA is still significant. In this graph, I took a second to go back to what we opened with, transitioning to highest performing businesses. So this is our U.S. revenue for flowback operations plotted against the rig count, and the things that are important to point out here are that since 2021, our revenue per U.S. rig has gone up 108%, that's significant. We're taking market share, and we're driving higher margins and higher returns with our automation, our technology and the innovation that we deploy, and the last point to touch on here as well is that when we talk about automation, it only makes up roughly 10% of the market today. So there's a lot of room for growth. So back to the story on U.S. land. When everybody hears and talks about U.S. land today, what are we hearing on U.S. rig count, up or down. It's down. Frac spreads, same thing. They're coming down. So as U.S. production has increased and now plateaued, we're seeing it maintain with lower service level activities, right? Historically, this has been an indicator for oilfield services companies. We watch rig count, we watch frac spreads, and it's an indication of the health of oilfield services companies and our overall business. Part of the drive behind this year is the operator consolidation. The other factor that's behind it is something called operators drive for efficiencies. It presents a pretty challenging picture for the traditional oilfield services company. But it's not all bad. And this is where TETRA departs from the norm. And so what you're seeing on the left-hand side here is our production flowback on the SandStorm is we're looking at the proppant per well and the frac fluid per well. You guys might have heard of the term of monster fracs, simul and trimul fracs. They're moving more water. They're moving more sand than ever. We're drilling longer laterals. They're getting the production out of 100 wells today where they used to get out of 130. So it's a significant drive, and it's all the things that were on that slide before on the left, right, these efficiency gains. TETRA is part of that story, and so when we're sitting here looking at longer wells, we're here longer laterals. right? And we hear simul and trimul fracs and increased proppant and frac plugs. We hear more sand production to recover. We hear longer flowback operations and more plugs to drill out. This is a positive for TETRA, and not only is the water production continuing to decrease, which is going to be better for our recycle division, which is what Matt is going to talk about later, it's driving a lot of efficiency gains, and TETRA is part of that story. And so one thought to leave you guys with is when you hear operators drive for efficiency, recognize that's good for TETRA's flowback business. So like the U.S., historical -- historically, conventional fields have been developed and international markets are moving toward their unconventional assets as their next phase of production. So automation and technology solutions we just spoke about are relevant as each of these models looks to exploit the learnings of U.S. shale. We've hosted multiple contingents from Argentina and from the Middle East here in Houston at our technology center, which I'll talk about in a little bit, and in our Permian Basin operations. They want to see what we're doing on the recycle, the water recycle side. They want to see what we're doing on flowback. They want to see what we're doing overall on water management because they're looking to learn from the United States as they go and develop their own assets. TETRA has an international presence in all three of the locations you see here. We're one of two publicly traded companies that offer water management and flowback services. And of those two, we're the only ones with an international footprint. And like I mentioned, we're in all of these markets. The Vaca Muerta in Argentina is an area that we've been working in for over a decade. So we've got significant presence there. We have almost near full utilization on our well testing and our sand management assets in country. And I mentioned earlier, we offer EPF or TPF services. And so the Vaca Muerta is very isolated, and they're just currently putting in all of the takeaway capacity, the pipeline capacity. And so how they're managing a lot of these fields is with these small production facilities, 10,000, 12,000, 15,000 barrels per day. TETRA offers those services. We design, we build, we manage those facilities, and they're typically on 3- to 5-year contracts. So that's a really lucrative business for us. And under the current administration, right, the future looks really bright in Argentina and our ability to repatriate the cash has also been very favorable. As we think about emerging markets, we look towards the Middle East. both the United Arab Emirates, Abu Dhabi and Saudi Arabia. We've performed technical trials in both markets with our water management solutions as well as our SandStorm solutions. And so there's a lot more to see here in the -- a lot more to see here in the future. And as I transition from my section from flowback over to Completion Fluids, I want to leave you with a few key thoughts. So as referenced in the opening, we're transitioning to the highest value businesses for which our most traditional oilfield services offering will be our flowback service line. We're uniquely -- we have a unique value proposition and differentiation through our advanced completion and flowback technology and automation. Our capital investment strategy for this segment supports projections to have our entire fleet of SandStorm's automated by the end of 2028. And as emphasized earlier, our automation and technology drive margin improvements. Beyond saturated in U.S. land, where automation only accounts for 10% of the current market, we have significant potential for expansion in key international markets, unconventional -- international unconventional markets where we are active today. TETRA's automation and technology is what's enabling our customers to achieve greater efficiency while improving their overall safety performance. And lastly, I'll leave you with a thought that when you hear operator drive for efficiency, remember that's good for TETRA's Flowback business. So transitioning over to our Completion Fluids segment. I think everybody here is again familiar with what Brady opened with. This segment has historically consisted of our Completion Fluids and our Industrial Chemicals segment, which Tim Moeller, my counterpart, is going to talk to you about shortly. So as a leader in high-value completion fluid solutions for the past 45 years, we are highly regarded and recognized for unique and innovative solutions like TETRA's Neptune family of fluids. Our commitment to safety and service quality continues to lead the market, where we have been recognized as the #1 provider of completion fluids for 4 consecutive years with industry-leading customer loyalty and performance in product quality, technical support and customer responsiveness in the annual Kimberlite Completion Fluids industry study. That's something we're very proud of. Additionally, our long-term bromine supply agreement ensures we have product availability and our global infrastructure positions us to participate in all key deepwater markets. So getting into the Completion Fluids business specifically, we continue to benefit from our innovation, quality and vertical integration. Being highly differentiated, as you can see in the slide -- or on the right-hand side of this slide, has helped us maintain market share and ensured margin resilience even through one of the worst down cycles our industry has ever experienced in 2020 and 2021. The deepwater market has been showing resurgence since 2022 and is backed by a robust long-term outlook that carries through 2030. More technically challenging and high-temperature wells are coming online and 20,000 rigs are coming into the Gulf of America. We have a strong pipeline of Neptune and high-density zinc bromide opportunities ahead of us, and with the incremental bromine supply coming in from our existing acreage in Arkansas, we're uniquely positioned to participate in a meaningful way. So what are completion fluids and why are they important? I'll take a second to talk about where they come into play first. So in the well construction process, you guys can see on the screen here in the center, right? A drilling rig arrives, is spotted on location. They're going to drill a hole, thousands of feet into the ground. They're going to case that hole. They're going to cement that hole, and then they go to the completion phase. So part of that drilling process is using drilling mud, which has suspended solids in it. Those need to be removed and flushed from the casing string before you can bring production online. That's done with the completion fluid. Completion fluids are important because it helps manage downhole pressures, preventing well control issues or blowouts while ensuring that the formation integrity remains strong and avoids corrosion to the casing string, again, maintaining the integrity of the well. They're chosen based on the density for pressure control, corrosion prevention and compatibility with the reservoir. The deepwater -- the deeper the well, the higher the pressure and the higher the temperature, hence, the higher the density and corrosion resistance required. Deepwater wells often use brominated fluids due to the higher pressures and temperatures, which I'll go into more on the next slide. The global market for completion fluids is $1.1 billion. It's predominantly offshore and deepwater, and TETRA has been a leader in this market for over 45 years. So completion fluids, clear brine fluids or commonly referred to as CBFs, they're water-based fluid. They're composed of dissolved salts as a means for increasing the density of the fluid, and it's unlike a typical drilling mud. There's no suspended solids in a CBF, and due to that, they won't cause any damage or plug the reservoir pores. Engineered CBFs range in weight and density, and with respect to price, it increases as the density and weight increases, and you'll see that illustrated on the chart. TETRA manufactures everything that's highlighted on the chart, and we are the only manufacturer in the United States of zinc bromide. So achieving these higher densities for use in high-pressure applications is technically challenging. That's part of what drives the price up and obviously, the cost and the value proposition to the customer, and just as an example, if you take the average bottle of water, that's got a pounds per gallon weight of 8.33 pounds. That same bottle of water with the zinc bromide solution in it is going to weigh 2.54 pounds, and it's very -- when we think about technically challenging the science behind it, being able to get that much density into the same volume and prevent it from crystallizing or changing state or form so that you can use it and it can maintain the integrity of the well is something that TETRA is an expert at. The last couple of items to mention on this slide. So you'll see Cesium formate here. So that's an alternate at higher densities. The challenge with Cesium is it's a mining process and the manufacturing process for it is very expensive. It's finite supply and quantities. And so a lot of times, it's found to be not to be economically viable for completion projects. The other thing that's on this slide is our Neptune family of fluids. And that's an alternate, obviously, to zinc at the higher densities as well as cesium. And we're going to talk about that more throughout the course of this presentation. So why do we get excited about the fluids business? And why should you? So we talked about the long-term outlook for the deepwater activity and it being robust. And the -- as we see that long-term outlook improve and we think about some of the lower-hanging fruit already been extracted, we're moving into these higher pressure and higher temperature wells, which are going to require more high-density fluids, which is right in TETRA's wheelhouse. And as you recall from the brine density table, these are our higher-margin businesses as well. Our strategic acquisitions in the key deepwater markets, North Sea, Brazil and Gulf of America have added to our capacity and our capability to our already well entrenched position. And they will continue to enable TETRA to service their key customers and be benefactors of key contract awards such as the recent 20,000 rig award in the Gulf of America, the long-term brominated fluids contract in deepwater Brazil, along with being the primary fluids provider for one of the largest operators in the Gulf of America. Adding to TETRA's strengths and differentiators is our competency linkages. As the only vertically integrated completion fluids provider, TETRA has decades of fluid chemistry experience in their Conroe, Texas-based technology center, along with over 40 years of chemical manufacturing, which Tim is going to talk about shortly. Couple this with our people, systems and processes behind our solutions that come with 45 years of experience as a leader in the completion fluids space, and you've got the premier completion fluids provider in TETRA that our customers see. At the core of our innovation is the innovation group or the TIG as we refer to it internally. Base of the TIG is a team of world-class experts in fluid chemistry with state-of-the-art labs and equipment who work directly with the technical teams of our internal and external customers to support current projects and develop solutions for the future to maintain our leadership position as an innovator. And as you can see on this slide, this group holds multiple patents in this space as well as a method for producing zinc bromide electrolyte. So I've talked about the robust long-term outlook for the deepwater market. Here, you can see that oil and gas demand is projected to continue to increase, almost over 25% through 2030. On the right-hand side, you'll see breakevens for the deepwater market. The important thing to note here is over 83% of deepwater markets have breakevens less than $45 per barrel. So if you're following U.S. land, these are fantastic. And how that's achieved? So if you think about the significance of an investment for a deepwater well, it's in the tens, hundreds of millions of dollars. But it's recovered over a very long period of time. So when you think about Permian Basin and decline curves, we're talking about wells with life cycles of years. Offshore, we're talking about wells with life cycles of decades and the decline curves are much further out. So these economics are recovered over a significant period of time. So these -- so when you think about the offshore market and how long these wells stay in play, it's no wonder that the market is so bullish and our view of the market is so bullish, and these deepwater economics are going to remain attractive even in low price environments. So when TETRA looks at the market, and we use indicators and what we're watching, these are some of the things we're looking at. We're looking at CapEx investments. And if you look at an offshore CapEx projections through 2028, they're increasing over 41%. If you take into account the planning cycle for a deepwater well being longer than 3 years, these deepwater forecasts start to look a lot less like projections and a lot more like backlog. And this is further enforced by the global floater demand. These rigs are contracted years out, and they're contracted 4 years. These aren't wells that get shut in when oil drops $1 or $2. These are long-term projects that are planned for a long time, and so the deepwater floater rig count is projected to increase over 27% through 2028, and coming back to the high-pressure and high-temperature wells and the demand increasing for these zinc fluids and for potentially Neptune, right? The left-hand chart shows TETRA's revenue against the global floater count, where you can see our revenue per floater has continued to increase significantly year-over-year, and we see the demand increasing on deepwater activity, but the percentage of deepwater wells require heavily bromated fluids. So again, this supports our bullish outlook. On the last slide, I talked a little bit about backlog. And so something people here might be familiar with is subsea tree installations. So on the right-hand side, you can see our bromine revenue plotted against subsea tree installations. So when a subsea tree is being purchased, it's indicative of a well being completed in the future, along with the completion where completion fluids are going to be required. And as you can see, that's going to be an opportunity for TETRA as it has been in the past. And so when you think about Technique and FMC reported on our backlog, recognize that's an indicator for an upcoming completion fluid opportunity. So here, we're looking at a map of global completions that require a fluid density of greater than 14 pounds per gallon. This is -- these are items that fall right within TETRA's sweet spot. There's over 550 offshore leases. So whether it's going to be a calcium bromide, calcium zinc bromide or an Neptune opportunity, this falls right in our wheelhouse, and when we think about the high-pressure and high-temperature wells, we think about higher-density fluids and often a zinc bromide. It's important to note that some markets don't allow the use of zinc. They consider it a marine pollutant, and so there's 2 solutions if you can't use zinc. It becomes Cesium formate, which we talked about earlier, being cost prohibitive for well economics, and you have TETRA's Neptune. So transitioning into this slide, I want to talk a little bit more about Neptune. We'll take a second, this picture that you see, it's a little bit distracting. That's a jackup. You're standing on the top of the legs of a jackup and looking down on the rig floor, and so we touched on the fact that zinc bromide solutions can be banned in certain markets. right? And beyond that, zinc can be very corrosive in nature, particularly at higher temperatures and can damage downhole metallurgy, elastomers and surface facilities unless they're specifically engineered to handle the fluid. So how Neptune was born. In 2015, we had a super major in the Gulf of America with a multibillion-dollar capital investment for deepwater field development come to us with a significant challenge. They couldn't use zinc to complete their well due to the production facility not being able to take it on and the high pressures in the reservoir. So TETRA, over the course of 18 months was the only company that was able to rise to the challenge, and we delivered noncorrosive, environmentally friendly and solids-free non-formation damaging solution, which is TETRA's Neptune. That saved the customer over $100 million on that 4-well project. And since Neptune has been introduced to the market, TETRA has generated over $150 million in revenues. And I talked about TETRA being a family of -- or Neptune being a family of fluids. And so what I think most people have been accustomed to is these significant wells that generate plus or minus $10 million per well in revenue. But the reality is it is a family of fluids and there are applications where this is being deployed much more commonly. And so in markets like Norway and even in the Gulf of America, you're going to see that Neptune is deployed in applications like a gravitational displacement and carrier fluids for reservoir simulation and packer fluids. When we think about the future, we've got some significant opportunities, some of which are going to be in the drilling fluid space and for high-density frac fluids. So there's a lot of things we're excited about going forward. Thinking about the Gulf of America and what's coming next, I talked a little bit about 20,000 rigs. Where these rigs are going is somewhere called the lower tertiary. And so with all markets, right, most of the low-hanging fruit has been extracted and the development is moving towards more technically challenging environments, and the Gulf of America is no exception. So the next frontier is the lower tertiary, where we're seeing more high-pressure and high-temperature wells. This is driving the requirement for these 20,000 rigs that I talked about, where we were recently awarded one of the two that are working in the Gulf of America. The higher pressures are going to require zinc-like densities for which TETRA is the only manufacturer based in the U.S. However, due to the high temperatures, and like I mentioned earlier, zinc can be corrosive and some production facilities don't allow it, which means they're going to look towards alternative solutions for which TETRA's Neptune is the most viable. So as we get towards the end of this section, I want to highlight a couple of things. So with our competency linkages, our IP portfolio, the innovation and commitment to quality, TETRA will continue to be a leader in completion fluids, introducing innovative solutions such as TETRA's Neptune to help solve upcoming challenges for our industry and for our customers. We're poised for growth and value creation through our strategic positioning and expansion investments in the Gulf of America and in Brazil. Leveraging our internal innovation and bromine project to further enhance margin and gain market share, we're going to drive some of the strongest returns in our sector. And as we look towards 2030, we believe this business is going to continue to grow at a 7% to 10% CAGR while maintaining or even increasing margins as more high-density wells come online. One of the important points to note, most of the investments for our facilities and our infrastructure has already been made and is in place. So it's going to continue to drive even better returns in this segment. And lastly, as I close out on my section and transition over to my counterpart, Matt Sanderson, I hope everybody is excited about the future of Energy Services business as we are. Brady mentioned it earlier, this is a business we're in today. So these aren't future-like statements. This is businesses that are performing and producing cash flow as we speak. TETRA is actively transitioning its Energy Services portfolio to the highest performing segments, which are completion fluids, well testing and flowback that I just talked about this morning. This streamlined focus will continue to drive growth along with margin enhancement. And our proprietary solutions like the automated drill-out and SandStorm technologies deliver superior safety, efficiency and market-leading recovery rates for our customers. When you hear operator efficiencies, remember, that's good for TETRA. And TETRA's completion fluids business is positioned for long-term growth, fueled by rising demand for high-density fluids in deepwater and in high-pressure, high-temperature wells, and this is supported by our strategic acquisitions and the vertical integration of our bromine asset. And when you hear high-pressure, high-temperature wells, remember, that's right in TETRA's sweet spot. And lastly, we have room for expansion with our international footprint. So with that, I'll hand it over to Matt. Thank you.

All right. Thanks, Roy. So Matt Sanderson, Chief Commercial Officer for TETRA. Last name Sanderson. So you heard Roy mention SandStorm. I would suggest there might be a linkage in there somewhere, okay? So I grew up not in South Texas. You're going to hear my buddy, Tim over here, slightly different accent from mine. I did not grow up in West Texas like Elijio. In fact, it grew up just about a 7-hour drive north of here. As we were preparing for this presentation, I was looking back a little bit, and I was thinking it's been almost 30 years since I graduated with a civil environmental engineering degree from Queen's University up in Canada. Immediately upon graduation, I went to work for a company called Schlumberger, also now known as SLB. I held various field, operational, functional management roles. In fact, one of the first jobs I ever did was outside on a rig, it was minus 50. Anybody want to guess was that Celsius, Fahrenheit? Well, if you actually look it up, it's the same thing, right? It's just really, really cold. I also had opportunities where 22 years old, I went to work in a helicopter, right? In fact, halfway to Greenland where the Titanic sunk, icebergs floating by, right? In fact, one time, I remember getting evacuated in the middle of the night because 60-foot high waves were approaching the rig, right? Needless to say, it was an adventure. So after escaping icebergs, freezing cold in Canada, I had the fortunate opportunity to move over to Australia. Now this was almost 25 years ago, went from Australia up to Thailand, over to India. In fact, in India, I was the Director of HR for Schlumberger for a very large region, right? I'm not from India. My background is an engineer, right? It was not an HR professional, albeit that was a short-lived assignment, okay? SLB then thought better, and they bought a company back in Canada. So I quickly moved back there. Nancy knows the story behind that one. And then in 2012, I relocated down to the U.S. During that time as well, I was also very proud to have completed my master's degree at Heriot-Watt over in Edinburgh, Scotland. Now who here is a golf fan? A couple, right? The Ryder Cup is on right now. So I will offer -- I took advantage of the fact of going to school in Scotland for a few years to get the golf bug and play a little bit. And I'm going to reference golfing again in the presentation. Now going back, again, looking back in time, preparing for this, it was almost 9 years ago when I received a phone call, that call was an opportunity to join TETRA. Now I knew who TETRA was. I didn't know a lot about the company. So I was gainfully employed at the time, a relatively maybe the youngest VP in my former employers company with an upward trajectory. However, I kept getting more and more phone calls saying, Matt, you need to look at TETRA, right? There's an opportunity. We know they've been calling. So I said, fine, right? Looking at her, I'm going to go for an interview. So I went to Houston and over 2 days was grilled, right, person after person after person coming in. At the end of the two days, the big heavy hitters came in, right? Bill Sullivan, who was Chairman of the Board; and Dr. Tom Bates. Where's Tom? So Tom is here today, right? Tom is one of our Board members. At the end of those two days, Tom got to the brass taxes. He looks at me and he goes, "All right, Matt, what's it going to take to get you to join TETRA?" I looked at him, I said, it's really simple, Tom, I need a round of golf at Bluejack National. He paused, he looks at me as what? And then all of a sudden, he got this big grin and he looked down at his golf shirt, which had a Bluejack emblem on there, and he goes, smart guy, right? Now at that point, I had made the decision to leave SLB after 20 years to join TETRA. The reason being I could see the tremendous potential in the company. Brady touched on some of that a little bit earlier. The goal here today is that really, hopefully, after today's session, you guys walk away with the same impression you see that same potential in TETRA that I do. So switching gears. who here is aware that the U.S. is the #1 producer of crude oil in the world. think a few, right? More than 13 million barrels a day of daily production. Who here is aware that on average, with each and every barrel of crude produced, there comes along with it 4 or 5 barrels of what we call produced water. A few hands? Yes. Okay. Put that in perspective, that's -- if you look at the Permian alone, that's 24 million barrels of produced water each and every day. So I was trying to think about that. I knew it was coming up to New York City. So what do you do when you're lost for words? You check ChatGPT, right? You check AI. So I said, put 24 million barrels a day of production into context in New York City, right? So the answer that came back was we heard Roy talk about the red zone. It came back with NFL. I said, okay, think about a modern-day NFL stadium like a big swimming pool, 24 million barrels a day of produced water is enough to fill 100 NFL stadiums each and every day. Closer to home, the Jacqueline Kennedy Onassis Reservoir over in Central Park, that 24 million barrels a day of Permian produced water fills that reservoir every single day. Amazing. The other thing before we move on, you heard Brady mentioned the word oasis. Take a look at the photo, okay? That's by design. There might be a quiz or a question a little bit later about that, but be thinking about oasis, have that visual, stark, aired land. However, in the middle, all of it, life, right, fueled by a valuable resource. So there are several challenges facing our industry today. But overall, I would offer that the most pressing is related to water. In many regions, there's crippling drought, freshwater depletion. In some regions like the Permian, which I mentioned, there's an overabundance of produced water. Today, the vast majority of that water is put into the ground. However, as you're going to hear from several speakers today, the window for disposing of more water underground is closing, and it's closing quickly. We're going to talk about several solutions available to some of these challenges that are being deployed today. Some of those are out-of-basin disposal. You may have heard of it. Moving to shallow from deep disposal, recycling for frac, which Roy touched on, and then lastly, we'll talk about desalination and beneficial reuse. So we've been producing oil and natural gas in the U.S. and around the world for well over 100 years. So why is this produced water such a challenge today? Rather than having me explain, I thought it would be beneficial for you to hear it directly from the state agency with the primary responsibility over the industry in Texas. Unfortunately, Jim Wright, Chairman of the Texas Railroad Commission, was unable to be with us in person today. However, he was kind enough to provide his comments and perspective on this subject.

Well, I think you have to kind of go back to the beginning so that people understand what comes along with oil and gas that we have generated beneath the surface of the earth. It's not just oil and gas that comes to the top. It also has water, what we refer to as produced water. So you've got some level of gas, some level of crude oil and some level of produced water. Today, those averages are somewhere between 4 and 5 barrels of water for every barrel of crude that gets produced. Our crude production today is basically 6 million barrels a day. So if you do the math on that, that's 24 million barrels, not gallons, barrels of produced water that Texas generates alone. In total, we've got about 30 million barrels of water every day that we're having to handle by reinjecting that into zones that we're not producing that oil and natural gas from. So what that means is it's got to go in a zone other than the zone that, that resource is actually being extracted from. And you ask, well, why don't just put it back where it came from? Well, it's almost impossible to do that because the new way of drilling today is horizontal fracking. And that fracking is cracking really tough tight formation rock. So to try to put that water back into those tight formations is almost impossible. You've got to look for formations that is more porous that allows that water to dissipate. So it's either got to go in a formation above or below where that production is. So the commission is looking at that very hard. We've determined some seismic areas that are very vulnerable to that. We've curtailed that now where a lot of that water has to go into a shallower injection. When shallower is good, it lessens the threat of seismicity, but it also builds pressure in those shallower formations, which are closer to our groundwater sources than you would in a deeper formation, which could cause that water to find a path of least resistance like older wells, bores that could take it into groundwater.

Okay. As you just heard from Chairman Wright, the produced water challenges are a particular concern in these unconventional shale developments. I'd suggest that as that development activity expands into lower quality acreage, you've heard the term Tier 2, Tier 3, those water volumes are only expected to increase. Much of the data and discussion today is really going to be focused on the Permian Basin for a reason, right? The sheer size of the issue in the Permian today, plus the immediate need for solution. However, as unconventional field development continues around the world, places like the Middle East, over in Latin America, in fact, I had a discussion at dinner last night about some of these activities that are going on today. As Roy mentioned, we're in those basins already. And undoubtedly, the folks in those regions are going to be looking to the U.S. to understand how we've addressed those challenges. As mentioned, the Permian Basin alone produces over 24 million barrels a day. Again, put that in context, that's over 9 billion barrels of water each and every year that has to be addressed. Treatment and recycling for reuse and frac, Roy talked about that, that's increasing. However, you can see the volume is still relatively small. Overwhelmingly, most of that water is disposed of. Now conversely, this is at the same time where you have several markets that require abundant, clean, fresh water. So you've got something on one hand that's being treated like a waste. And right next door, you've got somebody that needs something that's very, very similar.

I'm Kelly Bennett, CEO of B3 Insight, the leading provider of data and analytics to the oilfield management industry. The Permian water challenge has been in the news a lot over the last year. But what is it exactly? At its core, the issue is the tremendous amount of water produced in the basin. Each oil well produces 3 to 5 barrels of water per barrel of oil, depending on the location. Industry has increased use of this water and completion significantly. This year, 66% of all water use and completions will be produced water, and we expect that number to grow by 2 million barrels a day over the next decade. In order to support even modest growth in oil production over the next decade, injected volumes will need to grow nearly 40%, or over 6 million barrels per day. But this is where the challenge gets complicated. Injecting into disposal formations has created a growing level of pressure in those formations themselves. This pressure has been linked to seismicity and surface flows, and creates challenges for both existing producing wells, and in the process of drilling new wells. Pressure is a Permian-wide issue, but -- as pressure rises, it reduces the amount of water that you can safely inject in a disposal well, what we call the operational capacity, eventually rendering that well unuseful. Pressure limitations will likely cause disposal needs to exceed the available operational capacity in existing wells by the late part of 2028, resulting in rapidly growing volumes of water with no clear place to go. I'm Kelly Bennett, CEO of B3 Insight.

So quick apologies. As you saw with Roy, this thing is sticking a little bit. So I did miss one slide that introduces Kelly. So Kelly's firm B3 Insight really models produced water disposal in places like the Permian Basin. So you heard some of the data and the modeling that Kelly and his team at B3 have been putting out there in the public domain. So I recommend that you have a look at it. As Kelly mentioned, the formation pressures in the Permian Basin have been increasing significantly as a result of disposal of produced water into shallow formations. What you see in this slide here highlights those pressure increases in just the past 7 years. For those of you not familiar with it, there's a very faint line right here. That's the border between New Mexico and Texas. So this part that you see over here, this is really what's referred to as the Delaware Basin out in the Permian. Over here is the Midland Basin in the Permian. What you see in the blue shading, that's the typical downhole water pressure at 0.33 psi per linear foot. Over to the right, the reddish or the brown shading that you see, that's where those pressures in just 7 years have risen to 0.72 from 0.433, basically, a 70% increase over normal downhole pressures. As you heard from both Kelly and Chairman Wright, that's unsustainable and it's causing several issues. So right now, one of the solutions that's being proposed, and you're going to hear about it, is shifting some of the disposal from this area in the Delaware over to what's called the central platform, okay? So in essence, back to the swimming pool analogy, we've essentially filled up all the swimming pools in our town. So we're going down the street to the next town over, we're going to start filling up those swimming pools. However, out of basin disposal, I would suggest, is not a long-term solution and significantly increases both the capital and operating costs associated with that disposal. In fact, a recent announcement by a midstream company launching a brand-new project, a 42-mile pipeline, 30 inches in diameter, capital cost approaching $0.5 billion with a B. Again, I would suggest this is a stopgap measure and not a long-term solution. As Kelly explained, the pore space or operating capacity is being filled up. The water production continues to rise. And even if we factor in increases in treatment and recycling, it's simply not enough. In fact, Kelly's firm, they're modeling, they project that as soon as the end of 2028, there's no more disposal capacity in the Delaware Basin. Simply, as he said, there's no place for the water to go. And as we touched on a little bit earlier, that water is associated with what? Crude production, okay? And on average, 4 to 5 barrels of crude for every barrel of water. So you can imagine that in this scenario, somewhere in the future, over here to the right, you've got over 6 million barrels of produced water being modeled that again has no place to go. The associated crude production with that water could be north of 1 million barrels a day, okay? So think about that for a second. The Permian having to shut in over 1 million barrels a day of crude production simply because no place to put the water. You can do the math. The numbers become very big very quickly. So we've touched on the magnitude of the problem and issues associated with disposal. We've talked about different solutions that are in play to address out-of-basin disposal, moving from deep to shallow. We've talked about recycling and treatment for frac and a little bit upon beneficial reuse. However, again, what we talked about is this overabundance of produced water today being treated like a waste. But by and large, throughout history, water is really the most valuable resource on the planet. Huge demand, right? So what if we could repurpose, transform that to be used over there. That's what we're going to be talking about. Okay. So we've got a bit of a thorough understanding of the magnitude of the problem. So why is it that TETRA is here to bring a solution to the market? Brady touched on it. You're going to hear a similar theme over and over during this morning. Really, TETRA's core competencies have not changed. Service, technology development deployment, fluid chemistry, specifically saltwater experience in terms of chemistry. I would suggest these are the very core competencies required to desalinate oilfield produced water. So Roy touched on the fact that treatment and recycling of produced water for frac will continue to increase. This represents a meaningful opportunity for TETRA. As he mentioned, we have a leading position in that market today. In fact, we have over 400 team members working in the Permian Basin, serving a broad customer base that includes both E&P operators and midstream companies alike. The very folks that are producing this water, moving it around and being challenged with the disposal. The competencies and technologies that we are and will be deploying in this space are really the first step in the desalination process. The next step in desal requires the operation of a chemical plant, specifically a plant designed to process saltwater. As my South Texas friend, Tim over here will explain, TETRA owns and operates chemical plants around the world. Specifically, these are chemical plants that process water for commercial applications, including those that must exceed the highest quality of standards and regulatory requirements, including food grade qualification. In fact, we even have a plant that utilizes thermal evaporation and crystallization technology. Up in El Dorado, Arkansas, we not only built but operated a thermal evaporation plant that processed over 24,000 barrels a day of produced water for the sole purpose of extracting various minerals for commercial applications. So why is this relevant? Quite frankly, boiling water, condensing it, it's well understood. It's relatively easy. That's what thermal does. However, the economics associated with thermal evaporation are extremely expensive. Both the CapEx and OpEx and the ability to scale to much larger volumes are economically prohibitive. I'd suggest that because we own and operate one of these plants, we have a very unique understanding of thermal evaporation, okay? So why is this relevant? Why am I bringing it up? Well, you may have heard in the news, some folks because it is simple, are considering using thermal evaporation for desalination of oilfield produced water. I would suggest this is a big hammer approach. We looked at it over 6 years ago. We moved past it to something a little more, I'll call it, surgical. So where do we look? I think most folks in the room would be aware that on a global scale, seawater desalination is a well-understood, well-known process, okay? Overwhelmingly, membrane-based technology is used to desalinate seawater for the simple reason that the economics are very favorable. This desalination technology works very, very well at scale. In fact, you see over here on the -- on your right, a desalination plant in Indonesia designed for over 175,000 barrels a day of seawater desalination. I would suggest that the scale associated with that plant is much more aligned with the throughput volumes we talked about in the Permian. Now in your mind, compare that picture that you see, those throughput volumes to what you saw earlier with the El Dorado plant, our thermal evaporation plant that processes 24,000 barrels a day. Much smaller, much more efficient package, much more economical. However, I think everybody in the room will appreciate that seawater is not exactly the same as oilfield produced water. The total dissolved solids or TDS in oilfield water tends to be much, much higher than seawater. And the organic compounds or TOCs also tend to be different. You can also imagine the different chemicals and compounds found in oilfield water different, again, than what you find in seawater. However, leveraging our more than 40-year history in chemistry service technology, specifically saltwater chemistry, you're going to hear a little bit later that we have the ability to analyze what's in that water down to the parts per billion, okay? We also have the ability to then treat and remove those different compounds, those elements, those minerals so that membrane-based technology can be effectively used. So we had heard previously from Chairman Wright and Kelly with B3 that both the risk and costs associated with produced water disposal continue to rise. Chairman Wright was also kind enough to share with us his views on alternative solutions to disposal and why the timing for these technologies is now.

So it's imperative that as the oil and gas industry, as the Railroad Commission of Texas, we start looking at the possibility of alternative uses for this water to decrease the chances and seismicity or those chances in overpressurization that could make its way to our precious ground water sources and to try to be a supply that could maybe be used to regenerate our surface water sources or aquifers or the vast amount of irrigation needs that we have everywhere west of the 98th Meridian. So industry and the commission both have looked really strong and hard at what are alternative uses for this water. Has technology come far enough for us to treat that water and use it for water needs that we need, especially everything west of the 98th, as I talked about before. When you looked at that smaller circle, what's really caused is for us to move that water as much as we can outside that circle. We know that infrastructure cost increases the cost of disposal. So when we looked at very favorable injection rates a long time ago, today, those rates are much greater because we're having to build the infrastructure and the cost to transport that water further out of those zones. So that price has gone up I would say today, probably in the magnitude of 3 to 4x what we had ever imagined, and when you look at technology of treating this water for beneficial reuses, the economics, which started out 5 years ago being this different are now like this whenever you look at cost. So I think now is the time for the industry that we regulate, the oil and gas industry for us to look at kind of killing two birds with one stone. Let's find out how do we keep from injecting the stuff and causing issues like seismicity, overpressurization, and how do we solve some of the drought conditions that we've been experiencing here in Texas.

All right. So as Chairman Wright stated, right, the million-dollar question, if you will, everyone asked, what about the economics? We had a discussion this morning, John and I about that. You just heard it from the horse's mouth, right? The economics with produced water disposal, the risk and the costs are rising. At the very same time, the risk and cost with disposal or pardon me, with desalination are falling. Continued disposal of produced water, again, fails to recognize that, by and large, clean, fresh water is a valuable resource, again, virtually everywhere in the world. You saw in some earlier pictures, as you can well imagine, unconventional field developments, they have a bunch of land, but they also tend to be in pretty aeried dry climates. So as Chairman Wright mentioned, things like agriculture in Texas, tremendous demand for this water. Who here has heard about AI, right? Data centers, room full of investment bankers, okay? I'm sure everybody is aware of it. So simplistic terms, what does AI need? AI needs land, needs a lot of power. It needs a lot of water, okay? I guess what? Permian Basin has all three in abundance. So the market opportunity for desalinating produced water, I'd suggest is significant, but so is the opportunity to exploit the other minerals in the water. During the process of desalination, those other minerals in the water are variably increased in concentration and create an additional opportunity to further improve the overall commercial aspects of a project. As you'll learn today from Tim and Brady and others, TETRA has the knowledge and proven ability to remove minerals from the produced water streams. In some cases, we've been doing it for several years already. So taking a pause, right, quite simply, if desalinating oilfield produced water at scale was easy, it would have been done already, okay? However, you heard from the Chairman of the Texas Railroad Commission, the cost and risk associated with desalination with disposal continue to rise, while the cost and risk associated with desalination continue to fall. What was once a wide gap has narrowed considerably. The regulatory environment is changing and new measures are being passed to enable the use of this desalinated water for various applications. Our technical ability as a company to desalinate this produced water, it's been demonstrated. We're ready for commercial applications. At the very same time, there's significant market demand for desalinated water from a wide variety of industries. So I suggest this is a time where these favorable market dynamics are converging with TETRA's core competencies. So after more than half a decade of overcoming the aforementioned barriers, we're really excited to announce that we have a viable commercial offering, TETRA Oasis, I remember the photo from the beginning, right, total desalination solution or TETRA Oasis TDS. So as Roy touched on, if you look over here to the left, we are delivering water management services and technologies to customers in unconventional basins today. Again, these are the midstream and E&P operators that are producing this water and are faced with these disposal challenges. As Roy also mentioned, we're a leading provider of treatment and recycling services and technologies. These are the first step in the desalination process. We operate saltwater-based chemical plants. This is the basis for future desalination plants. We've evaluated and exclusively licensed specific technologies because we moved past thermal evaporation 6 years ago. We're going to talk in the next couple of slides a little bit about vacuum membrane distillation, VMD. You may have heard the term KMX. In fact, the CEO of KMX, Zach, he's sitting there at the back smiling, okay? So take an opportunity to say hi to Zach. The next one is a bit of a challenge, Osmotically Assisted Reverse Osmosis. Say that a bunch of times really fast in front of a room full of strangers. I practiced that one a couple of times. So OARO is what we're going to go with right now, okay? Again, we're going to talk about these a little bit later. So you get into post treatment, we have the proven ability to analyze, treat and desalinate this water down to a beneficial reuse spec as designed by our customers. I'll call out for a moment, ammonia. So in some cases, dependent on the beneficial reuse application, you want to remove that ammonia. We can do it. We can do it easily. However, I would suggest in other beneficial reuse applications like agriculture, what is ammonia? It's a fertilizer, right? A little bit of ammonia in that water as a fertilizer is of more value to the agriculture industry. So you wouldn't spend the time or money to remove it, okay, understanding those economics. We have the proven ability to extract and commercialize minerals from produced water. Again, this can help the economics. So it's because of all these core competencies that we believe that TETRA is ideally suited to provide a complete end-to-end desalination solution. left to right. Again, these are our customers today. So I mentioned previously that we had exclusively licensed two different membrane-based technologies, why? Like most things, there's pros and cons to everything, right? We wanted to leverage the strengths of these different technologies and minimize some of the areas that were less strong, okay? So in this situation, our unique patent-pending TETRA Oasis TDS utilizes a hybrid type system where we take advantage of the OARO technology at the bottom left, where the economics, both CapEx and OpEx in this electrically driven technology much, much lower, okay? As we concentrate up the water, move up to the right, the economics with a vacuum membrane distillation solution, VMD, become much more attractive. So you can see we shift over. Again, a hybrid solution, taking advantage of the strength of both of these technologies from a CapEx and OpEx standpoint. Another distinct advantage of our TETRA Oasis TDS is the multi-barrier approach as it relates to contaminants. Our pretreatment technologies remove these contaminants. However, anything that might still remain in that water is then effectively captured by the membranes themselves before it ever even reaches the post-treatment process. We've done extensive internal testing, a broad range of different waters, broad range of different applications. We've had third-party labs test our desalinated water, okay, even performing what's called a whole effluent toxicity test, WET test for short. Basically, what they do is they subject freshwater species of fish to the desalinated water for acute and chronic testing, see if they swim and survive. I'm pleased to announce that they did, right? The water is extremely clean. In fact, how do you like the water you're drinking today? No, we didn't go that far, but we could. So as mentioned, if it was easy, anybody could do it, it would have been done a long, long time ago. However, we've been really focusing our efforts for over 6 years. We have a strong market presence in places like Oklahoma. We identified the issues with disposals such as seismicity, things like that a long time ago and predicted that these would manifest themselves in a much larger way in places like the Permian Basin. So you can see here, we exclusively licensed these technologies over 3 years ago. That was before anybody else was even talking about desalinating, running field pilots, things like that. We had already locked in agreements with key partners such as Zach, okay? Do I mention field pilots. We ran one in South Texas successfully over 3 years ago. We then spent next couple of years testing, validating, putting the solution through its paces before ultimately, we came out and said, listen, we've got a solution. We're commercial. We're ready to go. Since then, very proud to announce that we have a collaboration with EOG. Since then, you've heard Texas passed Bill 49 that enables this water to be reused in a variety of different industries. So with our unique set of core competencies, we've been working at this for some time to again, bring an economically viable solution, and because the clicker takes so long, you had a long time to look at that time line. So you might have picked up the fact that earlier this year, we also won a Hart Energy award, a Meritorious Award for Engineering Innovation in the water category. You heard earlier from Roy, we've also won awards for TETRA CS Neptune, which he touched on, right? We're very proud of this. We're bringing solutions to an industry-wide problem. So everybody wants to know what does this mean, right? What's the size of the financial opportunity? Stephen is on his calculator already, right? He's trying to do the math. So let's forget unconventional fields overseas. Let's forget right now, those are even an opportunity. Let's not even consider other unconventional fields in the U.S. Forget the fact that water in the Permian is going to continue to rise. So for a moment, assume that the water that's disposed of in the Permian today, that's an addressable market, 6.3 billion barrels. A certain percentage of that, assume what you want, will go towards desalination. Then assume those volumes can be treated to a desal spec for $1.50 to $2 a barrel. Then assume everything I've said today about TETRA's core competencies enables us to participate at a certain level in this market, okay? Again, make your own assumptions. So I would suggest that regardless of what assumptions you make, this is an overall meaningful opportunity for TETRA. As Brady mentioned, we are targeting 500,000 barrels a day by 2030. During our recent Q2 earnings call, Brady and Elijio announced that we are in the process of finalizing the engineering design for a 25,000 barrel a day desalination facility, specifically for the Permian, okay? The design will be scalable to address much larger volumes in the future. With respect to capital, that's the next question that Elijio gets, and we'll leave him to cover that at the end of the presentation. However, I would suggest that our customers have varying capital strategies in terms of how they deploy their money. So as such, we're going to have flexible commercial models. Again, we're a service and technology provider. So some models in order to deploy this very, very quickly to market, we're going to have long-term agreements that have both an operation and maintenance component in there along with a licensing fee. Again, we'll touch on this model a little bit later in Elijio's presentation. All right. We're getting near the end. And of course, we have a break. So we're almost there, bear with me. So really, why TETRA? Why now? As you heard from both Chairman Wright and Kelly with B3, again, the cost and risk associated with disposal are increasing. The poor space is being exhausted and the downhole pressures continue to rise. The demand for this water continues to increase while the regulatory framework evolves to enable various industries to use this reclaimed water in their operations. Mineral extraction provides an opportunity to further improve overall project economics while in parallel, addressing an area of strategic importance here in the U.S. and other places in the world, and all of this aligns again with TETRA's core competencies around service, technology and saltwater or fluid chemistry. All these market forces are converging at exactly the right time. So in terms of next steps, we'll finish the engineering design for the 25,000 barrel a day plant. We'll continue to move the ball down field towards our stated targets of processing 500,000 barrels per day of produced water by 2030. As Brady mentioned, we'd suggest that's a relatively conservative estimate. It's a relatively small volume when you consider the overall produced water volumes that are being disposed of today. However, it's a start. And I would suggest, as you can see on the screen, this would be a meaningful opportunity for TETRA. So in summary, unconventional oil and gas production generates a massive amount of water. Permian, 100 NFL football fields every single day, causing significant issues like you heard from the Chairman. An increasing amount of that water is being recycled and treated for reuse and frac. That's an opportunity for TETRA itself. However, again, the vast majority of this water is being disposed of as a waste. The risk and costs associated with that disposal continue to rise to the point that the disposal capacity in the Delaware Basin could be exhausted in less than 4 years. You heard that from Kelly. TETRA Oasis TDS is a viable alternative that transforms this waste into a resource with broad market applications. TETRA's unique set of core competencies, customer base, coupled with the markets that we already serve, position us well to participate in a meaningful way in this market opportunity. So in closing, I appreciate your patience. It's a cramped room. It's been a long morning. We're going to take a break. But I suggest that as you sit here today, the information and data presented might seem overwhelming and sometimes even complicated. However, I'd offer to you that the One TETRA 2030 vision is really quite simple. Again, focus on service, technology, saltwater chemistry. That's how we're applying it into all these opportunities. That's the basis for what the company is paid for today and the basis for what we're going to be paid more for in the future, okay? Thank you. [Break]

Okay. So good morning again, and thank you all for joining. We've had the Gigabyte Mega Whistle folks in, and we're going to see if this works a little better. So my name is Tim Moeller. I'm the Senior Vice President for our Industrial Chemicals and our low-carbon energy activities, and my 40-year career has spanned over upstream oil and gas, industrial manufacturing, as well as oilfield services before getting to TETRA in 2018. Point in my career in terms of coming to TETRA, why? Like many teams, first, it was a coach. A lot of confidence in this coach. As you've heard from my two Canadian colleagues, we've been fairly successful in our prior careers. Before coming to TETRA, I was the Chief Commercial Officer for Halliburton, had over 5,000 people and responsibility for about a $10 billion checkbook. But it was the coach. It was the atmosphere, my 40 years in terms of this team, the collaboration, we're all competitive, we'll challenge. And the other piece is the opportunity that this company has, and I'll talk some about that. So first question is, I'm going to talk about our industrial chemicals and our low-carbon energy activities. On the industrial chemical side, how many people in the room think a significant piece of the revenue for industrial chemicals is oil and gas focused. A few. I'd advocate that our industrial chemicals business is probably perhaps the most misunderstood and maybe the least appreciated in terms of the company's portfolio today. Over the next 45 minutes, though, I hope to change that. Unlike the conversations prior to the break, I want you to take note in terms of how much we talk about oil and gas versus other industries. We definitely have exposure to the oil and gas side and our industrial chemicals, but I think you're going to -- we're going to show you in terms of what else we're exposed to that you may not be aware of. Today, our global calcium chloride business and its 10 plants roll up and make a significant piece of our Industrial Chemicals segment. We'll provide deeper insights, and we'll talk about the value that it's not only delivering today, but more importantly, in terms of the future. We'll talk about our low carbon energy segment, which we're pretty excited about that includes our new stationary energy storage products. We'll talk about our 40,000 acres of brine leases in Southwest Arkansas and the richness that they are and what they bring. And we're going to talk about our new bromine extraction plant that we're building south of Stamps, Arkansas that's under construction currently. It's scheduled to be mechanically complete by late 2027 and first production in 2028, which will be a meaningful transformation for this company, because starting in 2028, that plant will start supplying tetrabromine to our existing West Memphis, Arkansas plant, where we've been producing all of our brominated completion fluids for the past 35-plus years and where we produce our stationary energy storage products today. So the -- in 2028, which today, we -- as you heard earlier, we get our elemental bromine from third parties through a long-term agreement, starting in 2028, that will be a meaningful step change when we start utilizing our own and something Brady will speak to more later. So as Brady highlighted earlier, our transformation from a predominantly oil and gas service company to a more diverse value enterprise is well underway. I asked a question in terms of -- earlier in terms of the industrial chemicals. As we walk through the information ahead of us, I think you'll start to understand and appreciate and recognize just how far TETRA has come and all the exciting things ahead of not just for the company, but for our shareholders. This transformation has required new thinking, new horizons and new product offerings and now a new organizational structure, as we've told you. I will have the honor of the responsibility for our new TETRA Specialty Chemicals & Minerals segment, which will combine our calcium chloride business and our energy storage products business along with our Mineral Extraction business into a segment that will have stability from our calcium chloride business, but also have sustainable growth from that stationary energy products and mineral extraction business. Earlier in my career, I was fortunate to be a part of another company that went through a pretty significant transformation. We took the company from $2 billion in revenue to $50 billion in revenue in a handful of years. By anyone's standard, that was a significant transformation. It was an exciting time, and I would tell you the transformation underway here at TETRA has a lot of similarities to me, and I'm really excited about being a part of it personally and a big reason I came to TETRA. So let's look at the strength of this new segment and what it will enjoy. Our calcium chloride business has been known historically for fairly consistent financial performance. In fact, over the past several years, the business has been -- the business has been delivering at all-time highs. That's pretty impressive when you consider the business has been around for 40-plus years. Our energy storage products business has meaningful traction through our newest product offering, TETRA PureFlow. I'm going to tell you a lot more about that, but it's an ultra-high purity zinc bromide that's utilized in the feedstock for zinc bromide battery electrolytes. Today, we are 1 of 2 in the world, the only U.S. manufacturer in the world that can make that high-purity zinc bromide, right? If you kind of look at how we got there is that, that journey started about 4 years ago, as you heard earlier. It hasn't always been smooth, and it hasn't always been straight. But I would tell you that relentless dedication and that strong technical capability and collaboration we've talked to and partnerships like we have with Eos Energy has gotten us there. Put it in perspective, Eos' stated objective is to scale their production to 8 gigawatts per hour. If they're successful, just to put in perspective, that represents somewhere around $250 million a year in terms of revenue for TETRA. Equally exciting is that 40,000 acres of Smackover brine leases in Southwest Arkansas that we control. It contains extremely high levels of bromine, lithium, magnesium and manganese, 3 of these 4 are on the U.S. critical minerals list. This brine is arguably some of the richest mineral -- some of the richest brine in terms of mineral content in the Lower 48, and we're fortunate to have it. And it's not just the value of those minerals by themselves, but it's the value of what we as TETRA can do with them. We talk about our bromine in terms of we take that bromine and we turn it into completion fluids and my colleagues talk to you about where we are in terms of leading on the completion fluids side. We've talked in terms of the energy storage products, and we're going to talk about how we're continuing to lead in the market position we have there. So as evidenced by this slide, our transformation is more -- our transformation is a more diversified enterprise is well beyond just a vision. For instance, today, most don't realize, but 85% plus of our revenue for our calcium chloride business does not come from the oil and gas industry, but rather from other industries. We generate our revenues from places like food, agriculture, industrial and road. Oil and gas is definitely a piece of our revenue stream, but these other industries, we participate in heavily. And as you recall earlier from Brady and Roy's commentary is that the chemicals is a meaningful portion of the portfolio, right? Our vertical integration and geographical presence and capabilities enable us to service and grow a global business, 40 years of delivering quality and operational excellence has given us strong customer relationships, which bring us a higher barrier to entry, if you will, in terms of others. Today, we enjoy the #1 market share position in Europe, the #2 market position here in the States and the leader globally overall as it relates to calcium chloride. TETRA has long been known for its ability to deliver custom engineered solutions. You heard about some of them in terms of Neptune, SandStorm versus just the products that we produce. Nowhere is that more evident than in our food and agricultural industry offerings. I think all of us would agree in this room, there's probably nothing more critical around the globe than the world's global food chain and the quality of TETRA's calcium chloride product offerings are contributing meaningfully to that. I can confidently say that everyone sitting in this room today has consumed product that TETRA calcium chloride enabled. Matt relieved you and told you that wasn't our desal water, but I can tell you that I can't tell you, although tried is that whether or not that water in front of you, those paper products in front of you have TETRA calcium chloride involved in them. But TETRA's calcium chloride today in terms of these spaces, everything from canned tomatoes, cherries, nuts, cheeses, bottled water and many leading breweries around the world all utilize TETRA calcium chloride. While our TETRA label may not be on it, recognize that TETRA calcium chloride is making them happen. Beyond that is that our calcium chloride also enables the world around us. I talked about the water. Many of municipal water treatment facilities utilize our calcium chloride for pH adjustment. The pulp and paper industry utilizes our calcium chloride to make all kinds of paper products. In the construction industry, our calcium chloride enables the concrete that we're standing on and the roof tiles that are up over our head. Industrial dehumidification, those little white bags that you get in your Amazon box and you wonder what's in that and where did it come from, calcium chloride. Road surfaces, especially in this part of the world in terms of de-icing in the wintertime, dust control in the summertime. Our calcium chloride also enables the production of Kevlar that makes bulletproof vests, protecting our militaries around the world and all our law enforcement officers every day. While it may not be overly visible to you, TETRA calcium chloride is in the shadows of the world, and we're enabling a lot of critical needs around us every day. These maps on the right show where our 8 calcium chloride plants are located in our numerous terminals around the world. These manufacturing and distribution facilities allow us to produce and deliver product globally and diverse customer bases in the most efficient and cost-effective manner. They're -- thinking differently always doesn't come easy to a 40-year-old business, but we're proud of what we've done and what we've accomplished over the years because we've worked hard to optimize our assets and our operations. We've learned how to do more with less and solve customer problems differently and more efficiently. Our supply chain expert in TETRA is meaningful. Several of our senior leaders prior to coming beyond myself, managed multibillion-dollar supply chains in their prior careers. We've leveraged that talent and that knowledge, resulting in long-term contracts for not only our raw materials, but our services, and that's resulted in competitive advantages for the company. These are our largest -- 5 largest -- actually 6, if you will, calcium chloride of the 8 around the world. Our Kokkola, Finland, our Lake Charles, Louisiana and our Parkersburg, West Virginia plants use what's called a dissolution process. We take hydrochloric acid, we take and react it with high-purity limestone and it makes calcium chloride. TETRA is the largest consumer of hydrochloric acid in the Lower 48, bigger than the oil and gas industry. And my former colleagues back at Halliburton happen to know that given being the former Chief Procurement Officer. Amboy, Cadiz, California. These are our solar evaporation plants in the middle of the Mojave Desert. Solar evaporation, nothing else. The only organic calcium chloride in the globe, right? So they look like blue swimming pools. So this is -- that's actually -- as they go -- the brine goes through the actual 18-month process, it changes colors. Matt talked to you about the El Dorado facility and our mechanical evaporation process there. So we have two others dissolution plants in Europe. But what you can see here is that we manufacture our calcium chloride in a variety of ways, and we have flexibility and that brings us advantages. We spoke about the historical consistency of our financial performance coming from the calcium chloride business. A meaningful contributor to that is the diversity of the industries and the customers in which we serve, which gives us the ability to provide a more stable and consistent business result. I'd advocate that capability. It comes -- becomes the most important to us when we hit our times of challenge. No more challenging 2020 in the COVID crisis, right, is a big piece of the reason that we stay cash flow positive, our calcium chloride business. In fact, in 2020, our European operations set an all-time record. They've set several cents, right? But in time of need, the calcium chloride business has held strong for us. Taking and looking at history, our calcium chloride business has grown faster than GDP since 2016. In fact, 4 out of the past 8 years, we've grown more than 10% year-over-year. That doesn't just happen. Both our European and North American businesses have performed well and delivered -- have performed well in delivering these historical results. Those results are largely grounded in a continuous improvement mindset and culture of not just the company, but our employees. We've talked about the One TETRA employee, of all the places I've been, this staff and our employees around the world truly believe it's a powerful advantage for us. We continuously challenge ourselves internally around our organizational and operational paradigms while trying to keep an eye focused on the windshield in terms of new opportunities. I spoke of our supply chain execution and how our negotiations and execution of long-term raw material agreements have provided us competitive advantages and supply continuity, allowing us to provide longer-term pricing and supply surety to our customers, again, an advantage. You put all these together, and we've become better, faster and more efficient across all of our businesses, creating that competitive advantage against any others across the globe. While we're very proud of what we've accomplished, if you will, in the rearview mirror in terms of the Industrial Chemicals segment, -- we're about -- we're equally as excited about the opportunities in front of us. We still believe we have unmet needs in upselling our product in terms of higher technology and more demanding operational needs that are yet unmet. U.S. chip and data center expansions are providing us with a meaningful opportunity of growth, and we're pursuing those. All these things combined will allow us to continue to grow not only our top line, but also more importantly, our bottom line in the calcium chloride business as we transition to the new segment. So as we turn the page and sort of look at our low-carbon energy products, this is probably one of the most exciting verticals around stationary energy storage and our new product offerings. This new vertical presents a meaningful and sustainable growth opportunity for our Specialty Chemicals and Minerals segment that's ahead of us. As I said some 4 years ago, we identified a new growth opportunity vertical where we felt we could apply our core competencies and capabilities to create a product that would -- to meet a critical need. As you know, that need was in stationary energy storage space and the product that was required was an ultra-high purity zinc bromide. We're talking parts per billion level of impurities, extremely -- even to be able to detect at that level is an art, right? And we're able to do it. And how do we get there? We've been making zinc bromide for 35 years for the oil and gas industry. As Brady talked to, our fluids chemistry expertise, we believe, is as good as anybody, if not second to none. We leverage those two, and we developed in short order what the industry knows today is TETRA PureFlow and PureFlow Plus. We have a strong conviction these two products based on testing and customer feedback are superior to any others in the marketplace. Purity is one of the #1 critical enablers in zinc bromide battery performance, and PureFlow and PureFlow Plus are leading the way. So the stationary energy storage vertical is a multibillion-dollar market today and growing rapidly. Utility scale storage has had an impressive growth and behind me is a chart for the U.S. market alone, which has grown 70% of CAGR over the past 5 years. Even more encouraging is forward-looking, that growth is projected to -- over the next 10 years to be 25% CAGR. That's a meaningful market to go after, and we're well positioned with our energy storage product offerings and our blending capabilities to capitalize on this growth. Our PureFlow and fully blended battery electrolyte business has seen meaningful traction already today and growth. And we're excited about the business opportunities that are ahead and the market position that we've established. This picture on the right is our West Memphis, Arkansas bromine conversion plant I spoke to earlier. This is a plant where all of our brominated completion fluids for the oil and gas industry as well as our Tetra PureFlow, PureFlow Plus and fully blended electrolytes. It all happens right here. This team has done a remarkable job. As you can see on the slide, in terms of the innovation, our TETRA PureFlow Plus is patent pending given the unique manufacturing process that our team came up with that was needed in terms of supporting the full battery electrolyte. Today, we utilize both TETRA PureFlow and our PureFlow Plus as main feedstocks for that fully blended electrolyte. There are other elements that go in it. It's kind of like the Coca-Cola formula. In fact, we have to, by name to Eos, tell who actually gets to see the formula. I can tell you of all the executives and management team in the room, I'm the only one that has seen that formula. So -- but we take all that, put that together and we send back, if you will, a complete electrolyte. So let's talk about the advantages of the zinc bromide battery versus the traditional lithium ion battery and why we have -- we're encouraged in terms of this space, is that when you look in terms of, for instance, in terms of duration, zinc bromide-based zinc remote-based battery technology just simply is much more suited for this type of long duration, 6 hours and down, right, is a sweet spot in terms of lithium. When you push it past that, you get into sort of operational challenges, such as thermal runaway that you probably have heard of and know of. if you're not aware, 50% of all bromine produced in the world today goes to make brominated fire retardant. All those cell phones you have in your hand, the plastic around them have a brominated fire retardant around them. This TV and this monitor have a brominated fire retardant around them. Every coating on every electrical wire has a brominated fire retardant around them. Silicon chips, the injection molded plastic in your car, all have brominated fire retardant in them to keep them from catching on fire. What does that mean? That means that zinc bromide-based electrolyte has literally no threat of a thermal runaway that lithium-ion batteries are known for and are experiencing. Just some 45, 60 days ago, the second largest lithium stationary energy storage facility in California caught fire, right? Probably problem is, when they overheat and self-ignite, there's not enough water to put them out. Secondly, the thermal fumes off of them will clear a place like New York, will clear 50 or 60 blocks because of the fumes that are put off of them. So some real advantages from that standpoint as it relates to the zinc bromide battery technology. As it relates to recyclability, TETRA has been taking and recycling brominated fluids out of wellbores for 40 years, right? Real forward, zinc bromide electrolyte, we have one of the battery cases for Eos, as you can see. We put it into an injection molded case. They put an injection molded case, put it on the shelf, bring it back to us after 10 or 20 years versus taking and putting that fluid down a wellbore and everything mother nature can throw at it. We have 40 years of experience and capability that we're going to apply in terms and are applying in terms of the ability to take and recycle that electrolyte. If we can't bring it all the way back to part per billion level, my colleagues on my left, you're right in terms of the completion fluids, we can use it every day and all day in deepwater. So we have that ability to take and bring the total recyclability to the zinc bromide battery electrolyte as well. In terms of -- as you can read here and understand to some in terms of why they're continuing to gain more and more traction. Some of those are the benefit of being 100% manufactured in the U.S. with 91% domestic content adds to that appeal. They're one of few, if you will, in terms of alternatives at a commercial scale to non-lithium ion energy storage technology. I talked to you in terms about we're 1 of 2 in the world that can produce the high-purity zinc bromide. We're the only U.S. manufacturer that can produce that product. We contribute meaningfully in terms of that 91% content. A lifespan of 20 years, coupled with deep charge and discharge cycles without degradation. I think back to the purity of our product, adds to the 25% lower levelized cost of storage. Our electrolyte volumes have increased meaningfully. We started way back with totes. This picture on your right is now bulk trucks. So we now send bulk truckloads of electrolyte to Eos in their Pittsburgh plant from our West Memphis plant, which is another advantage in terms of we don't put it on a train, we don't put it on sea, et cetera, is that it leaves our West Memphis, Arkansas plant and drives straight to the Pittsburgh facility, unloads. That's about as short a supply chain as you're going to get. This is the chart from Eos' Q2 earnings presentation. We'll defer any validation questions to our Eos colleagues. But as you can see by the numbers, the meaningful commercial traction that Eos has made. Their transformation continues and is progressing and is encouraging as it relates to us as TETRA. Eos' stated objective in terms of the -- for this year is to have their first production line up and fully automated, resulting in having 2 gigawatts of production annually in place as they turn out of 2025. That, coupled with a backlog of $670 million plus and almost a $19 billion pipeline, along with data centers continuing to ramp and expand as well as the capabilities and safety aspects of Eos all becoming recognized and realized gives us confidence in our energy storage future ahead. So the zinc bromide energy storage battery market is a major opportunity for TETRA. Make no mistake about it. We are one of only 2 global OEMs in the world capable of producing this at scale today and the only U.S. manufacturer. Our partnering with Eos has resulted in a long-term supply agreement between the two companies where TETRA supplies 100% of our TETRA PureFlow, that high-purity zinc bromide and a minimum of 75% of their blended electrolyte needs. If Eos is successful, as I said earlier, in hitting that 8 gigawatt capacity, that equates to $250 million of revenue opportunity annually for TETRA. The energy storage market is growing rapidly and TETRA's vertical integrated supply chain and technical expertise provide us a real competitive advantage in this space. We have every reason to be optimistic given where we are and the capabilities that we possess. We have just begun, and I would advocate you need to stay tuned. Thank you for your time. I'm going to turn it back over to Brady.

Thanks, Tim. Before turning things over to Elijio for a financial recap, I'm going to close out our segment discussions by covering our critical minerals and where we are with our Arkansas bromine project. So I think one of the smartest decisions that former TETRA executives ever made was securing a key Arkansas brine acreage back in the 1980s. At the time, TETRA was starting to use bromine in its completion fluids business, and when Dow Chemical put its bromine plant and acreage up for sale, due to the high concentration of a very few number of bromine suppliers, the DOJ intervened and prevented further concentration of existing suppliers by forcing it to go outside to another party. Ultimately, because TETRA was a major user of bromine for energy production, the acreage was awarded to TETRA. Over the years, TETRA negotiated favorable bromine supply contracts with the existing suppliers, so the acreage was never developed until now. The acreage shown on this map is strategically located with Albemarle to the East, ExxonMobil for their lithium interest to the South. And what isn't shown here is Chevron's latest acquisition leases to the West. Our acreage is divided into two parcels. There's a 6,900-acre evergreen unit parcel, which is a partnership with ExxonMobil, where we own 65% of the minerals and Exxon retains the other 35%. The other parcel to the north of about 35,000 acres is where TETRA negotiated a royalty agreement with Standard Lithium who have now formed a partnership joint venture with Equinor to develop the lithium out of our acreage. We get a 2.5% royalty from future products from that lithium production. We'll talk a little bit more about that. But it's important also to know that TETRA retains all the ownership of all the other minerals in that acreage. It's just the lithium where we have the royalty agreement. As mentioned, the Smackover brine has very high salt saturation, and it contains a wealth of minerals. For all the reasons we've discussed, the mineral we find most valuable short-term to TETRA is bromine. However, lithium, magnesium and manganese exist at very attractive volumes. The lithium concentrations are among the highest recorded in U.S. brines. And although lithium prices have been under pressure for the past few years, the demand outlook remains strong and there are many reasons the U.S. will want to secure its own source of supply. What might not be widely known is that magnesium and manganese are essential to U.S. industry and various government agencies, including the Department of Defense. Currently, there is almost no U.S. production of magnesium or manganese with about 80% of the world's magnesium supply coming from China. As noted on this slide, all 3 minerals, lithium, magnesium and manganese, are listed as critical minerals by 3 U.S. agencies, all 3 agencies: the Department of Commerce, the Department of Defense and the Department of Interior. Earlier this week, we released an updated definitive feasibility study with updated and upgraded resource values that are displayed on this slide. This was a very positive report further verifying that the mineral richness in our acreage. In summary, we've further upgraded the bromine resources by increasing the measured and indicated by 173% and the lithium resources by 163%, also measured and indicated. We've also added new resources of magnesium and manganese to the report, which were not previously published. On September 3, Standard Lithium and Equinor released their definitive feasibility study on the TETRA lithium acreage, which included proven and probable lithium reserves as well as measured and indicated. As noted on the slide, these are the reserves and resources where TETRA receives the 2.5% royalty on all future production. I'll provide a brief update on our bromine project shortly. But since TETRA is going to be in the bromine -- the elemental bromine business, we thought it would be valuable to give a quick overview of the global bromine market. In 2024, the global bromine market was estimated at about $2 billion, with roughly 60% of the world's bromine production going into the fire retardant markets, as Tim highlighted. But other segments include consumer polymers, tires, energy, and others like pharma. Looking ahead the electrification of everything, including EVs, is expected to be a major growth driver due to bromine's valuable fire-retardant properties. As Roy discussed, growth from deepwater completions are going to continue to require more bromine. As Tim mentioned, energy storage is also a whole new market for our future bromine growth. The supply side of bromine is interesting, but I would say somewhat worrisome. As I mentioned, TETRA was awarded the bromine-rich brine leases in Arkansas through a DOJ consent decree back in the 1980s. That figures back then and even now an estimated 77% of the global bromine supply comes from 3 companies, Israeli Chemical Company and Albemarle from the Dead Sea and Albemarle and Lanxess Chemical from the Arkansas Smackover brines. The largest contribution estimated at 54% of the global supply comes from the Dead Sea, where the main concern is its ongoing shrinkage, which poses a serious environmental challenge. Water levels in the Dead Sea have been decreasing since the 1960s and are currently receiving about one meter per year. As this graphic on the slide shows, if this trend continues, there are real risk to future bromine supplies from the Dead Sea. Another estimated 21% of global supplies comes from China, which is expected to continue to decline and another 15% comes from the Arkansas Smackover brines, where production from the existing producers has been ongoing for almost 50 years. That longevity bodes well for TETRA's next 50 years with our virgin brine, but the resources from the existing acreage is well into their decline curves. The demand for deepwater completions and estimated future demand is forecasted to nearly double TETRA's bromine demand from today to 2030. Again, while existing supplies look challenging, it's one of the reasons, clearly why we have decided the need to develop our own bromine -- elemental bromine supply. In August of last year, we published a comprehensive SK 1300 definitive feasibility study for the TETRA Evergreen Brine project in Arkansas. The key economic analysis as shown on this slide for a total investment of roughly $270 million for bromine plant and upstream wells and pipelines, TETRA is estimating an incremental midpoint revenue increase of about $230 million and a midpoint $105 million increase in EBITDA. The bromine plant capacity of 75 million pounds per year will provide TETRA with more than twice our current long-term supply agreements with bromine. It will enable our Completion Fluids business to continue growing with the deepwater markets and help us keep pace with the substantial electrolyte the most demand growth that is forecasted. The EBITDA improvement not only comes from additional volumes, but from a lower cost base compared to our long-term contracts and the spot market supplies we are buying. We're progressing well with the construction of the plant. By the end of this year, the bromine tower that's shown on the left will be installed and erected at our plant site just outside of Stamps, Arkansas. That marks Phase 1 of our project, which is on schedule and fortunately, under budget for completion by year's end. Phase 2 will include the tower and all the major equipment supporting the bromine plant with completion projected by the end of 2026, as shown in the middle picture. The final phase, Phase 3 will involve completing the rest of the plant, including transporting brine to and from the wells and delivering elemental bromine to our manufacturing facility in West Memphis. This project is on track for completion by the end of 2027. Our current plan is to have the plant ready for startup at the beginning of 2028. Some of the latest updates from the project. Again, we announced earlier this week the updated resource report showing the substantial 173% increase in bromine resources. As discussed, we are on track for completion and start-up in '28. But one significant opportunity for the project is aligning our upstream requirements with standard lithium and Equinor. Remember, TETRA owns all the bromine and all the other minerals in the standard lithium acreage as they are required to make that brine flow available to us after extracting the lithium. As of now, standard lithium in Equinor plan to bring their lithium plant online in 2028, same timing as our bromine plant. If standard lithium stays on that schedule, TETRA could potentially avoid a substantial portion of the $84 million that was shown in the previous slide in our upstream and pipeline costs. Now there may be some offsetting expenses for reheating the brine before the bromine processing, and those engineering studies are underway. But a Standard Lithium and Equinor approach FID for their project we will complete the engineering to match that time line, and we'll update our DFS report accordingly. Now moving on to lithium. We mentioned that we have 2 different acreage parcels, each of them has a different economic benefit to TETRA. The Standard Lithium Phase 1 unit is projected to produce 22,500 metric tons of lithium carbonate per year, applying the 2.5% royalty to their estimated LCE price of $22,400 per metric ton, yields a cash contribution to TETRA of $12.6 million annually. We have included that number in our 2030 targets that we shared with you. The other future contribution comes from our 6,900 acre partnership with ExxonMobil. Again, TETRA is the operator of the unit and controls 65% of the minerals while ExxonMobil controls the remaining 35%. The lithium resources from this unit have been increased by 163% from our previous resource study to 585,000 tons of LCE. We're currently drilling the unit's first production well and expect to complete it sometime in October. Although considerable work has been done to complete test and validate several direct lithium extraction technologies, a final decision along with our partnership in ExxonMobil has not been made yet. Since we're using our cash flow -- back one here. Since we are using our cash flow to fund the bromine project, we'll continue to assess lithium prices before deciding on a development time line. For now, we are not including the financial benefits of a future lithium plant, but we have modeled the capacity of the Evergreen unit to produce roughly 10,000 metric tons per year. At a 65% ownership using the same futures price as standard lithium, this has the potential to generate another $150 million in revenue at very attractive margins. The future plans for other mineral extraction are still in development, but the main advantage for TETRA as it is other minerals like magnesium and manganese are found in the same Smackover brine flow that will be used to produce bromine and lithium. We've shown that although a small company, we have the wherewithal to form key relationships with strategic companies. We intend to continue that trend of forming partnerships for the development of other key minerals, and we're currently in discussions with companies for the extraction of manganese and magnesium from our Smackover brine as well as iodine on the back of our TETRA OASIS solution for produced water. Closing out for the segment discussion. The new future segment of Specialty Chemicals and Minerals, we see a near-term target to get our bromine tower erected before year-end, deliver 2 gigawatts of electrolyte to EOS in 2026, established partnerships with the extraction of magnesium and iodine finalized the bromine plant and reap the many benefits that we've discussed. The 2030 target for this segment of over $400 million does not include future lithium of nearly $150 million or the magnesium or manganese opportunities that we discussed. But ultimately, we believe is that all 4 minerals will eventually be extracted from our same rich brine flow of the TETRA acreage. Thank you, and I'll turn it over to Elijio.

Thank you, Brady. Good morning, everybody. Why did we select today as the day to have our Investor Day? I had mentioned to many of you that over the last couple of years, that only when we had made significant progress on our key growth initiatives, will we host an Investor Day and lay out management targets and goals. Before then, we're going to focus on engineering efforts, financial analysis, gaining customer traction and preparing the balance sheet to achieve our goals. We've accomplished that, and here we are now ready to commit to targets. For those of you that I have not yet met, let me give you a quick background on myself. I started my career in the chemicals industry working for Dow Chemical. And like Matt, I also had a long career working almost 18 years at Schlumberger, becoming controller for their global seismic business based out in London, before being promoted to our western hemisphere seismic General Manager. I then worked for a publicly traded company where we grew revenue from $600 million to $3.1 billion in a short time period. I've seen and been part of a high-growth transformational story that created significant shareholder value. And I'll also worked as CFO for two private equity-sponsored companies who are managing cash was the key objective. I'm going to close out the session with a summary of the key financial targets that we are working towards. At the beginning of the session, Brady laid out the goals and targets. Roy, Tim and Matt went through the specifics of our market position, our technology advantages and how we can take advantage of our fluids chemistry to transform TETRA to create significant and sustained shareholder value. Matt broke it.

It was like that when I got it.

All right. Roy broke it then. Let me go back to my -- all right. Here we are. Our objective is to more than double revenue by 2030 and do it gradually over the coming years. Our objective is to increase adjusted EBITDA to over $300 million with margins increasing from 18.9% to approximately 26%. This would result in earnings per share between $1.20 and $1.30. And free cash flow in excess of $100 million by 2028 after the bromine plant comes online, growing to approximately $145 million by 2030. The free cash flow yield based on the current share price could approach 20%. How do we get to $1.25 billion? This is the waterfall graph that I had mentioned to many of you that at one point, we would publish. This graph brings together what you heard from Matt, Tim and Roy and lays out the path to $1.25 billion in revenue. For the existing businesses, we have of energy services in calcium chloride, we are conservatively making an assumption of mid-single-digit organic annual growth. Our two new revenue streams of electrolyte sales and water desalination plant will drive the expected significant increase in revenue. Note that we are assuming some of our current lower-margin business, mainly the water transfer business will be rationalized as it does not meet the earnings and cash flow performance that we are expecting from all our future segments. Note also that we have not assumed that we are producing and sell lithium from our dedicated Evergreen unit that we share with ExxonMobil, as Brady mentioned earlier. When it comes to fruition, it could add $150 million per year in revenue for TETRA's share of that unit. And how do we get to the EBITDA targets? This waterfall graph provides a path towards taking our adjusted EBITDA to over $300 million. I will go over each of the segments in more details in the next few slides. It is our expectation to begin reporting 3 segments most likely in 2027. The new segments are intended to increase the visibility to our shareholders of each of the existing businesses and the growth segments. The first segment will be specialty chemicals that includes our current calcium chloride business and long-duration battery storage electrolyte sales. And in the future, will include revenue from minerals extraction and from lithium. As I mentioned, this does not include the potential revenue and earnings from the sale of lithium from our Evergreen unit, but it does assume expected royalties from Standard Lithium/Equinor. We are very encouraged by the progress we are seeing by EOS, both in raising capital and in automating the first line, then taking steps to begin the second line. We are conservatively assuming that we will be shipping electrolyte equivalent to 8 gigawatts of production for 2030, but it is very likely that they will get there sooner than 2030. Between now and then, we are assuming a gradual ramp-up to 8 gigawatts by 2030. We expect to bring our bromine plant online at the end of 2027 and in 2028, will see a full year benefit of additional volumes with lower cost of goods sold as we phase out our LANXESS volumes and eliminate open market purchases. The sum of all 3 reflects a revenue CAGR of over 25% with EBITDA margins above 28%. The next segment will be water treatment and desalination. This includes our current water treatment business and the water desalination plants. You heard Matt earlier, the demand is there. The regulatory environment is there to the point that at our request, the Chairman of the Texas Railroad Commission recorded a video communicating the commission's views and urging the industry to embrace technologies to address the challenge. Based on discussions with many customers, there is an appetite for operators and midstream companies to fund the capital as they have a lower cost of capital than TETRA does. We assume that gradually and by 2030, we will deploy a total of 10 plants processing 500,000 barrels of water per day, with 5 of those plants being the license model where the customers fund the capital and 5 being the service model where we fund the capital. And based on discussions we have had and are having with capital providers, there is strong interest from multiple capital providers to provide off-balance sheet financing at the project level on the back of 10- to 20-year take-or-pay agreements with our customers, counterparties who have very strong balance sheets. This is expected to create a segment with revenues of between $340 million and $360 million by 2030 with adjusted EBITDA margins above 28%. Our Energy Services segment will include our offshore completion fluids plus our flowback, sand filtration and early production facilities. You heard Roy lay out a strategy of capitalizing under the deepwater market, partially driven by the lower tertiary deepwater demand. The bromine plant will further improve our margins as bromine from our new plan will be much lower cost than the current LANXESS agreement and open market purchases. The revenue growth does not appear to be as significant as the other 2 segments. But keep in mind, we'll be replacing over $100 million of revenue from our water transfer business. We're also very conservatively projecting only mid-single-digit annual revenue growth with upside depending on how many CS Neptune wells we complete. Remember, we completed 3 CS Neptune wells in the first half of this year that again demonstrated the earnings power of our Neptune technology. So how should our future earnings be valued? We consulted multiple financial advisers to identify a group of companies that each of the segments would be benchmarked against to assist the buy and sell side in arriving at some of the parts for TETRA. This slide lays out the group of companies, we believe represent the EBITDA multiples for the specialty chemicals on the left side which is about 12.4x EBITDA. In the middle, the group of companies for water treatment and desalination of 12.7x EBITDA and the Energy Services business is slightly below 6x. We believe this group of companies have matching growth and margin profiles that will match our future business. When one does assemble the parts for each of the segments, you will arrive at a potential target share price that is very attractive, even if the sum of the parts is heavily discounted. This is why we have been so focused on the growth initiatives and have been and will invest heavily through 2027. We believe this path creates significantly more shareholder value in the coming years versus any other path we could have pursued. Between now and 2030, how can you monitor our progress? To get to the 2030 targets, we have identified some near-term milestones that we can be measured against. The first is to continue to exceed expectations. We beat consensus in the first and second quarters of the year. We provided guidance for the total year of 2025, and we believe we're on track to meet or exceed those targets. The other targets, Matt, Roy and Tim touched upon during their presentations. These are a combination of progress with certain customers and internal initiatives such as completing the bromine plant. The progress we are seeing with our desalination technology being embraced by customers is also very encouraging. And the progress we are seeing with Eos is equally encouraging. These two were critical requirements for us to host an Investor Day to communicate 2030 targets. And how does our capital allocation evolve? Our capital philosophy has been very straightforward. First, strengthened the balance sheet by improving our net leverage ratio, build cash and push out maturities. We achieved those with a current net leverage ratio of 1.2x. We are generating free cash flow from our base business in the first half alone over $52 million. We are investing to create a new revenue and earnings stream. Based on discussions with capital providers, there is non-dilutive project level capital for both the bromine plant and the desalination plants. We are working on finalizing those. And none of those solutions will put our balance sheet at risk. And as important, none of those solutions will increase the TETRA share count. Once our bromine plant is completed, we'll shift from an investment phase to a return of capital phase. We believe that beginning in 2028, we can generate approximately $100 million of free cash flow for TETRA in total, including the growth initiatives increasing thereafter, allowing us to pay down existing debt and either doing share repurchases and/or dividends. Our objective has been to capitalize on the base business to execute on the growth initiatives, position us to return more capital to shareholders and attain a higher valuation from the new revenue and earnings streams than what we could have done with the existing segments. And recall, we have a $100 million tax loss carryforward that can offset almost $400 million of pretax income in the future. In summary, our goal is shareholder value creation by evolving to a business that is higher growth, better margins, less dependent on oil and gas activity and more predictable than today. As we make progress, I expect we will attract sell-side coverage from outside the oil and gas sector. They will attract clean tech, chemicals and water technology investors, plus growth-oriented investors and that we will be pulled into indices in those areas. The TETRA management team and the Board of Directors collectively hold approximately 7% of the outstanding TETRA shares, high for a publicly traded company without a founder. You have seen buying -- insider buying in the last couple of years, including this year. Our interests are aligned towards the attainment of One TETRA 2030 to create significant shareholder value. And in case I didn't mention it, our objective is to create significant shareholder value. All the material that we've shared and we've put a lot in front of you is available on our website. I encourage you to download it. I encourage you to reach out to Kurt and I and we'll be more than glad to follow up with additional color. Before we go to Q&A, for our audience here at the conference room, let me cover a couple of logistics. For Q&A, we have some of our team members with microphones that will be brought to you so that everyone can hear the question. Please raise your hand, and they'll bring the microphone to you. State your name, please, and your affiliation when you do so. After Q&A, lunch will be served. I hit on the right. I encourage you to grab some lunch and come back to your spot. And for those of you that have the individual meetings with us here this afternoon, we have reserved the courtroom that you can hang out until your scheduled time and return calls or catch up in e-mails. It's right outside the hallway. Our first session that we had scheduled at 1:30 will begin instead at 1:15. And also today, for the ringing -- for the closing bell at the New York Stock Exchange, the TETRA management team and the Board have been invited to ring the bell. So I would encourage you to go to CNBC or whichever other channel you view for the closing of the bell. So with that, Brady, maybe we'll open it up for questions.

Absolutely.

Marty Malloy, Johnson Rice. I really appreciate all the additional information you gave us on the desalinization platform. In the $1.50 to $2 per barrel, that's still maybe a little bit more than kind of the $1 to $1.25 that E&P companies are paying to have their produce water taken away. Could you maybe talk a little bit more about the economics and what drives them to go ahead and use the TETRA solution going forward? And maybe -- also, could you talk about -- do you think it's midstream or E&P companies that are going to take the lead in using the TETRA solution?

Okay. I'll take that one, Marty. Thank you. Look, the $1.50 to $2 a barrel, we've already been socializing that with our customers, and they're prepared to start the process of getting these plants in place, proving them out over time. Because they know that their current, let's say, $1.25 disposal cost. But by the way, it started at $0.25 and is now $1.20 or $1.25 just due to the -- what you heard from the feedback is coming from. But that's going to continue to go up, Marty. And so that convergence that Jim Wright, Chairman Wright talked about is already happening. We think over time, we'll be able to learn enough to continue to bring the cost down of desal and being the first ones out there with the commercial plant, I think, gives us an advantage to do that. But like I said, the operators and the midstream guys are both talking to us, waiting to get our first plant completed to start commercial discussions. Now will it be midstream guys or will it be operators? I would say both right now are engaged with us. We talk about the number of NDAs that we have in place to carry out these discussions. And I don't know, Matt, it was half of them, midstream guys, half of the E&Ps at this point, it's somewhere along that line.

Yes, Stephen?

Stephen Gengaro, Stifel. A lot of great information here. So two things. One, can you talk a little bit about the deepwater completion fluids business? I mean over the last 4 or 5 years, you've kind of especially Neptune sort of been episodic and the other business has been more stable. Can you talk about the visibility you have on those products over the next couple of years?

You guys -- one of you guys want to take it or you want me to?

You go ahead.

Yes. So look, one of the, I think, charts that we thought was most compelling when we put together Roy's presentation, bromine completion fluids, you can almost directly link 100% to deepwater completions. That's the type of density and chemistry that you need for a deepwater completion. If you track our bromine revenue that was on that slide against both the rig count and the subsea trees, we are way exceeding that growth trajectory. So we're seeing not only an increase in deepwater completions, higher densities, as Roy pointed out. Now the Neptune is a special case. I understand that. But most of our deepwater fluids are bromine-based. Neptune is a special case but we're -- as we get into this next frontier, the 20,000 rigs that Roy talked about, zinc bromide is a great solution for deepwater completion. But when you get to these temperatures and those pressures, especially these temperatures, zinc is highly corrosive. And so what we are seeing is these 20,000 projects, zinc is not going to be applicable because of its corrosiveness and more and more Neptune jobs are going to start developing because of that. So last couple of years since COVID, no question, the number of Neptune jobs has been sporadic. But we do see that changing with the lower tertiary development in the Gulf of America.

And just the second question, we were in Turtle Creek last week, so we got to see the facility. They're obviously pushing automation, they're pushing to try to lower their costs, et cetera. How long is your agreement with them? And how much of it is like the total electrolyte versus just, I guess, the zinc bromide piece where they can work to save costs? I'm just trying to understand the dynamic there. And obviously, you have a lot in the numbers off of that business.

So our agreement is 5 years. And the terms of the agreement, which we made public, we have 100% of the zinc bromide, what we call PureFlow. And we have 75% minimum of the full electrolyte. So that's why we've modeled in our growth over the next few years to account for both those contractual terms and our current agreement. Once we get our bromine plant up and running, we intend to open discussions up with EOS again to extend that contract over an additional period of years. And we feel quite confidently we'll be able to do that.

Tim Moore from Clear Street. Great presentation today. It was nice to see the goals laid out for 2030 and the ramp there. I just have two questions. The first is around the 10 facility account on the desalination. Just wondering if there's a lot of upside for that number because I've been forecasting like even if there's 25% adoption and you take 30% market share, that could be 25 facilities for you? I know you can't do them all at once, obviously, but is the 10 kind of the minimum?

We were very conservative, quite frankly, in our view of by 2030. If we just do the 500,000 barrels per day that we have modeled. If you listen to Kelly from B3 Insight, his view is 5 million barrels a day of produced water will be stranded by 2030. So we'd be 10% of the market. Well, obviously, the position we're in right now, we think we should be a lot more than 10% because we don't see anybody else right now that have announced the full commercial end-to-end solution designing a 25,000 barrel per day commercial plant. But so we were fairly conservative in our estimates. So we definitely think there's some upside on that.

Great. That's good to hear. And the other question I had is around our exciting bromine project, and there's clearly a runway and addressable market for that. When you kind of think out later years, let's say that, that ramps up with production revenue in 2028. If you kind of get to 2029 or so, can you -- will you have capacity to take on another customer besides Eos? I'm just wondering how much you think in 2029 Eos might be consuming from our Arkansas supply?

Yes. So the -- we mentioned the bromine plant can handle GBP 75 million pounds per year. That's currently more than double what we have from our current supply. If U.S. ramps up to the 8 gigawatts, they will be slightly over 1/3 of that demand. So we would still have 2/3 available to either grow with another electrolyte customer or continue to grow our deepwater market, hopefully, all 3. So that's the intention.

Bobby Brooks from Northland Capital Markets. You mentioned the Sandstorm trial in Saudi Arabia. I was just curious, any update or insight when that test gets completed and potential more commercial orders come through?

Yes. I'll start that and then ask Roy to finish it. So we did the trial with -- in Saudi Arabia. Was it earlier this year or last year we actually did the trial? First quarter of this year, we actually did the trial and received a favorable report due to the results. And we just recently were awarded an award now, and maybe let Roy give you an update on that.

Sure. Yes, Brady. So like Brady mentioned, in the first quarter, we concluded all the technical trials, received all the sign off. We've been working with the unconventional team over there. But we've also got a contract where we provide well testing and flowback services with the conventional team. And so recently, we've been awarded the opportunity to go deploy our Sandstorm technology with Aramco. So I anticipate by the first quarter of '26, we'll actually have the sandstorms working on live contracts in Saudi. So that's pretty exciting for us. And what we're seeing over in the Middle East right now is a lot of what's happening in Saudi is being replicated in the UAE. And so in Abu Dhabi. So similar conversations happening with counter parties there.

And we're really pleased. We've been with Sandstorm in Argentina now for 2, 3 years. Just recently awarded, I think, 100% of customers -- major customers Sand management requirements.

Yes. And then one follow-up on Oasis. During the multiple conversations you're having with E&Ps and midstreams, obviously, you presented that you guys are looking at both the license model and a service model. Is it pretty evenly split between the groups of which they're preferring?

Elijio, you want to take that?

Yes. So we're giving them the option. Obviously, our cost of capital is going to be higher than our counterparties. And when you look at the spread between $1.50 and $2, assume that, that represents the cost of capital delta. If they want to bring the capital, it will be at the lower end. If we're bringing the capital, it will be on the higher end. And clearly, a lot of our customers, it's simply going to be a reallocation of capital. Matt mentioned that they're building pipelines to take it to the next county and the next county and the next county. They're spending capital to saltwater disposal wells. So instead of spending new money, they're simply going to reallocate capital from saltwater disposal wells and pipelines over to water treatment plants.

In our model, just to finish up on that, we assume the 50-50 ratio of our capital versus license model.

And it's 50-50, like midstream, both 50-50 between service and the license...?

Right now, that's how we see the market evolving is a 50-50 split.

Brady, one thing that's interesting to add we've had conversations with, obviously, the E&P and with the midstream. And there is competition out there. Something that's very unique about TETRA is the fact that not only do we design, own, but we operate these plants. And it's come down from multiple companies where they've actually expressed interest of would you guys operate other facilities because the other solutions that are in the market are product sales. They don't want to offer a solution. They want to sell a product, and they don't want to operate it. They don't want to maintain it. They don't want to service it. And so that's something else that's unique about TETRA.

Stephen?

Two more if you don't mind, Brady. First, on the bromine side, and maybe it might be for you Elijio, but when -- I think the LANXESS agreement ends in '28 or '29?

Towards the end of this...

End of '29.

Okay. What are the economics for you on the margin side of vertically integrating and controlling the bromine versus the current agreement that's in place? And is that embedded in the margin profile you gave?

Let me take that first and -- when you think about our current bromine supply, there's a couple of layers of bromine that we get today. So we have a LANXESS supply, which is inflation variable formula-based that is pretty attractive for us. But that's only 30 million pounds. We have to go out on the spot market today for an additional 10 million to 15 million pounds in spot market prices to support our current business. And that's at a pretty significantly higher. So when you blend those two together, we're playing a pretty significantly high priced for bromine compared to what we will be able to do when we have our own tower. And that's when you see the economics that we put in the $230 million revenue growth and $100 million of EBITDA, there's a decent chunk of that comes from improved profitability. Elijio, you want to add?

It's a combination of lower cost plus higher volumes.

Okay. And the other quick one, and this is my ignorance. When we look at the water desal business, I mean, we're hearing about all of these massive data centers being built throughout Texas, both planned and underway. Does this water have an application to those data centers? And is there anything on the books yet? Or are the people you're talking to about that opportunity? How does that -- how is that working?

Yes, absolutely. The data centers need water. They need cooling water, a lot of that water evaporates. So you got to continue to replace it. Now one thing to keep in mind, it's important, our model is a per barrel fee. We're not going to own the water. The operator or the midstream guys are still going to own the water. So they are the ones actually having the discussions with the ranchers or the data centers or the utility applications, municipal type applications. We're not involved in that because they own the water. We're just providing the fee, the service fee to do that. But what they tell us especially a couple of the midstream guys we're dealing with, they are in negotiations with data centers now for that type of application.

And I don't know about the water content, but do they have to desalinate with your technology [indiscernible]?

Well, they don't have to use our technology, but it's got to be desalinated for it to be used in a cooling environment.

Stephen, you raised a very good question. So this is not just a cost gain for the operators. So today, they pay somebody to dispose of the water. Tomorrow, they eliminate that cost and then they've got a revenue stream of selling the water. Whatever concentrations are left, if we extract minerals from that concentration, they can sell those minerals. So now it goes from a cost waste product into a potential revenue generator that helps them with the economics of the desalination.

One of the other things to add to that in terms of if you look at the amount of water Chairman Wright talked about in terms of agriculture wise, you'd add 10% to the irrigated water needs of Texas. So that agricultural value of dry land versus actual irrigated is also got to be factored into the economics.

Ted Warner with Northland. I had a question on the beneficial reuse side related to norm. I didn't see that mentioned at all in the presentation. I know that in a basin like the Permian compared to Appalachia, beneficial reuse makes a lot more sense there given the lack of fresh and your customers' ability to go sell it from various uses. Also know that Appalachia has a material amount of norm as compared to the Permian Basin. But are you seeing levels? Does your technology actually deal with that? I didn't see it sort of listed. I know it can get removed with solids sometimes, but if it was going to go for an agricultural use, I would think that they want to go to drinking water standards and wondering if that's an issue.

Yes. I'm trying to recall what was on the slide when you looked at seawater versus produced water, our technology absolutely deals with it. For those that are not familiar with what he's referring to, [ Norm ] is not the guy from cheers, okay? It's naturally occurring radioactive material, right? Don't get on the rock and the subsurface, some of this stuff can show up. In our flowback business today, which we've been in for a long time, this is pretty typical, right? We deal with it all the time. We've been dealing with it for 30-plus years. In terms of our desalination solution, I mentioned we're concentrated up different minerals. Any sort of naturally occurring radioactive material in that process is dealt with and stays in that concentrated water, some of which is then going to be disposed of back in the ground where it came from. So not concerned about that at all.

On the desal, maybe another point that I'm not sure we emphasize as much. But desalinated water, we're not desalinating at 100% of that water. Traditional reverse osmosis type technology can take about 50% of that water, desalinate it and then you have a highly concentrated volume of water that has high salt saturation, right, that still gets disposed, as Matt talked about. The one thing unique about our technology where we showed the combination OARO. I make sure I got that right. And the vacuum membrane distillation, that combination allows us to go up as high as 65%, maybe even higher desalinated water out of that 100 barrels, maybe we get to 70 barrels that's desalinated and that other 30% has to be dealt with either disposed or something done with it. So that's another advantage. I'm not sure it came out in our presentation.

Yes. I'll just clarify something Brad just said in terms of the water that we extract from that produced water stream, that percentage that he just referenced, it depends on the starting point of the total dissolved solids in the water, okay? So the numbers he's referring to around the Permian Basin, I'll call it, the tougher water, right? The total dissolved solids are much, much higher. The field pilot that we performed in South Texas over 3 years ago, I'll call it, easier water, lower total dissolved solids in there. And if you look back at our press release from back in 2022, we referenced we could extract over 92% of freshwater because, again, the starting point of the total dissolved solids in that water, much, much lower. So it all depends on kind of what your starting point is and really designing a treatment process to look at it, optimize the economics, which as Elijio mentioned, that's really the value that end-to-end solution rather than just taking discrete components, none of them actually solve it. You really need that kind of end-to-end solution to address all of it to make the economics work, some of which is, again, on the back end, identifying what kind of water be used for, what are the other minerals in the water, where there's an opportunity to exploit those and improve the economics.

Thanks, Matt.

Samantha Hoh from HSBC. I wanted to get some more information on that first desal plant. I think you said that you're in the engineering phase. What should we look for in terms of timing as to when it will begin? You're funding it out of cash, but are you going to take like reservation slots or how are you thinking about that?

Yes. So good question. So that rendering you saw in Matt's presentation, but that actually is the engineering work that is being done on that 25,000 plant. So now they're essentially what is kicking off the final detailed design engineering. And it's important for us to get to a stage of the engineering that we're really confident in the OpEx and the CapEx numbers before we sit down and start negotiating contracts. We actually have several customers right now that are waiting on us to get to the stage where we can sit down and have commercial discussions. But we want to get to a point where we're confident enough with the engineering that's being done, it's completed enough that we can have those commercial discussions. We expect to have -- I think before the end of the year, I think we're pretty confident that we will be at a point on the engineering side, confident enough that they progress derisk the OpEx and the CapEx enough to where we can have those commercial discussions. That's our expectation. And that's -- once we've gotten to that point, then when I think we can kind of build on those discussions with multiple customers going into next year. That's our intention.

I think the other thing to add there, Samantha, is if you look back at some of our earnings calls from earlier in the year, we were sort of in the windshield view anticipating doing more field pilots this year. We announced some collaboration that we're doing early on in the year with some folks. And that got a lot of attention. So quickly, the discussions moved from pilots to small-scale commercial facilities. So some of that accelerated. I think we touched on that on some of the earlier earnings calls. So this facility, like we tried to outlay the initial engineering design, again, it's for a relatively small amount, 24,000 barrels a day, but it's scalable to address much higher volumes. And as you get up into those higher volumes, the economies of scale benefit as well in terms of the economics.

And Samantha, to your other question, this customer has indicated a strong preference toward the license model.

Good questions. Thank you for the questions. Any additional questions?

How should we think about the engineering design, maybe even through our R&D expense intensity is -- we're in this development phase, but then if you start adding a number of plants, is that margin impact?

I think right now, we have two pretty major engineering plant designs ongoing. Our bromine plant as we get into the construction phase, there's detailed engineering going on in that as well. That will be part of the $270 million capital that we have been discussing in our DFS. So we're capitalizing most of that engineering cost. On the plant side, we will also have that engineering cost ongoing. We are -- I believe we are expensing that today. That's in our earnings today and our EBITDA margins results. Now once we have that first plant completed, which we think by the end of the year, the engineering company that we've hired, we have a very good relationship with, and they've done a great job, quite frankly. They're very encouraged and ready to move on to, okay, let's take this 25,000 building block and now let's get a 50,000. Let's get a 75,000. Let's get 100,000 plant design that is going to be somewhat building blocks but also taking additional costs out of the system, and we'll be probably expensing that level of cost through 2026, quite frankly, Jim, as part of our earnings. I don't think we've quantified or release that number publicly, but it's in our earnings right now.

Otherwise, lunch is available here, I encourage you guys to grab a bite, and then the management team and our Board of Directors are also in the back. We will be more than glad to exchange in further dialogue with the guys.

Thank you very much for coming today. Really appreciate it.