UNIDENTIFIED PARTICIPANT: Our next presenter is Mr. John Chisholm, CEO of Flotek Industries.

JOHN CHISHOLM, CHAIRMAN, PRESIDENT, CEO, FLOTEK INDUSTRIES, INC.: Thank you for the big crowd we have here, folks on the webcast. On behalf of Flotek, we are delighted to be presenting at the IPAA Oil and Gas Investment Symposium here in Fort Lauderdale, Florida. We appreciate being invited and your interest in the Company. I am John Chisholm, Chairman, President and CEO of Flotek. Also today with me is Chris Edmonds, our Senior Director of Corporate Finance and Strategy. We'll be happy to visit with you after our presentation and answer any additional questions.

It's simple to blame things on lawyers. We like to do that whenever we can. So this slide is for them. We note that anything that we say here involving future projections is subject to the limitations contained herein, which by itself sounds somewhat legal.

Flotek is at the core of an oilfield renaissance that we believe is transforming the way our industry operates, especially in unconventional oil and natural gas resource development. However, before we discuss the exciting (technical difficulty) for those of you who may be unfamiliar.

Flotek is first and foremost a specialty oilfield technology company with a portfolio of goods and services that stand to enhance every stage of a well's lifecycle from drilling to production, including intervention in mature wells that require advanced techniques and technologies to enhance mature production.

Flotek has three primary groups in the energy technology portfolio, first the energy chemical technologies group which provides specialty chemicals that add value in the drilling, completion and production stages of oil and gas wells; second, the drilling technologies group which provides the solutions during the drilling stages of oil and gas wells; and third, our production technologies group, which addresses a number of production challenges for oil and gas companies.

Additionally, through our acquisition of Florida Chemical, we added a fourth reporting segment, commercial and industrial chemical technologies. This segment captures our efforts in the non-energy space.

We operate in every major producing basin and many key bases around the globe. Our growth is geographically universal. That is our goal is to grow as fast internationally if not faster than we are domestically.

Shortly we'll take a closer look at the business drivers of each segment. First, however, it seems appropriate to make some general comments about the current commodity price environment and what it means to the industry in general and Flotek in particular.

If you look to your left, to your right, I'm certain you'll see people just like you who are concerned about the future direction of energy commodity prices. There is little doubt that the recent swoon in oil prices is as unnerving to you as it can be to companies like ours. And the most important question today is what happens next.

As far a guess on commodity prices in the short term, our lenses are clouded just like most folks. There are simply too many variables that can create short-term volatility in both directions. The value of the dollar, geopolitical events, political events and economic surprises all have impacted the price of oil in the past year and can continue to do so in the future. That said, what we do know are two very important facts. The incremental price of every new barrel of oil is more expensive than the last barrel of oil produced. While there have been amazing discoveries and technology advances that have created new supply, oil still remains a scarce finite commodity.

Second and to us more important is that each producer over time will seek to maximize the productivity of their wells and hence the economic return on their drilling investment. We believe that becomes even more important as commodity prices experience temporary pressure. Maximization means better cash flow for each producer at a time when pricing is challenged.

Quite simply, Flotek's innovative value-added technologies are critical in today's commodity price environment. Flotek's patented complex nanofluids provide opportunities for companies to enhance production and drive capital efficiency.

As we show here, our chemistry is key to maximization of returns on producer investments. We believe that is why all of our customers have continued to use CNF in the current environment. That is why we continue to grow our inventory of validation projects even as oil prices decline. That is why we continue to penetrate new markets in this challenging environment. In short, that is the primary reason why we believe that Flotek is relatively insulated from energy commodity price volatility that we've seen in recent months.

Flotek recently reported quarterly and full-year results. While I won't waste your time regurgitating each line item, I will provide you with an even greater perspective on our progress.

2014 revenues represent an increase of over 300% compared to revenues of about $112 million in 2009, which equates to nearly 60% average annual revenue growth since we began this journey nearly five years ago. While revenue growth is important, profitable growth is even more impactful to the value of your investment and we've made profitable growth a consistent goal since 2009. We are very pleased with our 2014 profitability. While annual revenue growth of 21% is admirable, profitability as measured by earnings per share grew by nearly 45%, one indication that our investment in people and infrastructure is providing positive operating results for our shareholders. These growth numbers speak for themselves.

While I am pleased with our efforts to date, I'm not satisfied and as I've said before, Flotek is not willing to rest comfortably in the past but rather your company will strive to reach for a future where our industry-leading innovation can create more value each and every day for our shareholders.

There is no measure of the success of our people than efficiency, and we believe Flotek is at or very near the top of just about every measure of personal productivity. During 2014, revenue generation per employee increased by 12% when compared to 2013 levels, and operating income per employee increased by over 21%.

For Flotek and its suite of customized chemistries, drilling and production technologies, the opportunity is in the fact that more complex exploration, completion, and production projects require more advanced, innovative technologies that can help our clients make better wells and as a result better returns for their shareholders. As seen on this slide and the next, our fee clients are beginning to extol the virtues of our oilfield chemistry and other technologies as they share their views on the growing need for customized chemistry and innovative technologies to help increase production and drive greater efficiency in their wells.

Not only do we hear other energy companies talking up the need for customized chemistry and innovative technologies, but like these companies, we hear them talking about the validation and operative of issues of key Flotek chemistries in the quest to maximize production and economic opportunity. Comments like these would've been only a dream even a year ago. However, with a concentrated marketing effort, the use of our FrakMax analytical marketing tool and empirical data showing the efficacy of our maximization thesis, our clients have become a key part of our marketing penetration strategy.

In addition to Flotek's belief that our chemistry products are even more important in a more challenging pricing environment, Flotek's financial strength should provide investors meaningful comfort regarding our relative insulation from recent commodity price volatility.

Our balance sheet is a good place to start. Compared to outstanding debt on December 31, 2013, Flotek reduced outstanding debt by nearly 40% in 2014 and should have the capacity to reduce debt even further in 2015 even in a more difficult market environment.

To put our debt repayment in perspective, Flotek carried $88.8 million in debt following the acquisition of Florida Chemical in May of 2013. As of December 2014, Flotek's debt stood at just $44 million, a reduction of nearly $45 million or 50% debt reduction in just 18 months.

In addition and to show the power of Flotek's cash generation, Flotek repurchased over 600,000 shares of its common stock in the fourth quarter of 2014. Even as we repurchased $10.4 million of Flotek common shares, we ended the year with a balance on our revolving credit line and facility of just $8.5 million, a clear sign we continue to generate significant cash from operations even as the market slows.

Flotek's cash generation remains the key to such rapid debt reduction. Cash from operations in 2014 was $48.8 million. That compares to just $39.5 million of cash from operations for the entire year of 2013.

Flotek's cash generation prowess combined with a very strong balance sheet leaves Flotek in an enviable position to consider a wide variety of options to enhance shareholder value. With strategic growth opportunities, internal research and innovation initiatives and share repurchases, we will consider the gamut of opportunities to optimize returns across this cycle.

Flotek's specialty chemical business is the focal point of many of you and certainly a key focus of the Flotek leadership team. We believe that our chemical technologies have and will continue to transform the way companies complete wells, especially unconventional wells, and what they expect as a result. Our hallmark product, Flotek's patented CNF, or complex nanofluids, suite of chemistries provides a superior environmentally friendly chemical solution to enhance production beyond other completion methods and technologies. Not only did we patent this innovative chemistry in 2003, well before calls for environmental action from the oil and gas industry, our research efforts continue to produce enhancements to our chemistries that are customized, proprietary, high-impact, client centered and environmentally advanced. Flotek is positioned to continue to be the leader in advanced, on-demand, customized chemistry solutions.

Through Flotek's continued marketing efforts, our chemistry sales team is acutely focused on the compelling economic benefits of CNF technology working with both service companies and E&P end users.

As a result, we are seeing increased penetration and adoption of chemistry technology not only in core completion work but also in additional areas, including enhanced oil recovery, drilling and fluids, and advanced production applications. Our recent introduction of FrakMax validates the efficacy of our CNF completion chemistry and has helped lead to the most robust prospect book in the history of the Company.

Our clients and as a result Flotek experienced several key milestones this year. Our largest client increased chemistry volumes as measured by revenue by over 25% from 2013 levels and our largest client has embraced customized chemistry as a key differentiator in well performance. Additionally, multiple large-scale operators are planning large-scale validation, something we are very excited about and feel further supports the efficacy of our customized chemistry solutions.

In total, we have over 40 commercial scale validation projects on the board today. Our penetration in North American markets has reached every key production basin. Moreover, the acceptance of CNF chemistries has reached the tipping point in key basins such as the Niobrara, the Eagle Ford and in key production plays in Canada.

I want to spend just a couple of minutes on our core technology complex in nanofluid technologies. Our patented chemistry is for simple, a special formulation of solvents, surfactants and other liquids designed to enhance hydrocarbon production.

The cartoon on this slide provides a molecular view of our complex nanofluid. A surfactant is designed to modify services and interfaces of a producing target that allows for better flow of hydrocarbons from the source rock. In very basic terms, the original surfactant was soap or detergent. Think about what happens when you put soap on a tabletop or as a kid around a wrist or an ankle that might've been stuck in a fence. The soap or simple surfactant reduces the tension and makes the surface slicker, allowing for better movement of the subject matter. Very simply, that's what a surfactant does to the surface of the producing rock. A solvent, in our case technical grade d-limonene made from citrus, is used to dissolve various oilfield deposits and changes the wettability of the formation. As you'll see next, the combination of these items with other fluids creates a nanoscopic the chemistry that reaches far into tight formations that materially improves well productivity.

As we note here, CNF technology involves the proprietary combination of surfactants, solvents and other chemistry into tiny droplets. With the core citrus chemistry as the hub, we customize our CNF completion fluids by basin and application that maximizes the benefits based on rock characteristics, hydrocarbon focus, and other unique facets of that project.

The key to the efficacy of the chemistry is the combination of the d-limonene solvent with the right surfactant and other chemistry specific to the basin. In short, the nanoscopic droplets allow the solvent to permeate the source rock more deeply, which in turn allows the surfactant to cover a greater surface area, resulting in better productivity with flow area of oil and gas wells. Our data shows this unique patented proprietary chemistry that results in significant productivity uplift and unconventional production when compared to common surfactants.

As noted earlier, the key to the efficacy of our next generation chemistry is d-limonene, a citrus-based solvent that has ubiquitous applications in the drilling, completion, and production of oil and gas wells. Not only do we believe d-limonene provides a number of key benefits to completion and production for our clients, it also improves the environmental stewardship of our industry. Quite simply, when compared to other solvents such as Zilene, d-limonene is an environmental champion that is generally regarded as safe by the FDA and designed for the environment by the EPA. Moreover, as an agricultural byproduct, it is both sustainable and bio renewable. However, we've said in the past it isn't good enough to be green. If a product doesn't perform, its environmental attributes are of little value. In this case, the proven efficacy of d-limonene in the oilfield truly does make it both great and green.

While I won't spend much time talking about individual clients, I want to provide you with a glimpse into our growing client base of users of innovative chemistry solutions. While maybe just short of revolutionary, the introduction of FrakMax, the Company's patent-pending application for comparing the performance of wells using Flotek's advanced next-generation CNF completion fluids versus those that use conventional surfactants, has been key to accelerating interest in Flotek's innovative completion chemistries. As noted, Flotek has added meaningful commercial chemistry validation projects with dozens of prospective clients across multiple domestic basins, many of which are a direct result of FrakMax.

The concept and theory behind FrakMax is fundamental using publicly reported data from E&P companies themselves to verify the impact of CNF on production results by location. Very simply, using data from FracFocus and various state production databases, we take E&P companies' self-reported data and compare well production in the aggregate by basin from wells that use Flotek's CNF chemistry and those that don't. While innovative E&P brethren made buy into the story more rapidly than others, Flotek firmly believes operators will ultimately find it hard to ignore data which conclusively validate the economic advantage of using CNF chemistry in completions.

In just its first year, FrakMax has become the premier analytical tool in determining optimal completion methods. The latest version of this powerful statistical software can demonstrate production per lateral foot and changes in such production over time as well as the predictive productivity of a well based on its location within a basin, not to mention an analysis of the efficacy of various proppants and other additives with and without the use of CNF completion chemistries.

Through data sourced from operator provided completion data, Flotek is able to compare production from both wells that use CNF technology and wells that do not. The FrakMax database continues to grow, now with data from over 75,000 wells across the US. Not only does such a large database give us a compelling evidence of the impact of CNF on production, but it also allows us to estimate the aggregate benefit of CNF usage for our clients. Based on data derived from FrakMax, we estimate the use of Flotek's CNF completion chemistries has added at least $8 billion in aggregate value for operators when compared to those operators that have not adopted CNF chemistry.

Our ability to run virtually limitless production comparison to our FrakMax Analytics subsidiary is not only helping our clients better understand the compelling benefit of using CNF chemistry in the completion process but also assisting clients in developing a better understanding of completion best practices validated through an analysis of data derived from the FrakMax database.

Most important, FrakMax has materially broadened the reach of Flotek's marketing efforts. As a direct result of FrakMax, the Company has converted approximately 20 exploration companies from validation clients to ongoing commercial users. Currently, the Company has an additional 15 to 20 companies in the process of conducting or designing validations.

In addition, there are approximately a dozen other unique validations that are in the scheduling process. As such, in total we are at a record number of validations on the board, largely a result of the compelling data contained in our FrakMax analytical software. As a result of FrakMax, we know that 234 unique operators have employed CNF in various projects in the US.

Early this year, Flotek also announced the introduction of FrakMax Canada. With approximately 10,000 wells, the Company's penetration into Canada continues to accelerate with nearly every Canadian-based pressure pumping company now pumping CNF completion chemistries in a number of projects.

Based on the current data set, Canadian wells with CNF perform at levels superior those without, very similar to results obtained from the US data set. We look forward to continue building this powerful platform in the coming months.

If you all had a chance to be here in the morning and listen to Bob Watson with Abraxas, he talked about how in the Eagle Ford they were fortunate to have wells that many times were three times as productive as bigger companies that surrounded them, and that information is all confirmed in the FrakMax database because Abraxas in fact uses complex nanofluid. So in many cases where there are wells and he talked about not having initial production reporting but over a 30-day period many of their wells will produce 18,000 to 20,000 barrels a month. Many of the larger E&P companies aside them produce in the neighborhood of 3,000 to 4,000 barrels a month that do not use the complex nanofluid validated by the FrakMax database.

In addition to our chemistry offerings, our drilling technologies group is also a key component of Flotek's success. This group provides a plethora of tools to assist our clients in successfully and efficiently reaching its downhole objective. The star of our drilling business remains Teledrift, our measurement while drilling product line, and the product has best in class market penetration and margins, and we continue to add technology to make the tool superior to its competition. Teledrift continues to grow in key domestic basis as well as expanding in international markets, including South America and the Middle East. In fact, Teledrift is now working on nearly 40% of all Saudi Aramco rigs. Additionally, Teledrift continues to expand its presence in Argentina with Teledrift working on over 55% of all the rigs in that South American nation.

In addition, we recently introduced a stimulator, a new technology that accelerates drilling the lateral portion of a horizontal well. We believe this tool will contribute meaningfully to Flotek revenue and more so bottom line results as we move forward into 2015 and beyond.

I'm also pleased to announce that our final validation work with TelePulse was an overwhelming success and we've started accepting commercial jobs, which is a horizontal measurement while drilling technology.

Flotek's reach in the North American market is significant. At least one component of Flotek's drilling technology portfolio can be found on nearly 1/3 of all the rigs drilling in the United States today. This graphic is illustrative of Flotek's reach in the US market.

While our production technologies business has traditionally been gas focused, our future we believe is much more balanced with a focus on new niche technologies and a level of service unmatched by any other company in the business. While traditionally a small part of Flotek's business, we're very excited about the future of our artificial lift efforts.

Our business will focus on niche technologies that should boost margins and market share in the future. As evidence to our recent announcement, this week to purchase substantially all of the assets of International Artificial Lift LLC, which we'll discuss shortly.

Moreover, our patented Petrovalve mechanical production valves continue to attract significant interest internationally. We believe these markets will provide additional opportunities for growth when managed appropriately.

Last week or -- yes, last week, we announced the acquisition of International Artificial Lift, a developmental stage hydraulic lift company based in the Dallas/Fort Worth Metroplex. The company founded and led by Larry Best, an expert developer of hydraulic and electronic controls for over four decades, provides Flotek with a growth -- with a proven proprietary hydraulic lift system that through its patented and patent pending designs will allow for more efficient production. We believe that production technologies and innovative lift systems will become more and more important in a world where unconventional production continues to accelerate. And we believe that our next-generation designs focused on increasing production and improving operating efficiencies will become a standard by which hydraulic lift systems are judged.

While we discussed details of our international efforts earlier, this map is worth a quick look as it shows the continued expansion of our global footprint. Our international efforts are continuing to provide great opportunities to create value for Flotek shareholders as Flotek continues to grow its international footprint.

In Canada, Flotek's presence continues to accelerate. The Company's monthly Canadian revenue was four times 2013 levels this year, and growth should continue with solid partnerships with Canadian service companies. Moreover, we are beginning to see an increase in demand for xylene replacement technology as Canadian operators become more focused on environmental stewardship.

Halfway around the world, we continue to grow our chemistry business in both the Middle East and South America. Flotek Gulf, our Omani joint venture, continues to progress with Flotek and Gulf Energy completing negotiations with an engineering and construction company for the development of Flotek Gulf's chemistry manufacturing facility in Oman. Completion of the facility is expected in the first half of this year. Moreover, our presence in the Middle East has resulted in increased chemistries sales across the region, including into Saudi Arabia.

South of the border, Flotek continues to make progress in Mexico with a CNF validation underway with major energy company. We expect the multiple well validation project to continue through the early part of this year and believe there are meaningful revenue opportunities towards the end of 2015.

These next four slides highlight some of our Canadian and international clients. As we noted earlier, we work with both service companies as well as the E&P end-user. Our service companies work with some of the largest and most innovative clients north of the border. I'm very pleased with our growth in Canada.

Like Canada, we work with some of the largest international and regional service companies around the globe, a list that continues to grow. As indicated by these newer clients, both service companies around the world as production companies are now enjoying the benefits of working with Flotek. We are very proud of the number of companies we have grown to touch over the course of the past five years.

As I conclude today, I want to discuss and take a minute the importance of corporate responsibility, a core tenet of Flotek's business. Flotek extends support to numerous charitable organizations and believes giving back to the community is not only a responsibility but indeed it's a privilege. We are proud of the organizations we support and the difference we make in the communities in which we work. We also feel corporate responsibilities extends into being good stewards of the environment and Flotek has positioned itself as the environmental leader in this energy industry. Flotek believes through emerging chemistry, technology and commitment to research and innovation, that the oil and gas industry can stand side-by-side to embrace a new paradigm of exploration that allows traditional energy production and environmental advocacy to coexist.

I want to provide you with a look inside Flotek's mantra. In short, Flotek wants to make a difference for its clients and its communities, its employees and the environments in which they live. Most importantly, we want to make a difference for you, our shareholders.

We've covered a lot of ground in 25 plus minutes, and we hope our continued work on your behalf is the most important message of all. We want to make a difference for you, our shareholders.

Thank you to the IPAA for the opportunity and for being terrific hosts here in Fort Lauderdale. And I think we still have some -- a little bit of time to answer a few questions.

Questions and Answers

UNIDENTIFIED AUDIENCE MEMBER: I think you said that one of your clients or largest client increased its purchase by 25%.

JOHN CHISHOLM: That's correct.

UNIDENTIFIED AUDIENCE MEMBER: Was it because they were using more per well or they started to use it on more wells?

JOHN CHISHOLM: It was actually a little bit of both, but more wells.

UNIDENTIFIED AUDIENCE MEMBER: And the last question is that huge increase in revenues, how much of that was from acquisitions?

JOHN CHISHOLM: We don't break that out specifically, but the growth, we did talk about it in the fourth-quarter earnings call that the chemistry growth all internally generated was 30% up year-over-year in the fourth quarter. If that kind of helps you.

UNIDENTIFIED AUDIENCE MEMBER: Did you have a handout -- did you bring handouts with you?

JOHN CHISHOLM: We have the slides on the website that you can go to FlotekNVE.com and be able to bring them down from there.

UNIDENTIFIED AUDIENCE MEMBER: How many employees do you have?

JOHN CHISHOLM: 600 and change, right around 600.

UNIDENTIFIED AUDIENCE MEMBER: And most are in Texas?

JOHN CHISHOLM: You know, again, I don't know that we actually break that out between -- you would expect that oil-producing states are the biggest part of the Texas, Oklahoma, Colorado, North Dakota. Probably now close to just under 10% are overseas internationally, to give you an idea. Anything else?

Okay, good stuff. Thank you.

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