Good afternoon, everybody. My name's Elijio Serrano. I'm the Chief Financial Officer for Tetra Technologies. Really appreciate the invitation by Needham to this conference. It's one of the better, most attended, well-attended conferences that we've had with significant investor interaction today. I also appreciate that the conference held the best presentation till the very end with the company with the highest growth profile out there. Forward-looking statements that you can review at your leisure. So just a quick snapshot on Tetra. Tetra is on a run rate of about $600 million in revenue, over $100 million of EBITDA. And if you look at the graph on the right side, you can see that our EBITDA margins have been steadily increasing over the last several years. Even during COVID, when a lot of our industry peers and competitors were going through financial restructurings, our EBITDA margins were improving materially.
The company has taken a series of actions to focus on those areas that we believe have competitive advantages, that we believe that we can secure strong margins. We have divested our investment in the compression business. We previously exited the offshore oil and gas business, and we previously exited the decommissioning business to focus on water and flowback services, to focus on industrial chemicals in the offshore oil and gas completion fluids market. And I'll go through those individually in a few slides. This today is the trend of what we've been seeing over the past several years. Completion fluids and products is we manufacture an offshore-based fluid that's a bromine-based product. We sell it to the oil and gas operators. They use it to complete the well after the well has been drilled.
You can see that over the trailing 12 months ended in September, we have not yet reported the fourth quarter. Revenue is the highest that we've seen in about a 10-year period at $362 million in revenue. Equally impressive is the EBITDA margins. The EBITDA margins have historically run in the mid-20s to high- 20s. This year, after completing some significant deep water wells in the Gulf of Mexico, our EBITDA margins are 33%. Also embedded within the segment is a calcium chloride business that moves slightly faster than the speed of GDP, about $160 million in revenue, also with 30% type EBITDA margins. That calcium chloride business is not correlated to oil and gas.
And that's one of the reasons that despite downturns that we saw in the oil and gas sector between 2015, 2016, and 2017, and again during COVID, Tetra was able to remain cash flow positive the entire two down cycles and also EBITDA positive during those cycles. On the right side is our onshore oil and gas business. This is where we manage the water logistics and water chemistry around oil wells at frac wells. We move water to the fracking operations on behalf of the operator. As the water comes back out of the well, we clean that water so they can frack subsequent wells. And then we also remove sand from the oil so that as the oil flows into the midstream system, it does not do damage to the midstream systems. 2025 was a critical year for Tetra.
We have been communicating for the past several years a path toward moving into different sectors that are more predictable and steady than oil and gas, have higher growth opportunities, and we made significant progress in several of those initiatives during the year. First one is that we've been communicating that one of the offshore fluids that we use, a zinc bromide-based solution, if purified to much higher levels of purity, can become the electrolyte for long-duration battery storage. Eos Energy Enterprises is our customer. We have been working with Eos for many years now, and 2025 was the first year that we saw a meaningful ramp-up in volumes to Eos. As an example, to show you the magnitude of the increase, we sold around $3 million of product to Eos in 2024. In 2025, we sold approximately $20 million of product to Eos.
We think that number is going to be between $50 million-$60 million of product in 2026. We've also announced that we have technologies that we have leveraged our history and expertise of dealing with produced water so that we can take that produced water, further clean it using membrane technology to where we can purify it. It can be used for water desalination. It can desalinate the water, and it can be used for crop irrigation, surface discharge. And now we're working with data center operators to be able to flow clean water so they can cool the data centers as they start building data centers in the Permian Basin.
Then in addition to that, the demand that we're seeing for our bromine-based products increased significantly to the point that we're going to begin drilling wells, extracting brine from a formation in Southwest Arkansas called the Smackover Formation. From that brine, we will extract bromine to be able to keep up with the demand from Eos and the offshore oil and gas market. We launched the construction of that plant that we think will be up and live by 2027, end of 2027. All those are significant steps forward as we expand the focus of the organization and transition into areas beyond oil and gas. I mentioned on the completion fluids and products, about $360 million trailing 12-month revenue. Calcium chloride is about 40%. The deepwater oil and gas market is the other 60%. We've got operations throughout the world in the Gulf of America.
We're up in the North Sea. We're up in the Middle East. We're also in West Africa and in offshore Brazil. We manufacture our own product. We buy elemental bromine from LANXESS on a multi-year agreement. We augment that with third-party purchases on the open market. And from there, we create the final product that we sell into the offshore oil and gas market. An offshore completion fluid is used to control the pressures of a well. Imagine drilling a well offshore Gulf of Mexico to where you're in one to two miles of water and then you're one to two miles into the earth. You've got the weight of up to three to four miles of water and earth on top of a formation, on top of gas pockets.
If you drill with a drill bit, tap into that gas pocket, that gas will rise uncontrolled to the surface and you could have a BP Macondo-type blowout. What operators do is they have mud in the wellbore as they're drilling the well, but they cannot complete the well with the mud in the wellbore because that mud will clog up the formation, so as soon as they're done drilling the well, they take out the mud and they insert our completion fluid, which is a bromine-based solution up to double the weight of water. It's a soluble solution, solids-free. With that solution in the wellbore, you can perforate the formation without clogging up the formation, and as they start producing the well, the gas and the oil gradually start to push out our fluid.
We recover it, we clean it, and then we sell it to the next operator. So it's a critical process that the operators use to bring wells online. Our competition is Schlumberger, Halliburton, and Baker Hughes. And while those three are materially bigger than us, our vertically integrated business model allows us to effectively compete against them. And on top of that, we have developed significant chemistry know-how to where we've got technologies that they don't. And we've been able to run with market share as much as 30% against those much larger capitalized competitors. On the trend here, as you can see how the completion fluids market has grown over time. We saw a slowdown in the COVID time period, and since then, it's been gradually increasing. We're at the highest period that we've been in the last 10 years.
If you want to follow and anticipate what's happening in the future, follow how many deep water wells are scheduled to be completed by the majors, the large independents, and the national oil companies. And that's the market that we participate in. Calcium chloride, very broad industrial applications. You find it in food products. You find it in water. In fact, if you have a water bottle in front of you, there's probably calcium chloride in that water bottle that came from Tetra. It's an additive for food. It goes into cement. It goes into industrial processes. It goes into dust binding. And it's unrelated to what happened in the oil and gas sector. This has consistently been performing to where we're getting 30% type EBITDA margins. It's built out manufacturing facilities across the globe. We're number one in Europe in terms of market share.
Number two in the United States behind OxyChem, and the growth here is slightly better than GDP. September of last year, we laid out at the New York Stock Exchange a path that we call One Tetra 2030, and we laid out a path to where we believe that we can take the company from $600 million in revenue to $1.25 billion in revenue. We can take the EBITDA from a little over $100 million to about $325 million, and we can take cash flow, free cash flow to over $140 million. The pie chart that you see on the left is the current Tetra business to where 70% of our revenue today comes from oil and gas.
As we expand and use some of our chemistry know-how for fluids by selling into the battery storage market, and as we take some of our know-how of working with produced water and desalinate it, we expand into the water treatment business to where in the future our traditional oil and gas business can be less than 40%. Water treatment and desalination can be slightly below 30%. The specialty chemicals can be 35%-40%. At that point, we have a company that is much more balanced in terms of the market that it is serving.
If you look at the waterfall graph as to how do we get there, how do we go from $600 million to $1.25 billion, it lays out how the growth that we see from the existing business, from the specialty chemicals being the battery electrolyte and calcium chloride, how the water desalination so that we take water, clean it, and use it for crop irrigation or data center cooling can also expand. And that takes us to the $1.25 billion. And there's an equivalent path that you see on the EBITDA. The critical part of this is that since that Investor Day that we had at the New York Stock Exchange September of last year, we've achieved milestones that keep pointing toward hitting those targets. And that's what I think is driving the stock performance. Tetra's share price has gone from $3 to $4 to over $10 since then.
By the time that we complete this transformation, the left side will show specialty chemicals, which we intend to create a segment that will include calcium chloride plus battery storage, revenue in the $350 million range with about $100 million of EBITDA. The middle is a water treatment business to where we take dirty water coming from oil wells, clean it, and then sell it to either data center operators or allow it to go in for crop irrigation. It can be close to $450 million with also over $100 million of EBITDA. Then our existing energy services business that we think will continue to grow single digits and generate over $100 million also of EBITDA. We're doing this by, again, taking what we know and what we do today. Our focus is specialty chemicals around water.
And the products that we're selling into the battery storage are simply an extension of what we're doing into the oil and gas offshore market today. And on the water treatment side, it's an extension of what we're doing today, treating produced water so that it can be used to frack subsequent wells. And now we want to take it one step further and further clean it, desalinate it, purify it so that it's got other applications. And instead of being a waste product, now it becomes a revenue source for the owners of the water. With Eos, we've got a long-term relationship with them. We're working with Eos in terms of selling them the electrolyte. We're in the middle of a five-year agreement with them. Effectively, we're selling them 100% of the zinc bromide solution that goes into their electrolyte.
We're blending a minimum of 75% of the electrolyte that goes into the battery using our zinc bromide solution. As you follow Eos, you've seen that they've made significant progress in capitalizing the balance sheet, being able to buy all the robotics to automate the production. They've got a backlog of approximately $700 million. And as they increase their production, their volumes of electrolyte required from Tetra increase dramatically. On the produced water side, when you drill a well in the Permian Basin, you're getting as much as four to six barrels of water for every barrel of oil that you get. That water has a lot of nasty components in it that need to be disposed of. Historically, operators were disposing of that in reservoirs that previously used to contain oil. Those reservoirs are now full.
Then as they fracked the formation and broke the rock to let the oil flow out of that formation, it was a very tight formation. That water cannot be sunk back into that formation because it's a fracked formation. So now they started moving it further and disposing of it in neighboring counties. All those areas are now full to the point that they keep injecting water into the formation, and it causes earthquakes, and it's causing geysers of dirty water coming back out of the formations. The regulatory bodies are putting a lot of pressure on the oil and gas operators to instead find a way to clean that water and identify an alternative use for it. We have teamed up with technology companies that have been doing desalination of ocean water. We have taken their know-how and technology.
We have matched it to our pretreatment that we're doing today with produced water to where we treat the water before it hits the membrane technology that we've licensed without destroying that membrane technology, and as a result, now we've got an end-to-end solution to be able to achieve that. This schematic lays out the process of water coming out of wells, and that water comes out of wells over the life of the well. If your well is going to produce oil for 10 years, it's going to produce water for 10 years, and that water needs to be dealt with, so this is not something that's completion activity related. It's production activity related, so we take that water, comes out of those wells, we pretreat the water, remove a lot of the contaminants, a lot of the dissolved solids in there.
We remove a lot of the chemicals that are used in the fracking operation, get it clean enough to then run it through membrane technology that we have licensed. And then after that comes out of there, we post-treat the water. And now that water is clean enough to be used for crop irrigation and can be used for data center operators. All during the deployment of this technology, we were working with the oil and gas operators and the midstream companies to solve and reduce the amount of water that they dispose of. And that was the solution that we were working toward. The narrative quickly changed in the October-November time period.
Operators that owned this water instead told us, rather than eliminate the volumes of water to be disposed, we now need more volumes of water because data center operators are coming to them asking if they can buy clean water to be able to sell to the data center operators and cool that water. We were originally thinking that we're going to do several pilot units to prove that our technology worked. We signed last year an agreement with EOG, one of the largest, most respected operators in the oil and gas sector. They're running a pilot unit. Many other operators that respect EOG said that if EOG is doing a pilot unit, that is good enough for us. We now want to go moving towards smaller production facilities, smaller facilities that were cleaning 25,000 barrels a day.
We started doing the engineering design to begin producing small water desalination facilities. And then the operators pivoted on us and said, "Now we've got a home that instead of cleaning the water to surface discharge it, we want to clean the water to sell it to data center operators." And now they're asking us to submit proposals and bids to clean up to 75,000-100,000 barrels of water a day. And this is a narrative that has changed just over the last several months. This is an example of one water treatment facility to where we receive the water coming from wells that have been in production, take that water, clean it, and then return it right back to the operator. Our business model is that we provide a service. We do not own the water. We simply receive the water on behalf of the operator.
We clean the water, and then we return it back to the operator. It's up to the operator whether they sell it to a data center operator or whether they use it for surface discharge. Now, mentioned bromine and that we need a significant volume of bromine to keep up with the Eos opportunity and also for the oil and gas business. We purchased the mineral rights to 40,000 acres in Arkansas almost 25 years ago. We did that in case our supply agreements with LANXESS and others did not continue. We've been sitting on those mineral rights for almost 25 years. It's the mineral rights to everything in the brine. That brine is rich with bromine, and that brine is also rich with lithium.
Now that the volumes and the demand for bromine is increasing materially, we believe that the market will not be able to keep up with our demand. So we made the decision to begin drilling 10,000-foot water wells, bring the brine to the surface, build a bromine extraction facility, and extract the bromine molecule from the brine. Since that has happened, Exxon bought over 130,000 acres just south of us. Chevron bought over 100,000 acres just east of us, just west of us. East of us is Albemarle Corporation, the largest producer of bromine and lithium in the world. And we're right in the middle with some of the richest concentrations of bromine in the brine. And that's what we're going to develop so that we can keep up with the opportunity.
We laid out a business plan that if we spend around $200 million to build a bromine processing facility and we stop buying in the open market and we stop buying on our long-term supply agreement with LANXESS, we materially drop our cost of goods sold, and also, we pick up the volumes to meet the demand of battery storage plus the offshore oil and gas market. We believe that we can add over $100 million of EBITDA when this bromine processing facility comes online late 2027. This is a financial snapshot of the quarterly results over the recent quarters. The important thing is that Tetra has a solid balance sheet, 1.2 times leverage ratio. We're sitting on $50 million-$60 million of cash. We've got nothing drawn and now sitting on a revolver. Our term loan does not mature until 2030.
So we believe that the balance sheet is solid to be able to make the investment and keep expanding into the areas that we think are going to position Tetra to be a growth story that is unmatched in the oil and gas industry. So to summarize, if you follow Tetra and you follow the market cap of Tetra, you follow the history of Tetra, you have seen that we've essentially moved to the cadence of the oil and gas industry. We're repositioning the company to where we're going to have a position in high-growth markets of battery storage and water desalination and keep our position to where we're generating very strong margins in the oil and gas business and that the value creation that we are in the process of completing is going to result in significant shareholder value creation.
With that, Sean, maybe open it up for Q&A. And Matt Sanderson, our Chief Commercial Officer, will join me for any Q&A. The company announced that I will be retiring at the end of March after 13 years with the company. We announced that in October. And Matt Sanderson, who joined us eight, nine years ago and has been Chief Commercial Officer, will transition into the CFO role. So we're working on an extended transition plan here. So Sean, any questions or any questions from the audience we can address?
When you talk about the water opportunity in the Permian Basin, building a feed plan, I guess is that what I heard. How do you think about the contracts there, how they're structured? What does economics kind of look like?
Yeah, I think I'm mic'd up. Yeah. So we've been pretty public that on our earnings calls in the past, we've had a tough time predicting how quickly some of this market opportunity has been accelerating. We had originally mentioned to the market that we felt 2025 would be really moving into pilot-type facilities in terms of desalination beneficial reuse. At our Investor Day conference at NYSE end of September, we advocated that people have moved beyond pilots. We are doing some today, but really into more small-scale commercial plant discussions, call it 25,000 barrels per day. However, since then, we've also seen the market continue to accelerate where people are now really moving into discussions around 100,000 barrel a day plus type facilities. On one of the slides, which you saw in here a little bit earlier, we advocated the economies of scale.
If you go from a 25,000 barrel a day type facility larger, starting with a smaller one, building blocks up, the economics get better. However, as I said, we're now starting to see opportunities around power generation, AI data center cooling. Some of those conversations, those folks are moving very, very quickly. The volume of water that's been communicated that's required for some of those opportunities, as I said, is significant, much, much more than 100,000 barrels per day. Also, the specification of the water is very, very clean water. So Elijio showed a slide around the Tetra Oasis Total Desalination Solution, which we now have a patent on that. It produces an extremely clean form of water that aligns with those kinds of specifications.
Just to put it in context, if you look at boiler specifications for water that are required for some of these cogen power generation plants, the tap water here wouldn't pass. It doesn't meet that spec. So we're going to be taking oil field-produced water, cleaning it up, identifying the constituents in there for beneficial reuse application that can meet those specifications.
But what is the revenue benefit to you? When you talk about barrels per day, how do we think of that in terms of revenue?
Yeah. So one of the slides that Elijio mentioned, when we put out some 2030 targets, the management team outlined some of the total addressable market. The volumes of produced water that are being disposed of in the Permian Basin today alone are more than 6 billion barrels. So every barrel of oil that's produced, on average, you're going to see four or five barrels of water come along with it. So when we laid out at the NYSE end of September, we put out a 2030 target of treating to a beneficial reuse, 500,000 barrels per day. And we put in some numbers in terms of both revenue and EBITDA, what that could look like for the company.
Matt, I'll add 500,000 barrels a day. The middle graph is, it would translate to somewhere over $400 million in revenue and over $100 million of EBITDA.
Is that at the same? That's at the lower, that's not at the data center spec of water.
The cost to do it at data center spec versus surface discharge or crop irrigation is not materially different. Correct me if I'm wrong.
It's correct.
Not significant pricing difference. We're thinking that we're charging somewhere between $1.50 and $2 a barrel. If you want to do the math and we've got a 100,000 a day facility, 100,000 times $2 times 365 days a year is the type of revenue that one plant could generate. That's over $70 million for one plant out there.
Are they going to use existing infrastructure to pipe that out to data centers? Are they going to have to truck it before they do it in that regard?
Yeah. So if you look at places like the Permian Basin, again, it depends a little bit where you are. But by and large, the infrastructure is in place as far as the pipeline infrastructure moving water around. It's interconnected. Most of the large E&P operators have those networks. You have some large midstream companies. Some of them recently have IPO'd. You still also have some very large private equity-backed midstream companies. These are folks that are moving around two million, three million, four million, five million barrels of produced water a day through interconnected pipework, essentially. And then couple that with you have vast tracts of land where you can deploy these and construct these data centers. You have the gas for the power generation. You have the water. It's all right there. It's just the spec of the water that needs to be required.
Just as an example, Western Midstream announced recently that they were building what they call the Pathfinder pipeline network. And that's to move produced water. And they were moving it from where the water's coming from to an area that they could dispose of it. That same pipeline network can move the water if you build a data center anywhere along that network.
Does it matter? Can you mix the produced water with your data center spec water or do they have that different infrastructure?
So the input to our plant, so when you look at the plant that we've got.
Is the plant going to be in front of the data center?
No. We can put the plant anywhere along the network of the pipelines moving the produced water. We can put it in the middle of an oil field, and if they connect all those wells, we take that water clean and hand it back to the operator, and then the operator at that point can either pipe it or sell it to a data center operator if they're in the immediate area, so the schematic that we've got here as an example, on the left side, the produced water is coming out of the well. We treat it. We pre-treat it. We clean it with our membrane technology. We post-treat it, and then we hand it right back to the operator, and they can either surface discharge it at that site or move it to where a data center operator might need the water.
Yeah. Envision that really, ultimately, this is all moving around via pipe. Now, you get into some other basins, some other areas in the world, trucking does come into play. And in some cases, trucking's used for disposal. You even have some states here in the U.S. where you cannot dispose in a certain state. If an event comes up, they actually dispose in another state. In those cases, they truck it. The cost to do that is very high.
And then the cost of even the pipe, you've got Delaware within the state line area. They're going farther and farther.
That's right.
The way you're known, just more costs, more branches that you go across, more people taking cut.
Absolutely, and by and large, again, throughout history, water is a valuable resource. Today, it's being treated as a waste, and in fact, it's one of the largest oil field waste that there is, waste streams, but really, we view it as a significant opportunity. If you've been to some of these areas, they're very arid. Again, vast tracts of land, skilled workforce, plenty of power. What they're lacking is vast abundance of clean water, and we can make that happen.
And then just to go back to the 2030 forecast on the battery energy side, what does that contemplate in terms of deployments and gigawatts? How do you think about that?
We think that by 2030 and likely sooner, we think Eos is going to be over eight gigawatts of production. Our numbers assume eight gigawatts of production.
You might have said this in the presentation, I missed it, but with the new stuff coming online in Arkansas, how much will you be able to serve? If they pull forward demand, what can you serve? And how does that ratchet up for you?
We can keep up with slightly more than two production lines or four gigawatts. After that, it starts stressing us. And we think that by that point, our manufacturing facility is up and running. Any other questions? If you follow Tetra, the catalyst to the stock price performance, I think, has been milestones and targets that we're hitting toward each of the achievement that we've laid out here. If you follow Tetra in the coming quarters, I think the next items will be look at Eos and their backlog. And as their backlog increases by default, our backlog increases. Look at contract announcements as we announce contracts for water desalination plants and follow continued success in terms of the deep water activity and our participation in that market. I think that'll be the next three events that continue to push the Tetra stock price up.
Really, in terms of the company, the way I think about it, the company's been around almost half a century, 50 years. We have a base business. We feel we're very well respected. That base business has continued to perform at some record levels. Plus, on top of it, you layer in leveraging our skill competencies, core competencies to extrapolate those products, those set of competencies into some high growth markets. But really, it's all based around water chemistry. That's what it is. Just repurposing some of that into whether it's energy storage, but we're using what was traditionally a completion fluid in deep water offshore, getting slightly repurposed to go into energy storage. We can recycle it. We're in produced water treatment and recycling today, cleaning it up just a little bit further so that it can have a beneficial reuse application.
Then if you look at Arkansas, you're extracting different minerals for commercial applications from brine. Same thing in produced water. We're extracting clean water, but we're also concentrating up other minerals that present another opportunity set that through that concentration process, now the economics could be accretive to the overall project to target and identify certain minerals in that concentrate and also extract those. That's really the tie of the entire story in my view.
Yeah. Consistent with your theme of growth, I would challenge that there's no other small-cap energy company that's got the shots on goal, that's got the foundation and existing revenue and cash generation to have this kind of growth profile out there. Thank you, Sean.
Thank you.
How active is the Permian Basin and data centers? Is there power constraints there? Or just how does it compare to other regions?
So in my view, what I've seen, some of the initial data center deployment was up here in the Northeast. You started to see people realizing, wait a minute, they need water. And local communities, they're not going to be too enthused about taking that out of freshwater streams. In that same time, you've seen gas prices in places like the Permian where you have the associated gas production. Those rates are not economical. They're focusing on the crude, but they have vast tracts of land. They have the gas for power, and they have the water. And they have a regulatory environment and a group of E&P operators and others that are looking to attract some of these folks. And these are large-scale, well-capitalized companies with a lot of regulatory support behind them to repurpose this and really attract that investment. Again, you have skilled workforces in the area.
So I think you're starting to see a lot more of that. I'm sure Elijio talked about Eos with the energy storage. A lot of their messaging was around grid scale, wind, solar. You're already seeing some of their pipeline of opportunities transition into data centers, energy storage, and those applications. And it's in Texas.