Flotek Industries: AND PROFRAC TEAM UP TO PROVIDE SUSTAINABLE AND VERTICALLY INTEGRATED SOLUTIONS – Form 8-K

FLOTEK AND PROFRAC TEAM UP TO PROVIDE SUSTAINABLE AND VERTICALLY INTEGRATED SOLUTIONS

Innovative multi-year partnership creates compelling offering to improve operator ESG and operational performance

HOUSTON AND WILLOW PARK, TX – February 2, 2022 – Flotek Industries, Inc. (“Flotek” or the “Company”) (NYSE: FTK), a leader in technology-driven specialty green chemistry solutions, today announced its entry entered into a long-term agreement with ProFrac Services, LLC (“ProFrac”), the largest private North American provider of hydraulic fracturing services, to provide its comprehensive portfolio of sustainable chemical solutions to a dedicated portion of fracturing fleets hydraulics from ProFrac.

The partnership creates a compelling, vertically integrated solution for E&Ps to more sustainably develop natural resources, while lowering total cost of ownership. The agreement builds on ProFrac’s market-leading position and new technologies that significantly reduce greenhouse gas (“GHG”) emissions and increase efficiency with Flotek’s green chemicals that reduce the environmental impact of energy by increasing customers’ operational and ESG performance beyond existing sustainability practices.

Under the terms of the contract, Flotek will provide complete downhole chemistry solutions for a minimum required number of fleets for three years. This creates an expected immediate backlog of revenue in excess of $230 million, based on estimated chemical volumes and prices, and is expected to represent recurring annual revenue unlike traditional transactional purchases.

Main contractual highlights:

• Scope: Complete downhole chemistry for the largest 33% of ProFrac teams or 10 minimum teams

• Duration: three years

• Protections: Flotek will receive 25% of the difference between the committed volumes and the shortfall if the defined perimeter is not reached

In exchange for entering the multi-year revenue commitment, ProFrac will receive an initial principal amount of $10 million of notes convertible into common stock of Flotek (as described below). In addition, ProFrac will be permitted to appoint up to two new directors to Flotek’s Board of Directors.

Simultaneously, Flotek entered into a private equity investment (PIPE) transaction with a consortium of investors to secure growth capital for the company. Pursuant to the PIPE transaction, Flotek will issue an aggregate initial principal amount of $21.2 million of convertible notes for net cash proceeds of approximately $19 million. The investors are ProFrac Holdings, LLC, Burlington Ventures Ltd., entities associated with North Sound Management, certain funds associated with one of Flotek’s directors, including the D3 Family Fund and the D3 Bulldog Fund, and Firestorm Capital LLC. The notes issued to ProFrac and in the PIPE transaction bear interest in kind at the rate of 10% per annum, have a maturity of one year and are converted into ordinary shares of Flotek (a) at the option of the holder at any time before the at maturity, at a price of $1.088125 per share, (b) at Flotek’s option, if the volume-weighted average trading price of Flotek’s common stock is equal to or greater than $2.50 for 20 trading days on during a period of 30 consecutive trading days, or (c) at maturity, at a price of $0.8705.

John W. Gibson, Jr., chairman, president and chief executive officer of Flotek, said, “We are delighted to establish this long-term strategic partnership with ProFrac. We believe this relationship creates a compelling ESG solution for the industry and provides long-term mutual benefits for customers of both companies. Together, we have the opportunity to reduce emissions and establish green chemistry solutions, thereby protecting the air, land and water. This transformative deal creates a complete finishing solution merging operational efficiency in line with ESG objectives.

Matt Wilks, President and CFO of ProFrac, said, “Flotek is an amazing company that we have the privilege of working with. We believe this transaction presents a unique opportunity to create mutual value as we grow.

Ryan Ezell, Ph.D, President, Chemistry Technologies Segment, Flotek, said, “Our innovative partnership with ProFrac will deliver differentiated performance for operators, while reducing total cost of ownership and environmental risk. We are honored to partner with an established industry leader. , continuing our strategy to rebuild our indirect channels of market access with service companies, significantly accelerating our revenue growth and industry adoption of ESG principles.”

Piper Sandler is Flotek’s exclusive financial advisor.

About Flotek Industries, Inc.

Flotek Industries, Inc. creates solutions to reduce the environmental impact of energy on air, water, land and people. A technology-driven company specializing in green chemistry and data, Flotek helps customers in industrial, commercial and consumer markets improve their environmental, social and governance performance. Flotek’s Chemistry Technologies segment provides sustainable and optimized chemical solutions that maximize the value of our customers by increasing their ESG performance, reducing operational costs and delivering a better return on invested capital. The Company’s proprietary green chemistry, specialty chemistry, logistics and technology services enable its customers to seek improved efficiencies and performance throughout the life cycle of their desired chemical application program. Large integrated oil and gas companies, oil service companies, independent oil and gas companies, national and public oil companies, geothermal energy companies, solar energy companies and advanced alternative energy companies benefit best technologies, field operations and continuous improvement exercises that go beyond existing sustainability practices. Flotek is a publicly traded company headquartered in Houston, Texas, and its common stock trades on the New York Stock Exchange under the symbol “FTK”. For more information, please visit www.flotekind.com.

About ProFrac Holding Corp.

ProFrac is a growth-oriented, vertically integrated and innovation-driven energy services company that provides hydraulic fracturing, completions and other complementary products and services to leading upstream oil and gas companies engaged in the exploration and production (“E&P”) of North American unconventional resources. oil and gas resources. Founded in 2016, ProFrac was designed to be the go-to service provider for the most demanding hydraulic fracturing needs of E&P companies. ProFrac is focused on using new technologies to dramatically reduce “greenhouse gas” (“GHG”) emissions and increase the efficiency of what has always been an emissions-intensive component of the manufacturing process. unconventional E&P development. For more information, please visit https://profrac.com/.

Forward-looking statements

Certain statements in this press release constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding the business, financial condition, results of operations and prospects. Words such as will, continue, expect, anticipate, intend, plan, believe, seek, estimate and similar expressions or variations of these words are intended to identify forward-looking statements, but are not proprietary means of identifying forward-looking statements in this press release. Although the forward-looking statements contained in this press release reflect the good faith judgment of management. such statements can only be based on facts and factors currently known to management. Therefore, forward-looking statements are inherently subject to risks and uncertainties, and actual results and results may differ materially from the results and results discussed in the forward-looking statements. Further information about the risks and uncertainties that could affect the company is set forth in the company’s most recent filing with the Securities and Exchange Commission on Form 10-K (including, without limitation, in the “Risk Factors” section herein), and in the Company’s other filings with the SEC and publicly available documents. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to revise or update any forward-looking statements to reflect any event or circumstance that may occur after the date of this press release.

Information, contact:

Flotec Industries

Investor Relations

E: [email protected]

T.: (713) 726-5322

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