Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information

Segment Information

Note 15 — Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by chief operating decision-makers to determine allocation of resources and assessment of performance.

The Company is comprised of three reportable segments; Chemicals, Drilling, and Artificial Lift:

• Chemicals consist of two business divisions: 1) Specialty Chemicals and 2) Logistics. Specialty Chemicals designs, develops, manufactures, packages and sells chemicals used by oilfield service companies in oil and natural gas well drilling, cementing, stimulation and production activities. The Logistics division manages automated handling, loading facilities, and blending capabilities of bulk materials for oilfield service companies.

• Drilling rents, inspects, manufactures and markets down-hole drilling equipment used in energy, mining, and water well and industrial drilling activities.

• Artificial Lift manufactures and markets artificial lift equipment, including the Petrovalve line of beam pump components, electric submersible pumps and gas separators, valves and services that support coal bed methane production activities.

The Company evaluates performance based upon several criteria. The primary financial measure is business segment income before taxes. Various functions, including certain sales and marketing activities and general and administrative activities are provided centrally by the corporate office. Costs associated with corporate office functions, other corporate income and expense items, as well as estimated income tax provisions (benefits), are not allocated to reportable segments. Intersegment revenue totaled approximately $2.0 million, or 3.5%, of consolidated revenue and $ 1.7 million, or 5.1%, of consolidated revenue for the three months ended June 30, 2011 and 2010, respectively and $4.5 million, or 4.0% and $3.6 million, or 5.7% of consolidated revenue for the six months ended June 30, 2011 and 2010, respectively.

Summarized financial information regarding reportable segments for the three months and six months ended June 30, 2011 and 2010 includes (in thousands):

	Chemicals		Drilling			Artificial Lift			Corporate and Other			Total
Three Months Ended June 30, 2011
Net revenue from external customers	$	29,142	$	24,464		$	2,312		$	—		$	55,918
Gross margin		11,011		10,808			425			—			22,244
Income (loss) from operations		8,266		5,905			(32	)		(6,233	)		7,906
Depreciation and amortization		390		1,981			52			73			2,496
Total assets		58,261		108,468			8,889			18,065			193,683
Capital expenditures		111		2,136			—			169			2,416
Three Months Ended June 30, 2010
Net revenue from external customers	$	14,017	$	14,861		$	2,296		$	—		$	31,174
Gross margin		6,403		4,215			733			—			11,351
Income (loss) from operations		3,984		(232	)		379			(7,544	)		(3,413	)
Depreciation and amortization		432		2,946			54			80			3,512
Total assets		37,038		116,074			7,489			25,147			185,748
Capital expenditures		87		1,095			21			5			1,208

	Chemicals		Drilling			Artificial Lift		Corporate and Other			Total
Six Months Ended June 30, 2011
Net revenue from external customers	$	56,068	$	47,105		$	5,650	$	—		$	108,823
Gross margin		22,312		19,753			1,324		—			43,389
Income (loss) from operations		16,791		10,602			394		(10,597	)		17,190
Depreciation and amortization		780		3,923			105		156			4,964
Total assets		58,261		108,468			8,889		18,065			193,683
Capital expenditures		161		2,955			11		530			3,657
Six Months Ended June 30, 2010
Net revenue from external customers	$	27,129	$	27,772		$	4,643	$	—		$	59,544
Gross margin		12,215		5,734			1,414		—			19,363
Income (loss) from operations		7,680		(3,401	)		633		(12,059	)		(7,147	)
Depreciation and amortization		864		5,874			111		161			7,010
Total assets		37,038		116,074			7,489		25,147			185,748
Capital expenditures		126		2,023			29		5			2,183

One customer and its affiliates accounted for $7.1 million and $3.2 million of consolidated revenue for the three months ended June 30, 2011 and 2010, respectively and for $14.3 million and $6.9 million of consolidated revenue for the six month ended June 30, 2011 and 2010, respectively. Over 97.9% and 97.4% of aforementioned revenue for the three and six months periods ended June 30, 2011, and 97% respectively, and approximately 97% for the same periods in 2010 were attributable to sales within Chemicals.

Revenue by country is based upon the location of services provided and products sold. Revenue by geographic location is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
United States	$	50,775	$	26,714	$	95,850	$	50,968
Other Countries		5,143		4,460		12,973		8,576
Total	$	55,918	$	31,174	$	108,823	$	59,544

Long-lived assets held in countries other than the U.S. at June 30, 2011 represent 4.1%, or $8.0 million, of total assets of $193.7 million. Long-lived assets held in countries other than the U.S. at June 30, 2010 represented 1.6%, or $2.9 million, of total assets of $185.7 million.