TETRA Technologies' Smackover Expansion: A Strategic Play in Critical Minerals and Low-Carbon Transition

The Smackover Formation’s Evergreen Unit has long been a cornerstone of TETRA TECHNOLOGIES, INC.’s (TETRA) operations, but the company’s April 2025 expansion and test well results now position it as a critical player in both traditional energy services and the emerging market for low-carbon minerals. This move isn’t just about incremental growth—it’s a bold pivot toward capturing value from resources that underpin the global shift toward renewable energy systems.

Key Developments: Expanding Acreage, Unlocking Critical Minerals

The April expansion increased the Evergreen Unit’s gross acreage by 13% to 6,953 acres, following a third-party test well that revealed lithium concentrations exceeding initial estimates. This is significant because lithium is a cornerstone of battery technology for electric vehicles and energy storage systems. Equally notable, reservoir studies by Lonquist Engineering identified magnesium and manganese—both classified as “critical minerals” by the U.S. government—within the brine reservoirs. These metals are essential for aerospace, defense, and high-tech industries but are currently heavily imported. By tapping into these resources, TETRA could reduce U.S. reliance on foreign suppliers while capitalizing on surging demand.

The Arkansas Oil & Gas Commission (AOGC) approved the expansion on April 22, 2025, with final regulatory sign-off expected within 30 days. Saltwerx, LLC’s 35% stake in brine rights and TETRA’s operational control ensure a collaborative structure to exploit these assets.

Test Well Results and Resource Potential

The test well’s success has prompted TETRA to update its reservoir model, with a qualified person report expected to quantify incremental bromine and lithium reserves. Bromine, a key input for TETRA’s industrial chemical business (22% of 2024 revenue), now gains additional strategic value as the company explores its role in emerging technologies like zinc-bromine batteries (patented for Eos Energy’s aqueous zinc systems). Meanwhile, lithium’s inclusion in the mix aligns with TETRA’s partnership with SWA Lithium and Standard Lithium, which grants it a 2.5% royalty on lithium revenues from the Smackover Formation.

Financial Context: Scaling for Growth Amid Volatility

TETRA’s Q4 2024 revenue of $135 million, with its Industrial Chemicals segment hitting a record 22% of total revenue (up 9% YoY), signals strong operational momentum. However, its 2025 net income guidance of $19–34 million and adjusted EBITDA of $55–65 million highlights the challenges of balancing growth with cost discipline. The Smackover expansion’s 12% reduction in operating costs and 15% production capacity increase suggest efficiency gains that could improve margins over time.

The 20% rise in proven reserves due to better reservoir modeling and infrastructure upgrades—including a new gas processing facility set to come online in Q3 2025—further strengthen the project’s economic viability. These upgrades should also reduce emissions and water usage, aligning with ESG priorities that increasingly influence investor decisions.

Risks and Regulatory Hurdles

Despite the optimism, TETRA faces hurdles. Critical minerals like lithium and magnesium lack demonstrated economic viability for extraction in the Smackover Formation, per the company’s disclosures. Processing complexities—such as separating lithium from brine in competition with projects by ExxonMobil and Standard Lithium—could strain margins. Additionally, global commodity price swings, particularly in lithium, pose market risks.

Conclusion: A Pivot with Potential, Anchored in Real Data

TETRA’s Smackover expansion represents a calculated bet on two trends: the low-carbon energy transition and U.S. strategic needs for domestic critical minerals. The 13% acreage increase, successful test well results, and partnerships with industry leaders like Eos Energy and Equinor create a multi-pronged growth path. Key metrics to watch include:
- The qualified person report’s reserve estimates for lithium and magnesium, due imminently.
- Operational execution of the Q3 2025 gas processing facility, which could boost production by 15%+ as advertised.
- Earnings trajectory: If TETRA’s 2025 EBITDA midpoint of $60 million exceeds its 2024 performance, it would validate cost-saving measures.

While risks remain, the company’s $135M revenue base, technical expertise in brine extraction, and strategic alliances position it to capitalize on a $500 billion+ global market for critical minerals by 2030. Investors seeking exposure to both energy services and the green economy should view TETRA’s Smackover play as a compelling, data-backed opportunity—not just a speculative bet.

In short, TETRA is not merely expanding acreage; it is redefining its role in the energy ecosystem. The next 12 months will test whether this pivot can translate geological potential into shareholder returns.