Oil services firm CarboCeramics (NYSE:CRR) must have felt like one of the hydraulically fractured oil wells propped open by its ceramic beads; its stock price fractured yesterday on badly missed revenue and earnings estimates, falling 25%.

Companies like Halliburton (NYSE:HAL), BJ Services (NYSE:BJS), and Schlumberger (NYSE:SLB) use the ceramic beads, called proppants, to keep oil wells propped open, allowing the black gold to flow more freely. When high oil prices rise, as they have lately, the need for proppants rises dramatically, since oil companies find it more economical to extract more oil from existing wells rather than exploring for new reserves.

This should have made Carbo Ceramics products more desirable; analysts had predicted greater-than-30% growth in revenues for the quarter. While higher demand allowed the company to raise average selling prices for the premium ceramic beads by 7% in the quarter, customers responded by shifting purchases to lower-cost sand-based proppants. Moreover, demand declined precipitously overseas, primarily because of slack demand in Russia, where increased delays have beset a new plant under construction. Coupled with falling demand in the Middle East, sales volume fell 21% compared to last year.

Demand in North America remained strong, though, as sales volume rose 16% over 2005's second quarter. Since approximately 60% of Carbo Ceramics' sales come from its North American operations, the company was still able to post record revenues, though that figure missed expectations. Is the proppant-maker an attractive investment now, since it trades some 55% below the 52-week high achieved last September, at its lowest level in more than two years?

In addition to significant competition in Russia, several of Carbo Ceramics' patents will expire this year, with several more following in the next few years, allowing competitors to move into its market. With the company relying upon its top three customers for 65% of its revenues, it may not be able to raise its prices as easily as it has in the past, despite continued demand growth in North America.

Though Carbo's competitors have a sizeable lead in the Russian market, the former Soviet state has enough demand to justify the construction of a local manufacturing plant for Carbo's wares. There have been some delays and apparent cost overruns, but management expects its sales picture to improve measurably once the facility is up and running. Its locally manufactured proppants will also avoid the transportation and duty costs now imposed on them, making Carbo better able to compete with rival products.

Carbo always faces new competition, but at present, it has no real domestic threats to its industry-leading position. It provides 40% of the ceramic proppants and 7% of all the proppants used worldwide. Its primary competitor is France-based Saint-Gobain, and to a lesser extent Brazilian MineracaoCurimbaba, both of which make proppants similar to Carbo's. Neither, though, makes a lightweight proppant, Carbo's most widely used product.

The loss of patents will hurt Carbo's results somewhat, but there's more to industry demand than price sensitivity. The company can fall back on additional services such as the fracture diagnostic software provided through its Pinnacle Technologies acquisition, the world's most widely used model. Those sorts of value-added revenues contributed $7.8 million this quarter, up 16% from last year's $6.7 million.

Though revenues were hit by depressed demand in Russia, and earnings affected by higher costs from the new factory and increased marketing of Pinnacle's services, these temporary setbacks should correct themselves over the next quarter or so. To this Fool, Carbo Ceramics looks like an attractive investment at these prices.

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Fool contributor Rich Duprey owns shares in Carbo Ceramics but does not own any of the other stocks mentioned in this article. The Motley Fool has a disclosure policy.