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What changed in NCS Multistage Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NCS Multistage Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+186 added−345 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-08)

Top changes in NCS Multistage Holdings, Inc.'s 2024 10-K

186 paragraphs added · 345 removed · 149 edited across 3 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

137 edited+37 added−48 removed186 unchanged
Biggest changeRisks Related to Our Business and the Oil and Natural Gas Industry Our business depends on the levels of expenditures by companies in the oil and natural gas industry and particularly on the level of E&P activity in Canada, the United States and internationally. The cyclicality of the oil and natural gas industry may cause our results of operations to fluctuate. Competition within our industry may adversely affect our ability to market our services. We may not be able to successfully implement our strategy of increasing sales of our products and services for use in the U.S. or select international markets. The loss of any of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue and cash flow to decline substantially. The products and services we provide are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation. Losses and liabilities from operating activities could have a material adverse effect on our business, financial condition and results of operations. Explosive incidents arising out of dangerous materials used in our business could disrupt operations and result in bodily injuries and property damages. We are exposed to counterparty credit risk. The growth of our business through acquisitions or strategic partnerships exposes us to various risks, including identifying suitable opportunities and integrating businesses, assets and personnel. We may be adversely affected by the effects of inflation. Disruptions or delays involving our suppliers or increases in prices for the components, raw materials and parts that we obtain from our suppliers could have an adverse effect on our business. Our success may depend on the continued service and availability of key personnel. We conduct a portion of our operations through the Repeat Precision joint venture, which subjects us to additional risks that could adversely affect the success of these operations, which could adversely impact our business, financial position and results of operations. A significant amount of our revenue generated is denominated in CAD and could be negatively impacted by currency fluctuations. Our operations may be limited or disrupted during severe weather conditions. We may hold excess or obsolete inventory or have insufficient inventory. 13 Table of Contents We could be subject to additional income tax liabilities. Our operations and our customers’ operations are subject to a variety of governmental laws and regulations. Policy changes affecting international trade could adversely impact our business.
Biggest changeRisks Related to Our Business and the Oil and Natural Gas Industry ● Our business depends on the levels of expenditures by companies in the oil and natural gas industry and particularly on the level of E&P activity in Canada, the United States and internationally. ● The cyclicality of the oil and natural gas industry may cause our results of operations to fluctuate. ● Competition within our industry may adversely affect our ability to market our services. ● We may not be able to successfully implement our strategy of increasing sales of our products and services for use in the United States or select international markets. ● The loss of any of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue and cash flow to decline substantially. ● The products and services we provide are used in operations that are subject to potential hazards inherent in the oil and natural gas industry, including as a result of the use of explosive materials in our manufacturing processes and products, and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation. ● Losses and liabilities from our operations could have a material adverse effect on our business, financial condition and results of operations. ● Policy changes affecting international trade, including the potential imposition of new or increased tariffs, could adversely impact our business. ● We are exposed to counterparty credit risk. ● The growth of our business through acquisitions or strategic partnerships exposes us to various risks, including identifying suitable opportunities and integrating businesses, assets and personnel. ● We may be adversely affected by the effects of inflation or negatively impacted by currency fluctuations as a significant amount of our revenue generated is denominated in CAD. ● Disruptions or delays involving our suppliers or increases in prices for the components, raw materials and parts that we obtain from our suppliers could have an adverse effect on our business. ● Our success may depend on the continued service and availability of key personnel, including attracting and retaining skilled and technically knowledgeable employees. 15 Table of Contents ● Our operations may be limited or disrupted during severe weather conditions. ● We may hold excess or obsolete inventory or have insufficient inventory. ● Our operations and our customers’ operations are subject to a variety of governmental laws and regulations.
Risks Related to Environmental and Regulatory Matters Restrictions on the ability of our customers to obtain water may have a material adverse effect on our business. The adoption of climate change legislation or regulations restricting emissions of GHGs, and associated litigation, could result in increased compliance or operating costs, limit the areas in which our customers may conduct E&P activities, and reduce demand for oil and natural gas. Federal, state and provincial legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays on our customers. Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect the ability of our customers to conduct drilling activities in some of the areas where we operate. We may not be able to meet applicable regulatory requirements for our use of certain chemicals by our tracer diagnostics business.
Risks Related to Environmental and Regulatory Matters ● Restrictions on the ability of our customers to obtain water may have a material adverse effect on our business. ● The adoption of climate change legislation or regulations restricting emissions of GHGs, and associated litigation, could result in increased compliance or operating costs, limit the areas in which our customers may conduct E&P activities, and reduce demand for oil and natural gas. ● Federal, state and provincial legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays on our customers. ● Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect the ability of our customers to conduct drilling activities in some of the areas where we operate. ● We may not be able to meet applicable regulatory requirements for use of certain chemicals by our tracer diagnostics business.
The cyclicality of the oil and natural gas industry may cause our results of operations to fluctuate. We derive our revenues from companies engaged in oil and natural gas exploration and production, a historically cyclical industry with levels of activity that are significantly affected by the levels and volatility of oil and natural gas prices.
The cyclicality of the oil and natural gas industry may cause our results of operations to fluctuate. We derive our revenues from companies engaged in oil and natural gas exploration and production, a historically cyclical industry with levels of activity that are significantly affected by the volatility of oil and natural gas prices.
Our outstanding indebtedness, and any additional indebtedness we incur, may have important consequences for us, including, without limitation, that: we may be required to use a substantial portion of our cash flow to pay the principal of and interest on our indebtedness; our indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressures; our ability to obtain additional financing for working capital, capital expenditures, acquisitions and for general corporate and other purposes may be limited; our indebtedness may expose us to the risk of increased interest rates because our borrowings are at variable rates of interest (including SOFR); our indebtedness may prevent us from taking advantage of business opportunities as they arise or successfully carrying out our plans to expand our business; and our flexibility in planning for, or reacting to, changes in our business and our industry may be limited by covenants in our indebtedness documents.
Our outstanding indebtedness, and any additional indebtedness we incur, may have important consequences for us, including, without limitation, that: we may be required to use a substantial portion of our cash flow to pay the principal of and interest on our indebtedness; our indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressures; our ability to obtain additional financing for working capital, capital expenditures, acquisitions and for general corporate and other purposes may be limited; our indebtedness may expose us to the risk of increased interest rates because our borrowings are at variable rates of interest; our indebtedness may prevent us from taking advantage of business opportunities as they arise or successfully carrying out our plans to expand our business; and our flexibility in planning for, or reacting to, changes in our business and our industry may be limited by covenants in our indebtedness documents.
Our Second Amended and Restated Certificate of Incorporation (as amended by the Certificate of Amendment, our “amended and restated certificate of incorporation”) provides that Advent and our directors that were previously affiliated with Advent do not have any obligation to offer us an opportunity to participate in business opportunities presented to them even if the opportunity is one that we might reasonably have pursued (and therefore may be free to compete with us in the same business or similar businesses), and that, to the extent permitted by law, Advent and such directors, will not be liable to us or our stockholders for breach of any duty by reason of any such activities.
Our Second Amended and Restated Certificate of Incorporation (as amended by the Certificate of Amendment, our “amended and restated certificate of incorporation”) provides that Advent and our directors who were previously affiliated with Advent do not have any obligation to offer us an opportunity to participate in business opportunities presented to them even if the opportunity is one that we might reasonably have pursued (and therefore may be free to compete with us in the same business or similar businesses), and that, to the extent permitted by law, Advent and such directors, will not be liable to us or our stockholders for breach of any duty by reason of any such activities.
In addition, more stable or higher commodity prices do not necessarily translate to a higher level of expenditures by companies in the oil and natural gas industry. For example, in recent years, investors in E&P companies have been prioritizing free cash flow and return of capital to shareholders over production growth, leading to lower expenditures.
In addition, more stable or higher commodity prices do not necessarily translate to a higher level of expenditures by companies in the oil and natural gas industry. For example, in recent years, certain investors in E&P companies have been prioritizing free cash flow and return of capital to shareholders over production growth, leading to lower expenditures.
While the scope and future implementation of any final rules and regulations regarding such proposed NSPS in the United States or the Federal Cap Framework in Canada, emissions requirements and financial incentives, remain uncertain, these rules and regulations could have an adverse effect on our customers and result in an indirect material adverse effect on our business.
While the scope and future implementation of any final rules and regulations regarding such proposed NSPS in the United States or the federal emissions cap regulations in Canada, emissions requirements and financial incentives, remain uncertain, these rules and regulations could have an adverse effect on our customers and result in an indirect material adverse effect on our business.
Our operations may be limited or disrupted in certain parts of the continental United States, Canada and the North Sea during severe weather conditions, including severe winters or wildfires, which could have a material adverse effect on our business, financial condition and results of operations.
Our operations may be limited or disrupted in certain parts of the continental United States, Canada and the North Sea during severe weather conditions, particularly, including severe winters or wildfires, which could have a material adverse effect on our business, financial condition and results of operations.
We conduct business globally, and our business activities and services are subject to import and export control laws and regulations, as well as economic sanctions and other international trade laws of the United States and other countries. We must comply with U.S. export and import controls, economic sanctions, embargoes and other international trade laws, including the U.S.
We conduct business globally, and our business activities and services are subject to import and export control laws and regulations, as well as economic sanctions and other international trade laws of the United States and other countries. We must comply with U.S. export and import controls, economic sanctions, tariffs, embargoes and other international trade laws, including the U.S.
In addition, despite our intention to generally allocate risk under contracts, we might not have any contract arrangement which allocates responsibility or may operate under more onerous terms and conditions proposed by customer.
In addition, despite our intention to generally allocate risk under contracts, we might not have any contract arrangement which allocates responsibility or may operate under more onerous terms and conditions proposed by the customer.
In addition, business acquisitions and strategic partnerships involve a number of risks that could affect our business, financial condition and results of operations, including but not limited to: our ability to integrate or implement operational, accounting and technology policies, processes and systems; our ability to integrate personnel and human resources systems as well as the cultures of each of the acquired businesses; our ability to implement our business plan for the acquired business; transition of operations, users and clients to our existing platforms or the integration of data, systems and technology platforms with ours; compliance with regulatory requirements and avoiding potential conflicts of interest in markets that we serve; diversion of management’s attention and other resources; our ability to retain or replace key personnel; our ability to maintain relationships with the customers of the acquired business or a strategic partner and further develop the acquired business or the business of our strategic partner; our ability to cross-sell our products and services and products and services of the acquired businesses or strategic partners to our respective clients; entry into unfamiliar markets; assumption of unanticipated legal or financial liabilities and/or negative publicity related to prior acts by the acquired entity; litigation or other claims in connection with the acquired company, including claims from terminated employees, clients, former stockholders or third parties; misuse of intellectual property by our strategic partners; disagreements with strategic partners or a misalignment of incentives within any strategic partnership; 19 Table of Contents becoming subject to increased regulation as a result of an acquisition; becoming significantly leveraged as a result of incurring debt to finance an acquisition; unanticipated operating, accounting or management difficulties in connection with the acquired entities; and impairment of acq uired intangible assets, including goodwill, and dilution to our earnings per share.
In addition, business acquisitions and strategic partnerships involve a number of risks that could affect our business, financial condition and results of operations, including but not limited to: ● our ability to integrate or implement operational, accounting and technology policies, processes and systems; ● our ability to integrate personnel and human resources systems as well as the cultures of each of the acquired businesses; ● our ability to implement our business plan for the acquired business; ● transition of operations, users and customers to our existing platforms or the integration of data, systems and technology platforms with ours; ● compliance with regulatory requirements and avoiding potential conflicts of interest in markets that we serve; ● diversion of management’s attention and other resources; ● our ability to retain or replace key personnel; ● our ability to maintain relationships with the customers of the acquired business or a strategic partner and further develop the acquired business or the business of our strategic partner; ● our ability to cross-sell our products and services and products and services of the acquired businesses or strategic partners to our respective customers; ● entry into unfamiliar markets; ● assumption of unanticipated legal or financial liabilities and/or negative publicity related to prior acts by the acquired entity; ● litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or third parties; 24 Table of Contents ● misuse of intellectual property by our strategic partners; ● disagreements with strategic partners or a misalignment of incentives within any strategic partnership; ● becoming subject to increased regulation as a result of an acquisition; ● becoming significantly leveraged as a result of incurring debt to finance an acquisition; ● unanticipated operating, accounting or management difficulties in connection with the acquired entities; and ● impairment of acquired intangible assets, including goodwill, and dilution to our earnings per share.
As permitted by our status as a controlled company, we may choose to change our Board composition, or the composition of the compensation, nominating and corporate governance committee.
As permitted by our status as a controlled company, we may choose to change our Board composition, or the composition of the Compensation, Nominating and Governance Committee.
Weather conditions may also affect the price of crude oil and natural gas, and related demand for our services. 21 Table of Contents If we are unable to accurately predict customer demand or if customers cancel their orders on short notice, we may hold excess or obsolete inventory, which would reduce gross margins.
Weather conditions may also affect the price of crude oil and natural gas, and related demand for our services. 27 Table of Contents If we are unable to accurately predict customer demand or if customers cancel their orders on short notice, we may hold excess or obsolete inventory, which would reduce gross margins.
Client dissatisfaction or performance problems with a particular acquired entity or resulting from a strategic partnership could have a material adverse effect on our reputation as a whole. We may be unable to profitably manage any acquired entities, or we may fail to integrate them successfully without incurring substantial expenses, delays or other problems.
Customer dissatisfaction or performance problems with a particular acquired entity or resulting from a strategic partnership could have a material adverse effect on our reputation as a whole. We may be unable to profitably manage any acquired entities, or we may fail to integrate them successfully without incurring substantial expenses, delays or other problems.
In addition, substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas our customers produce. 27 Table of Contents In addition, various federal and/or state common law claims have been made against certain energy companies alleging that GHG emissions have resulted in actionable damages.
In addition, substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas our customers produce. 35 Table of Contents In addition, various federal and/or state common law claims have been made against certain energy companies alleging that GHG emissions have resulted in actionable damages.
For example, we may: share approval rights over certain major decisions and may not be able to fully control decisions, including cash distributions to us from the joint venture; devote significant management time to the requirements of, and matters relating to, the joint ventures; engage in disputes that may result in delays, litigation or operational impasses; 20 Table of Contents incur liabilities as a result of an action taken by our joint venture partner, including leaving us liable for the other joint venture partners’ shares of joint venture liabilities; not receive credit for additional borrowing capacity under the borrowing base of our ABL Facility, as in the case with the Repeat Precision joint venture; breach a covenant or restriction in the promissory note entered into by Repeat Precision (the “ Repeat Precision Promissory Note”); have different systems or controls at the joint venture, which may subject us to additional risks and vulnerabilities; and not carry adequate insurance policies that fully cover loss or damage incurred by both us and our joint venture partners in certain circumstances.
For example, we may: ● share approval rights over certain major decisions and may not be able to fully control decisions, including cash distributions to us from the joint venture; ● devote significant management time to the requirements of, and matters relating to, the joint ventures; ● engage in disputes that may result in delays, litigation or operational impasses; ● incur liabilities as a result of an action taken by our joint venture partner, including leaving us liable for the other joint venture partners’ shares of joint venture liabilities; ● not receive credit for additional borrowing capacity under the borrowing base of our ABL Facility, as in the case with the Repeat Precision joint venture; ● breach a covenant or restriction in the promissory note entered into by Repeat Precision (the “Repeat Precision Promissory Note”); ● have different systems or controls at the joint venture, which may subject us to additional risks and vulnerabilities; and ● not carry adequate insurance policies that fully cover loss or damage incurred by both us and our joint venture partners in certain circumstances.
Item 1A. Risk F actors Described below are certain risks that we believe apply to our business and the industry in which we operate. You should carefully consider each of the following risk factors in conjunction with other information provided in this Form 10-K and in our other public disclosures.
Item 1A. Risk Factors Described below are certain risks that we believe apply to our business and the industry in which we operate. You should carefully consider each of the following risk factors in conjunction with other information provided in this Form 10-K and in our other public disclosures.
Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays on our customers, which could in turn decrease the demand for our products and services. Our business is dependent on the ability of our customers to conduct hydraulic fracturing and horizontal drilling activities.
Legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays on our customers, which could in turn decrease the demand for our products and services. Our business is dependent on the ability of our customers to conduct hydraulic fracturing and horizontal drilling activities.
In addition, we issue equivalent stock units, or cash-settled, liability-classified RSUs (“ESUs”) that are settled in cash at the closing price of our common stock on the day of vesting, which may require us to pay a substantial amount and could impact our liquidity.
In addition, we issue equivalent stock units, or cash-settled, liability-classified restricted stock units (“ESUs”) that are settled in cash at the closing price of our common stock on the day of vesting, which may require us to pay a substantial amount and could impact our liquidity.
Moreover, if any of our counterparties or jurisdictions where we do business becomes the target of economic sanctions, we may face an array of issues, including, but not limited to, having to abandon the related project, being unable to recoup prior invested time and capital or being subject to lawsuits, investigations or regulatory proceedings that could be time consuming and expensive to respond to, and which 23 Table of Contents could lead to criminal or civil fines or penalties.
Moreover, if any of our counterparties or jurisdictions where we do business becomes the target of economic sanctions, we may face an array of issues, including, but not limited to, having to abandon the related project, being unable to recoup prior invested time and capital or being subject to lawsuits, investigations or regulatory proceedings that could be time consuming and expensive to respond to, and which could lead to criminal or civil fines or penalties.
Our business and our customers’ businesses may be significantly affected by: federal, state and local and non-U.S. laws and other regulations relating to import tariffs, oilfield operations, worker safety and protection of the environment; changes in these laws and regulations; and the level of enforcement of these laws and regulations.
Our business and our customers’ businesses may be significantly affected by: ● federal, state and local and non-U.S. laws and other regulations relating to import tariffs, oilfield operations, employment, labor, worker safety and protection of the environment; ● changes in these laws and regulations; and ● the level of enforcement of these laws and regulations.
If we are unable to continue to develop and produce competitive technology or deliver it to our clients in a timely and cost-competitive manner in the various markets we serve, it could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to continue to develop and produce competitive technology or deliver it to our customers in a timely and cost-competitive manner in the various markets we serve, it could have a material adverse effect on our business, financial condition and results of operations.
As a result, Advent or any of its managers, officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries (other than us and our subsidiaries) will not be prohibited from investing in competing businesses or doing business with our clients.
As a result, Advent or any of its managers, officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries (other than us and our subsidiaries) will not be prohibited from investing in competing businesses or doing business with our customers.
We are unable to predict what effect the energy transition may have on prices, spending by customers, selling strategies, competitive position, customer retention or our ability to negotiate favorable agreements with customers. Advancements in drilling and well completion technologies and processes could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We are unable to predict what effect the energy transition may have on prices, spending by customers, selling strategies, competitive position, customer retention or our ability to negotiate favorable agreements with customers. 31 Table of Contents Advancements in drilling and well completion technologies and processes could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Any legal proceeding concerning intellectual property is generally not covered by insurance and could be protracted and costly regardless of the merits of any claim and is inherently unpredictable and could have a material adverse effect on our financial condition, regardless of the outcome.
Any legal proceeding concerning intellectual property is not currently covered by insurance and could be protracted and costly regardless of the merits of any claim and is inherently unpredictable and could have a material adverse effect on our financial condition, regardless of the outcome.
To sell the fracturing systems products and services we must convince customers of the benefits of pinpoint stimulation as compared to traditional well completion techniques, which remain the prevailing methods to complete wells in the United States.
In the United States, we sell a variety of products and services. To sell the fracturing systems products and services we must convince customers of the benefits of pinpoint stimulation as compared to traditional well completion techniques, which remain the prevailing methods to complete wells in the United States.
Moreover, failure to comply with applicable requirements or the occurrence of an explosive incident may also result in the loss of our licenses to store and handle explosives, which would have a material adverse effect on our business, financial condition and results of operations. We are exposed to counterparty credit risk.
Moreover, failure to comply with applicable requirements or the occurrence of an explosive incident may also result in the loss of our licenses to store and handle explosives, which would have a material adverse effect on our business, financial condition and results of operations. 23 Table of Contents We are exposed to counterparty credit risk.
Also, should a low commodity price environment impact our customers’ expenditures, we could encounter difficulties such as an inability to access needed capital on attractive terms or at all, the incurrence of impairment charges, a reduction in our borrowing capacity under our ABL Facility, a need to reduce our capital spending and other similar impacts, any of which could have a material adverse effect on our business, financial condition and results of operations.
Also, should a low commodity price environment curtail our customers’ level of operating expenditures, we could encounter difficulties such as an inability to access needed capital on attractive terms or at all, the incurrence of impairment charges, a reduction in our borrowing capacity under our ABL Facility, a need to reduce our capital spending and other similar impacts, any of which could have a material adverse effect on our business, financial condition and results of operations.
Our inability to satisfy the fixed charge coverage ratio could render us unable to borrow under the ABL Facility at the time when liquidity is most needed. A breach of any covenant or restriction contained in the agreement governing our Available Loans could result in an event of default thereunder.
Our inability to satisfy the fixed charge coverage ratio could render us unable to borrow under the ABL Facility at the time when liquidity is most needed. 38 Table of Contents A breach of any covenant or restriction contained in the agreement governing our Available Loans could result in an event of default thereunder.
Our operations are dependent upon the continued ability of our suppliers to deliver the components, raw materials and parts that we need to manufacture our products. In some instances, we purchase components, raw materials and parts that are ultimately derived from a single source and may be at an increased risk for supply disruptions.
Our operations are dependent upon the continued ability of our suppliers to deliver the components, raw materials and parts that we need to manufacture our products. In some instances, we purchase components, raw materials and parts that are ultimately derived from a single source, or a limited number of suppliers, and may be at an increased risk for supply disruptions.
Although it is not possible at this time to predict how any legal requirements imposed following the implementation of the Paris Agreement, subsequent international negotiations or otherwise that may be adopted or issued to address GHG emissions would impact our business or that of our customers, any such future laws, regulations or legal requirements imposing reporting or permitting obligations on, or limiting emissions of GHGs from, oil and natural gas exploration activities could require our customers to incur costs to reduce emissions of GHGs associated with their operations.
Although it is not possible at this time to predict how any legal requirements imposed following these or subsequent international negotiations or otherwise that may be adopted or issued to address GHG emissions would impact our business or that of our customers, any such future laws, regulations or legal requirements imposing reporting or permitting obligations on, or limiting emissions of GHGs from, oil and natural gas exploration activities could require our customers to incur costs to reduce emissions of GHGs associated with their operations.
In addition, the development of new processes to replace hydraulic fracturing altogether or that replace our 24 Table of Contents technologies, could cause a decline in the demand for the products and services that we provide and could result in a material adverse effect on our business, financial condition and results of operations.
In addition, the development of new processes to replace hydraulic fracturing altogether or that replace our technologies, could cause a decline in the demand for the products and services that we provide and could result in a material adverse effect on our business, financial condition and results of operations.
We are controlled by funds (the “Advent Funds”) managed by Advent, which beneficially own in the aggregate 60% of the combined voting power of our common stock.
We are controlled by funds (the “Advent Funds”) managed by Advent, which beneficially own in the aggregate 59% of the combined voting power of our common stock.
In addition, wildfires in Canada, which are more common in spring, can result in selected shut-ins of oil and natural gas production.
In addition, wildfires in Canada, which are more common in spring and summer seasons, can result in selected shut-ins of oil and natural gas production.
Risks Relating to Our Indebtedness We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to meet our obligations. We are a holding company that does not conduct any business operations of our own.
We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to meet our obligations. We are a holding company that does not conduct any business operations of our own.
Various U.S. states or groups of states also have adopted or considered adopting legislation, regulations or other governmental actions focused on reducing GHG emissions, including cap and trade programs, carbon taxes, restricting methane emissions from exploration and production activities, reporting and tracking initiatives and renewable portfolio standards.
Various U.S. states or groups of states also have adopted or considered adopting legislation, regulations or other governmental actions focused on reducing GHG emissions, including cap and trade programs, carbon taxes, restricting methane emissions from E&P activities, reporting and tracking initiatives and renewable portfolio standards.
Any material weakness in our internal control over 33 Table of Contents financial reporting could result in a material misstatement of our annual or interim consolidated financial statements that may not be prevented or detected on a timely basis.
Any material weakness in our internal control over financial reporting could result in a material misstatement of our annual or interim consolidated financial statements that may not be prevented or detected on a timely basis.
Such an impairment would result in non-cash charges and may indicate that conditions exist which could otherwise materially adversely affect our business, financial condition and results of operations . 22 Table of Contents Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that may increase our costs, limit the demand for our products and services or restrict our operations.
Such an impairment would result in non-cash charges and may indicate that conditions exist which could otherwise materially adversely affect our business, financial condition and results of operations. 29 Table of Contents Our operations and our customers ’ operations are subject to a variety of governmental laws and regulations that may increase our costs, limit the demand for our products and services or restrict our operations.
Before we can manufacture or distribute significant volumes of a chemical, we need to determine whether that chemical is listed in the TSCA inventory. If the substance is listed, then manufacture or distribution can commence immediately. If not, then we must file a Pre-Manufacture Notice (“PMN”) with the EPA for review.
Before we can manufacture or distribute significant volumes of a chemical, we need to determine whether that chemical is listed in the TSCA inventory. If the substance is listed, then manufacture or distribution can commence immediately. If not, then we must file a PMN with the EPA for review.
Under our ABL Facility, which is secured by substantially all of our assets, we may borrow up to the lesser of a borrowing base and $35.0 million, with sublimits for loans in Canadian dollars, letters of credit and swingline loans.
Under our ABL Facility, which is secured by substantially all our assets, we may borrow up to the lesser of a borrowing base or $35.0 million, with sub limits for loans in Canadian dollars, letters of credit and swingline loans.
Many factors over which we have no control affect the supply of and demand for, and our customers’ willingness to explore, develop and produce oil and natural gas, and therefore, influence the volumes we can sell and the prices we can charge for our products and services, including: the global supply of and demand for oil and natural gas; the level of prices, and expectations about future prices, of oil and natural gas; the level of global oil and natural gas E&P capital spending; the cost of exploring for, developing, producing and delivering oil and natural gas, which may increase as a result of inflation in wages, materials, components, parts, equipment and other costs borne by suppliers to E&P companies; the expected decline rates of current production; the price and quantity of foreign imports; political and economic conditions in oil and natural gas producing countries, including the United States, Canada, the Middle East, Africa, Europe, South America and Russia; actions by OPEC and certain other countries, including Russia (informally known as “OPEC+”), with respect to oil production levels and announcements of potential changes in such levels; speculative trading in crude oil and natural gas derivative contracts; the level of consumer product demand; the discovery rates of new oil and natural gas reserves; contractions in the credit market; the strength or weakness of the United States dollar (“USD”); available pipeline and other transportation capacity; the levels of oil and natural gas storage; weather conditions, natural disasters, including earthquakes, wildfires, floods, drought, hurricanes and tornadoes, and health concerns and epidemics; political instability in oil and natural gas producing countries; domestic and foreign tax policy; domestic and foreign governmental approvals and regulatory requirements and conditions; the continued threat of terrorism and the impact of military and other action, including military action in the Middle East or Ukraine; technological advances affecting energy demand, generation and consumption; the proximity and capacity of oil and natural gas pipelines and other transportation facilities; alternative energy requirements or technological advances and the demand and availability of alternative energy sources; energy conservation measures, including increased focus by the investment community on sustainability practices in the oil and natural gas industry; 15 Table of Contents climate change legislation or regulations restricting emissions of greenhouse gases and related divestment and other efforts; the ability of oil and natural gas producers to raise equity capital and debt financing; interest rates and the cost of capital for E&P companies; merger and divestiture activity among oil and natural gas producers; cyclical/seasonal business and dependence upon spending of our customers; competition among oilfield service and equipment providers; and overall domestic and global economic conditions.
Many factors over which we have no control affect the supply of, demand for, and our customers’ willingness to explore, develop and produce oil and natural gas, and therefore, influence the volumes we can sell and the prices we can charge for our products and services, including: ● the global supply of and demand for oil and natural gas; ● the level of prices, and expectations about future prices, of oil and natural gas, including speculative trading in crude oil and natural gas derivative contracts; ● the level of global oil and natural gas E&P capital spending; ● the cost of exploring for, developing, producing and delivering oil and natural gas, which may increase as a result of inflation in wages, materials, components, parts, equipment and other costs borne by suppliers to E&P companies; ● the expected decline rates of current production; ● the price and quantity of foreign imports; ● political and economic conditions in oil and natural gas producing countries and regions, including the United States, Canada, the Middle East, Africa, Europe, South America and Russia; ● actions by OPEC and certain other countries, including Russia (informally known as “OPEC+”), with respect to oil production levels and announcements of potential changes in such levels; ● the level of consumer product demand; ● the discovery rates of new oil and natural gas reserves; ● contractions in the credit market; ● the strength or weakness of the United States dollar (“USD”); ● available pipeline and other transportation capacity; ● the levels of oil and natural gas storage; ● weather conditions, natural disasters, including earthquakes, wildfires, floods, drought, hurricanes and tornadoes, and health concerns and epidemics; ● political instability in oil and natural gas producing countries; 17 Table of Contents ● changes in international trade policies, tariffs, or sanctions; ● domestic and foreign tax policy; ● domestic and foreign governmental approvals and regulatory requirements and conditions; ● the continued threat of terrorism, cyber warfare, and the impact of geopolitical tensions and other action, including military action in the Middle East or Ukraine; ● technological advances affecting energy demand, generation, consumption, and operations, including the adoption of AI and machine learning techniques; ● the proximity and capacity of oil and natural gas pipelines and other transportation facilities; ● alternative energy requirements or technological advances and the demand and availability of alternative energy sources; ● energy conservation measures and evolving preferences and attitudes towards climate change and sustainability, including increased focus by the investment community on sustainability practices in the oil and natural gas industry; ● climate change legislation or regulations restricting emissions of GHGs and related divestment and other efforts; ● the ability of oil and natural gas producers to raise equity capital and debt financing; ● interest rates and the cost of capital for E&P companies; ● merger and divestiture activity among oil and natural gas producers; ● cyclical/seasonal business and dependence upon spending of our customers; ● competition among oilfield service and equipment providers; and ● overall domestic and global economic conditions.
As described in the risk factor above, our contracts may require us to indemnify our customers for damage or loss arising out of our sale of goods or performance of our work, regardless of fault, and provide for warranties for products and workmanship and we may also be required to name the customer and others as an additional insured under our insurance policies.
Our contracts may require us to indemnify our customers for damage or loss arising out of our sale of goods or performance of our work, regardless of fault, and provide for warranties for products and workmanship and we may also be required to name the customer and others as an additional insured under our insurance policies.
A key component of our growth strategy is to increase our market share in the U.S. and international markets. In Canada, we have several product and service offerings where we have established a higher market share through a long-standing operating history.
A key component of our growth strategy is to increase our market share in the United States and international markets. In Canada, we have several product and service offerings where we have established a higher market share through a long-standing operating history.
In particular, our customers may elect not to purchase our services if they view our safety record as unacceptable, which could cause us to lose customers and substantial revenues. Losses and liabilities from operating activities could have a material adverse effect on our business, financial condition and results of operations.
In particular, our customers may elect not to purchase our services if they view our safety record as unacceptable, which could cause us to lose customers and substantial revenues. 21 Table of Contents Losses and liabilities from our operations could have a material adverse effect on our business, financial condition and results of operations.
Sales of substantial amounts of shares 32 Table of Contents of our common stock in the public market, or the perception that those sales will occur, could cause the market price of our common stock to decline.
Sales of substantial amounts of shares of our common stock in the public market, or the perception that those sales will occur, could cause the market price of our common stock to decline.
Noncompliance with the EPA consent order could result in civil or criminal penalties and delays, or require us to cease operations that are authorized under the consent order.
Noncompliance with the EPA approval could result in civil or criminal penalties and delays, or require us to cease operations that are authorized under the approval.
Moreover, at the December 2023, COP28 climate summit, representatives from nearly 200 countries agreed to transition away from fossil fuels in energy systems so as to achieve net zero by 2050.
At the international level, at the COP28 climate summit in December 2023, nearly 200 countries agreed to transition away from fossil fuels in energy systems so as to achieve net zero by 2050.
In the U.S. and international markets, we have been selling for a shorter period of time and thus must convince potential customers about either the value of the emerging technology compared to traditional methods or, in the case of more mature technology offerings, our differentiated benefits. In the United States, we sell a variety of products and services.
In the United States and international markets, we have been selling our products and services for a shorter period of time and thus must convince potential customers of the value of the emerging technology compared to traditional methods or, in the case of more mature technology offerings, our differentiated benefits.
Our ability to satisfy the fixed charge coverage ratio can be affected by events beyond our control and we cannot assure you that we will be 30 Table of Contents able to satisfy these covenants.
Our ability to satisfy the fixed charge coverage ratio can be affected by events beyond our control and we cannot assure you that we will be able to satisfy these covenants.
In addition, regardless of the macro commodity price environment, our current or prospective customers may experience certain constraints that disproportionately impact their business and reduce their expenditures.
In addition, regardless of the macro commodity price environment, our current or prospective customers may experience certain constraints that disproportionately impact their business and affect their level of operating expenditures.
Risks Related to Technology Advancement and Cybersecurity Our success depends on our ability to develop and implement new technologies, products and services that align with the needs of our customers, including addressing the shift to more non-traditional energy markets as part of the energy transition.
Our success depends on our ability to develop and implement new technologies, products and services that align with the needs of our customers, including addressing the shift to more non-traditional energy markets as part of the energy transition.
We have elected to take advantage of the “controlled company” exemption to the corporate governance rules for publicly-listed companies, which could make our common stock less attractive to some investors or otherwise harm our stock price.
We have elected to take advantage of the “ controlled company ” exemption to the corporate governance rules for publicly-listed companies, which could make our common stock less attractive to some investors or otherwise harm our stock price.
Factors affecting the trading price of our common stock could include: m arket conditions in the broader stock market; actual or anticipated variations in our quarterly financial and operating results; developments in the oil and natural gas industry in general or in the oil and natural gas services market in particular; variations in operating results of similar companies; introduction of new services by us, our competitors or our customers; issuance of new, negative or changed securities analysts’ reports, recommendations or estimates; a decline in the number of securities analysts covering our company; investor perceptions of us and the industries in which we or our customers operate, including perceptions of our ESG attributes; sales, or anticipated sales, of our stock, including sales by our officers, directors and significant stockholders; additions or departures of key personnel; regulatory or political developments; the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; announcements, media reports or other public forum comments related to litigation, claims or reputational charges against us; guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; the sustainability of an active trading market for our common stock; investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives; other events or factors, including those resulting from system failures and disruptions, wildfires, floods, droughts, earthquakes, hurricanes, war, acts of terrorism, other natural disasters or responses to these events; changes in accounting principles; share-based compensation expense under applicable accounting standards; litigation and governmental investigations; and changing economic conditi ons. 31 Table of Contents In addition, because our common stock is more thinly traded, its market price may fluctuate significantly more than the stock market in general or the stock prices of similar companies, which are exchanged, listed or quoted on Nasdaq or another stock exchange.
Factors affecting the trading price of our common stock could include: ● market conditions in the broader stock market; ● actual or anticipated variations in our quarterly financial and operating results; ● developments in the oil and natural gas industry in general or in the oil and natural gas services market in particular; ● variations in operating results of similar companies; ● introduction of new services by us, our competitors or our customers; ● issuance of new, negative or changed securities analysts’ reports, recommendations or estimates; ● a decline in the number of securities analysts covering our company; ● investor perceptions of us and the industries in which we or our customers operate, including perceptions of our ESG attributes; ● sales, or anticipated sales, of our stock, including sales by our officers, directors and significant stockholders; ● additions or departures of key personnel; 39 Table of Contents ● regulatory or political developments; ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; ● announcements, media reports or other public forum comments related to litigation, claims or reputational charges against us; ● guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; ● the sustainability of an active trading market for our common stock; ● investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives; ● other events or factors, including those resulting from system failures and disruptions, wildfires, floods, droughts, earthquakes, hurricanes, war, acts of terrorism, other natural disasters or responses to these events; ● changes in accounting principles; ● share-based compensation expense under applicable accounting standards; ● litigation and governmental investigations; and ● changing economic conditions.
The chemicals that we use in our tracer diagnostics business may be subject to government regulation in our target markets. In the United States, the EPA administers the Toxic Substances Control Act (the “TSCA”) which regulates the commercial registration, distribution, and use of many chemicals, including many of the chemicals we use in our tracer diagnostics business.
The chemicals that we use in our tracer diagnostics business may be subject to government regulation in our target markets. In the United States, the EPA administers the TSCA which regulates the commercial registration, distribution, and use of many chemicals, including many of the chemicals we use in our tracer diagnostics business.
Risks Related to Technology Advancement and Cybersecurity Our success depends on our ability to develop and implement new technologies, products and services that align with the needs of our customers. Advancements in drilling and well completion technologies and processes could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our competitors may infringe upon, misappropriate, violate or challenge the validity or enforceability of our intellectual property. We may be adversely affected by disputes regarding intellectual property rights of third parties. We may be unable to attract and retain skilled and technically knowledgeable employees. Loss of our information and computer systems could adversely affect our business. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.
Risks Related to Technology Advancement and Cybersecurity ● We may be adversely affected by disputes regarding intellectual property rights of third parties and our competitors may infringe upon, misappropriate, violate or challenge the validity or enforceability of our intellectual property. ● Our success depends on our ability to develop and implement new technologies, products and services that align with the needs of our customers. ● Advancements in drilling and well completion technologies and processes, including emerging AI and machine learning technologies, could have a material adverse effect on our business, financial condition, results of operations and cash flows. ● A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.
These offices and facilities are particularly susceptible to severe weather events, including tropical storms, hurricanes, and tornados, which have in the past and may in the future disrupt our operations. In addition, our Repeat Precision joint venture operates one manufacturing facility in Mexico.
We have offices and manufacturing operations in Houston, Texas and Tulsa, Oklahoma, and these offices and facilities are particularly susceptible to severe weather events, including tropical storms, hurricanes, and tornados, which have in the past and may in the future disrupt our operations. In addition, our Repeat Precision joint venture operates a manufacturing facility in Mexico.
Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions is giving rise to an increased likelihood of regulatory actions to address climate change in the United States and abroad. As a result, our customers are or may become subject to statutes or regulations aiming to reduce emissions of GHGs.
Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has led to regulatory actions to address climate change in the United States and abroad. As a result, our customers are or may become subject to statutes or regulations aiming to reduce emissions of GHGs.
Recently we had a judgment rendered against us that could have resulted in a requirement to pay above our insurance policy limits. Even though this matter was settled below our insurance policy limits with the Company not paying any cash towards settlement, there can be no assurance that any future matter would have similar results.
In the past, we have had a judgment rendered against us that could have resulted in a requirement to pay above our insurance policy limits. Even though this matter was settled below our insurance policy limits whereby we did not pay any cash toward settlement, there can be no assurance that any future matter would have similar results.
Patent rights are limited and it may be possible for a third-party to design around our patents. Furthermore, patent rights have strict territorial limits and we may not be able to enforce our patents against infringement occurring in “non-covered” territories.
Patent rights are limited and it may be possible for a third-party to design around our patents. Furthermore, patent rights have strict territorial limits and we may not be able to enforce our patents against infringement occurring in “non-covered” territories. In addition, our patents may be challenged and found to be invalid or unenforceable through litigation.
We are a “smaller reporting company” and have elected to comply with reduced reporting requirements, which could make our common stock less attractive to investors.
We are a “ smaller reporting company ” and have elected to comply with reduced reporting requirements, which could make our common stock less attractive to investors.
Remote work relies heavily on the use of remote networking and online conferencing services that enable employees to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes us to additional cybersecurity risks, including unauthorized access to sensitive information as a result of increased remote access and other cybersecurity related incidents.
Remote work relies heavily on the use of remote networking and online conferencing services that enable employees to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes us to additional cybersecurity risks, including unauthorized access to sensitive information as a result of increased remote access and other cybersecurity related incidents. 33 Table of Contents We are consistently subject to attempts to compromise our information technology systems.
Also, we do not have patents in every jurisdiction in which we conduct business and our patent portfolio will not protect all aspects of our business and may relate to obsolete or unusual methods, which would not prevent third parties from entering the same market.
Also, we do not have patents in every jurisdiction in which we conduct business and our patent portfolio will not protect all aspects of our business and may relate to obsolete or unusual methods, which would not prevent third parties from entering the same market. Additionally, we generate meaningful income from license agreements related to our intellectual property.
State, provincial and federal regulatory agencies recently have focused on a possible connection between the operation of injection wells used for oil and natural gas waste disposal and seismic activity. Similar concerns have been raised that hydraulic fracturing may also contribute to seismic activity. When caused by human activity, such events are called induced seismicity.
State, provincial and federal regulatory agencies recently have focused on a possible connection between the operation of injection wells used for oil and natural gas waste disposal and seismic activity. Similar concerns have been raised that hydraulic fracturing may also contribute to seismic activity.
Any insurance obtained by us may not be adequate to cover any losses or liabilities and, particularly in the event that we must submit larger claims to insurance providers, this insurance may not continue to be available at all or on terms which are acceptable to us.
Any insurance obtained by us may not be adequate to cover any losses or liabilities and, particularly, if we must submit larger claims to our insurance providers, insurance coverage may not continue to be available at all or on terms which are acceptable to us.
In the event that any of our customers was to enter into bankruptcy, we could lose all or a portion of the amounts owed to us by such customer, and we may be forced to cancel all or a portion of our contracts with such customer at significant expense to us.
Should one or more of our customers enter into bankruptcy, we could lose all or a portion of the amounts owed to us by such customer, and we may be forced to cancel all or a portion of our contracts with such customer at significant expense to us.
A single customer accounted for approximately 7% and 6% of our revenue for the years ended December 31, 2023 and 2022, respectively. Additionally, our five largest customers accounted for approximately 28% and 24% of our revenue for the years ended December 31, 2023 and 2022, respectively.
A single customer accounted for approximately 8% and 7% of our revenue for the years ended December 31, 2024 and 2023, respectively. Additionally, our five largest customers accounted for approximately 26% and 28% of our revenue for the years ended December 31, 2024 and 2023, respectively.
When Repeat Precision increases the outstanding borrowings under the Repeat Precision Promissory Note, it may not be able to meet the ongoing interest obligations or repay the principal balance when due and the note may not be renewed on the current schedule, which could prevent Repeat Precision from pursuing its business strategies, paying us cash distributions or obtaining additional financing and could also have a material adverse effect on our business, financial condition and results of operations.
When Repeat Precision increases the outstanding borrowings under the Repeat Precision Promissory Note, it may not be able to meet the ongoing interest obligations or repay the principal balance when due and the note may not be renewed on the current schedule, which could prevent Repeat Precision from pursuing its business strategies, paying us cash distributions or obtaining additional financing.
Our success may depend on the continued service and availability of key personnel. Our success and future growth is dependent upon the ability of our executive officers, senior managers and other key personnel to operate and manage our business and execute on our growth strategies successfully.
Our success and future growth are dependent upon the ability of our executive officers, senior managers and other key personnel to operate and manage our business and execute on our growth strategies successfully.
Publicly available information (e.g. information in expired issued patents, published patent applications, and scientific literature) can also be used by third parties to independently develop technology. This independently developed technology may be equivalent or superior to our proprietary technology.
Publicly available information (e.g. information in expired issued patents, published patent applications, and scientific literature) can also be used by third parties to independently develop technology.
Commitments and Contingencies – Canadian Patent Matters,” a jud ge in the Canada Court rendered a decision against us holding that our asserted patents were invalid and that we infringed upon a patent of a third party. The Canada Court g ranted an injunction prohibiting us from any further infringement of the asserted patent.
Commitments and Contingencies, Canada Patent Matters ,” a judge of the Federal Court of Canada (“Canada Court”) rendered a decision against us holding that our asserted patents were invalid and that we infringed upon a patent of a third party. The Canada Court granted an injunction prohibiting us from any further infringement of the asserted patent.
Oil and natural gas operations in our operating areas can be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife and their habitat, which may limit the ability of our customers to operate in protected areas.
Oil and natural gas operations can be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife and their habitat, which may limit the ability of our customers to operate in protected areas. Permanent restrictions imposed to protect endangered species could prohibit drilling in certain areas or require the implementation of expensive mitigation measures.
If our products or 26 Table of Contents facilities are unable to satisfy such requirements, or we are unable to perform or satisfy the required testing, our customers may cancel their contracts and/or seek new suppliers, which could have a material adverse effect on our business, financial condition and results of operations.
If our products or facilities are unable to satisfy such requirements, or we are unable to perform or satisfy the required testing, our customers may cancel their contracts and/or seek new suppliers, which could have a material adverse effect on our business, financial condition and results of operations. 34 Table of Contents Risks Related to Environmental and Regulatory Matters Hydraulic fracturing is substantially dependent on the availability of water.
Confidential information shared with employees, customers and potential customers and suppliers may be used by those parties in a manner inconsistent with their employment, confidentiality and/or license agreements and we may not be able to adequately protect against or stop such behavior.
This independently developed technology may be equivalent or superior to our proprietary technology. 32 Table of Contents Confidential information shared with employees, customers and potential customers and suppliers may be used by those parties in a manner inconsistent with their employment, confidentiality and/or license agreements and we may not be able to adequately protect against or stop such behavior.
Disruptions in operations or damages to a location where we or our vendors manufacture and assemble our products could reduce our ability to produce products and satisfy customer demand. In particular, we have offices and manufacturing operations in Houston, Texas and Tulsa, Oklahoma.
Disruptions in operations or damages to a location where we or our vendors manufacture and assemble our products could reduce our ability to produce products and satisfy customer demand.
In many countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by U.S. regulations applicable to us. The U.S.
Local laws and customs in many countries differ significantly from those in the United States. In many countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by U.S. regulations applicable to us. The U.S.
There are several risks associated with doing business in Mexico, including, exposure to local economic and political conditions, export and import restrictions, tariffs and related duty-free rules, and the potential for shortages of labor. The realization of any of these risks could disrupt our supply chain and adversely affect our business and results of operations.
There are several risks associated with doing business in Mexico, including, exposure to local economic and political conditions, export and import restrictions, tariffs and related duty-free rules, and the potential for shortages of labor.
We maintain limited insurance coverage against these and other risks associated with our business.
We maintain limited insurance coverage to protect us from these and other risks associated with our business.
Risks Relating to Our Indebtedness Our outstanding indebtedness could adversely affect our financial condition and our ability to operate our business, and we may not be able to generate sufficient cash flows to meet our debt service obligations. We and our subsidiaries may be able to incur substantial indebtedness. Restrictive covenants in the agreement governing our ABL Facility or other indebtedness may restrict our ability to pursue our business strategies.
Risks Relating to Our Indebtedness We and our subsidiaries may be able to incur substantial indebtedness or other cash obligations, which could adversely affect our financial condition and our ability to operate our business, and we may not be able to generate sufficient cash flows to meet our debt service obligations.
We are consistently subject to attempts to compromise our information technology systems. It is possible that our business, financial and other systems could be compromised, which could go unnoticed for a prolonged period of time.
It is possible that our business, financial and other systems could be compromised, which could go unnoticed for a prolonged period of time.
As we had a trade accounts receivable balance in Canadian dollars of $20.9 million as of December 31, 2023, a 10% movement in exchange rates for CAD relative to USD would increase or decrease the resulting trade accounts receivable balance by $1.6 million in USD.
Our trade accounts receivable balance denominated in Canadian dollars was $26.4 million as of December 31, 2024. A 10% movement in exchange rates for CAD relative to USD would increase or decrease the resulting trade accounts receivable balance by $1.8 million in USD.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph As we are a “smaller reporting company,” for the year ended December 31, 2023, we are not required to provide the performance graph under Item 201(e) of Regulation S-K. Unregistered Sales of Equity Securities and Use of Proceeds None. Issuer Purchases of Equity Securities None. Ite m 6. [Reserved] 36 Table of Contents I tem 7.
Biggest changePerformance Graph As we are a “smaller reporting company” for the year ended December 31, 2024, we are not required to provide the performance graph under Item 201(e) of Regulation S-K. Unregistered Sales of Equity Securities and Use of Proceeds None. Issuer Purchases of Equity Securities None.
The actual number of stockholders is considerably greater than this number of record holders, and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Dividends We do not intend to pay cash dividends on our common stock in the foreseeable future.
The actual number of stockholders is considerably greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Dividends We do not currently intend to pay cash dividends on our common stock.
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding shares of common stock authorized for issuance under our stock incentive plans. Holders On March 6, 2024, we had 2,485,708 shares of common stock outstanding, which were held by approximately 16 record holders.
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding shares of common stock authorized for issuance under our stock incentive plans. Holders On March 6, 2025, we had 2,540,849 shares of common stock outstanding, which were held by approximately 15 record holders.
Item 5. M arket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “NCSM”. See Part III, Item 12.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “NCSM.” See Part III, Item 12.
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Mana gement’s Discussion and Analysis of Financial Condition and Results of Operations The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of our financial condition and results of operations together with the sections entitled Item 1A.
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“Risk Factors,” “—Cautionary Note Regarding Forward-Looking Statements,” and our consolidated financial statements and related notes thereto included elsewhere in this Form 10-K.
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This section and other parts of the Form 10-K contain forward-looking statements regarding the industry outlook, estimates and assumptions concerning events and financial and industry trends that may affect our future results of operations or financial condition and other non-historical statements.
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These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “—Cautionary Note Regarding Forward-Looking Statements” and Item 1A. “Risk Factors.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.
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Overview and Outlook We are a leading provider of highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completions and field development strategies.
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We provide our products and services primarily to E&P companies for use in onshore and offshore wells, predominantly wells that have been drilled with horizontal laterals in both unconventional and conventional oil and natural gas formations.
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Our products and services are utilized in oil and natural gas basins throughout North America and in selected international markets, including the North Sea, the Middle East, Argentina and China. We provided our products and services to over 225 customers in 2023, including leading large independent oil and natural gas companies and major oil companies.
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Our primary offering is our fracturing systems products and services, which enable efficient pinpoint stimulation: the process of individually stimulating each entry point into a formation targeted by an oil or natural gas well.
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Our fracturing systems products and services can be used in both cemented and open-hole wellbores and enable our customers to precisely place stimulation treatments in a more controlled and repeatable manner as compared with traditional completion techniques. Our fracturing systems products and services are utilized in conjunction with third-party providers of pressure pumping, coiled tubing and other services.
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As an extension of fracturing systems, we offer enhanced recovery systems, which enable our customers to inject water, other fluids, or gases in a controlled manner with the objective of increasing the amount of hydrocarbons produced from their assets. We own a 50% interest in Repeat Precision, which sells composite frac plugs, perforating guns and related products.
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We provide tracer diagnostics services for well completion and reservoir characterization that utilize downhole chemical and radioactive tracers. We sell products for well construction, including casing buoyancy systems, liner hanger systems and toe initiation sleeves. We operate in one reportable segment that has been identified based on how our chief operating decision maker manages our business.
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Our products and services are primarily sold to North American E&P companies and our ability to generate revenues from our products and services depends upon oil and natural gas drilling and completion activity in North America. Oil and natural gas drilling and completion activity is directly influenced by oil and natural gas prices.
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Based on E&P company announced capital budgets and industry reports for 2024, we believe that annual average drilling and completion industry activity in Canada will be flat to slightly lower compared to 2023. Certain regions in Canada may ration the use of fresh water due to last summer’s drought, which could in turn lead to a reduction in completions activity.
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We expect activity in the United States will decline on average by 5% to 10% compared to 2023, although we expect U.S. activity to increase compared to December 2023 levels as the year progresses. We expect international industry activity to improve on average between 5% to 10% in 2024 as compared to 2023.
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Oil and natural gas prices were volatile in 2022, and this volatility continued into 2023. The war between Russia and Ukraine has played a significant role in this volatility and led to increased oil and natural gas commodity prices in 2022 before moderating in late 2022 and throughout 2023.
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The impact of the war on pricing was somewhat mitigated by heightened uncertainty in demand and growing concerns about a global recession. Certain countries have agreed and continue to extend voluntary crude oil output cuts to mitigate the impact of uncertain economic conditions on the oil market.
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In addition, Hamas attacked Israel in October 2023 and the resulting Israeli-Hamas conflict and recent tensions in the Red Sea could add to commodity price volatility if the war continues and escalates or if general unrest continues in the Middle East. See further discussion below on oil and natural gas pricing.
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We continue to face intense competitive pressure across all of our product and services offerings, which has and may continue to have a negative impact on market share and operating margins for certain product lines.
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Furthermore, this competitive pressure constrains our ability to raise prices in an inflationary environment, which was more pronounced in 2022 and early to mid-2023 but has since partially improved.
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The competitive pressure for our fracturing systems product line in Canada may significantly increase as a result of the recent court decision which held certain of our Canadian patents to be invalid, however we do not believe we have yet experienced such an impact. 37 Table of Contents For the past two years, we have experienced modest disruptions to our supply chain, and higher prices for certain raw materials, including steel and chemicals, and purchased components and outsourced services.
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This cost inflation persisted throughout 2022 and continued into 2023, though prices for steel have begun to moderate. While we have endeavored to increase customer prices to defray our higher raw material and component costs, these price increases have not always fully offset our higher input costs and there has been a delay in our ability to do so.
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We also experienced tight labor conditions throughout 2022 and in 2023, which led to increased employee turnover, delays in filling open positions and labor cost inflation, which impacted both our cost of sales and selling, general and administrative (“ SG&A”) expenses and resulted in higher salaries, hourly pay rates and benefit costs.
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However, labor cost inflation while still elevated, began to decrease during the latter part of 2023. To counter inflationary pressures on the economy, central banks, including the U.S. Federal Reserve, increased reference interest rates several times between March 2022 and July 2023, an action which typically had the effect of increasing borrowing costs and restraining economic activity.
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There were also several noted regional bank failures in the United States during 2023 although we had no direct exposure to these banks. In January 2024, the U.S. Federal Reserve continued to leave the benchmark interest rate unchanged amid signs of steadily cooling inflation and solid economic growth. While the U.S.
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Federal Reserve continues to keep the benchmark interest rate consistent, it is expected to begin rate cuts during 2024. Market Conditions Oil and Natural Gas Drilling and Completion Activity Oil and natural gas prices remain volatile, with WTI crude oil pricing decreasing to an average of $77.58/BBL during 2023 compared to an average of $94.90/BBL during 2022.
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This decrease reflects a rise in supply from non-OPEC+ members combined with a softer macroeconomic environment, which lowers demand growth .
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Since 2022 and continuing into 2023, to address the uncertain outlook for the global economy and, specifically the oil markets, and to reduce the potential of an oil and gas inventory build, members of OPEC and certain other countries, including Russia (informally known as “OPEC+”) agreed to several collective voluntary oil production reductions b eginning in November 2022 through December 2024.
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Natural gas pricing continues to be volatile and decreased in 2023 to an average level of $2.53 per MMBtu compared to an average level of $6.45 per MMBtu during 2022. Realized natural gas prices for Canadian E&P customers are typically at a discount to U.S. Henry Hub pricing.
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In the second and third quarters of 2022, n atural gas pricing in the United States was supported by increased demand for exports of liquified natural gas (“LNG”), especially for power generation in Europe and Asia , reflecting European demand for LNG sourced from the United States and other regions to offset supply historically provided by Russia, in response to the Russian-Ukraine conflict .
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However, natural gas pricing declined in 2023 due to the overall warm winter weather conditions and extended downtime at an LNG export facility, which decreased near-term demand and led to robust levels of natural gas in storage, which negatively impacted drilling and completion activity in certain regions, particularly in the United States.
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Sustained meaningful declines in commodity prices from current levels, or sustained periods when the local pricing received in regional markets is below benchmark pricing, known in the industry as high differentials, would be expected to lead North American E&P companies to reduce drilling and completion activity, which could negatively impact our business.
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Listed and depicted below are recent crude oil and natural gas pricing trends, as provided by the Energy Information Administration (“EIA”) of the U.S.
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Department of Energy: Average Price Quarter Ended WTI Crude (per Bbl) Brent Crude ‎ (per Bbl) Henry Hub Natural Gas ‎ (per MMBtu) 3/31/2022 $ 95.18 $ 100.87 $ 4.67 6/30/2022 108.83 113.84 7.50 9/30/2022 93.06 100.71 8.03 12/31/2022 82.79 88.72 5.55 3/31/2023 75.93 81.07 2.64 6/30/2023 73.54 77.99 2.16 9/30/2023 82.25 86.65 2.59 12/31/2023 78.53 84.01 2.74 38 Table of Contents Listed and depicted below are the average number of operating onshore rigs in the United States and in Canada per quarter since the first quarter of 2022, as provided by Baker Hughes.
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The quarterly changes, particularly for the second quarter Canadian land rig count, can be partially attributed to seasonality of activity in that market: Average Drilling Rig Count Quarter Ended U.S.
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Land Canada Land North America Land 3/31/2022 618 198 816 6/30/2022 698 112 810 9/30/2022 744 198 942 12/31/2022 760 187 947 3/31/2023 744 221 965 6/30/2023 699 116 815 9/30/2023 630 187 817 12/31/2023 601 180 781 39 Table of Contents Over the past several years, North American E&P companies have been able to reduce their cost structures and have also utilized technologies, including ours, to increase efficiency and improve well performance.
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The average U.S. land rig count and completion activity continued to increase from lows reached in late 2020 until the fourth quarter of 2022. However, the average U.S. land rig count has declined by 21%, to 601, in the fourth quarter of 2023 as compared to the fourth quarter of 2022.
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The average land rig count in Canada for the fourth quarter of 2023 was lower by 4% compared to the same period in 2022.
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We currently expect U.S. rig counts and completion activity in 2024 to decline from the 2023 annual average level, but to increase from year-end 2023 levels as we progress through the year while the Canadian activity is expected to remain flat to slightly lower. A substantial portion of our business is subject to seasonality, which results in quarterly variability .
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In Canada, we typically experience higher activity levels in the first quarter of each year, as our customers take advantage of the winter freeze to gain access to remote drilling and production areas.
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In the past, our revenue in Canada has declined during the second quarter due to warming weather conditions that result in thawing, softer ground, difficulty accessing well sites and road bans that curtail drilling and completion activity.
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Access to well sites typically improves throughout the third and fourth quarters in Canada, leading to activity levels that are higher than in the second quarter, but usually lower than activity in the first quarter.
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During the second quarter of 2023, access to well sites was further impacted by Canadian wildfires, a seasonal phenomenon, but more extensive in 2023 relative to prior years. These wildfires resulted in selected shut-ins of oil and natural gas production, which negatively impacted certain of our customers’ cash flows and drilling and completion activity in the second half of 2023.
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O ur business can be impacted by a reduction in customer activity during the winter holidays in late December and early January. In some years, customers in the United States and Canada may exhaust their capital budgets prior to the end of the year, resulting in lower drilling and completion activity during the fourth quarter.
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How We Generate Revenues We derive our revenues from the sale of our fracturing systems and enhanced recovery systems products and the provision of related services , the sale of composite frac plugs, perforating guns and related products through Repeat Precision, and from sales of our tracer diagnostics services, casing buoyancy systems, liner hanger systems and toe initiation sleeves products.
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Product sales represented 71% and 68% of our revenues for the years ended December 31, 2023 and 2022, respectively. Most of our sales are on a just-in-time basis, as specified in individual purchase orders, with a fixed price for our products. We occasionally supply our customers with large orders that may be filled on negotiated terms.
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Services represented 29% and 32% of our revenues for the years ended December 31, 2023 and 2022, respectively. Services include tool charges and associated personnel services related to fracturing systems and tracer diagnostics services.
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Our services are provided at agreed upon rates to customers for the provision of our downhole frac isolation assembly, which may include our personnel, and for the provision of tracer diagnostics services.
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During periods of low drilling and well completion activity or as may be needed to compete in certain markets, we may, in some instances, lower the prices of our products and services.
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Our revenues are also impacted by well complexity, since wells with more stages typically result in longer jobs, which may increase revenue attributable to the use of more sliding sleeves or increase composite frac plug sales, and increase the volume of services we provide.
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The percentages of our revenues derived from sales in Canada and denominated in Canadian dollars were approximately 69% and 65% for the years ended December 31, 2023 and 2022, respectively. Our Canadian contracts are typically invoiced in Canadian dollars; therefore, the effects of foreign currency fluctuations impact our revenues and are regularly monitored.
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Strengthening of the U.S. dollar, our reporting currency, relative to the Canadian dollar, would result in lower reported revenues, partially offset by lower reported cost of sales and SG&A expenses.
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Although most of our sales are to North American E&P companies, we also have sales to customers outside of North America, and we expect sales to international customers to increase over time.
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These international sales are made through local NCS entities or to our local operating partners typically on a free on board or free carrier basis with a point of sale in the United States. Some of the locations in which we have operating partners or sales representatives include the Middle East and China.
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Our operating partners and representatives do not have authority to contractually bind NCS but market our products in their respective territories as part of their product or services offering. Costs of Conducting our Business Our cost of sales is comprised of expenses relating to the manufacture of our products in addition to the costs of our support services.
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Manufacturing cost of sales includes payments made to our suppliers for raw materials and payments made to machine shops for the manufacture of product components and finished assemblies and costs related to our employees that perform quality control analysis, assemble and test our products.
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In addition, Repeat Precision operates a manufacturing facility with supporting personnel in Mexico, which has allowed us to reduce our costs for certain product categories.
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We review forecasted activity levels in our business and either directly procure or support our vendors in procuring the required raw materials with sufficient lead time to meet our 40 Table of Contents business requirements .
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We obtain certain chemicals utilized in our tracer diagnostics services business from suppliers in China, which are subject to tariffs that increase our costs, although these tariffs have recently declined.
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Prices for certain raw materials, including steel and chemicals and for purchased components and outsourced services, have increased in recent years due to inflation, exacerbated by the impacts resulting from Russia’s continuing invasion of Ukraine , though prices for steel have begun to moderate.
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Cost of sales for support services includes compensation and benefit-related expenses for employees who provide direct revenue generating services to customers in addition to the costs incurred by these employees for travel and subsistence while on site.
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Cost of sales includes other variable manufacturing costs, such as shrinkage, obsolescence, revaluation and scrap related to our existing inventory and costs related to the chemicals used and laboratory analysis associated with our tracer diagnostics services.
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Our SG&A expenses are comprised of compensation expense, which includes compensation and benefit-related expenses for our employees who are not directly involved in revenue generating activities, including those involved in our research and development activities, as well as our general operating costs.
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These general operating costs include, but are not limited to: rent and occupancy for our facilities, information technology infrastructure services, software licensing, advertising and marketing, third party research and development, risk insurance and professional service fees for audit, legal and other consulting services. Our SG&A expenses also include litigation expenses, severance expenses and expected credit losses.
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During the second half of 2023, in an effort to streamline operations and gain efficiencies, we implemented several cost reduction initiatives, including consolidation of our Tracer Diagnostics operations, consolidation of Repeat’s manufacturing footprint in Mexico, restructuring of certain U.S. and international operations, and the elimination of various support positions.
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As a result of these efforts, we expect to realize annualized cost savings of approximately $4.0 million, which we began to realize a majority of these benefits starting in the fourth quarter of 2023.
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The percentage of our operating costs denominated in Canadian dollars (including cost of sales and SG&A expenses but excluding depreciation and amortization expense) approximated 28% and 27%, for the years ended December 31, 2023 and 2022, respectively. 41 Table of Contents Results of Operations The following tables summarize our results of operations and gross margins for the years ended December 31, 2023 and 2022, and present revenue by geographic area for the years then ended.
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Year Ended December 31, Variance 2023 2022 $ % Revenues Product sales $ 100,447 $ 105,859 $ (5,412) (5.1) % Services 42,024 49,773 (7,749) (15.6) % Total revenues 142,471 155,632 (13,161) (8.5) % Cost of sales Cost of product sales, exclusive of depreciation ‎ and amortization expense shown below 64,242 68,412 (4,170) (6.1) % Cost of services, exclusive of depreciation ‎ and amortization expense shown below 22,626 26,816 (4,190) (15.6) % Total cost of sales, exclusive of depreciation ‎ and amortization expense shown below 86,868 95,228 (8,360) (8.8) % Selling, general and administrative expenses 56,518 58,338 (1,820) (3.1) % Depreciation 3,947 3,650 297 8.1 % Amortization 669 669 — — % Loss from operations (5,531) (2,253) (3,278) (145.5) % Other income (expense) Interest expense, net (586) (1,015) 429 42.3 % Provision for litigation, net of recoveries (1,802) — (1,802) (100.0) % Other income, net 4,114 2,950 1,164 39.5 % Foreign currency exchange gain (loss) 462 (283) 745 263.3 % Total other income 2,188 1,652 536 32.4 % Loss before income tax (3,343) (601) (2,742) (456.2) % Income tax (benefit) expense (232) 351 (583) (166.1) % Net loss (3,111) (952) (2,159) (226.8) % Net income attributable to non-controlling interest 42 150 (108) (72.0) % Net loss attributable to NCS Multistage Holdings, Inc. $ (3,153) $ (1,102) $ (2,051) (186.1) % Year Ended December 31, Variance 2023 2022 $ % Gross Margin and Gross Margin Percentage: Depreciation and amortization attributable to cost of product sales $ 1,613 $ 1,425 $ 188 13.2 % Cost of product sales 65,855 69,837 (3,982) (5.7) % Product sales gross profit $ 34,592 $ 36,022 $ (1,430) (4.0) % Product sales gross margin 34.4% 34.0% Depreciation and amortization attributable to cost of services $ 592 $ 547 $ 45 8.2 % Cost of services 23,218 27,363 (4,145) (15.1) % Services gross profit $ 18,806 $ 22,410 $ (3,604) (16.1) % Services gross margin 44.8% 45.0% Total cost of sales $ 89,073 $ 97,200 $ (8,127) (8.4) % Total gross profit $ 53,398 $ 58,432 $ (5,034) (8.6) % Total gross margin 37.5% 37.5% 42 Table of Contents Year Ended December 31, Variance 2023 2022 $ % Revenues by Geographic Area: United States Product sales $ 26,613 $ 34,009 $ (7,396) (21.7) % Services 11,206 12,228 (1,022) (8.4) % Total United States 37,819 46,237 (8,418) (18.2) % Canada Product sales 71,946 71,176 770 1.1 % Services 26,161 29,695 (3,534) (11.9) % Total Canada 98,107 100,871 (2,764) (2.7) % Other Countries Product sales 1,888 674 1,214 180.1 % Services 4,657 7,850 (3,193) (40.7) % Total Other Countries 6,545 8,524 (1,979) (23.2) % Total Product sales 100,447 105,859 (5,412) (5.1) % Services 42,024 49,773 (7,749) (15.6) % Total revenues $ 142,471 $ 155,632 $ (13,161) (8.5) % Year Ended December 31, 2023 compared to Year Ended December 31, 2022 Revenues Revenues were $142.5 million for the year ended December 31, 2023 as compared to $155.6 million for the year ended December 31, 2022.
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This decrease reflected lower U.S. product sales as well as a decrease in U.S., Canadian and international services activity, partially offset by increases in Canadian and international product sales. The overall decline was primarily related to reductions in sales volume and while we experienced favorable pricing for some of our products, our overall average pricing remained consistent between the periods.
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The overall decrease in revenues largely resulted from declining industry drilling and completion activity throughout 2023 as compared to 2022, particularly in the United States, for which lower natural gas pricing was a contributing factor.
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Canadian sales during 2023 were tempered by the effect of the Canadian wildfires which primarily impacted activity for the second quarter of 2023, but also had continuing effects for the remainder of 2023 as some operators delayed or decided to forgo projects. International revenues were lower due to a decline in North Sea services activity.
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Product sales for the year ended December 31, 2023 were $100.4 million as compared to $105.9 million for the year ended December 31, 2022. Services revenue was $42.0 million for the year ended December 31, 2023 as compared to $49.8 million for the year ended December 31, 2022.
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Cost of sales Cost of sales was $89.1 million, or 62.5% of revenues, for the year ended December 31, 2023 as compared to $97.2 million, or 62.5% of revenues, for the year ended December 31, 2022.
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Cost of sales as a percentage of revenue was consistent at 62.5% for each of the periods due in part to our actions taken to consolidate manufacturing and operational facilities and reduce field service personnel throughout the year in response to lower activity levels.
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However, this improvement was offset by ongoing inflationary pressures, leading to increased operating costs, and certain nonrecurring expenses associated with consolidations undertaken in June 2023 of our tracer diagnostics business and Repeat Precision’s manufacturing operations in Mexico, as discussed in “Note 9. Accrued Expenses” in the accompanying consolidated financial statements .
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Cost of product sales was $65.9 million or 65.6% of product sales revenue and cost of services was $23.2 million or 55.2% of services revenue for the year ended December 31, 2023.
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For the year ended December 31, 2022, cost of product sales was $69.8 million or 66.0% of product sales revenue and cost of services was $27.4 million or 55.0% of services revenue.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−0 removed3 unchanged
Biggest changeDuring the years ended December 31, 2023 and 2022, approximately 69% and 65%, respectively, of our revenues were attributable to our operations in Canada . We also derive revenue from several jurisdictions outside of North America, including countries that occasionally experience periods of significant inflation, which occurred in Argentina in 2023 and 2022.
Biggest changeDuring the years ended December 31, 2024 and 2023, approximately 63% and 69%, respectively, of our revenues were attributable to our operations in Canada. We also derive revenue from several jurisdictions outside of North America, including countries that occasionally experience periods of significant inflation, which occurred in Argentina in 2024 and 2023.
This concentration of counterparties operating in a single industry may increase our overall exposure to credit risk, in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. We manage credit risk by analyzing the counterparties’ financial condition prior to accepting new customers and prior to adjusting existing credit limits. 48 Table of Contents
This concentration of counterparties operating in a single industry may increase our overall exposure to credit risk, in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. We manage credit risk by analyzing the counterparties’ financial condition prior to accepting new customers and prior to adjusting existing credit limits. 59 Table of Contents
Borrowings bear interest plus a margin that varies depending on our leverage ratio as follows: (i) for ABR based loans, between 1.40% and 2.40%, and (ii) for Adjusted Daily Simple SOFR, Adjusted Term SOFR Rate, Canadian Prime Rate, and CDOR Rate, between 2.40% and 3.40%.
Borrowings bear interest plus a margin that varies depending on our leverage ratio as follows: (i) for ABR based loans, between 1.40% and 2.40%, and (ii) for Adjusted Daily Simple SOFR, Adjusted Term SOFR Rate, Canadian Prime Rate, and Adjusted Term CORRA Rate, between 2.40% and 3.40%.
We do not currently intend to hedge our future exposure to the Argentine Peso or other foreign currencies. Interest Rate Risk We were primarily exposed to interest rate risk through our ABL Facility. At December 31, 2023, we had no outstanding indebtedness under our ABL Facility.
We do not currently intend to hedge our future exposure to the Argentine Peso or other foreign currencies. Interest Rate Risk We were primarily exposed to interest rate risk through our ABL Facility. At December 31, 2024, we had no outstanding indebtedness under our ABL Facility.
Borrowings under the Repeat Precision Promissory Note are made in U.S. dollars with interest calculated using the prime rate plus a 1.0% margin over the index. The applicable interest rate at December 31, 2023 was 9.5%. Credit Risk Our customers are E&P companies and other oilfield services companies.
Borrowings under the Repeat Precision Promissory Note are made in U.S. dollars with interest calculated using the prime rate plus a 1.0% margin over the index. The applicable interest rate at December 31, 2024 was 8.5%. Credit Risk Our customers are E&P companies and other oilfield services companies.
Item 7A. Quant itative and Qualitative Disclosures About Market Risk Our financial position is exposed to a variety of risks, including commodity price risk, foreign currency exchange rate risk, interest rate risk and credit risk.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our financial position is exposed to a variety of risks, including commodity price risk, foreign currency exchange rate risk, interest rate risk and credit risk.
Borrowings under the ABL Facility may be made in U.S. dollars with interest calculated using either the “ABR”, the “Adjusted Daily Simple SOFR” or the “Adjusted Term SOFR Rate”, and in Canadian dollars with interest calculated using the “Canadian Prime Rate” or the “CDOR Rate” (each as defined in the Credit Agreement).
Borrowings under the ABL Facility may be made in U.S. dollars with interest calculated using either the “ABR”, the “Adjusted Daily Simple SOFR” or the “Adjusted Term SOFR Rate”, and in Canadian dollars with interest calculated using the “Canadian Prime Rate” or the “Adjusted Term CORRA Rate” (each as defined in the amended and restated Credit Agreement).
We must also pay a monthly commitment fee of 0.25% to 0.50% per year, based on unused commitments. The applicable interest rate at December 31, 2023 was 7.9%. We are also subject to interest rate risk through our Repeat Precision Promissory Note. At December 31, 2023, we had no outstanding indebtedness under the Repeat Precision Promissory Note.
We must also pay a commitment fee calculated at 0.25% to 0.50% per annum, based on unused commitments. The applicable interest rate at December 31, 2024 was 6.9%. We are also subject to interest rate risk through our Repeat Precision Promissory Note. At December 31, 2024, we had no outstanding indebtedness under the Repeat Precision Promissory Note.

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