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What changed in ProPetro Holding Corp.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ProPetro Holding Corp.'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.

+524 added−429 removedSource: 10-K (2025-02-20) vs 10-K (2024-03-13)

Top changes in ProPetro Holding Corp.'s 2024 10-K

524 paragraphs added · 429 removed · 322 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

85 edited+100 added−20 removed64 unchanged
Biggest changeWe have not experienced any material adverse effect from compliance with current requirements; however, this trend may not continue in the future. Below is an overview of some of the more significant environmental, health and safety requirements with which we must comply. Our customers’ operations are subject to similar laws and regulations.
Biggest changeBelow is an overview of some of the more significant environmental, health and safety requirements with which we must comply. Our customers’ operations are subject to similar laws and regulations. Any material adverse effect of these laws and regulations on our customers’ operations and financial position may also have an indirect material adverse effect on our operations and financial position.
However, we have increased our operations in the Delaware sub-basin and are well-positioned to support further increases to our activity in this area in response to demand from our customers. Over time, we expect the Permian Basin's Midland and Delaware sub-basins to continue to command a disproportionate share of future North American E&P spending.
However, we have increased our operations in the Delaware sub-basin and are well-positioned to support further increases in our activity in this area in response to demand from our customers. Over time, we expect the Permian Basin's Midland and Delaware sub-basins to continue to command a disproportionate share of future North American E&P spending.
Our results of operations have historically reflected seasonal tendencies, typically in the fourth quarter, relating to the holiday season, inclement winter weather and exhaustion of our customers' annual budgets. As a result, we typically experience declines in our operating and financial results in November and December, even in a stable commodity price and operations environment.
Our results of operations have historically reflected seasonal tendencies, typically in the fourth quarter, relating to the holiday season, inclement winter weather and the exhaustion of our customers' annual budgets. As a result, we typically experience declines in our operating and financial results in November and December, even in a stable commodity price and operations environment.
We maintain directors and officers insurance; however, our insurance coverage is subject to certain exclusions (including, for example, any required United States Securities and Exchange Commission (“SEC”) disgorgement or penalties) and we are 5 responsible for meeting certain deductibles under the policies. Moreover, we cannot assure you that our insurance coverage will adequately protect us from all future claims.
We maintain directors and officers insurance; however, our insurance coverage is subject to certain exclusions (including, for example, any required United States Securities and Exchange Commission (“SEC”) disgorgement or penalties) and we are responsible for meeting certain deductibles under the policies. Moreover, we cannot assure you that our insurance coverage will adequately protect us from all future claims.
Further, legislation to amend the Safe Drinking Water Act to repeal the exemption for hydraulic fracturing (except when diesel fuels are used) from 8 the definition of “underground injection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, have previously been proposed in Congress.
Further, legislation to amend the Safe Drinking Water Act to repeal the exemption for hydraulic fracturing (except when diesel fuels are used) from the definition of “underground injection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, have previously been proposed in Congress.
Liability for the costs of removing or remediating previously disposed wastes or contamination, damages to natural resources, the costs of conducting certain health studies, amongst other things, is strict and joint and several. In the course of 6 our operations, we use materials that, if released, would be subject to CERCLA and comparable state laws.
Liability for the costs of removing or remediating previously disposed wastes or contamination, damages to natural resources, the costs of conducting certain health studies, amongst other things, is strict and joint and several. In the course of our operations, we use materials that, if released, would be subject to CERCLA and comparable state laws.
However, we have recently observed the energy industry and our customers shift to lower emissions equipment, which we believe will be an increasingly important factor in an E&P company’s selection of a service provider. The transition to lower emissions equipment has been challenging for companies in the oilfield service industry because of the capital requirements.
However, we have recently observed the energy industry and our customers shift to lower emissions equipment, which we believe will be an increasingly important factor in an E&P company’s selection of a service provider. The transition to lower emissions equipment has been challenging for companies in the energy service industry because of the capital requirements.
However, to the extent any protections are implemented for this or any other species, it could cause us or our customers to incur additional costs or become subject to operating restrictions or operating bans in the affected areas. Regulation of Hydraulic Fracturing and Related Activities. Our hydraulic fracturing operations are a significant component of our business.
To the extent any protections are implemented for this or any other species, it could cause us or our customers to incur additional costs or become subject to operating restrictions or operating bans in the affected areas. Regulation of Hydraulic Fracturing and Related Activities. Our hydraulic fracturing operations are a significant component of our business.
With the industry transition to lower emissions equipment and Simul-Frac, in addition to several other changes to our customers' job designs, we believe that our available fleet capacity could decline if we decide to reconfigure our fleets to increase active HHP and backup HHP at wellsites.
With the industry transition to 3 lower emissions equipment and Simul-Frac, in addition to several other changes to our customers' job designs, we believe that our available fleet capacity could decline if we decide to reconfigure our fleets to increase active HHP and backup HHP at wellsites.
The transition to lower emissions equipment has been challenging for companies in the service industry because of the capital requirements, lack of large scale deployment of certain new technology such as electric-powered equipment, and the pricing for our services and expected return on invested capital.
The transition to lower 1 emissions equipment has been challenging for companies in the service industry because of the capital requirements, lack of large-scale deployment of certain new technology such as electric-powered equipment, and the pricing for our services and expected return on invested capital.
Currently, a number of lower emission solutions for pumping equipment, including Tier IV DGB dual-fuel , FORCE SM electric, direct drive gas turbine and other technologies have been developed, and we expect additional lower emission solutions will be developed in the future.
Currently, a number of lower emission solutions for pumping equipment, including Tier IV DGB dual-fuel , FORCE ® electric, direct drive gas turbine and other technologies have been developed, and we expect additional lower emission solutions will be developed in the future.
Environmental laws such as the Endangered Species Act ("ESA") and analogous state laws may impact exploration, development and production activities in areas where we operate. The ESA provides broad protection for species of fish, wildlife and plants that are listed as threatened or endangered.
Environmental laws such as the Endangered Species Act (“ESA”) and analogous state laws may impact exploration, development and production activities in areas where we operate. The ESA provides broad protection for species of fish, wildlife and plants that are listed as threatened or endangered.
In the course of our operations, some of our equipment may be exposed to naturally occurring radioactive materials ( " NORM " ) associated with oil and gas deposits and, accordingly, may result in the generation of wastes and other materials containing NORM.
In the course of our operations, some of our equipment may be exposed to naturally occurring radioactive materials (“NORM”) associated with oil and gas deposits and, accordingly, may result in the generation of wastes and other materials containing NORM.
The program opportunities included many crucial topics ranging from budgeting and debt management to understanding plan options and investment strategy. Concerning health benefits, in 2023 we added additional services focused on emotional and mental health, as well as certain preventative health services related to the early detection of concerns including breast cancer, diabetes and cardiovascular disease.
The program opportunities included many crucial topics ranging from budgeting and debt management to understanding plan options and investment strategy. Concerning health benefits, in 2024 we added additional services focused on emotional and mental health, as well as certain preventative health services related to the early detection of concerns including breast cancer, diabetes and cardiovascular disease.
Similar protections are offered to migratory birds under the Migratory Bird Treaty Act and various state analogs. The U.S. Fish and Wildlife Service ("FWS") may identify previously unidentified endangered or threatened species or may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatened or endangered species.
Similar protections are offered to migratory birds under the Migratory Bird Treaty Act and various state analogs. The U.S. Fish and Wildlife Service (“FWS”) may identify previously unidentified endangered or threatened species or may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatened or endangered species.
Some examples of this effort to recruit and develop a diverse team and create an inclusive culture include: ◦ a commitment to conducting business in a manner that respects all human rights in compliance within the requirements of applicable laws; ◦ a commitment within our business operations to promoting and encouraging respect for human rights and fundamental freedoms for all without distinctions of any kind, such as race, color, sex, language, religion, political or other opinions; ◦ working with personnel, business partners and other parties directly linked to our operations that share our commitment to these same principles; 9 ◦ maintaining employment policies reflecting our commitments, including our code of conduct, our equal employment opportunity employer policy, and our anti-harassment and anti-discrimination policy; and ◦ providing an anonymous Ethics and Compliance hotline that is promoted internally and accessible from our intranet and website to make it possible for grievances regarding health and safety to be addressed early and remediated directly, in confidence and without fear of retaliation. • Training and Safety.
Some examples of this effort to recruit and develop our team and culture include: ◦ a commitment to conducting business in a manner that respects all human rights in compliance within the requirements of applicable laws; ◦ a commitment within our business operations to promoting and encouraging respect for human rights and fundamental freedoms for all without distinctions of any kind, such as race, color, sex, language, religion, political or other opinions; ◦ working with personnel, business partners and other parties directly linked to our operations that share our commitment to these same legal compliance principles; ◦ maintaining employment policies reflecting our commitments, including our code of conduct, our equal employment opportunity employer policy, and our anti-harassment and anti-discrimination policy; and ◦ providing an anonymous Ethics and Compliance hotline that is promoted internally and accessible from our intranet and website to make it possible for grievances regarding health and safety to be addressed early and remediated directly, in confidence and without fear of retaliation. • Training and Safety.
Ten percent of our executive officers’ annual target bonuses under the 2023 annual incentive program were based upon the Company’s achievement of certain safety goals, including a target total recordable incident rate. • Professional Development. In 2023, the Company continued its focus on leadership development, targeting leadership positions including frontline supervisors and above.
Ten percent of our executive officers’ annual target bonuses under the 2024 annual incentive program were based upon the Company’s achievement of certain safety goals, including a target total recordable incident rate. • Professional Development. In 2024, the Company continued its focus on leadership development, targeting leadership positions including frontline supervisors and above.
If the rig count or market conditions do not improve or decline in the future, and we are 2 unable to increase our pricing or pass-through future cost increases to our customers, there could be a material adverse impact on our business, results of operations and cash flows .
If the rig count or market conditions do not improve or decline in the future, and we are unable to increase our pricing or pass-through future cost increases for our customers, there could be a material adverse impact on our business, results of operations and cash flows .
Administrative, civil and criminal penalties can be imposed for failure to comply with waste handling requirements. Moreover, the U.S. Environmental Protection Agency ( " EPA " ) or state or local governments may adopt more stringent requirements for the handling of non-hazardous wastes or recategorize some non-hazardous wastes as hazardous for future regulation.
Administrative, civil and criminal penalties can be imposed for failure to comply with waste handling requirements. Moreover, the U.S. Environmental Protection Agency (“EPA”) or state or local governments may adopt more stringent requirements for the handling of non-hazardous wastes or recategorize some non-hazardous wastes as hazardous for future regulation.
As the global response to the COVID-19 pandemic began to wane, the demand and prices for crude oil increased from the lows experienced in 2020, with the West Texas Intermediate (“WTI”) average crude oil price reaching approximately $94 per barrel in 2022, the highest average price in the prior nine years.
As the global response to the COVID-19 pandemic began to wane, the demand and prices for crude oil increased from the lows experienced in 2020, with the West Texas Intermediate (“WTI”) average crude oil price reaching approximately $94 per barrel in 2022, the highest average price in the prior ten years.
We currently have 23 wireline units. Cementing We provide cementing services for completion of new wells and remedial work on existing wells. Cementing services use pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole.
We currently have 26 wireline units. Cementing We provide cementing services for completion of new wells and remedial work on existing wells. Cementing services use pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole.
On November 1, 2022, we consummated the acquisition of all of the outstanding limited liability company interests of Silvertip Completion Services Operating, LLC (the "Silvertip Acquisition"), which provides wireline perforation and ancillary services solely in the Permian Basin in exchange for 10.1 million shares of our common stock valued at $106.7 million, $30.0 million of cash, the payoff of $7.2 million of assumed debt, and the payment of certain other closing and transaction costs.
On November 1, 2022, we consummated the acquisition of all of the outstanding limited liability company interests of Silvertip Completion Services Operating, LLC (the “Silvertip Acquisition”), which provides wireline perforation and ancillary services in the Permian Basin in exchange for 10.1 million shares of our common stock valued at $106.7 million, $30.0 million of cash, the payoff of $7.2 million of assumed debt, and the payment of certain other closing and transaction costs.
We also strive to give back to the areas in which we conduct business operations, and in which our employees live and work. Our employees give generously and receive up to 8 hours per year of paid time off to participate in community service. Our employee-led P.U.M.P.
We also strive to give back to the areas in which we conduct business operations, and in which our employees live and work. Our employees give generously and receive up to eight hours per year of paid time off to participate in community service. Our employee-led P.U.M.P.
Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, implement New Source Performance Standards directing the reduction of certain pollutants from certain new, modified, or reconstructed facilities in the oil and natural gas sector, and together with the Department of Transportation ("DOT"), implementing GHG emissions limits on vehicles manufactured for operation in the United States.
Supreme Court finding that greenhouse gas (“GHG”) emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, implement New Source Performance Standards directing the reduction of certain pollutants from certain new, modified, or reconstructed facilities in the oil and natural gas sector, and together with the Department of Transportation (“DOT”), implementing GHG emissions limits on vehicles manufactured for operation in the United States.
The Clean Air Act ( " CAA " ) and comparable state laws and regulations, regulate emissions of various air pollutants through the issuance of permits and the imposition of other emissions control requirements. The EPA has developed, and continues to develop, stringent regulations governing emissions of air pollutants from specified sources.
The Clean Air Act (“CAA”) and comparable state laws and regulations, regulate emissions of various air pollutants through the issuance of permits and the imposition of other emissions control requirements. The EPA has developed, and continues to develop, stringent regulations governing emissions of air pollutants from specified sources.
The Texas Railroad Commission ("TRRC") has adopted similar rules including the indefinite suspension of all deep oil and gas produced water injection wells in certain areas covered by the TRRC’s seismic response program.
The Texas Railroad Commission (“TRRC”) has adopted similar rules including the indefinite suspension of all deep oil and gas produced water injection wells in certain areas covered by the TRRC’s seismic response program.
While we seek to price our services competitively, we believe many of our customers elect to work with us based on our operational efficiencies, productivity, equipment quality, reliability, ability to manage multifaceted logistics challenges, commitment to safety and the ability of our people to handle the most complex Permian Basin well completions.
While we seek to price our services competitively, we believe many of our customers elect to work with us based on our operational efficiencies, productivity, equipment quality and technology, reliability, ability to manage multifaceted logistics challenges, commitment to safety and the ability of our people to handle the most complex Permian Basin well completions and power generation challenges.
We provide our services primarily in the Permian Basin, and we compete against different companies in each service and product line we offer. Our competition includes many large and small oilfield service companies, including the largest integrated oilfield service companies.
We provide our services primarily in the Permian Basin, and we compete against different companies in each service and product line we offer. Our competition includes many large and small energy service companies, including the largest integrated energy service companies.
We handle, transport, store and dispose of wastes that are subject to the Resource Conservation and Recovery Act ( " RCRA " ) and comparable state laws and regulations, which affect our activities by imposing requirements regarding the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes.
Waste Handling. We handle, transport, store and dispose of wastes that are subject to the Resource Conservation and Recovery Act ( " RCRA " ) and comparable state laws and regulations, which affect our activities by imposing requirements regarding the 6 generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes.
The Comprehensive Environmental Response, Compensation and Liability Act ( " CERCLA " or " Superfund " ) and analogous state laws generally impose liability without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment.
The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and analogous state laws generally impose liability without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment.
Following the increase in rig count and the WTI crude oil price, the oilfield service industry has experienced increased demand for its completion services, and improved pricing.
Following the increase in rig count and the WTI crude oil price, the energy service industry has experienced increased demand for its completion services, and improved pricing.
Our major competitors include Halliburton Company, Liberty Energy Inc., Patterson‑UTI Energy Inc., ProFrac Holding Corp., RPC, Inc., and a number of private and locally-oriented businesses.
Our major competitors include Halliburton Company, Liberty Energy Inc., Patterson‑UTI Energy Inc., ProFrac Holding Corp., Solaris Energy Infrastructure, Inc., RPC, Inc., and a number of private and locally-oriented businesses.
Our employee benefit offerings are designed to meet the varied and evolving needs of a diverse workforce across the Company and we believe are consistent with those provided by our peer companies with which we compete for talent.
Our employee benefit offerings are designed to meet the varied and evolving needs of our entire workforce across the Company and we believe are consistent with those provided by our peer companies with which we compete for talent.
Additionally, the EPA has recently finalized rules covering the standards of performance for methane and volatile organic compounds emissions for oil and gas facilities, including leak detection, monitoring and repair, and a "super-emitter" response program to timely mitigate emissions events as detected by governmental agencies or qualified third parties, triggering certain investigation and repair requirements.
Additionally, the EPA has recently finalized rules covering the standards of performance for methane and volatile organic compounds emissions for oil and gas facilities, including leak detection, monitoring and repair, and a “super- 7 emitter” response program to timely mitigate emissions events as detected by governmental agencies or qualified third parties, triggering certain investigation and repair requirements.
See " Risk Factors " for a description of certain risks associated with our insurance policies. Environmental and Occupational Health and Safety Regulations Our operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection, and occupational health and safety.
See “Risk Factors” for a description of certain risks associated with our insurance policies. Environmental and Occupational Health and Safety Regulations Our operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection, and occupational health and safety.
Item 1. Business. Our Company We are a leading integrated oilfield service company, located in Midland, Texas, focused on providing innovative hydraulic fracturing, wireline, and other complementary oilfield completion services to leading upstream oil and gas companies engaged in the E&P of North American oil and natural gas resources.
Item 1. Business. Our Company We are a leading integrated energy service company, located in Midland, Texas, focused on providing innovative hydraulic fracturing, wireline, and other complementary energy and power generation services to leading upstream oil and gas companies engaged in the E&P of North American oil and natural gas resources.
In addition, in 2021 and 2022, we committed to additional conversions of our Tier II equipment to Tier IV DGB dual-fuel equipment, and to purchase new Tier IV DGB dual-fuel equipment.
In addition, in 2021 and 2022, we committed to additional conversions of some of our Tier II equipment to Tier IV DGB, and to purchase new Ti er IV DGB dual-fuel equipment.
The Permian Basin is widely regarded as one of the most prolific oil‑producing areas in the United States, and we believe we are one of the leading providers of completion services in the region.
The Permian Basin is widely regarded as one of the most prolific oil and natural gas producing areas in the United States, and we believe we are one of the leading providers of energy services in the region.
Our substantial market presence in the Permian Basin positions us well to capitalize on drilling and completion activity in the region. Our operational focus has primarily been in the Permian Basin's Midland sub-basin, where our customers have operated.
We believe that our substantial market presence in the Permian Basin positions us well to capitalize on drilling, and completion activity and power demand in the region. Our operational focus has primarily been in the Permian Basin's Midland sub-basin, where our customers have operated.
However, in 2023, the WTI average crude oil price declined to approximately $78 per barrel.
However, the WTI average crude oil price declined to approximately $78 per barrel in 2023 and approximately $76 per barrel in 2024.
We have transitioned our hydraulic fracturing available equipment portfolio from approximately 10% lower emissions equipment in 2021 to approximately 35% in 2022 and 60% in 2023, and expect to increase to approximately 65% by the end of the first half of 2024.
We have transitioned our hydraulic fracturing available equipment portfolio from approximately 10% lower emissions equipment in 2021 to approximately 35% in 2022, 60% in 2023 and 70% in 2024, and expect to increase to approximately 75% by the end of the first quarter of 2025.
The Department of the Interior ("DOI") has also issued a report recommending various changes to the federal leasing program, though many such changes would require congressional action. In July 2023, the BLM proposed a rule to update the fiscal terms of federal oil and gas leases, which would increase fees, rents, royalties, and bonding requirements.
The Department of the Interior (“DOI”) issued a report recommending various changes to the federal leasing program, though many such changes would require congressional action. In July 2023, the BLM finalized a rule to update the fiscal terms of federal oil and gas leases, which increases fees, rents, royalties, and bonding requirements.
The markets in which we operate are highly competitive. To be successful, an oilfield service company must provide services that meet the specific needs of oil and natural gas E&P companies at competitive prices. Competitive factors impacting sales of our services are price, reputation, technical expertise, emissions profile, service and equipment design and quality, and health and safety standards.
To be successful, an energy service company must provide services that meet the specific needs of oil and natural gas E&P companies at competitive prices. Competitive factors impacting sales of our services are price, reputation, technical expertise, technology, emissions profile, service and equipment design and quality, and health and safety standards.
Similarly, the geopolitical and macroeconomic consequences of the Russian invasion of Ukraine, including the associated sanctions, and the adverse impacts of the COVID-19 pandemic in recent years have resulted in volatility in supply and demand dynamics for crude oil and associated volatility in crude oil pricing.
The geopolitical and macroeconomic consequences of military action in the Middle East, the Russian invasion of Ukraine, including the associated sanctions, and the adverse impacts of the COVID-19 pandemic have resulted in volatility in supply and demand dynamics for crude oil and associated volatility in crude oil pricing.
However, we have recently experienced a 13% decrease in the rig count in 2023 to 309 at the end of 2023 which resulted in a reduction in the demand for completion services and pressure on pricing of our services. Sustained levels of high inflation have likewise caused the U.S.
However, the Permian Basin rig count experienced a 13% decrease to 309 at the end of 2023 and further decreased to 304 at the end of 2024 which resulted in a reduction in the demand for completion services and pressure on pricing of our services. Sustained levels of high inflation likewise caused the U.S.
Our equipment has been designed to handle the operating conditions commonly encountered in the Permian Basin and the region’s increasingly high-intensity well completions (including Simul-Frac, which involves fracturing multiple wellbores at the same time), which are characterized by longer horizontal wellbores, more stages per lateral and increasing amounts of proppant per well.
Our equipment has been designed to handle the operating conditions commonly encountered in the Permian Basin and the region’s increasingly high-intensity well completions, including (“Simul-Frac”), which are characterized by longer horizontal wellbores, more stages per lateral and increasing amounts of proppant per well.
Operating Risks and Insurance Our operations are subject to hazards inherent in the oilfield service industry, such as accidents, blowouts, explosions, fires and spills and releases that can cause personal injury or loss of life, damage or destruction of property, equipment, natural resources and the environment and suspension of operations.
Operating Risks and Insurance Our operations are subject to hazards inherent in the energy service industry, such as accidents, blowouts, explosions, fires and spills and releases that can cause personal injury or loss of life, damage or destruction of property, equipment, natural resources and the environment and suspension of operations. 5 In addition, claims for loss of oil and natural gas production and damage to formations can occur in the energy service industry.
We believe that the volatility of crude oil prices in recent years has been partly driven by declines in crude oil supplies, concerns over sanctions resulting from Russia's invasion of Ukraine, concerns over a potential disruption of Middle Eastern oil supplies resulting from the ongoing conflict between Israel and Palestinian militants in the Israel-Gaza region, slower crude oil production growth due to the lack of reinvestment in the oil and gas industry in the last two years, recent OPEC+ production cuts of approximately 1.3 million barrels per day and concerns of a potential global recession resulting from high inflation and interest rates.
We believe that the volatility of crude oil prices in recent years has been partly driven by declines in crude oil supplies, concerns over sanctions resulting from Russia's invasion of Ukraine, concerns over a potential disruption of Middle Eastern oil supplies resulting from the conflict in the Middle East, slower crude oil production growth due to the lack of reinvestment in the oil and gas industry in the last three years, the extension of OPEC+ production cuts of approximately 3.9 million barrels per day originally announced in 2023 and concerns of a potential global recession resulting from high inflation and interest rates.
Upon the sale of our coiled tubing assets, we recorded a loss on sale of $13.8 million . 1 Commodity Price and Other Economic Conditions The oil and gas industry has traditionally been volatile and is characterized by a combination of long-term, short-term and cyclical trends, including domestic and international supply and demand for oil and gas, current and expected future prices for oil and gas and the perceived stability and sustainability of those prices, and capital investments of E&P companies toward their development and production of oil and gas reserves.
Commodity Price and Other Economic Conditions The oil and gas industry has traditionally been volatile and is characterized by a combination of long-term, short-term and cyclical trends, including domestic and international supply and demand for oil and gas, current and expected future prices for oil and gas and the perceived stability and sustainability of those prices, and capital investments of E&P companies toward their development and production of oil and gas reserves.
We believe that in order to attract and retain talent with the skill sets and expertise that can help to maximize our operational efficiencies across all levels in the Company, it is in our best interest to create a culture that is inclusive. We conducted an employee engagement survey in 2023 related to inclusion, belonging and other engagement efforts.
We believe that in order to attract and retain talent with the skill sets and expertise that can help to maximize our operational efficiencies across all levels in 9 the Company, it is in our best interest to create a culture that is inclusive. We conducted our second annual employee engagement survey in 2024.
The Company provides employees with the ability to participate in health and welfare plans, including medical, dental, life, accidental death and dismemberment and short-term and long-term disability insurance plans. In 2023, as part of our 401(k) plan, we introduced opportunities for holistic financial wellness education and group and individual consultations for employees.
The Company provides employees with the ability to participate in health and welfare plans, including medical, dental, life, accidental death and dismemberment and short-term and long-term disability insurance plans. In 2024, as part of our 401(k) plan, we continued to focus on financial wellness education and group and individual consultations for employees as well as encouraging participation in the program.
Availability of Filings Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are made available free of charge on our internet website at www.propetroservices.com, as soon as reasonably practicable after we have electronically filed the material with, or furnished it to, the SEC.
Committee also organizes or sponsors events in which employees can choose to participate in addition to our paid community service time benefit. 10 Availability of Filings Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are made available free of charge on our internet website at www.propetroservices.com, as soon as reasonably practicable after we have electronically filed the material with, or furnished it to, the SEC.
For more information, see our risk factors titled "Our and our customers’ operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, and reduce demand for the products and services we provide" and "The IRA 2022 could accelerate the transition to a low carbon economy and could impose new costs on our customers’ operations." Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate-change-related pledges made by certain candidates for public office.
For more information, see our risk factors titled “Our and our customers’ operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, limit the areas in which oil and natural gas production may occur, and reduce demand for the products and services we provide” and “The IRA 2022 could accelerate the transition to a low carbon economy and could impose new costs on our customers’ operations.” Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, for example, in January 2024 the government announced a temporary pause on pending decisions on liquefied natural gas exports to certain countries.
As of December 31, 2023, we emplo yed approximately 2,070 people, and n one of our employees are represented by a union. All of our employees work for or support our hydraulic fracturing, wireline and cementing operating segments. We believe that we have good relations with our employees.
As of December 31, 2024, we emplo yed approxim ately 1,900 people , and n one of our employees are represented by a union. All of our employees work for or support our hydraulic fracturing, wireline, cementing and power generation services operating segments. We believe that we have good relations with our employees.
Effective as of the fourth quarter of fiscal year 2023, we revised our segment reporting as we determined that our three operating segments no longer met the criteria to be aggregated. Our Hydraulic Fracturing and Wireline operating segments meet the criteria of a reportable segment.
Effective in the fourth quarter of fiscal year 2023, we revised our segment reporting as we determined that our operating segments no longer met the criteria to be aggregated.
These requirements were finalized in 2023, but may be subject to legal challenge. Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas such as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas such as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
Materials known as proppants, which in our business are comprised primarily of sand, are suspended in the fracturing fluid and are pumped into the fracture to prop it open.
The hydraulic fracturing process consists of pumping fracturing fluid into a well at sufficient pressure to fracture the formation. Materials known as proppants, which in our business are comprised primarily of sand, are suspended in the fracturing fluid and are pumped into the fracture to prop it open.
For example, the Bureau of Land Management (“BLM”) recently proposed a rule that would limit flaring from well sites on federal lands, as well as allow the delay or denial of permits if BLM finds that an operator’s methane waste minimization plan is insufficient.
For example, in March 2024, the Bureau of Land Management (“BLM”) finalized a rule that requires operators to limit flaring from well sites on federal lands, and allows the delay or denial of permits if BLM finds that an operator’s methane waste minimization plan is insufficient.
For more information on each of these items, see our risk factor titled "Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays." OSHA Matters.
For more information on each of these items, see our risk factor titled “Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.” OSHA Matters. The Occupational Safety and Health Act (“OSHA”) and comparable state statutes regulate the protection of the health and safety of workers.
We also refer to all of our fracturing units, other equipment and vehicles necessary to perform a fracturing job as a "fleet" and the personnel assigned to each fleet as a "crew." Our hydraulic fracturing units consist primarily of a high pressure hydraulic pumps, diesel or dual gas engines, transmissions and various hoses, valves, tanks and other supporting equipment like blenders, irons, hoses and datavans. 3 We provide dedicated equipment, personnel and services that are tailored to meet each of our customer’s needs.
We also refer to all of our fracturing units, other equipment and vehicles necessary to perform a fracturing job as a “fleet” and the personnel assigned to each fleet as a “crew.” Our hydraulic fracturing units consist primarily of high pressure hydraulic pumps, diesel or dual gas engines, gas turbine generators, transmissions and various hoses, valves, tanks and other supporting equipment like blenders, irons, hoses and data vans.
An individual fleet could range from approximately 50,000 to 80,000 HHP depending on the job design and customer demand at the wellsite.
Our hydraulic fracturing fleets range from approximately 50,000 to 80,000 HHP depending on the job design and customer demand at the wellsite.
A significant increase in or continued high levels of inflation, to the extent we are unable to timely pass-through the cost increases to our customers, or further declines in crude oil prices would negatively impact our business, financial condition and results of operations. See Part II, Item 1A.
A significant increase in or continued high levels of inflation, to the extent we are unable to timely pass-through the cost increases to our 2 customers, further declines in crude oil prices, or potential changes in U.S trade policy, including the imposition of tariffs and the resulting consequences, would negatively impact our business, financial condition and results of operations.
Cementing provides isolation between fluid zones behind the casing to minimize potential damage to hydrocarbon bearing formations or the integrity of freshwater aquifers, and provides structural integrity for the casing by securing it to the earth. Cementing is also done when re-completing wells, where one zone is plugged and another is opened.
Cementing provides isolation between fluid zones behind the casing to minimize potential damage to hydrocarbon bearing formations or the integrity of freshwater aquifers, and provides structural integrity for the casing by securing it to the earth.
Although we believe our customers consider all of these factors, we believe price is a key factor in E&P companies' criteria in choosing a service provider. However, we have recently observed the energy industry and our customers shift to lower emissions equipment, which we believe will be an increasingly important factor in an E&P company's selection of a service provider.
However, we have recently observed the energy industry and our customers’ shift to new technologies and lower emissions equipment, which we believe will be an increasingly important factor in an E&P company's selection of a service provider.
The Fleet Two Agreement was effective as of January 1, 2023 and was terminated on May 12, 2023. 4 Competition The markets in which we operate are highly competitive. To be successful, an oilfield service company must provide services and equipment that meet the specific needs of oil and natural gas E&P companies at competitive prices.
Competition The markets in which we operate are highly competitive. To be successful, an energy service company must provide services and equipment that meet the specific needs of oil and natural gas E&P companies at competitive prices.
As such, we entered into conversion and purchase agreements with our equipment manufacturers for a total of 452,500 HHP of Tier IV DGB du al-fuel equipment and as of December 31, 2023, we have received all of the converted and new Tier IV DGB dual-fuel equipment.
As such, we entered into conversion and purchase agreements with our equipment manufacturers and received all of the converted and new Tier IV DGB dual-fuel equipment by the end of 2023, representing 450,000 HHP of our Tier IV DGB dual-fuel equipment as of December 31, 2024.
In addition, claims for loss of oil and natural gas production and damage to formations can occur in the oilfield service industry. If a serious accident were to occur at a location where our equipment and services are being used, it could result in us being named as a defendant in lawsuits asserting large claims.
If a serious accident were to occur at a location where our equipment and services are being used, it could result in us being named as a defendant in lawsuits asserting large claims.
For example, the dunes sagebrush lizard, which is found only in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where our customers operate), was a candidate species for listing under the ESA by the FWS for many years.
For example, the dunes sagebrush lizard, which is found only in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where our customers operate), has, since May 2024, been listed as endangered under the ESA.
Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Annual Report or the documents incorporated by reference in this Annual Report. 10
The SEC maintains an internet site that contains our reports, proxy and information statements and our other SEC filings. The address of that website is www.sec.gov. Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Annual Report or the documents incorporated by reference in this Annual Report.
Our top five customers accounted for a pproximately 63.2%, 84.0% and 85.7% of our revenue, for the years ended December 31, 2023, 2022 and 2021, respectively. For the year ended December 31, 2023, Endeavor Energy Resources and XTO Energy accounted for 19.7% and 18.2%, respectively, of total revenue.
Our top five customers accounted for a pproxim ately 58.8%, 63.2% and 84.0% of our revenue, for the years ended December 31, 2024, 2023, and 2022, respectively. For the year ended December 31, 2024, XTO Energy Inc.
"Risk Factors—We may be adversely affected by the effects of inflation." Government regulations and investors are demanding the oil and gas industry transition to a lower emissions operating environment, including upstream and oilfield service companies. As a result, we are working with our customers and equipment manufacturers to transition our equipment to a lower emissions profile.
See Part II, Item 1A. “Risk Factors—We may be adversely affected by the effects of inflation.” Government regulations and investors are demanding the oil and gas industry transition to a lower emissions operating environment, including upstream and energy service companies.
Changes in environmental, health and safety laws and regulations occur frequently, and any changes that result in more stringent and costly requirements could materially adversely affect our operations and financial position.
Changes in environmental, health and safety laws and regulations occur frequently, and any changes that result in more stringent and costly requirements could materially adversely affect our operations and financial position. We have not experienced any material adverse effect from compliance with current requirements; however, this trend may not continue in the future.
Effective September 1, 2022, we disposed of our coiled tubing assets to STEP Energy Services L td. ("STEP") and shut down our coiled tubing operations. We received approximately $2.8 million in cash and 2.6 million common shares of STEP, valued at $11.8 million, as consideration.
(“STEP”) and shut down our coiled tubing operations. We received approximately $2.8 million in cash and 2.6 million common shares of STEP, valued at $11.8 million, as consideration. Upon the sale of our coiled tubing assets, we recorded a loss on sale of $13.8 million .
No other customer accounted for more than 10% of our total revenue for the year ended December 31, 2023. There have been many recent mergers and acquisitions in the oil and gas industry. In October 2023, Pioneer Natural Resources USA, Inc. (“Pioneer”) entered into a merger agreement with Exxon Mobil Corporation.
(“XTO”), a wholly owned subsidiary of Exxon Mobil Corporation (“ExxonMobil”), Permian Resources and EOG Resources accounted for 19.7%, 14.9%, and 10.6%, respectively, of total revenue. No other customer accounted for more than 10% of our total revenue for the year ended December 31, 2024. There have been many recent mergers and acquisitions in the oil and gas industry.
At the international level, the United Nations-sponsored " Paris Agreement, " requires member states to submit non-binding, individually-determined reduction goals known as Nationally Determined Contributions ( " NDCs " ) every five years after 2020.
At the international level, the United Nations-sponsored “Paris Agreement,” requires member states to submit non-binding, individually-determined reduction goals known as Nationally Determined Contributions (“NDCs”) every five years after 2020. The United States rejoined the Paris Agreement and, in April 2021, established a goal of reducing economy-wide net GHG emissions 50-52% below 2005 levels by 2030.
We have significant expertise in multi‑stage fracturing of horizontal oil‑producing wells in unconventional geological formations. Our total available hydraulic horsepower ("HHP") at December 31, 2023 w as 1,461,500 HHP, which was comprised of 452,500 HHP of our Tier IV DGB dual-fuel equipment, 144,000 HHP of FORCE SM electric-powered equipment and 865,000 HHP of conventional Tier II equipment.
Our total available hydraulic horsepower (“HHP”) at December 31, 2024, w as 1,556,500 HHP, which was comprised of 450,000 HHP of our Tier IV DGB dual-fuel equipment, 294,000 HHP of FORCE ® electric-powered equipment and 812,500 HHP of conventional Tier II equipment.
For additional financial information on our reportable segments presentation, please see reportable segment information in Part II - Item 8, "Financial Statements and Supplementary Data." Completion Services Hydraulic Fracturing We provide hydraulic fracturing services to E&P companies in the Permian Basin. These services are intended to optimize hydrocarbon flow paths during the completion phase of horizontal shale wellbores.
As a result, corporate administrative expenses have been included under “Reconciling Items.” For additional financial information on our reportable segment presentation, please see reportable segment information in Part II - Item 8, “Financial Statements and Supplementary Data.” Hydraulic Fracturing We provide hydraulic fracturing services to E&P companies in the Permian Basin.
Par Five’s business complements our existing cementing business and enables us to serve both the Midland and Delaware Basins of the Permian Basin. Our competitors include many large and small oilfield service companies, including Halliburton Company, Liberty Energy Inc., Patterson-UTI Energy Inc., ProFrac Holding Corp., RPC, Inc., and a number of private and locally-oriented businesses.
Our competitors include many large and small energy service companies, including Halliburton Company, Liberty Energy Inc., Patterson-UTI Energy Inc., ProFrac Holding Corp., Solaris Energy Infrastructure, Inc., RPC, Inc., and a number of private and locally-oriented businesses. The markets in which we operate are highly competitive.
The rule would also add new criteria for BLM to consider when determining whether to lease nominated land, including the presence of important habitats or wetlands, the presence of historical properties or sacred sites, and recreational use of the land. BLM anticipates a final action on the proposal in Spring 2024.
The rule also adds new criteria for BLM to consider when determining whether to lease nominated land, including the presence of important habitats or wetlands, the presence of historical properties or sacred sites, and recreational use of the land. Any regulations that restrict, ban or effectively ban such operations may adversely impact demand for our products and services.
The current government has also called for revisions and restrictions to the leasing and permitting programs for oil and gas development on federal lands and, for a time, suspended federal oil and gas leasing activities.
Although the rule is currently being implemented in areas not covered by the order, the future of the rule is uncertain. The previous administration also called for revisions and restrictions to the leasing and permitting programs for oil and gas development on federal lands and, for a time, suspended federal oil and gas leasing activities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny future decreases in the rate at which oil and natural gas reserves are discovered or developed, whether due to the passage of legislation, increased governmental regulation leading to limitations, or prohibitions on exploration and drilling activity, including hydraulic fracturing, or other factors, could have a material adverse effect on our business and financial condition, even in a stronger oil and natural gas price environment. 25 Moreover, while we may create and publish voluntary disclosures regarding ESG matters from time to time, certain statements in those voluntary disclosures may be based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Biggest changeWhile it remains to be seen if the current administration would modify or repeal some or all of the IRA 2022, any future decreases in the rate at which oil and natural gas reserves are discovered or developed, whether due to the passage of legislation, increased governmental regulation leading to limitations, or prohibitions on exploration and drilling activity, including hydraulic fracturing, or other factors, could have a material adverse effect on our business and financial condition, even in a stronger oil and natural gas price and regulatory environment.
Our operations are exposed to the risks inherent to our industry, such as equipment defects, vehicle accidents, worksite injuries to our or third-party personnel, fires, explosions, blowouts, surface cratering, uncontrollable flows of gas or well fluids, pipe or pipeline failures, abnormally pressured formations and various environmental hazards, such as oil spills and releases of, and 15 exposure to, hazardous substances.
Our operations are exposed to the risks inherent to our industry, such as equipment defects, vehicle accidents, worksite injuries to our or third-party personnel, fires, explosions, blowouts, surface cratering, uncontrollable flows of gas or well fluids, pipe or pipeline failures, abnormally pressured formations and various environmental hazards, such as oil spills and releases of, and exposure to, hazardous substances.
The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including management's assessment of the intrinsic value of the Company's common stock, the market price of the Company's common stock, general market and economic conditions, available liquidity, compliance with the Company's debt and other agreements, applicable legal requirements, and other considerations.
The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including management's assessment of the intrinsic value of our common stock, the market price of the our common stock, general market and economic conditions, available liquidity, compliance with the Company's debt and other agreements, applicable legal requirements, and other considerations.
As a result of this concentration, we may be disproportionately exposed to the impact of regional supply and demand factors, 12 delays or interruptions of production from wells in the Permian Basin caused by significant governmental regulation, processing or transportation capacity constraints, market limitations, curtailment of production or interruption of the processing or transportation of oil and natural gas produced from the wells in these areas.
As a result of this concentration, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in the Permian Basin caused by significant governmental regulation, processing or transportation capacity constraints, market limitations, curtailment of production or interruption of the processing or transportation of oil and natural gas produced from the wells in these areas.
Further, we may face competitive pressure to develop, implement or acquire and deploy certain technology improvements at a substantial cost, such as our FORCE SM electric-powered hydraulic fracturing fleets deployed in 2023, or the cost of implementing or purchasing a technology like FORCE SM may be substantially higher than anticipated, and we may not be able to successfully implement the technologies we may purchase.
Further, we may face competitive pressure to develop, implement or acquire and deploy certain technology improvements at a substantial cost, such as our FORCE ® electric-powered hydraulic fracturing fleets deployed in 2023, or the cost of implementing or purchasing a technology like FORCE ® may be substantially higher than anticipated, and we may not be able to successfully implement the technologies we may purchase.
By contracting services on a short‑term basis, we are exposed to the risks of a rapid reduction in market prices and utilization and resulting volatility in our revenues. The majority of our operations are located in the Permian Basin, making us vulnerable to risks associated with operating in one major geographic area.
By contracting services on a short‑term basis, we are exposed to the risks of a rapid reduction in market prices and utilization and resulting volatility in our revenues. 16 The majority of our operations are located in the Permian Basin, making us vulnerable to risks associated with operating in one major geographic area.
We may experience ownership changes, which may result in annual limitation under Section 382 determined by multiplying the value of our stock at the time of the ownership change by the applicable long‑term tax‑exempt rate as defined in Section 382, increased under certain circumstances as a result of recognizing built‑in gains in our assets existing at the time of the ownership change.
We may experience future ownership changes, which may result in annual limitation under Section 382 determined by multiplying the value of our stock at the time of the ownership change by the applicable long‑term tax‑exempt rate as defined in Section 382, increased under certain circumstances as a result of recognizing built‑in gains in our assets existing at the time of the ownership change.
The TRRC has adopted similar rules and, in September 2021, issued a notice to disposal well operators in the Gardendale Seismic Response 24 Area near Midland, Texas to reduce daily injection volumes following multiple earthquakes above a 3.5 magnitude over an 18 month period.
The TRRC has adopted similar rules and, in September 2021, issued a notice to disposal well operators in the Gardendale Seismic Response Area near Midland, Texas to reduce daily injection volumes following multiple earthquakes above a 3.5 magnitude over an 18 month period.
However, despite this general allocation of risk, we might not succeed in enforcing such contractual allocation, might incur an unforeseen liability falling outside the scope of such allocation or may be required to enter into an MSA with terms 16 that vary from the above allocations of risk.
However, despite this general allocation of risk, we might not succeed in enforcing such contractual allocation, might incur an unforeseen liability falling outside the scope of such allocation or may be required to enter into an MSA with terms that vary from the above allocations of risk.
Certain provisions of our certificate of incorporation, and bylaws, as well as Delaware law, may discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock. Our certificate of incorporation authorizes our board of directors (the " Board " ) to issue preferred stock without shareholder approval.
Certain provisions of our certificate of incorporation, and bylaws, as well as Delaware law, may discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock. Our certificate of incorporation authorizes our board of directors (the “Board”) to issue preferred stock without shareholder approval.
Risks Related to Regulatory Matters We are subject to environmental laws and regulations, and future compliance, claims, and liabilities relating to such matters may have a material adverse effect on our results of operations, financial position or cash flows.
Risks Related to Regulatory Matters 24 We are subject to environmental laws and regulations, and future compliance, claims, and liabilities relating to such matters may have a material adverse effect on our results of operations, financial position or cash flows.
As a result, our 21 operations as well as the operations of our oil and natural gas E&P customers are subject to a series of regulatory, political, litigation, and financial risks associated with the production and processing of fossil fuels and emission of GHGs.
As a result, our operations as well as the operations of our oil and natural gas E&P customers are subject to a series of regulatory, political, litigation, and financial risks associated with the production and processing of fossil fuels and emission of GHGs.
Risks Related to Employees We rely on a few key employees whose absence or loss could adversely affect our business. 20 Many key responsibilities within our business have been assigned to a small number of employees. The loss of their services could adversely affect our business.
Risks Related to Employees We rely on a few key employees whose absence or loss could adversely affect our business. Many key responsibilities within our business have been assigned to a small number of employees. The loss of their services could adversely affect our business.
The market price of our common stock is subject to volatility. 28 The market price of our common stock could be subject to wide fluctuations in response to, and the level of trading of our common stock may be affected by, numerous factors, many of which are beyond our control.
The market price of our common stock is subject to volatility. The market price of our common stock could be subject to wide fluctuations in response to, and the level of trading of our common stock may be affected by, numerous factors, many of which are beyond our control.
Significant sales of our common stock, or the expectation of these sales, by significant shareholders, officers or directors could materially and adversely affect the market price of our common stock. There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.
Significant sales of our common stock, or the expectation of these sales, by significant shareholders, officers or directors could materially and adversely affect the market price of our common stock. 31 There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.
Limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities.
Any limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities.
As a result, competition for experienced oilfield service personnel is intense, and we face significant challenges in competing for crews and management with large and well‑established competitors. A significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both.
As a result, competition for experienced energy service personnel is intense, and we face significant challenges in competing for crews and management with large and well‑established competitors. A significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both.
The delivery of our services requires skilled and qualified workers with specialized skills and experience who can perform physically demanding work. As a result of the volatility of the oilfield service industry and the demanding nature of the work, workers may choose to pursue employment in fields that offer a less challenging work environment at wage rates that are competitive.
The delivery of our services requires skilled and qualified workers with specialized skills and experience who can perform physically demanding work. As a result of the volatility of the energy service industry and the demanding nature of the work, workers may choose to pursue employment in fields that offer a less challenging work environment at wage rates that are competitive.
Many factors over which we have no control affect the supply of, and demand for our services, and our customers’ willingness to explore, develop and produce oil and natural gas, and therefore, influence prices for our services, including: • the actions by the members of OPEC+ with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with supply limitations; • the domestic and foreign 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; • the cost of exploring for, developing, producing and delivering oil and natural gas; • the supply of and demand for drilling and hydraulic fracturing and wireline equipment, including the supply and demand for lower emissions hydraulic fracturing and wireline equipment; • cost increases and supply chain constraints related to our services; • the expected decline in 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, the Middle East, Africa, South America and Russia; • the actions taken by the United States and other countries on climate change or to transition away from fossil fuels; • the severity and duration of world health events and related economic repercussions; • speculative trading in crude oil and natural gas derivative contracts; • the level of consumer product demand; 11 • the discovery rates of new oil and natural gas reserves; • contractions in the credit market; • the strength or weakness of the U.S. dollar; • available pipeline and other transportation capacity; • the levels of oil and natural gas storage; • weather conditions and other natural disasters; • domestic and foreign tax policy; • domestic and foreign governmental approvals and regulatory requirements and conditions, including tighter emissions standards in the energy industry; • the continued threat of terrorism and the impact of military and other action, including military action in the Middle East; • political or civil unrest in the United States or elsewhere, including the Russia-Ukraine war and the conflict in the Israel-Gaza region and related instability in the Middle East, including from Houthi rebels in Yemen; • technical advances affecting energy consumption; • the proximity and capacity of oil and natural gas pipelines and other transportation facilities; • the price and availability of alternative fuels; • the ability of oil and natural gas producers to raise equity capital and debt financing; • merger and divestiture activity among oil and natural gas producers; and • overall domestic and global economic conditions.
Many factors over which we have no control affect the supply of, and demand for our services, and our customers’ willingness to explore, develop and produce oil and natural gas, and therefore, influence prices for our services, including: • the actions by the members of OPEC+ with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with supply limitations; • the domestic and foreign 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; • the cost of exploring for, developing, producing and delivering oil and natural gas; • the supply of and demand for drilling and hydraulic fracturing and wireline equipment, including the supply and demand for lower emissions hydraulic fracturing and wireline equipment; • cost increases and supply chain constraints related to our services; • the expected decline in 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, the Middle East, Africa, South America and Russia; • the actions taken by the United States and other countries on climate change or to transition away from fossil fuels; • the severity and duration of world health events and related economic repercussions; • speculative trading in crude oil and natural gas derivative contracts; • the level of consumer product demand; 15 • the discovery rates of new oil and natural gas reserves; • contractions in the credit market; • the strength or weakness of the U.S. dollar; • available pipeline and other transportation capacity; • the levels of oil and natural gas storage; • weather conditions and other natural disasters; • domestic and foreign tax policy; • domestic and foreign governmental approvals and regulatory requirements and conditions, including tighter emissions standards in the energy industry and proposed tariffs; • the result of the U.S presidential election; • the continued threat of terrorism and the impact of military and other action, including military action in the Middle East; • political or civil unrest in the United States or elsewhere, including the Russia-Ukraine war and the conflict in the Israel-Gaza region and related instability in the Middle East, including from Houthi rebels in Yemen, and tensions with Iran; • technical advances affecting energy consumption; • the proximity and capacity of oil and natural gas pipelines and other transportation facilities; • the price and availability of alternative fuels; • the ability of oil and natural gas producers to raise equity capital and debt financing; • merger and divestiture activity among oil and natural gas producers; and • overall domestic and global economic conditions.
Our business depends upon the ability to obtain specialized equipment, parts and key raw materials, including sand and chemicals, from third‑party suppliers, and we may be vulnerable to delayed deliveries and future price increases. We purchase specialized equipment, parts and raw materials (including, for example, frac sand, chemicals and fluid ends) from third party suppliers and affiliates.
Our business depends upon the ability to obtain specialized equipment, parts and key raw materials, including sand and chemicals, from third‑party suppliers, and we may be vulnerable to delayed deliveries and future price increases. We purchase specialized equipment, parts and raw materials (including, for example, power generation equipment, frac sand, chemicals and fluid ends) from third party suppliers and affiliates.
Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, increased attention to climate change and other ESG matters, and technological advances in fuel economy and energy generation devices could reduce demand for oil and natural gas, resulting in reduced demand for oilfield services.
Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, increased attention to climate change and other ESG-related matters, and technological advances in fuel economy and energy generation devices could reduce demand for oil and natural gas, resulting in reduced demand for energy services.
This could result in a significant decline in demand for oilfield services and could adversely impact the prices oilfield service companies can charge for their services. These factors have materially and adversely affected our business, results of operations and financial condition.
This could result in a significant decline in demand for energy services and could adversely impact the prices energy service companies can charge for their services. These factors have materially and adversely affected our business, results of operations and financial condition.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters. Additionally, we may announce various targets or product and service offerings in an attempt to improve our ESG profile.
Such expectations and assumptions or hypothetical scenarios are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established approach to identifying, measuring and reporting on many ESG matters. Additionally, we may announce various targets or product and service offerings in an attempt to improve our ESG profile.
In some cases, our customers are responsible for supplying necessary raw materials (including frac sand), parts and/or equipment. At times during the business cycle, there is a high demand for hydraulic fracturing and other oilfield services and extended lead times to obtain equipment and raw materials needed to provide these services.
In some cases, our customers are responsible for supplying necessary raw materials (including frac sand), parts and/or equipment. At times during the business cycle, there is a high 23 demand for hydraulic fracturing and other energy services and extended lead times to obtain equipment and raw materials needed to provide these services.
In January 2021, the president issued an executive order suspending new leasing activities, but not operations under existing leases, for oil and gas E&P on non-Indian federal lands pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices that take into consideration potential climate and other impacts associated with oil and gas activities on such lands and waters.
Additionally in January 2021, the president issued an executive order suspending new leasing activities, but not operations under existing leases, for oil and gas E&P on non-Native American federal lands pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices that take into consideration potential climate and other impacts associated with oil and gas activities on such lands and waters.
For example, on January 26, 2024, the president announced a temporary pause on pending decisions on new exports of LNG to countries that the United States does not have free trade agreements with, pending Department of Energy review of the underlying analyses for authorizations.
Additionally on January 26, 2024, the former president announced a temporary pause on pending decisions on new exports of LNG to countries that the United States does not have free trade agreements with, pending Department of Energy review of the underlying analyses for authorizations.
At the international level, the United Nations-sponsored Paris Agreement, requires member states to submit non-binding, individually-determined reduction goals known as NDCs every five years after 2020. Following the president’s executive order in January 2021, the United States rejoined the Paris Agreement and, in April 2021, established a goal of reducing economy-wide net GHG emissions 50-52% below 2005 levels by 2030.
At the international level, the United Nations-sponsored Paris Agreement, requires member states to submit non- 25 binding, individually-determined reduction goals known as NDCs every five years after 2020. The United States rejoined the Paris Agreement in January 2021 and, in April 2021, established a goal of reducing economy-wide net GHG emissions 50-52% below 2005 levels by 2030.
In particular, the loss of the services of one or more members of our executive team, such as our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, Chief Commercial Officer and General Counsel could disrupt our operations. We do not maintain " key person " life insurance policies on any of our employees.
In particular, the loss of the services of one or more members of our executive team, such as our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer, Chief Accounting Officer, Chief Commercial Officer and General Counsel could disrupt our operations. We do not maintain “key person” life insurance policies on any of our employees.
Any acquisition of assets or businesses involves potential risks, including the failure to realize expected profitability, growth or accretion; environmental or regulatory compliance matters or liability; title or permit issues; the incurrence of significant charges, such as impairment of goodwill, property and equipment or intangible assets or restructuring charges; and the incurrence of unanticipated liabilities and costs for which indemnification is unavailable or inadequate.
Any acquisition of assets or businesses, or expansion into new lines of business involves potential risks, including the failure to realize expected profitability, growth or accretion; environmental or regulatory compliance matters or liability; title or permit issues; the incurrence of significant charges, such as impairment of goodwill, property and equipment or intangible assets or restructuring charges; and the incurrence of unanticipated liabilities and costs for which indemnification is unavailable or inadequate.
Additionally, in November 2021, the EPA finalized a rule that established OOOOb more stringent new source and OOOOc first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities. Under the final rule, states will have two years to prepare and submit their plans to impose methane emissions controls on existing sources.
In December 2023, the EPA finalized a rule that established OOOOb more stringent new source and OOOOc first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities. Under the final rule, states will have two years to prepare and submit their plans to impose methane emissions controls on existing sources.
The methane emissions charge will start in calendar year 2024 at $900 per ton of methane, increase to $1,200 in 2025, and be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA 2022.
The methane emissions charge began in calendar year 2024 at $900 per ton of methane, increased to $1,200 in 2025, and will be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA 2022.
Due to the large percentage of our revenue historically derived from our hydraulic fracturing services with recurring customers and the limited availability of our fracturing units, we have had some degree of customer concentration. Our top ten customers represented approximately 85.5% , 91.2% and 91.4% of our consolidated revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
Due to the large percentage of our revenue historically derived from our hydraulic fracturing services with recurring customers and the limited availability of our fracturing units, we have had some degree of customer concentration. Our top ten customers represented approximately 75.3%, 85.5% and 91.2% of our consolidated revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
The cost of managing such risks may be significant. The frequency and severity of such incidents will affect operating costs, insurability and relationships with customers, employees and regulators. In particular, our customers may elect not to purchase our services if they view our environmental or safety record as unacceptable, which could cause us to lose customers and substantial revenues.
The frequency and severity of such incidents will affect operating costs, insurability and relationships with customers, employees and regulators. In particular, our customers may elect not to purchase our services if they view our environmental or safety record as unacceptable, which could cause us to lose customers and substantial revenues.
Our level of indebtedness may affect our operations in several ways, including the following: • increasing our vulnerability to general adverse economic and industry conditions; • the covenants that are contained in the agreements governing our indebtedness could limit our ability to borrow funds, dispose of assets, pay dividends and make certain investments; • our debt covenants could also affect our flexibility in planning for, and reacting to, changes in the economy and in our industry; • any failure to comply with the financial or other debt covenants, including covenants that impose requirements to maintain certain financial ratios, could result in an event of default, which could result in some or all of our indebtedness becoming immediately due and payable; • our level of debt could impair our ability to obtain additional financing, or obtain additional financing on favorable terms in the future for working capital, capital expenditures, research and development efforts, potential strategic acquisitions or other general corporate purposes; • placing us at a competitive disadvantage relative to competitors that have less debt; and • our business may not generate sufficient cash flow from operations to enable us to meet our obligations under our indebtedness. 14 Furthermore, interest rates on future indebtedness could be higher than current levels, causing our financing costs to increase accordingly.
Our level of indebtedness may affect our operations in several ways, including the following: • increasing our vulnerability to general adverse economic and industry conditions; • the covenants that are contained in the agreements governing our indebtedness could limit our ability to borrow funds, dispose of assets, pay dividends and make certain investments; 18 • our debt covenants could also affect our flexibility in planning for, and reacting to, changes in the economy and in our industry; • any failure to comply with the financial or other debt covenants, including covenants that impose requirements to maintain certain financial ratios, could result in an event of default, which could result in some or all of our indebtedness becoming immediately due and payable; • our level of debt could impair our ability to obtain additional financing, or obtain additional financing on favorable terms in the future for working capital, capital expenditures, research and development efforts, potential strategic acquisitions or other general corporate purposes; • placing us at a competitive disadvantage relative to competitors that have less debt; and • our business may not generate sufficient cash flow from operations to enable us to meet our obligations under our indebtedness.
There are also increasing financial risks for companies in the fossil fuel sector as shareholders currently invested in fossil-fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel related sectors.
There have also recent been increasing financial risks for companies in the fossil fuel sector as certain shareholders currently invested in fossil-fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel related sectors.
In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our shareholders, including: 27 • limitations on the removal of directors; • limitations on the ability of our shareholders to call special meetings; • advance notice provisions for shareholder proposals and nominations for elections to the Board to be acted upon at meetings of shareholders; • providing that the Board is expressly authorized to adopt, or to alter or repeal our bylaws; and • establishing advance notice and certain information requirements for nominations for election to our Board or for proposing matters that can be acted upon by shareholders at shareholder meetings.
In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our shareholders, including: • limitations on the removal of directors; • limitations on the ability of our shareholders to call special meetings; • advance notice provisions for shareholder proposals and nominations for elections to the Board to be acted upon at meetings of shareholders; • providing that the Board is expressly authorized to adopt, or to alter or repeal our bylaws; and • establishing advance notice and certain information requirements for nominations for election to our Board or for proposing matters that can be acted upon by shareholders at shareholder meetings. 30 Our business could be negatively affected as a result of the actions of activist shareholders.
Federal Reserve may continue to raise benchmark interest rates into 2024 in an effort to curb inflationary pressure on the costs of goods and services across the U.S., which could have the effects of raising the cost of capital and depressing economic growth, either of which—or the combination thereof—could hurt the financial and operating results of our business.
Federal Reserve may maintain high benchmark interest rates into 2025 in an effort to curb inflationary pressure on the costs of goods and services across the U.S., which could have the effects of raising the cost of capital and depressing economic growth, either of which—or the combination thereof—could hurt the financial and operating results of our business.
The IRA 2022 provides for hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
The IRA 2022, signed into law in August 2022, provides for hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
Our operations are geographically concentrated in the Permian Basin. For the years ended December 31, 2023, 2022 and 2021, approximately 98.1% , 98.3% and 98.7%, respectively, of our revenues were attributable to our operations in the Permian Basin.
Our operations are geographically concentrated in the Permian Basin. For the years ended December 31, 2024, 2023 and 2022, approximately 98.5%, 98.1% and 98.3%, respectively, of our revenues were attributable to our operations in the Permian Basin.
Terrorist activities, anti‑terrorist efforts, other armed conflicts and political or civil unrest, including the Russia-Ukraine war and conflicts in the Israel-Gaza region, could adversely affect the U.S. and global economies and could prevent us from meeting financial and other obligations.
Terrorist activities, anti‑terrorist efforts, other armed conflicts and political or civil unrest, including the Russia-Ukraine war and conflicts in the Middle East, could adversely affect the U.S. and global economies and could prevent us from meeting financial and other obligations.
In addition, Section 382 ( " Section 382 " ) of the Internal Revenue Code of 1986, as amended (the " Code " ), generally imposes an annual limitation on the amount of taxable income that may be offset by NOLs when a corporation has undergone an " ownership change " (as determined under Section 382).
In addition, Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended, generally imposes an annual limitation on the amount of taxable income that may be offset by NOLs when a corporation has undergone an “ownership change” (as determined under Section 382).
We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price of our common stock. There can be no assurance that our share repurchase program will be fully consummated or that such program will enhance the long-term value of our share price.
We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price of our common stock. There can be no assurance that we will purchase all the shares authorized under our share repurchase program or that such program will enhance the long-term value of our share price.
The average WTI oil price per barrel was approximately $78 , $94 and $68 for the years ended December 31, 2023, 2022 and 2021, respectively.
The average WTI oil price per barrel was approximately $76 , $78 and $94 for the years ended December 31, 2024, 2023, and 2022, respectively.
We are subject to various complex and evolving U.S. federal, state and local tax laws. U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect.
U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect.
Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.
While such ratings do not impact all investors’ investment or voting decisions, unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital.
Neighboring landowners and other third parties may file claims against us for personal injury or property damage allegedly caused by the release of pollutants into the environment. Environmental laws and regulations have changed in the past, and they may change in the future and become more stringent.
Neighboring landowners and other third parties may file claims against us for personal injury or property damage allegedly caused by the release of pollutants into the environment. Environmental laws and regulations have changed in the past, and they may change in the future and become more stringent. For example, the prior administration made climate change a focus of its administration.
These incentives could further accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which could decrease demand for oil and gas and consequently adversely affect the business of our customers, thereby reducing demand for our services.
If not modified, repealed or revoked by the current administration, these incentives could further accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which could decrease demand for oil and gas and consequently adversely affect the business of our customers, thereby reducing demand for our services.
Any disruptions or volatility in the global financial markets may lead to an increase in interest rates or a contraction in credit availabil ity impacting our ability to finance our operations. Our borrowing base was $152.0 million as of December 31, 2023 .
Any disruptions or volatility in the global financial markets may lead to an increase in interest rates or a contraction in credit availabil ity impacting our ability to finance our operations. Our Borrowing Base (as defined below) was $164.1 million as of December 31, 2024 .
The methane emissions charge could increase our customers’ operating costs and adversely affect their businesses, thereby reducing demand for our services. Our business may be adversely affected by a deterioration in general economic conditions or a weakening of the broader energy industry.
To the extent that the methane emissions charge is implemented as originally promulgated, it could increase our customers’ operating costs and adversely affect their businesses, thereby reducing demand for our services. Our business may be adversely affected by a deterioration in general economic conditions or a weakening of the broader energy industry.
Any failure to manage acquisitions effectively or integrate acquired assets or businesses into our existing operations successfully, or to realize the expected benefits from an acquisition or minimize any unforeseen operational difficulties, could have a material adverse effect on our business, financial condition, prospects or results of operations.
Any failure to manage acquisitions and expansions effectively or integrate acquired assets or businesses into our existing operations successfully, or to realize the expected benefits from an acquisition or minimize any unforeseen operational difficulties, could have a material adverse effect on our business, financial condition, prospects or results of operations. We may be adversely affected by the effects of inflation.
Endeavor Energy Resources and XTO Energy accounted for 19.7% and 18.2% , respectively, of our revenue for the year ended December 31, 2023. If either of these customers were to significantly reduce or discontinue our services, it could have a material adverse effect on our financial condition, results of operations and cash flows.
XTO Energy, Permian Resources and EOG Resources accounted for 19.7%, 14.9% and 10.6%, respectively, of our revenue for the year ended December 31, 2024. If either of these customers were to significantly reduce or discontinue our services, it could have a material adverse effect on our financial condition, results of operations and cash flows.
Our business could be negatively affected as a result of the actions of activist shareholders. Publicly traded companies have increasingly become subject to campaigns by investors seeking to increase shareholder value by advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases, sales of assets or even sale of the entire company.
Publicly traded companies have increasingly become subject to campaigns by investors seeking to increase shareholder value by advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases, sales of assets or even sale of the entire company.
We cannot assure that we will be able to maintain our competitive position. We are exposed to the credit risk of our customers, and any material nonpayment or nonperformance by our customers could adversely affect our business, results of operations and financial condition. We are subject to the risk of loss resulting from nonpayment or nonperformance by our customers.
We are exposed to the credit risk of our customers, and any material nonpayment or nonperformance by our customers could adversely affect our business, results of operations and financial condition. We are subject to the risk of loss resulting from nonpayment or nonperformance by our customers.
We may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements, cause us to fail to meet our reporting obligations, investors may lose confidence in our financial reporting, and our stock price may decline as a result or cause us to fail to meet our reporting obligations.
If we or our auditors identify and report material weaknesses in internal controls over financial reporting or if we fail to maintain an effective system of internal controls, such instances may result in material misstatements of our financial statements, cause us to fail to meet our reporting obligations, investors may lose confidence in our financial reporting, and our stock price may decline as a result.
The IRA 2022 could accelerate the transition to a low carbon economy and could impose new costs on our customers’ operations. In August 2022, the president signed the IRA 2022 into law.
The IRA 2022 could accelerate the transition to a low carbon economy and could impose new costs on our customers’ operations.
The threat of climate change continues to attract considerable attention in the United States and in foreign countries. Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate future GHG emissions.
Numerous proposals regarding climate change have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate future GHG emissions.
Our or our customers’ inability to obtain water from local sources or to effectively utilize flowback water could have an adverse effect on our financial condition, results of operations and cash flows. Risks Related to our Tax Matters Our ability to use our NOLs may be limited.
Our or our customers’ inability to obtain water from local sources or to effectively utilize flowback water could have an adverse effect on our financial condition, results of operations and cash flows.
Federal Reserve and other central banks to increase interest rates multiple times in 2023 and the U.S.
Federal Reserve and other central banks to increase interest rates in 2023 followed by decreases in 2024, and the U.S.
The pause is intended to provide time to integrate certain considerations, including potential energy cost increases for consumers and manufacturers and the latest assessment of the impact of GHG emissions, to ensure adequate guards against health risks are in place.Litigation risks are also increasing as a number of parties have sought to bring suit against certain oil and natural gas companies operating in the United States in state or federal court, alleging among other things, that such companies created public nuisances by producing fuels that contributed to climate change or that such companies have been aware of the adverse effects of climate change but failed to adequately disclose those impacts to their investors or customers.
Litigation risks are also increasing as a number of parties have sought to bring suit against certain oil and natural gas companies operating in the United States in state or federal court, alleging among other things, that such companies created public nuisances by producing fuels that contributed to climate change or that such companies have been aware of the adverse effects of climate change but failed to adequately disclose those impacts to their investors or customers.
" We may record losses or impairment charges related to goodwill and long-lived assets including intangible assets. Changes in future market conditions and prolonged periods of low utilization, changes in technology or the sale of assets below their carrying value may cause us to experience losses in our results of operations.
Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facility and Other Financing Arrangements.” We may record losses or impairment charges related to goodwill and long-lived assets including intangible assets. 19 Changes in future market conditions and prolonged periods of low utilization, changes in technology or the sale of assets below their carrying value may cause us to experience losses in our results of operations.
One or more of these developments could have a material adverse effect on our business, financial condition and results of operations. Moreover, climate change may result in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in the meteorological and hydrological patterns, that could adversely impact us, our customers’ and our suppliers’ operations.
Climate change may result in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in the meteorological and hydrological patterns, that could adversely impact us, our customers’ and our suppliers’ operations.
For example, many E&P companies, including our customers, are transitioning to a lower emissions operating environment and may require us to invest in equipment with lower emissions profiles.
If we are unable to quickly transition to lower emissions equipment, the demand for our services could be adversely impacted. For example, many E&P companies, including our customers, are transitioning to a lower emissions operating environment and may require us to invest in equipment with lower emissions profiles.
Concerns over global economic conditions, geopolitical issues (including the Russia-Ukraine war and conflicts in the Israel-Gaza region), public health crises, interest rates, inflation, the availability and cost of credit in the United States and foreign financial markets have contributed to increased economic uncertainty and diminished expectations for the global economy.
Concerns over global economic conditions, geopolitical issues (including the Russia-Ukraine war and conflicts in the Middle East, including tensions with Iran), public health crises, interest rates, inflation, the availability and cost of credit in the United States, foreign financial markets and potential changes in U.S trade policy, including the imposition of tariffs and the resulting consequences have contributed to increased economic uncertainty and diminished expectations for the global economy.
For example, the BLM recently proposed a rule that would limit flaring from well sites on federal lands, as well as allow the delay or denial of permits if BLM finds that an operator’s methane waste minimization plan is insufficient.
For example, in March 2024 the BLM finalized a rule that requires operators to limit flaring from well sites on federal lands, and allows the delay or denial of permits if BLM finds that an operator’s methane waste minimization plan is insufficient.
Terrorist activities, the threat of potential terrorist activities, political or civil unrest and any resulting economic downturn could adversely affect our results of operations, impair our ability to raise capital or otherwise adversely impact our ability to realize certain business strategies.
Terrorist activities, the threat of potential terrorist activities, political or civil unrest and any resulting economic downturn could adversely affect our results of operations, impair our ability to raise capital or otherwise adversely impact our ability to realize certain business strategies. 20 We may be subject to claims for personal injury and property damage, which could materially adversely affect our financial condition and results of operations.
The principal competitive factors impacting sales of our services are price, reputation and technical expertise, equipment and service quality and health and safety standards.
The energy service industry is highly competitive and has relatively few barriers to entry. The principal competitive factors impacting sales of our services are price, reputation and technical expertise, equipment and service quality and health and safety standards.
Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays. Our hydraulic fracturing operations are a significant component of our business, and it is an important and common practice that is used to stimulate production of hydrocarbons, particularly oil and natural gas, from tight formations, including shales.
Our hydraulic fracturing operations are a significant component of our business, and it is an important and common practice that is used to stimulate production of hydrocarbons, particularly oil and natural gas, from tight formations, including shales.
We may grow through acquisitions and our failure to properly plan and manage those acquisitions may adversely affect our performance. We have completed and may in the future pursue, asset acquisitions or acquisitions of businesses.
We may grow through acquisitions and/or internal expansions, and our failure to properly plan and manage such growth may adversely affect our performance. 21 We have completed and may in the future pursue, asset acquisitions or acquisitions of businesses. We have internally expanded and may in the future expand into new lines of business.
It is likely that these requirements will be subject to legal challenge. Failure to comply with these new methane rules may result in substantial fines and penalties for non-compliance, as well as injunctive relief.
Notwithstanding this, failure to comply with these new methane rules may result in substantial fines and penalties for non-compliance, as well as injunctive relief.
Similarly, certain states have enacted or are otherwise considering disclosure requirements for certain climate-related risks. While we are still assessing our obligations under the rule, enhanced climate-related disclosure requirements could increase our operating costs and lead to reputational or other harm with customers, regulators, or other stakeholders to the extent our disclosures do not meet their own standards or expectations.
Enhanced climate-related disclosure requirements could increase our operating costs and lead to reputational or other harm with customers, regulators, or other stakeholders to the extent our disclosures do not meet their own standards or expectations.
Additionally, the SEC released a final rule on climate-related disclosures on March 6, 2024, requiring the disclosure of certain climate-related risks and financial impacts, as well as GHG emissions.
Separately, the SEC released a final rule on climate-related disclosures on March 6, 2024, requiring the disclosure of certain climate-related risks and financial impacts, as well as GHG emissions, which was subsequently stayed by the U.S. Court of Appeals for the Fifth Circuit.
While we cannot predict the ultimate outcome of these actions, any action that temporarily or permanently restricts the availability of disposal capacity for produced water or other oilfield fluids may increase our customers’ costs or require them to suspend operations, which may adversely impact demand for our products and services.
While we cannot predict the ultimate outcome of these actions, any action that temporarily or permanently restricts the availability of disposal capacity for produced water or other oilfield fluids may increase our customers’ costs or require them to suspend operations, which may adversely impact demand for our products and services. 27 Increased regulation of hydraulic fracturing and related activities could subject us and our customers to additional permitting and financial assurance requirements, more stringent construction specifications, increased monitoring, reporting and recordkeeping obligations, and plugging and abandonment requirements.
We may be adversely affected by the effects of inflation. 17 The U.S. inflation rate steadily increased in 2021 and 2022 before decreasing to a moderate level in 2023.
The U.S. inflation rate steadily increased in 2021 and 2022 before decreasing to a moderate level in 2023 through 2024.
As such, we operate as a motor carrier in providing certain of our services and therefore are subject to regulation by the DOT and by various state agencies.
In connection with our business operations, including the transportation and relocation of our hydraulic fracturing equipment and shipment of frac sand, we operate trucks and other heavy equipment. As such, we operate as a motor carrier in providing certain of our services and therefore are subject to regulation by the DOT and by various state agencies.
Also, despite any voluntary actions, we may receive pressure from certain investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals or policies, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles.
However, such targets are often aspirational and we cannot guarantee that we will be able to meet any such targets or that such targets or offerings will have the intended results on our ESG profile, including but not limited to as a result of unforeseen costs, consequences or technical difficulties associated with such targets or offerings. 28 Also, despite any voluntary actions, we may receive pressure from certain investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals or policies, but we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles.
For example, the current government has proposed increasing the amount of the excise tax from 1% to 4%. However, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect. 29
In the past, there have been proposals to increase the amount of the U.S. federal stock repurchase excise tax from 1% to 4%, however, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect. 32
In 2022, we recorded an impairment of $57.5 million on our DuraStim® electric-powered equipment because they did not meet our expectations. Some of our competitors have greater financial, technical and personnel resources that may allow them to enjoy technological advantages and develop and implement new products on a timely basis or at an acceptable cost.
Some of our competitors have greater financial, technical and personnel resources that may allow them to enjoy technological advantages and develop and implement new products on a timely basis or at an acceptable cost. We cannot be certain that we will be able to develop and implement new technologies or products on a timely basis or at an acceptable cost.
Pressure on pricing for our services resulting from the industry downturn has impacted, and may continue to impact, our ability to maintain utilization and pricing for our services or implement price increases.
Pressure on pricing for our services resulting from the industry downturn has impacted, and may continue to impact, our ability to maintain utilization and pricing for our services or implement price increases. During periods of declining pricing for our services, we may not be able to reduce our costs accordingly, which could further adversely affect our results of operations.
In July 2023, the BLM proposed a rule to update the fiscal terms of federal oil and gas leases, which would increase fees, rents, royalties, and bonding requirements.
In April 2024, the BLM finalized a rule updating the fiscal terms of federal oil and gas leases, increasing fees, rents, royalties, and bonding requirements.
To the extent elevated inflation remains, we may experience further cost increases for our operations, including labor costs and equipment.
To the extent elevated inflation remains, and as a result potential changes in U.S trade policy, including the imposition of tariffs and the resulting consequences, we may experience further cost increases for our operations, including labor costs and equipment.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−2 removed15 unchanged
Biggest changeThe Information Technology Director is part of the Company’s Security Committee and reports to the Security Committee with respect to emerging cybersecurity incidents deemed to have a moderate or higher business impact, even if immaterial to us.
Biggest changeThe Information Technology Director reports to the audit committee of our Board with respect to emerging cybersecurity incidents deemed to have a moderate or higher business impact, even if immaterial to us. Our Information Technology Director and our Chief Financial Officer are ultimately responsible for the implementation of our cybersecurity risk management processes.
To facilitate effective oversight, our Security Committee holds discussions on cybersecurity risks, incident trends, and the effectiveness of cybersecurity measures as necessitated by emerging cybersecurity risks. The Security Committee has experience managing enterprises relying on technology and business systems with cybersecurity risks and consults with trusted advisors where appropriate.
To facilitate effective oversight, they hold discussions on cybersecurity risks, incident trends, and the effectiveness of cybersecurity measures as necessitated by emerging cybersecurity risks. They have experience managing enterprises relying on technology and business systems with cybersecurity risks and consults with trusted advisors where appropriate. The audit committee of our Board is responsible for oversight of risks from cybersecurity threats.
The Information Technology Director presents an update on cybersecurity risk management to the audit committee of our Board during quarterly meetings and the audit committee reports to the Board. 30 Impact of Risks from Cybersecurity Threats As of the date of this report, though the Company and our service providers have experienced certain cybersecurity incidents, we are not aware of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations and financial condition.
Impact of Risks from Cybersecurity Threats As of the date of this report, though the Company and our service providers have experienced certain cybersecurity incidents, we are not aware of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially 33 affect us, including our business strategy, results of operations and financial condition.
Removed
Our Security Committee, comprised of the Information Technology Director, the Chief Financial Officer, the Chief Legal Counsel and the Vice President of Human Resources is ultimately responsible for the implementation of our cybersecurity risk management processes.
Added
The Information Technology Director presents an update on cybersecurity risk management to the audit committee of our Board during quarterly meetings and the audit committee provides relevant updates to the Board.
Removed
The audit committee of our Board is responsible for oversight of risks from cybersecurity threats.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+2 added−0 removed4 unchanged
Biggest changeIn addition, our ABL Credit Facility places certain restrictions on our ability to pay cash dividends. 31 Share Repurchase Program The following sets forth information with respect to our repurchases of shares of common stock during the three months ended December 31, 2023: Period Total number of shares purchased Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the plans or programs (1) October 1, 2023 to October 31, 2023 894,300 $ 10.21 894,300 $ 54,611,997 November 1, 2023 to November 30, 2023 213,967 $ 9.75 213,967 $ 52,526,741 December 1, 2023 to December 31, 2023 505,455 $ 8.44 505,455 $ 48,261,638 Total 1,613,722 $ 9.59 1,613,722 $ 48,261,638 (1) On May 17, 2023, the Board authorized and the Company announced a share purchase program that allows the Company to repurchase up to $100 million of the Company's common stock beginning immediately and continuing through and including May 31, 2024.
Biggest changeIn addition, our ABL Credit Facility places certain restrictions on our ability to pay cash dividends. 34 Share Repurchase Program The following sets forth information with respect to our repurchases of shares of common stock during the three months ended December 31, 2024: Period Total number of shares purchased Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the plans or programs (1) October 1, 2024 to October 31, 2024 353,171 $ 8.15 353,171 $ 89,654,253 November 1, 2024 to November 30, 2024 70,305 $ 7.13 70,305 $ 89,152,858 December 1, 2024 to December 31, 2024 — $ — — $ 89,152,858 Total 423,476 $ 7.98 423,476 $ 89,152,858 (1) On April 24, 2024, the Board approved an increase and extension of the share purchase program previously authorized on May 17, 2023.
Dividend We do not anticipate declaring or paying any cash dividends to holders of our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the growth of our business and repay borrowings under our ABL Credit Facility, if any.
Dividends We do not anticipate declaring or paying any cash dividends to holders of our common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the growth of our business and repay borrowings under our ABL Credit Facility, if any.
Performance Graph The annual changes for the periods shown in the following graph are based on the assumption that $100 had been invested in our common stock, the Russell 2000 Index ("Russell 2000") and a self-constructed peer group index of comparable companies ("Peer Group") on December 31, 2018, and that all dividends were reinvested at the closing prices of the dividend payment dates.
Performance Graph The annual changes for the periods shown in the following graph are based on the assumption that $100 had been invested in our common stock, the Russell 2000 Index (“Russell 2000”) and a self-constructed peer group index of comparable companies (“Updated Peer Group”) on December 31, 2019, and that all dividends were reinvested at the closing prices of the dividend payment dates.
Our common stock is traded on the New York Stock Exchange under the symbol "PUMP." Holders As of December 31, 2023, there were 109,483,281 shares of common stock outstanding, held of record by twelve holders. The number of record holders of our common stock does not include Depository Trust Company participants or beneficial owners holding shares through nominee names.
Our common stock is traded on the New York Stock Exchange under the symbol "PUMP." Holders As of December 31, 2024, there were 102,994,958 shares of common stock outstanding, held of record by five holders. The number of record holders of our common stock does not include Depository Trust Company participants or beneficial owners holding shares through nominee names.
The stock price performance on the following graph and table is not necessarily indicative of future stock price performance. 32 Date Peer Group Russell 2000 ProPetro Holding Corp. 12/31/2018 $ 100.0 $ 100.0 $ 100.0 12/31/2019 $ 70.8 $ 125.5 $ 91.3 12/31/2020 $ 45.4 $ 150.6 $ 59.7 12/31/2021 $ 56.9 $ 172.9 $ 65.8 12/31/2022 $ 108.5 $ 137.6 $ 84.2 12/31/2023 $ 92.1 $ 160.9 $ 68.0
The stock price performance on the following graph and table is not necessarily indicative of future stock price performance. 35 Date Former Peer Group Updated Peer Group Russell 2000 ProPetro Holding Corp. 12/31/2019 $ 100.0 $ 100.0 $ 100.0 $ 100.0 12/31/2020 $ 64.1 $ 64.1 $ 120.0 $ 65.7 12/31/2021 $ 80.3 $ 80.3 $ 137.7 $ 72.0 12/31/2022 $ 153.1 $ 153.1 $ 109.6 $ 92.2 12/31/2023 $ 130.0 $ 106.4 $ 128.1 $ 74.5 12/31/2024 $ 116.6 $ 95.7 $ 142.9 $ 82.9
The relevant companies included in our Peer Group consists of Liberty Energy Inc., Patterson-UTI Energy, Inc., RPC, Inc., Calfrac Well Services Ltd., and Mammoth Energy Services, Inc. The total cumulative dollar returns shown on the graph represent the value that such investments would have had on the last trading date of 2023. The calculations exclude trading commissions and taxes.
The total cumulative dollar returns shown on the graph represent the value that such investments would have had on the last trading date of 2024. The calculations exclude trading commissions and taxes.
Added
The program permits the repurchase of up to an additional $100 million of the Company’s common stock for a total of $200 million and extends the expiration date by one year to May 31, 2025.
Added
The relevant companies included in our Updated Peer Group consists of Liberty Energy Inc., Patterson-UTI Energy, Inc., RPC, Inc., Calfrac Well Services Ltd., Mammoth Energy Services, Inc. and ProFrac Holding Corp. (added in 2024). We have also included our previous peer group (“Former Peer Group”) which did not include ProFrac Holding Corp. in the following graph.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

119 edited+66 added−32 removed66 unchanged
Biggest changeBy adding two additional electric fleets by the end of the first half of 2024, our available equipment portfolio is expected to be comprised of approximately 65% lower emissions (FORCE SM electric and Tier IV DGB dual-fuel), and 35% conventional diesel equipment; • published our inaugural sustainability report, which describes our commitment to building a sustainable business that supports the safe, reliable production of the energy the world needs by offering competitive, value-driving services to customers, while benefitting our shareholders, communities, and other stakeholders; and • on December 1, 2023, we consummated the purchase of the assets and operations of Par Five, which provides cementing services in the Delaware Basin. 2023 Financial Highlights Financial highlights for the year ended December 31, 2023: • revenue increased $350.7 million, or 27.4%, to $1,630.4 million, as compared to $1,279.7 million for the year ended December 31, 2022; • cost of services (exclusive of depreciation and amortization) increased $249.0 million or 28.2% to $1,131.8 million, as compared to $882.8 million for the year ended December 31, 2022; cost of services as a percentage of revenue increased to 69.4% in 2023 compared to 69.0% for the year ended December 31, 2022; • general and administrative expenses, inclusive of stock-based compensation, increased $2.6 million, or 2.3% to $114.4 million, as compared to $111.8 million for the year ended December 31, 2022; • no impairment expense was recorded during the year December 31, 2023, compared to $57.5 million impairment expense recorded during the year ended December 31, 2022 related to our DuraStim® electric-powered hydraulic fracturing equipment; • net income was $85.6 million, compared to $2.0 million for the year ended December 31, 2022.
Biggest changeFour FORCE ® electric-powered hydraulic fracturing fleets are now operating under contract with leading customers; • our available equipment portfolio is expected to be comprised of approximately 75% lower emissions (FORCE ® electric and Tier IV DGB dual-fuel), and 25% conventional diesel equipment by the end of 2025; • despite market volatility, our average active hydraulic fracturing fleet count was approximately 14 fleets, a decrease from 15 active fleets in 2023; • we published our second annual sustainability report, which describes our commitment to building a sustainable business that supports the safe, reliable production of the energy the world needs by offering competitive, value-driving services to customers, while benefitting our shareholders, communities, and other stakeholders; • we consummated the purchase of all of the outstanding equity interests in AquaProp on May 31, 2024, which provides wet sand solutions for hydraulic fracturing sand requirements at oil well sites; and • we formed PROPWR in the fourth quarter of 2024, to provide power generation services to oil and gas producers and non-oil and gas applications such as general industrial projects and data centers.
In addition to hydraulic fracturing services, we generate revenue through other completion services that we provide to our customers, including cementing, wireline and other related services. These completion services are complementary to each other and are undertaken in unison with hydraulic fracturing services.
In addition to hydraulic fracturing services, we generate revenue through other completion services that we provide to our customers, including wireline, cementing and other related services. These completion services are complementary to each other and are undertaken in unison with hydraulic fracturing services.
Future cash flows are subject to a number of variables, and are highly dependent on the drilling, completion, and production activity by our customers, which in turn is highly dependent on oil and natural gas prices.
Future cash flows are subject to a number of variables, and are highly dependent on the drilling and completion, and production activity by our customers, which in turn is highly dependent on oil and natural gas prices.
The agreements with the Sand Suppliers require that we purchase minimum volume of sand, based primarily on a certain percentage of our sand requirements from our customers or in certain situations based on predetermined fixed minimum volumes, otherwise certain penalties (shortfall fees) may be charged.
The agreements with the Sand Suppliers require that we purchase a minimum volume of sand, based primarily on a certain percentage of our sand requirements from our customers or in certain situations based on predetermined fixed minimum volumes, otherwise certain penalties (shortfall fees) may be charged.
On November 1, 2022, we consummated the acquisition of all of the outstanding limited liability company interests of Silvertip Completion Services Operating, LLC (the “Silvertip Acquisition”), which provides wireline perforation and ancillary services solely in the Permian Basin in exchange for 10.1 million shares of our common stock valued at $106.7 million, $30.0 million of cash, the payoff of $7.2 million of assumed debt, and the payment of certain other closing and transaction costs.
On November 1, 2022, we consummated the acquisition of all of the outstanding limited liability company interests of Silvertip Completion Services Operating, LLC (the “Silvertip Acquisition”), which provides wireline perforation and ancillary services in the Permian Basin in exchange for 10.1 million shares of our common stock valued at $106.7 million, $30.0 million of cash, the payoff of $7.2 million of assumed debt, and the payment of certain other closing and transaction costs.
Borrowings under the ABL Credit Facility accrue interest based on a three-tier pricing grid tied to availability, and we may elect for loans to be based on either the Secured Overnight Financing Rate ("SOFR") or the base rate, plus the applicable margin, which ranges from 1.75% to 2.25% for SOFR loans and 0.75% to 1.25% for base rate loans.
Borrowings under the ABL Credit Facility accrue interest based on a three-tier pricing grid tied to availability, and we may elect for loans to be based on either the Secured Overnight Financing Rate (“SOFR”) or the base rate, plus the applicable margin, which ranges from 1.75% to 2.25% for SOFR loans and 0.75% to 1.25% for base rate loans.
The increase was primarily attributable to higher average outstanding borrowings under our ABL Credit Facility during the year ended December 31, 2023 and the addition of a finance lease for certain power generation equipment in August 2023. Other Expense (Income).
The increase was primarily attributable to higher average outstanding borrowings under our ABL Credit Facility during the year ended December 31, 2024 and the addition of a finance lease for certain power generation equipment in August 2023. Other (Income) Expense.
If the Permian Basin rig count and market conditions improve, including improved pricing for our services and labor availability, and we are able to meet our customers' lower emissions equipment demands, we believe our operational and financial results will also continue to improve.
If the Permian Basin rig count and market conditions improve, including improved pricing for our services and labor availability, and we are able to meet our customers' lower emissions equipment demands, we believe our operational and 39 financial results will also continue to improve.
Critical Accounting Policies and Estimates 44 The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Land Indefinite Buildings and property improvements 5 - 30 years Vehicles 1 ‑ 5 years Equipment 1 ‑ 22 years Leasehold improvements 5 ‑ 20 years Impairment of Long-Lived Assets In accordance with the Financial Accounting Standards Board Accounting Standards Codification ( " ASC " ) 360 regarding Accounting for the Impairment or Disposal of Long‑Lived Assets , we review the long‑lived assets including intangible assets to be held and used whenever events or circumstances indicate that the carrying value of those assets may not be recoverable.
Land Indefinite Buildings and property improvements 5 - 30 years Vehicles 1 ‑ 5 years Equipment 1 ‑ 22 years Leasehold improvements 5 ‑ 20 years Impairment of Long-Lived Assets In accordance with the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 360 regarding Accounting for the Impairment or Disposal of Long‑Lived Assets , we review the long‑lived assets including intangible assets to be held and used whenever events or circumstances indicate that the carrying value of those assets may not be recoverable.
Depending on the impacts of these factors, the Company may decide to retain conventional equipment for a longer period of time or accelerate the retirement, replacement or conversion of that equipment. We anticipate our capital expenditures will be funded by existing cash, cash flows from operations, and if needed, borrowings under our ABL Credit Facility.
Depending on the impact of these factors, the Company may decide to retain conventional equipment for a longer period of time or accelerate the retirement, replacement or conversion of that equipment. We anticipate our capital expenditures will be funded by existing cash, cash flows from operations, and if needed, borrowings under our ABL Credit Facility.
The ABL Credit Facility has a borrowing base of the sum of 85% to 90% of monthly eligible accounts receivable and 80% of eligible unbilled accounts (up to a maximum of 25% of the Borrowing Base) less customary reserves (the "Borrowing Base"), in each case, depending on the credit ratings of our accounts receivable counterparties, as redetermined monthly.
The ABL Credit Facility has a borrowing base of the sum of 85% to 90% of monthly eligible accounts receivable and 80% of eligible unbilled accounts (up to a maximum of 25% of the borrowing base), in each case, depending on the credit ratings of our accounts receivable counterparties, less customary reserves (the “Borrowing Base”) as redetermined monthly.
Currently, a number of lower emission solutions for pumping equipment, including Tier IV DGB dual-fuel , FORCESM electric, direct drive gas turbine and other technologies have been developed, and we expect additional lower emission solutions will be developed in the future.
Currently, a number of lower emission solutions for pumping equipment, including Tier IV DGB dual-fuel , FORCE ® electric, direct drive gas turbine and other technologies have been developed, and we expect additional lower emission solutions will be developed in the future.
The estimated useful lives and salvage values of property and equipment is subject to key assumptions such as maintenance, utilization and job variation. Unanticipated future changes in these assumptions could negatively or positively impact our net income (loss).
The estimated useful lives and salvage values of property and equipment are subject to key assumptions such as maintenance, utilization and job variation. Unanticipated future changes in these assumptions could negatively or positively impact our net income (loss).
The significant portion of our total capital expenditures incurred during the year ended December 31, 2023 were maintenance capital expenditures and conversion of our hydraulic fracturing equipment to lower emissions equipment. Our future material use of cash will be to fund our capital expenditures.
The significant portion of our total capital expenditures incurred during the year ended December 31, 2024, were maintenance capital expenditures and conversion of our hydraulic fracturing equipment to lower emissions equipment. Our future material use of cash will be to fund our capital expenditures.
The final determination of our income tax liabilities involves the interpretation of local tax laws and related authorities in each jurisdiction. Changes in the operating environments, including changes in tax law, could impact the determination of our income tax liabilities for a tax year.
The final determination of our income tax 50 liabilities involves the interpretation of local tax laws and related authorities in each jurisdiction. Changes in the operating environments, including changes in tax law, could impact the determination of our income tax liabilities for a tax year. 51
Note Regarding Non‑GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA margin are not financial measures presented in accordance with GAAP ( " non-GAAP " ), except when specifically required to be disclosed by GAAP in the financial statements.
Note Regarding Non‑GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA margin are not financial measures presented in accordance with GAAP (“non-GAAP”), except when specifically required to be disclosed by GAAP in the financial statements.
The Company is not obligated to purchase any shares under the repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice. The Company expects to fund the repurchases using cash on hand and expected free cash flow to be generated through May 2024.
The Company is not obligated to purchase any shares under the share repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice. The Company expects to fund the repurchases using cash on hand and expected free cash flow to be generated through May 2025.
In determining our need for a valuation allowance as of December 31, 2023, we have considered and made judgments and estimates regarding estimated future taxable income.
In determining our need for a valuation allowance as of December 31, 2024, we have considered and made judgments and estimates regarding estimated future taxable income.
As the global response to the COVID-19 pandemic began to wane, the demand and prices for crude oil increased from the lows experienced in 2020, with the WTI average crude oil price 35 reaching approximately $94 per barrel in 2022, the highest average price in the prior nine years.
As the global response to the COVID-19 pandemic began to wane, the demand and prices for crude oil increased from the lows experienced in 2020, with the WTI average crude oil price reaching approximately $94 per barrel in 2022, the highest average price in the prior ten years.
We performed our annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and Other , on December 31, 2023, at which time, we determined that the fair value of our wireline reporting unit was substantially in excess of its carrying value.
We performed our annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and Other , on December 31, 2024, at which time, we determined that the fair value of our wireline reporting unit was substantially in excess of its carrying value resulting in impairment.
Following the increase in rig count and the WTI crude oil price, the oilfield service industry has experienced increased demand for its completion services, and improved pricing.
Following the increase in rig count and the WTI crude oil price, the energy service industry has experienced increased demand for its completion services, and improved pricing.
With the significant increase in global crude oil prices from 2021, including the WTI crude oil price, there was a significant increase in the Permian Basin rig count from approximately 179 at the beginning of 2021 to approximately 353 at the end of 2022, according to the Baker Hughes Company (“Baker Hughes”).
With the significant increase in global crude oil prices from 2021, including the WTI crude oil price, there was a significant increase in the Permian Basin rig count from approximately 179 at the beginning of 2021 to approximately 353 at the end of 2022, according to the Baker Hughes.
(3) Includes our leases for FORCE SM electric-powered hydraulic fracturing fleets (240,000 HHP). We expect to receive the remaining equipment under these leases in the first half of 2024. (4) Finance lease for certain power generation equipment (70 MW) to support electric-powered hydraulic fracturing equipment . (5) Relates to a take-or-pay sand commitment with one of our sand vendors.
(3) Includes our leases for FORCE ® electric-powered hydraulic fracturing fleets (312,000 HHP). We expect to receive the remaining equipment under these leases in the first half of 2025. (4) Finance lease for certain power generation equipment (70 MW) to support electric-powered hydraulic fracturing equipment . (5) Relates to a take-or-pay sand commitment with one of our sand vendors.
However, assuming a weighted average interest rate of 6.69% , and that our ABL Credit Facility debt balance remains the same, our estimated annual interest payment will be $3.0 million. (2) Operating leases exclude short-term leases and other commitments (see Note 17. Leases and Note 18. Commitments and Contingencies in the financial statements for additional disclosures).
However, assuming a weighted average interest rate of 7.12% , and that our ABL Credit Facility debt balance remains the same, our estimated annual interest payment will be $3.2 million. (2) Operating leases exclude short-term leases and other commitments (see Note 17. Leases and Note 18. Commitments and Contingencies in the financial statements for additional disclosures).
Prices are affected by many factors beyond our control. The average WTI oil price per barrel was approximately $78 , $94 and $68 for the years ended December 31, 2023, 2022 and 2021, respectively. In January 2024, the WTI oil price was approximately $74 p er barrel.
Prices are affected by many factors beyond our control. The average WTI oil price per barrel was approximately $76 , $78, and $94 for the years ended December 31, 2024, 2023, and 2022, respectively. In January 2025, the WTI oil price was approximately $74 p er barrel.
Cash, Restricted Cash and Cash Flows The following table sets forth our net cash provided by (used in) operating, investing and financing activities during the years ended December 31, 2023 and 2022, respectively.
Cash and Cash Flows The following table sets forth our net cash provided by (used in) operating, investing and financing activities during the years ended December 31, 2024 and 2023, respectively.
Overview Our Business We are a leading integrated oilfield service company, located in Midland, Texas, focused on providing innovative hydraulic fracturing, wireline and other complementary oilfield completion services to leading upstream oil and gas companies engaged in the exploration and production (“E&P”) of North American oil and natural gas resources.
Overview Our Business We are a leading integrated energy service company, located in Midland, Texas, focused on providing innovative hydraulic fracturing, wireline and other complementary energy and power generation services to leading upstream oil and gas companies engaged in the exploration and production (“E&P”) of North American oil and natural gas resources.
Direct Labor Costs. Payroll and benefit expenses related to our crews and other employees that are directly or indirectly attributable to the effective delivery of services are included in our operating costs. Direct lab or costs amounted to 28.7% and 27.7% of total costs of service for the years ended December 31, 2023 and 2022, respectively.
Direct Labor Costs. Payroll and benefit expenses related to our crews and other employees that are directly or indirectly attributable to the effective delivery of services are included in our operating costs. Direct lab or costs amounted to 30.2% and 28.7% of total costs of service for the years ended December 31, 2024, and 2023, respectively.
As such, our goodwill analysis incorporates inherent uncertainties that are difficult to predict in volatile economic environments and could result in impairment charges in future periods if actual results materially differ from the estimated assumptions utilized in our forecast. As of December 31, 2023 and 2022, our goodwill carrying value was $23.6 million and $23.6 million, respectively.
As such, our goodwill analysis incorporates inherent uncertainties that are difficult to predict in volatile economic environments and could result in impairment charges in future periods if actual results materially differ from the estimated assumptions utilized in our forecast. As of December 31, 2024, and 2023, our goodwill carrying value w as $0.9 million and $23.6 million, respectively.
The Borrowing Base as of December 31, 2023, was approximately $152.0 million. The ABL Credit Facility includes a springing fixed charge coverage ratio to apply when excess availability is less than the greater of (i) 10% of the lesser of the facility size or the Borrowing Base or (ii) $15.0 million.
The Borrowing Base as of December 31, 2024, was approximately $164.1 million. The ABL Credit Facility includes a springing fixed charge coverage ratio to apply when excess availability is less than the greater of (i) 10% of the lesser of the facility size or the Borrowing Base or (ii) $15.0 million.
Capital expenditures for 2024 are projected to be primarily related to capital expenditures to extend the useful life of our existing completion services assets, costs to convert some existing equipment to lower emissions equipment, strategic purchases and other ancillary equipment purchases, subject to market conditions and customer demand.
Capital expenditures for 2025 are projected to be primarily related to capital expenditures to extend the useful life of our existing completion services assets, costs to convert some existing equipment to lower emissions equipment, purchase power generation equipment, strategic purchases and other ancillary equipment purchases, subject to market conditions and customer demand.
A 10% change in the useful lives of our property and equipment would have resulted in approximately $17.0 million impact on pre-tax loss during the year ended December 31, 2023. Depreciation of property and equipment is provided on the straight‑line method over estimated useful lives as shown in the table below.
A 10% change in the useful lives of our property and equipment would have resulted in approximately $18.5 million impact on pre-tax loss during the year ended December 31, 2024. Depreciation of property and equipment is provided on the straight‑line method over estimated useful lives as shown in the table below.
The change in income tax expense recorded during the year ended December 31, 2023, compared to the year ended December 31, 2022, is primarily attributable to the difference in the impact of nondeductible expenses on the pre-tax income for 2023, as compared to 2022. 43 Liquidity and Capital Resources Our liquidity is currently provided by (i) existing cash balances, (ii) operating cash flows and (iii) borrowings under our ABL Credit Facility (as defined below).
The change in income tax benefit recorded during the year ended December 31, 2024, compared to the change in income tax expense recorded during the year ended December 31, 2023, is primarily attributable to the difference in the impact of nondeductible expenses and state taxes on the pre-tax loss for 2024, as compared to pre-tax income for 2023. 47 Liquidity and Capital Resources Our liquidity is currently provided by (i) existing cash balances, (ii) operating cash flows and (iii) borrowings under our ABL Credit Facility (as defined below).
Basis of Presentation This discussion of our results omits our results of operations and cash flows for the year ended December 31, 2021 and the comparison of our results of operations for the years ended December 31, 2022 and 2021, which may be found in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023.
Basis of Presentation This discussion of our results omits our results of operations and cash flows for the year ended December 31, 2022, and the comparison of our results of operations for the years ended December 31, 2023, and 2022, which may be found in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 13, 2024.
Other expense during the year ended December 31, 2023 is primarily comprised of settlement expenses resulting from routine audits and one-time health insurance costs totaling approximately $7.4 million, and a $2.5 million unrealized loss on short-term investment.
Other expense for the year ended December 31, 2023 is primarily comprised of settlement expenses resulting from routine audits and true-up health insurance costs totaling approximately $7.4 million and a $2.5 million unrealized loss on short-term investment.
These costs comprise a substantial variable component of our service costs, particularly with respect to the quantity and quality of sand and chemicals demanded when providing hydraulic fracturing services. Expendable product costs comprised approximately 32.9% and 33.6% of total costs of service for the years ended December 31, 2023 and 2022, respectively.
These costs comprise a substantial variable component of our service costs, particularly with respect to the quantity and quality of sand and chemicals demanded when providing hydraulic fracturing services. Expendable product costs comprised approximately 25.7% and 32.9% of total costs of service for the years ended 41 December 31, 2024, and 2023, respectively.
Fuel is consumed both in the operation and movement of our equipment. Repairs and maintenance costs are expenses directly related to upkeep of equipment, which have been amplified by the demand for higher horsepower jobs. Capital expenditures to upgrade or extend the useful life of equipment are capitalized and are not included in other direct costs.
Repairs and maintenance costs are expenses directly related to upkeep of equipment, which have been amplified by the demand for higher horsepower jobs. Capital expenditures to upgrade or extend the useful life of equipment are capitalized and are not included in other direct costs.
We could incur significant additional capital expenditures if our projected activity levels increase during the course of the year, inflation and supply chain tightness continues to adversely impact our operations or we invest in new or different lower emissions equipment.
We currently expect to receive this equipment in the first half of 2025. We could incur significant additional capital expenditures if our projected activity levels increase during the course of the year, inflation and supply chain tightness continues to adversely impact our operations or we invest in new or different lower emissions equipment.
However, in 2023, the WTI average crude oil price declined to approximately $78 per barrel.
However, the WTI average crude oil price declined to approximately $78 per barrel in 2023 and approximately $76 per barrel in 2024.
We have transitioned our hydraulic fracturing available equipment portfolio from approximately 10% lower emissions equipment in 2021 to approximately 35% in 2022 and 60% in 2023, and expect to increase to approximately 65% by the end of the first half of 2024.
We have transitioned our hydraulic fracturing available equipment portfolio from approximately 10% lower emissions equipment in 2021 to approximately 35% in 2022, 60% in 2023, 70% in 2024, and expect to increase to approximately 75% by the end of the first quarter of 2025.
Other expense was approximately $9.5 million for the year ended December 31, 2023, as compared to other income of $11.6 million for the year ended December 31, 2022.
Other income was approximately $5.5 million for the year ended December 31, 2024, as compared to other expense of $9.5 million for the year ended December 31, 2023.
The associated loss is recorded in our statement of operations as part of net loss on disposal of assets, which was $73.0 million , $102.1 million and $64.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The associated loss is recorded in our statement of operations as part of net loss on disposal of assets and businesses, which was $7.5 million , $73.0 million, and $102.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Total income tax expense was $29.9 million resulting in an effective tax rate of 25.9% for the year ended December 31, 2023, as compared to $5.4 million or an effective tax rate of 72.5% for the year ended December 31, 2022.
Total income tax benefit was $31.4 million resulting in an effective tax rate of 18.5% for the year ended December 31, 2024, as compared to income tax expense of $29.9 million resulting in an effective tax rate of 25.9% for the year ended December 31, 2023.
The historical weekly average Permian Basin rig count based on Baker Hughes rig count information was as follows: Year Ended December 31, Drilling Rig Type (Permian Basin) 2023 2022 2021 Directional 3 3 2 Horizontal 323 318 227 Vertical 9 14 11 Total 335 335 240 Average Permian Basin rig count to U.S. rig count 48.7 % 46.3 % 50.5 % Costs of Conducting our Business The principal direct costs involved in operating our business are direct labor, expendables and other direct costs.
The historical weekly average Permian Basin rig count based on Baker Hughes rig count information was as follows: Year Ended December 31, Drilling Rig Type (Permian Basin) 2024 2023 2022 Directional 3 3 3 Horizontal 296 323 318 Vertical 10 9 14 Total 309 335 335 Average Permian Basin rig count to U.S. rig count 51.6 % 48.7 % 46.3 % Costs of Conducting our Business The principal direct costs involved in operating our business are direct labor, expendables and other direct costs.
Similarly, the geopolitical and macroeconomic consequences of the Russian invasion of Ukraine, including the associated sanctions, and the adverse impacts of the COVID-19 pandemic in recent years have resulted in volatility in supply and demand dynamics for crude oil and associated volatility in crude oil pricing.
The geopolitical and macroeconomic consequences of military action in the Middle East, the Russian invasion of Ukraine, including the associated sanctions, and the adverse impacts of the COVID-19 pandemic have resulted in volatility in supply and demand dynamics for crude oil and associated volatility in crude oil pricing.
Effective June 2, 2023, the Company entered into an amendment to its amended and restated revolving credit facility the revolving credit facility (as amended and restated in April 2022, as amended in June 2023 and as may be amended further, "ABL Credit Facility").
Effective June 26, 2024, the company entered into an amendment to its amended and restated revolving credit facility (the revolving credit facility, as amended and restated in April 2022, as amended in June 2023, as amended in June 2024 and as may be amended further, the “ABL Credit Facility”).
Capital Requirements, Future Sources and Use of Cash Capital expenditures incurred were $310.0 million during the year ended December 31, 2023, as compared to $365.3 million during the year ended December 31, 2022.
Capital Requirements, Future Sources and Use of Cash Capital expenditures incurred were $133.4 million during the year ended December 31, 2024, as compared to $310.0 million during the year ended December 31, 2023.
However, we have recently experienced a 13% decrease in the rig count in 2023 to 309 at the end of 2023 which resulted in a reduction in the demand for completion services and pressure on pricing of our services. Sustained levels of high inflation have likewise caused the U.S.
However, the Permian Basin rig count experienced a 13% decrease in 2023 to 309 at the end of 2023 and further decreased to 304 at the end of 2024 which resulted in a reduction in the demand for completion services and pressure on pricing of our services. Sustained levels of high inflation likewise caused the U.S.
We believe that the volatility of crude oil prices in recent years has been partly driven by declines in crude oil supplies, concerns over sanctions resulting from Russia's invasion of Ukraine, concerns over a potential disruption of Middle Eastern oil supplies resulting from the ongoing conflict between Israel and Palestinian militants in the Israel-Gaza region, slower crude oil production growth due to the lack of reinvestment in the oil and gas industry in the last two years, recent OPEC+ production cuts of approximately 1.3 million barrels per day and concerns of a potential global recession resulting from high inflation and interest rates.
We believe that the volatility of crude oil prices in recent years has been partly driven by declines in crude oil supplies, concerns over sanctions resulting from Russia's invasion of Ukraine, concerns over a potential disruption of Middle Eastern oil supplies resulting from the conflict in the Middle East, slower crude oil production growth due to the lack of reinvestment in the oil and gas industry in the last three years, the extension of OPEC+ production cuts of approximately 3.9 million barrels per day originally announced in 2023, and concerns of a potential global recession resulting from high inflation and interest rates.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Interest Expense. Interest expense increased to $5.3 million for the yea r ended December 31, 2023, as compared to $1.6 million for t he year ended December 31, 2022.
Interest Expense. Interest expense increased to $7.8 million for the yea r ended December 31, 2024, as compared to $5.3 million for t he year ended December 31, 2023.
Our equipment has been designed to handle Permian Basin specific operating conditions and the region’s increasingly high‑intensity well completions, which are characterized by longer horizontal wellbores, more frac stages per lateral and increasing amounts of proppant per well.
Our equipment has been designed to handle Permian Basin specific operating conditions a nd the region’s increasingly high‑intensity well completions, which are characterized by longer horizontal wellbores, more frac stages per lateral and increasing amounts of proppant per well. We plan to continually reinvest in our equipment to ensure optimal performance and reliability.
Effective as of the fourth quarter of fiscal year 2023, we revised our segment reporting as we determined that our three operating segments no longer met the criteria to be aggregated. Our Hydraulic Fracturing and Wireline operating segments meet the criteria of a reportable segment.
Effective in the the fourth quarter of fiscal year 2023, we revised our segment reporting as we determined that our three operating segments no longer met the criteria to be aggregated.
Prior to the fourth quarter of fiscal year 2023, our operating segments met the aggregation criteria and were aggregated into the “Completion Services” reportable segment and our coiled tubing operations (which were divested in September 2022) were shown in the “All Other” category.
We have historically conducted our business through four operating segments: hydraulic fracturing, wireline, cementing and coiled tubing. Prior to the fourth quarter of fiscal year 2023, our operating segments met the aggregation criteria and were aggregated into the “Completion Services” reportable segment and our coiled tubing operations (which were divested in September 2022) were shown in the “All Other” category.
For additional financial information on our reportable segments presentation, please see reportable segment information in Part II - Item 8, "Financial Statements and Supplementary Data." Pioneer Pressure Pumping Acquisition On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property from Pioneer Natural Resources USA, Inc.
As a result, corporate administrative expenses have been included under “Reconciling Items.” For additional financial information on our reportable segments presentation, please see reportable segment information in Part II - Item 8, “Financial Statements and Supplementary Data.” Pioneer Pressure Pumping Acquisition On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property from Pioneer Natural Resources USA, Inc.
We define Adjusted EBITDA as EBITDA, plus (i) loss/(gain) on disposal of assets, (ii) stock-based compensation, (iii) other expense/(income) and (iv) other unusual or nonrecurring (income)/expenses, such as impairment charges, retention bonuses, severance, costs related to asset acquisitions, insurance recoveries, one-time professional fees and legal settlements. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of our revenues.
We define Adjusted EBITDA as EBITDA, plus (i) loss/(gain) on disposal of assets and businesses, (ii) stock-based compensation, (iii) business acquisition contingent consideration adjustments, (iv) other expense/(income), (v) other unusual or nonrecurring (income)/expenses, such as impairment expenses, costs related to asset acquisitions, insurance recoveries, one-time professional fees and legal settlements and (vi) retention bonuses and severance expense.
The wireline operating segment is the only segment with goodwill at December 31, 2023 and 2022. There were no goodwill impairment losses during the years ended December 31, 2023 and 2022.
The wireline operating segment was the only segment with goodwill at December 31, 2023 . There were no goodwill impairment losses during the year ended December 31, 2023 .
We received advance payments from a customer for our services, and the amount outstanding in connection with the advance payments was $19.2 million and $10.0 million as of December 31, 2023 an d 2022, respectively. These amounts included restricted cash of $0 and $10.0 million as of December 31, 2023 an d 2022, respectively.
We received advance payments from a customer for our services, and the amount outstanding in connection with the advance payments was $11.8 million and $19.2 million as of December 31, 2024 an d 2023, respectively. There were no amounts of restricted cash as of December 31, 2024 an d 2023.
Diluted net income per common share was $0.76, compared to $0.02 for the year ended December 31, 2022.
Diluted net loss per common share was $1.31, compared to diluted net income of $0.76 for the year ended December 31, 2023.
During the year ended December 31, 2023 , the Company repurchased and retired 5.8 million shares of common stock for an aggregate of $51.7 million, an average price per share of $8.93 including commissions, under the repurchase program. As of December 31, 2023 , $48.3 million remained authorized for future repurchases of common stock under the repurchase program.
During the year ended December 31, 2024 , the Company repurchased and retired 7.2 million shares of common stock for an aggregate of $59.1 million, an average price per share of $8.21 including commissions, under the share repurchase program. As of December 31, 2024 , $89.2 million remained authorized for future repurchases of common stock under the share repurchase program.
As such, we entered into conversion and purchase agreements with our equipment manufacturers for a total of 452,500 HHP of Tier IV DGB dual-fuel equipment and as of December 31, 2023, we have received all of the converted and new Tier IV DGB dual-fuel equipment.
As such, we entered into conversion and purchase agreements with our equipment manufacturers and have received all of the converted and new Tier IV DGB dual-fuel equipment by the end of 2023, representing 450,000 HHP of our Tier IV DGB dual-fuel equipment as of December 31, 2024 .
Our hydraulic fracturing operations account for approximately 78.5% of our total revenues and operations. Our total available hydraulic horsepower ("HHP") at December 31, 2023 w as 1,461,500 HHP, which was comprised of 452,500 HHP of our Tier IV Dynamic Gas Blending (“DGB”) dual-fuel equipment, 144,000 HHP of FORCE SM electric-powered equipment and 865,000 HHP of conventional Tier II equipment.
Our hydraulic fracturing operations account for approximately 75.6% of our total revenues and operations. Our total available hydraulic horsepower (“HHP”) at December 31, 2024, w as 1,556,500 HHP, which was comprised of 450,000 HHP of our Tier IV Dynamic Gas Blending (“DGB”) dual-fuel equipment, 294,000 HHP of FORCE ® electric-powered equipment and 812,500 HHP of conventional Tier II equipment.
Adjusted EBITDA and Adjusted EBITDA Margin We view Adjusted EBITDA and Adjusted EBITDA margin as important indicators of performance. We define EBITDA as our earnings, before (i) interest expense, (ii) income taxes and (iii) depreciation and amortization.
We define EBITDA as our earnings, before (i) interest expense, (ii) income taxes and (iii) depreciation and amortization.
A significant increase in or continued high levels of inflation, to the extent we are unable to timely pass-through the cost increases to our customers, or further declines in crude oil prices would negatively impact our business, financial condition and results of operations. See Part II, Item 1A.
A significant increase in or continued high levels of inflation, to the extent we are unable to timely pass-through the cost increases to our customers, further declines in crude oil prices, or potential change in U.S trade policy, including the imposition of tariffs and the resulting consequences, would negatively impact our business, financial condition and results of operations.
As of December 31, 2023, our borrowings under our ABL Credit Facility were $45.0 million and our total liquidity was $134.4 million, consisting of cash and cash equivalents of $33.4 million and $101.0 million of availability under our ABL Credit Facility.
As of December 31, 2024, our borrowings under our ABL Credit Facility were $45.0 million and our total liquidity was $160.9 million, consisting of cash and cash equivalents of $50.4 million and $110.5 million of availability under our ABL Credit Facility.
The amendment increased the borrowing capacity under the ABL Credit Facility to $225.0 million (subject to the Borrowing Base limit), and extended the maturity date to June 2, 2028.
Effective June 2, 2023, the Company entered into an amendment to its amended and restated revolving credit facility. The amendment increased the borrowing capacity under the ABL Credit Facility to $225.0 million (subject to the Borrowing Base limit), and extended the maturity date to June 2, 2028.
Our future capital expenditures depend on our projected operational activity, emission requirements and planned conversions to lower emissions equipment, among other factors, which could vary significantly throughout the year. Based on our current plan and projected activity levels for 2024, we expect our capital expenditures to range between $200 million to $250 million.
Our future capital expenditures depend on our projected operational activity, emission requirements and planned conversions to lower emissions equipment, among other factors, which could vary significantly throughout the year.
Par Five’s business complements our existing cementing business and enables us to serve both the Midland and Delaware Basins of the Permian Basin.
The Par Five Acquisition complemented our existing cementing business and enabled us to serve both the Midland and Delaware sub-basins of the Permian Basin.
Excluding nonrecurring and non-cash items ( i.e., stock-based compensation of $14.5 million, legal settlements (net of insurance reimbursements) of $0.7 million, transaction expenses of $2.3 million, and retention bonuses and severance expenses of $2.3 million), general and administrative expenses were $94.6 million for the year ended December 31, 2023, as compared to $80.3 million for the year ended December 31, 2022.
Excluding nonrecurring and noncash items ( i.e., stock-based compensation of $17.3 million, legal settlements (net of insurance reimbursements) of $0.2 million, transaction expenses of $1.6 million and retention bonuses and severance expenses of $2.3 million, partially offset by business acquisition contingent consideration adjustments of $2.6 million), general and administrative expenses were $95.5 million for the year ended December 31, 2024, as compared to $94.6 million for the year ended December 31, 2023.
Revenue. Revenue increased 27.4%, or $350.7 million, to $1,630.4 million for the year ended December 31, 2023, as compared to $1,279.7 million for the year ended December 31, 2022. Revenue by reportable segment was as follows: Hydraulic Fracturing.
Revenue. Revenue decreased 11.4%, or $186.1 million, to $1,444.3 million for the year ended December 31, 2024, as compared to $1,630.4 million for the year ended December 31, 2023. Revenue by reportable segment was as follows: Hydraulic Fracturing.
General and administrative expen ses increased 2.3%, or $2.6 million, to $114.4 million for the y ear ended December 31, 2023, as compared to $111.8 million for the year ended December 31, 2022.
General and administrative expen ses remained flat at $114.3 million for the y ear ended December 31, 2024, as compared to $114.4 million for the year ended December 31, 2023.
Year Ended December 31, (in thousands) 2023 2022 Net cash provided by operating activities $ 374,742 $ 300,429 Net cash used in investing activities $ (384,127) $ (349,745) Net cash (used in) provided by financing activities $ (46,123) $ 26,260 Operating Activities Net cash provided by operating activities was $374.7 million for the year ended December 31, 2023, as compared to $300.4 million for the year ended December 31, 2022.
Year Ended December 31, (in thousands) 2024 2023 Net cash provided by operating activities $ 252,295 $ 374,742 Net cash used in investing activities $ (155,099) $ (384,127) Net cash used in financing activities $ (80,107) $ (46,123) Operating Activities Net cash provided by operating activities was $252.3 million for the year ended December 31, 2024, as compared to $374.7 million for the year ended December 31, 2023.
Cost of services increased 28.2%, or $249.0 million, to $1,131.8 million for the year ended December 31, 2023, from $882.8 million during the year ended December 31, 2022. Cost of services by reportable segment was as follows: Hydraulic Fracturing.
Cost of services decreased 5.9%, or $66.3 million, to $1,065.5 million for the year ended December 31, 2024, from $1,131.8 million during the year ended December 31, 2023. Cost of services by reportable segment was as follows: Hydraulic Fracturing.
Our estimated useful life could be sensitive to changes in market conditions and management’s judgment, and are likely to change in the future if certain events occur. Presently, there are no events or circumstances that will cause us to believe that our estimated useful life for our intangible assets are likely to change.
Our estimated useful life could be sensitive to changes in market conditions and management’s judgment, and are likely to change in the future if certain events occur.
Loss on the disposal of assets decreased 28.5%, or $29.1 million, to $73.0 million for the year ended December 31, 2023, as compared to $102.1 million for the year ended December 31, 2022.
Loss on the disposal of assets and business decreased 89.8%, or $65.5 million, to $7.5 million for the year ended December 31, 2024, as compared to $73.0 million for the year ended December 31, 2023.
We perform an annual impairment test of goodwill and intangible assets as of December 31, or more frequently if circumstances indicate that impairment may exist. In connection with the Silvertip Acquisition, we added $23.6 million of goodwill during the year ended December 31, 2022. There were no additions to goodwill during the year ended December 31, 2023.
We perform an annual impairment test of goodwill and intangible assets as of December 31, or more frequently if circumstances indicate that impairment may exist. In connection with the AquaProp Acquisition, we added $0.9 million of goodwill in our hydraulic fracturing operating segment during the year ended December 31, 2024.
(“Pioneer”) and Pioneer Pumping Services, LLC in the Pioneer Pressure Pumping Acquisition in exchange for 16.6 million shares of our common stock and $110.0 million in cash, and concurrently entered into a pressure pumping services agreement (the "Pioneer Services Agreement") with Pioneer.
(“Pioneer”) and Pioneer Pumping Services, LLC in the Pioneer Pressure Pumping Acquisition in exchange for 16.6 million shares of our common stock and $110.0 million in cash. In May 2024, Pioneer merged with and into a wholly owned subsidiary of ExxonMobil after which ExxonMobil became the owner of these shares.
We own and operate a fleet of mobile hydraulic fracturing, wireline and cementing units and other auxiliary equipment to perform completion services to E&P companies. We also provide personnel and services that are tailored to meet each of our customers’ needs. Hydraulic fracturing operations account for a significant portion of our total revenue.
We also provide personnel and services that are tailored to meet each of our customers’ needs. Hydraulic fracturing operations account for a significant portion of our total revenue.
Listed below are the accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved, and that we believe are critical to the understanding of our operations. Property and Equipment Our property and equipment are recorded at cost, less accumulated depreciation.
Listed below are the accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved, and that we believe are critical to the understanding of our operations. Business Combinations Business combinations are accounted for under the acquisition method of accounting.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe impact of a 1% increase in interest rates on our variable rate debt would have resulted in an increase in interest expense and corresponding decrease/(increase) in pre‑tax income/(loss) of approximately $0.5 million , $0.1 million and $0 , for the years ended December 31, 2023, 2022 and 2021, respectively.
Biggest changeThe impact of a 1% increase in interest rates on our variable rate debt would have resulted in an increase in interest expense and corresponding decrease/(increase) in pre‑tax income/(loss) of approximately $0.5 million , $0.5 million, and $0.1 million, for the years ended December 31, 2024, 2023, and 2022, respectively.
Credit Risk Financial instruments that potentially subject us to concentrations of credit risk are trade receivables. We extend credit to customers and other parties in the normal course of business. We have established various procedures to manage our credit exposure, including maintaining an allowance for doubtful accounts. 47
Credit Risk Financial instruments that potentially subject us to concentrations of credit risk are trade receivables. We extend credit to customers and other parties in the normal course of business. We have established various procedures to manage our credit exposure, including maintaining an allowance for doubtful accounts. 52
Item 7A. Quantitative and Qualitative Disclosure of Market Risks Foreign Currency Exchange Risk Our operations are currently conducted entirely within the U.S.; therefore, we had no significant exposure to foreign currency exchange risk in 2023. Commodity Price Risk Our materials and fuel purchases expose us to commodity price risk.
Item 7A. Quantitative and Qualitative Disclosure of Market Risks Foreign Currency Exchange Risk Our operations are currently conducted entirely within the U.S.; therefore, we had no significant exposure to foreign currency exchange risk in 2024. Commodity Price Risk Our materials and fuel purchases expose us to commodity price risk.

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