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What changed in TETRA TECHNOLOGIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TETRA TECHNOLOGIES INC's 2022 and 2023 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 2023 report.

+320 added−284 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-27)

Top changes in TETRA TECHNOLOGIES INC's 2023 10-K

320 paragraphs added · 284 removed · 213 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

50 edited+13 added−9 removed74 unchanged
Biggest changeIn August 2021, we announced completion of a preliminary technical assessment by an independent geological consulting firm to assess lithium and bromine exploration targets in our Southwest Arkansas brine leases. Bromine is a key mineral component in zinc-bromide energy storage systems and our TETRA PureFlow ® ultra-pure zinc bromide has been qualified by several battery technology companies.
Biggest changeWe have also reached agreement with CarbonFree on the potential use of a unique solution proposed by TETRA to produce low carbon calcium chloride to support their SkyCycle emissions technology. 2 In August 2021, we announced completion of a preliminary technical assessment by an independent geological consulting firm to assess lithium and bromine exploration targets in our Southwest Arkansas brine leases.
These systems include the TETRA SwiftWater Automated Treatment (SWAT™) system that chemically treats produced water through a clarification process and the TETRA Oil Recovery After Production Technology (Orapt™) mobile oil separation system that recovers oil from produced water.
These systems include the TETRA SwiftWater Automated Treatment (SWAT) system that chemically treats produced water through a clarification process and the TETRA oil recovery after production technology ORAPT (Orapt™) mobile oil separation system that recovers oil from produced water.
This review of executive talent determines readiness to take on additional leadership roles and identifies developmental opportunities needed to prepare our executives for greater responsibilities. Our short and long-term business strategy is considered when evaluating candidates and their skills. Compensation and Benefits The Company’s compensation programs are designed to incentivize performance, maximize returns, and build shareholder value.
This review of executive talent determines readiness to take on additional leadership roles and identifies developmental opportunities needed to prepare our executives for greater responsibilities. Our short and long-term business strategy is considered when evaluating candidates and their skills. 6 Compensation and Benefits The Company’s compensation programs are designed to incentivize performance, maximize returns, and build shareholder value.
The Division also has locations in certain countries in Latin America, Europe, and the Middle East. 3 Former Compression Division Our former Compression Division provided compression services and equipment for natural gas and oil production, gathering, artificial lift, transmission, processing, and storage. O ur former Compression Division’s operations were conducted through our partially-owned CSI Compressco LP (“CSI Compressco”) subsidiary.
The Division also has locations in certain countries in Latin America, Europe, and the Middle East. Former Compression Division Our former Compression Division provided compression services and equipment for natural gas and oil production, gathering, artificial lift, transmission, processing, and storage. O ur former Compression Division’s operations were conducted through our partially-owned CSI Compressco LP (“CSI Compressco”) subsidiary.
Failure to comply with these laws and regulations or associated permits may result in the assessment of administrative, civil or criminal fines and penalties, the imposition of other corrective action obligations or other injunctive relief, or both. 7 Our operations in the United States are subject to various evolving environmental laws and regulations that are enforced by the U.S.
Failure to comply with these laws and regulations or associated permits may result in the assessment of administrative, civil or criminal fines and penalties, the imposition of other corrective action obligations or other injunctive relief, or both. Our operations in the United States are subject to various evolving environmental laws and regulations that are enforced by the U.S.
Early production services typically include sophisticated evaluation techniques for reservoir management, including unconventional shale reservoir exploitation and optimization of well workover programs. Frac flowback and production well testing services may include well control, well cleanup and laboratory analysis. These services are used in the completion process after hydraulic fracturing and in the production phase of oil and gas wells.
Early production services typically include sophisticated evaluation techniques for reservoir management, including unconventional shale reservoir exploitation and optimization of well workover programs. Frac flowback and 3 production well testing services may include well control, well cleanup and laboratory analysis. These services are used in the completion process after hydraulic fracturing and in the production phase of oil and gas wells.
CBFs are salt solutions that have variable densities and are used to control bottom-hole pressures during oil and gas completion and workover operations. The Division sells CBFs and various CBF additives to United States and international oil and gas exploration and production companies and to other companies that service customers in the oil and gas industry.
CBFs are salt solutions that have variable densities and are used to control bottom-hole pressures during oil and gas completion and workover operations. The Division sells CBFs and various CBF additives to 1 United States and international oil and gas exploration and production companies and to other companies that service customers in the oil and gas industry.
The Completion Fluids & Products Division provides both stock and custom-blended CBFs based on each customer’s specific needs and the proposed application. It provides a broad range of associated CBF services, 1 including: on-site fluids filtration, handling and recycling; wellbore cleanup; custom fluids blending; and fluid management services.
The Completion Fluids & Products Division provides both stock and custom-blended CBFs based on each customer’s specific needs and the proposed application. It provides a broad range of associated CBF services, including: on-site fluids filtration, handling and recycling; wellbore cleanup; custom fluids blending; and fluid management services.
During 2022, we completed the maiden inferred bromine and lithium brine resource estimation report for our leased acreage in the Smackover Formation in Southwest Arkansas, as well as a front end engineering and design study for the design of a brine to bromine processing plant, pipeline and related assets.
During 2022, we completed the maiden inferred bromine and lithium brine resource estimation report for our leased acreage in the Smackover Formation in Southwest Arkansas, as well as a front end engineering and design (“FEED”) study for the design of a brine to bromine processing plant, pipeline and related assets.
The Division’s flagship CBF technology, TETRA CS Neptune ® completion fluids, are high-density monovalent and divalent fluids that are free of undissolved solids, zinc, priority pollutants, and formate ions.
The Division’s flagship CBF technology, TETRA CS Neptune are high-density monovalent and divalent fluids that are free of undissolved solids, zinc, priority pollutants, and formate ions.
There are multiple sources of zinc that we can use in the production of zinc bromide and zinc calcium bromide. We have a long-term supply agreement with LANXESS, AG (“LANXESS”) under which the Completion Fluids & Products Division purchases its requirements of raw material bromine from LANXESS’ Arkansas bromine production facilities. The supply agreement with LANXESS is under arbitration.
There are multiple sources of zinc that we can use in the production of zinc bromide and zinc calcium bromide. We have a long-term supply agreement with LANXESS, AG (“LANXESS”) under which the Completion Fluids & Products Division purchases its requirements of raw material bromine from LANXESS’ Arkansas bromine production facilities.
Compliance with such laws and regulations may expose us to significant costs and liabilities, and cause us to incur significant capital expenditures in our operations.
Compliance with such laws and regulations may 7 expose us to significant costs and liabilities, and cause us to incur significant capital expenditures in our operations.
We maintain a fleet of DOT and non-DOT vehicles and provide positive, real-time behavior feedback to our drivers via real-time monitors. Coupled with Journey Management, vehicle selection guidelines, and driver training, we have a comprehensive approach to reducing our driving exposure and incidents.
We maintain a fleet of DOT and non-DOT vehicles and provide real-time behavior feedback to our drivers via near real-time monitors. Coupled with Journey Management, vehicle selection guidelines, and driver training, we have a comprehensive approach to reducing our driving exposure and incidents.
Our common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “TTI.” Our Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics for Senior Financial Officers, Audit Committee Charter, Human Capital Management and Compensation Committee Charter, and Nominating, Governance and Sustainability Committee Charter, as well as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and all amendments to those reports are all available, free of charge, on our website at www.tetratec.com as soon as practicable after we file the reports with the SEC.
Our common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “TTI.” Our Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics for Senior Financial Officers, Policy on Trading in Company Securities, Audit Committee Charter, Human Capital Management and Compensation Committee Charter, and Nominating, Governance and Sustainability Committee Charter, as well as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and all amendments to those reports are all available, free of charge, on our website at www.tetratec.com as soon as practicable after we file the reports with the SEC.
To ensure our work remains safe and of the highest quality, the Company has a comprehensive HSEQ Management System and program designed to improve the capacity of the organization by controlling worksite risks, developing proper work practices and procedures, and empowering employees with stop-work authority if they observe unsafe conditions, omissions, errors, or actions that could result in safety or environmental incidents, or product and service quality issues.
To ensure our work remains safe and of the highest quality, the Company has a comprehensive health, safety, environment, and quality (“HSEQ”) Management System and program designed to improve the capacity of the organization by controlling worksite risks, developing proper work practices and procedures, and empowering employees with stop-work authority if they observe unsafe conditions, omissions, errors, or actions that could result in safety or environmental incidents, or product and service quality issues.
No single customer provided 10% or more of our total consolidated revenues during the years ended December 31, 2022, 2021 or 2020. Other Business Matters Human Capital Management We collaborate as a team to execute for each other, our customers, and our shareholders. As of December 31, 2022, we employed approximately 1,300 people worldwide.
No single customer provided 10% or more of our total consolidated revenues during the years ended December 31, 2023, 2022, or 2021. Other Business Matters Human Capital Management We collaborate as a team to execute for each other, our customers, and our shareholders. As of December 31, 2023, we employed approximately 1,500 people worldwide.
We work with consultants to benchmark our compensation and benefits programs to help us offer competitive compensation packages to attract and retain high-performing talent.
We work with consultants to benchmark our compensation and benefits programs to help us offer competitive compensation packages to attract and retain high-performing talent. We also offer competitive benefits to attract and retain exceptional talent.
Although most wastes associated with the exploration, development and production of oil and natural gas are currently exempt from the more stringent hazardous waste regulations under RCRA and its state analogs, it is possible that some of the material we handle now or may handle in the future may be subject to regulation under RCRA as a hazardous waste.
Although most wastes associated with the exploration, development and production of oil and natural gas are currently exempt from the more stringent hazardous waste regulations under the Resource Conservation and Recovery Act (“RCRA’) and its state analogs, it is possible that some of the material we handle now or may handle in the future may be subject to regulation under RCRA as a hazardous waste.
As part of our low carbon solutions, we produce and provide end users with zinc bromide, used in zinc-bromine batteries and energy storage. We also sell sodium bromide into industrial water treatment markets as a biocide under the BioRid ® tradename. Most of these markets are highly competitive.
As part of our low carbon solutions, we produce and provide end users with zinc bromide, used in zinc-bromine batteries and energy storage. We also sell sodium bromide into industrial water treatment markets as a biocide. Most of these markets are highly competitive.
We also manufacture liquid calcium chloride at our facilities in Parkersburg, West Virginia and Lake Charles, Louisiana, and we have two solar evaporation facility locations located in San Bernardino County, California, that produce liquid calcium chloride and sodium chloride from underground brine reserves, which are replenished naturally.
In the United States, we also manufacture liquid calcium chloride at our facilities in Parkersburg, West Virginia and Lake Charles, Louisiana, and we have two solar evaporation facilities located in San Bernardino County, California, that produce liquid calcium chloride and sodium chloride from underground brine reserves, which are replenished naturally.
The Water & Flowback Services Division’s patented and patent-pending equipment and processes include advanced hydrocyclones for sand management, certain produced- and fresh-water blending technologies, and the TETRA Steel™ 1200 rapid deployment water transfer system.
The Water & Flowback Services Division’s patented and patent-pending equipment and processes include advanced hydrocyclones for sand management, certain produced- and fresh-water blending technologies, and the TETRA Steel 1200, a lay-flat hose rapid deployment water transfer system.
Liquid and flake calcium chloride are also produced at our Kokkola, Finland plant. We operate our European calcium chloride operations under the name TETRA Chemicals Europe.
Liquid and flake calcium chloride are also produced at our Kokkola, Finland plant. We operate our European calcium chloride operations under the names TETRA Chemicals Europe AB and TETRA Chemicals Europe Oy.
As of December 31, 2022, we retained an interest in CSI Compressco consisting of approximately 3.7% of the outstanding common units. Throughout this Annual Report, we refer to the transaction with Spartan as the “GP Sale.” We have reflected the operations of our former Compression Division as discontinued operations for all periods presented.
On December 31, 2023, we held an interest in CSI Compressco consisting of approximately 3.7% of their outstanding common units at that time. Throughout this Annual Report, we refer to the transaction with Spartan as the “GP Sale.” We have reflected the operations of our former Compression Division as discontinued operations for all periods presented.
In May 2021, we signed a memorandum of understanding (“MOU”) with CarbonFree Chemicals Holdings, LLC (“CarbonFree”), a carbon capture company with patented technologies that capture CO 2 and mineralize emissions to make commercial, carbon-negative chemicals.
Properties” of this Annual Report), and our leading calcium chloride production capabilities. In May 2021, we signed a memorandum of understanding (“MOU”) with CarbonFree Chemicals Holdings, LLC (“CarbonFree”), a carbon capture company with patented technologies that capture CO 2 and mineralize emissions to make commercial, carbon-negative chemicals.
See Part I “Item 3. Legal Proceedings” and Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in this Annual Report for further information. We have not historically directly purchased any significant volumes of raw materials from Russia nor from Ukraine.
See Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in this Annual Report for further information. We have not historically directly purchased any significant volumes of raw materials from Russia, Ukraine, Israel, or the Gaza region.
The proposal also revises requirements for fugitive emissions monitoring and repair and as well as equipment leaks and the frequency of monitoring surveys, establishes a “super-emitter” response program to timely mitigate emissions events, and provides additional options for the use of advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions.
The rule also revises requirements for fugitive emissions monitoring and repair, as well as equipment leaks and the frequency of monitoring surveys, establishes a “super-emitter” response program to timely mitigate emissions events as detected by governmental agencies or qualified third 8 parties, triggering certain investigation and repair requirements, and provides additional options for the use of advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions.
Water & Flowback Services Division The Water & Flowback Services Division provides comprehensive water management and frac flowback services to a wide-range of onshore oil and gas operators located in all active North America unconventional oil and gas basins. 5 The Division also provides frac flowback services, early production facilities and services, production well testing services, sand filtration, and other associated services in various domestic and international locations, including well flow management and evaluation services that enable operators to quantify oil and gas reserves, optimize oil and gas production, and minimize oil and gas reservoir production damage.
The Division also provides frac flowback services, early production facilities and services, production well testing services, sand filtration, and other associated services in various domestic and international locations, including well flow management and evaluation services that enable operators to quantify oil and gas reserves, optimize oil and gas production, and minimize oil and gas reservoir production damage.
While we believe that our patents and trade secrets are important to our competitive positions in our businesses, we do not believe any one patent or trade secret is essential to our success.
Proprietary Technology and Trademarks We own a variety of intellectual property rights, such as patents, trademarks and trade secrets. While we believe that our patents and trade secrets are important to our competitive positions in our businesses, we do not believe any one patent or trade secret is essential to our success.
In addition, we are party to agreements with Standard Lithium Ltd. (“Standard Lithium”) (NYSE: SLI), under which Standard Lithium has the right to explore, produce and extract lithium in our Arkansas leases as well as additional potential resources in the Mojave region (San Bernardino County) of California.
(“Standard Lithium”) (NYSE: SLI), under which Standard Lithium has the right to explore, produce and extract lithium and lithium derivatives in a portion of our Arkansas leases located outside of the Evergreen Brine Unit as well as additional potential resources in the Mojave region (San Bernardino County) of California.
The Division also markets liquid and dry calcium chloride products manufactured at its production facilities or purchased from third-party suppliers to a variety of markets outside the energy industry, and markets TETRA PureFlow ® ultra-pure zinc bromide to several battery technology companies. Our Water & Flowback Services Division provides onshore oil and gas operators with comprehensive water management services.
The Division also markets liquid and dry calcium chloride products manufactured at its production facilities or purchased from third-party suppliers to a variety of markets outside the energy industry, and markets TETRA PureFlow an ultra-pure zinc bromide as well as TETRA PureFlow Plus, an ultra-pure zinc bromide/zinc chloride blend; both to several battery technology companies.
The lithium battery market is a rapidly growing market, affording us the potential opportunity to participate in a meaningful way. In December, 2021, we 2 announced a strategic agreement with Eos Energy Enterprises, Inc. ("Eos") (NASDAQ: EOSE) involving a long-term supply and collaboration agreement to supply our, TETRA PureFlow ® ultra-pure zinc bromide.
In December, 2021, we announced a strategic agreement with Eos Energy Enterprises, Inc. ("Eos") (NASDAQ: EOSE) involving a long-term supply and collaboration agreement to supply our ultra-pure zinc bromide TETRA PureFlow to Eos.
Additionally, in November 2021, EPA issued a proposed rule that, if finalized, would establish OOOO(b) new source and OOOO(c) first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities.
Separately, in December 2023, EPA finalized a rule that, established more stringent OOOO(b) new source and OOOO(c) first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities.
We are also pursuing low-carbon energy initiatives that leverage our fluids and aqueous chemistry core competencies, our significant bromine and lithium assets (including our approximately 40,000 gross acres of brine leases in Arkansas) and technologies, and our leading calcium chloride production capabilities.
We are also pursuing low-carbon energy initiatives that leverage our fluids and aqueous chemistry core competencies, our significant bromine and lithium resources (including our approximately 40,000 gross acres of brine leases in Arkansas) and technologies (see our disclosures titled “Bromine and Lithium Resources” set forth in Part I, “Item 2.
Our operations include providing services and materials to oil and gas operators for the use of TCW fluids in the Gulf of Mexico. The EPA’s current NPDES permits for Region 6 and Region 4 for oil and gas operations in the federal waters of the Gulf of Mexico expired on September 30, 2022 and January 19, 2023, respectively.
Our operations include providing services and materials to oil and gas operators for the use of TCW fluids in the Gulf of Mexico. The EPA’s most recent NPDES permits for Region 6 for oil and gas operations in the federal waters of the western and central Gulf of Mexico went into effect on May 11, 2023.
We cannot predict the scope of any final methane regulatory requirements or the cost to comply with such requirements. However, additional or more stringent regulations could impose new air permitting or pollution control requirements on our equipment that could require us 8 to incur material costs.
Any additional or more stringent regulations that impose new air permitting or pollution control requirements on our equipment could require us to incur material costs.
For more information, see our risk factor titled “Our operations, and those of our suppliers and customers, are subject to a series of risks arising from climate change.” In accordance with Section 402 of the Clean Water Act, the EPA is authorized to issue National Pollutant Discharge Elimination System (“NPDES”) General Permits to regulate offshore discharges in the Gulf of Mexico which includes Treatment, Completion and Workover (“TCW”) fluids.
In accordance with Section 402 of the Clean Water Act, the EPA is authorized to issue National Pollutant Discharge Elimination System (“NPDES”) General Permits to regulate offshore discharges in the Gulf of Mexico which includes Treatment, Completion and Workover (“TCW”) fluids.
Bromine is a key mineral component in zinc-bromide energy storage systems and our TETRA PureFlow ® high purity zinc bromide has been qualified by several battery technology companies. The lithium battery market is a rapidly growing market, so we believe we are well positioned to meaningfully participate in that market.
Bromine is a key mineral component in zinc-bromide energy storage systems and our TETRA PureFlow is an ultra-pure zinc bromide, which has been qualified by several battery technology companies. The lithium battery market is a rapidly growing market, affording us the potential opportunity to participate in a meaningful way.
None of our U.S. employees are presently covered by a collective bargaining agreement. Our employees outside the U.S. are generally members of labor unions and associations in the countries in which they are employed. We believe that our relations with our employees are good.
None of our U.S. employees are presently covered by a collective bargaining agreement. Our employees outside the U.S. are generally members of labor unions and associations in the countries in which they are employed. We use engagement surveys and exit interviews to, among other things, gauge our employees’ perspective on the company.
Because of the ongoing conflict between Russia and Ukraine, during early 2022, our primary European supplier of certain raw materials advised us of supply constraints with one of their suppliers of a key raw material used in their manufacturing process.
However, one of our raw material providers sourced one of their raw materials from Russia or Ukraine. 4 Because of the ongoing conflict between Russia and Ukraine, during early 2022, we experienced supply constraints with our primary European supplier of certain raw materials.
Market Overview and Competition Our operations are highly dependent upon the demand for, and production of, natural gas and oil in the various domestic and international locations in which we operate. Demand for products and services of our Completion Fluids & Products Division remained resilient despite pandemic impacts on commodity prices in 2020.
The Water & Flowback Services Division purchases water management and production testing equipment and components from third-party manufacturers. Market Overview and Competition Our operations are highly dependent upon the demand for, and production of, natural gas and oil in the various domestic and international locations in which we operate.
As part of our safety-focused culture, it is customary that each meeting starts with an employee-led safety moment.
Safety Recognizing that safety, service quality, and environmental protection are conditions of employment, all employees and contractors are responsible for their safety, the safety of those around them, the quality of their work, and protection of the environment. As part of our safety-focused culture, it is customary that each meeting starts with an employee-led safety moment.
Operators of affected facilities will have to comply with specific standards of performance to include leak detection using optical gas imaging and subsequent repair requirement, and reduction of emissions by 95% through capture and control systems.
The presumptive standards under the final rule are generally the same for both new and existing sources, including enhanced leak detection using optical gas imaging and subsequent repair requirement, and reduction of emissions by 95% through capture and control systems.
Prices have experienced significant recoveries beginning in the second half of 2021 and continuing through 2022. West Texas Intermediate oil prices continued to improve from an average of $68.14 in 2021 to an average of $94.90 per barrel during 2022.
West Texas Intermediate oil prices declined from an average of $94.90 per barrel during 2022 to an average of $77.58 per barrel during 2023.
This was an investment alongside other investors that provided CarbonFree the necessary capital to construct the first SkyCycle TM facility. We have also reached agreement with CarbonFree on the potential use of a unique solution proposed by TETRA to produce low carbon calcium chloride to support SkyCycle TM technology.
This was an investment alongside other investors that provided CarbonFree the necessary capital to construct the first SkyCycle facility.
The long-term LANXESS bromine supply agreement discussed above provides a secure supply of bromine to support a majority of the Division’s current manufacturing levels. We do, however, continue to evaluate our strategy related to the Arkansas assets and their future development. LANXESS has certain rights to participate in future development of these Arkansas assets.
See our disclosures titled “Bromine and Lithium Resources” set forth in Part I, “Item 2. Properties” of this Annual Report. The long-term LANXESS bromine supply agreement discussed above provides a secure supply of bromine to support a majority of the Division’s current manufacturing levels.
The Completion Fluids & Products Division’s European calcium chloride operations market our calcium chloride products to certain European markets. Our principal competitors in the non-energy related calcium chloride markets include Occidental Chemical Corporation and Vitro in North America and NedMag in Europe.
Our principal competitors in the non-energy related calcium chloride markets include Occidental Chemical Corporation and Vitro Corporation in North America and Nedmag B.V. in Europe. 5 Water & Flowback Services Division The Water & Flowback Services Division provides comprehensive water management and frac flowback services to a wide-range of onshore oil and gas operators located in all active North America unconventional oil and gas basins.
Additionally, we have not historically sold any significant volumes of product to Russia or to Ukraine. However, one of our raw material providers sourced one of their raw materials from Russia or Ukraine.
Additionally, we have not historically sold any significant volumes of product to Russia, Ukraine, Israel or, the Gaza region and have discontinued all transactions with customers and suppliers in Russia and Ukraine.
See Note 2 - “Basis of Presentation and Significant Accounting Policies” and Note 14 - “Fair Value Measurements” in the Notes to Consolidated Financial Statements for further information. The Water & Flowback Services Division purchases water management and production testing equipment and components from third-party manufacturers.
Standard Lithium delivered a notice to exercise this option to acquire those lithium rights in a portion of our Arkansas leases located outside of the Evergreen Brine Unit on October 6, 2023. See Note 2 - “Basis of Presentation and Significant Accounting Policies” and Note 14 - “Fair Value Measurements” in the Notes to Consolidated Financial Statements for further information.
We are in the final stages of a reservoir analysis to further assess TETRA’s bromine and lithium assets in Arkansas. Completion of this front end engineering and design study and reservoir analysis were incremental steps for TETRA to complete an initial and preliminary economic analysis.
Completion of this FEED study and reservoir analysis were incremental steps for TETRA to complete an initial and preliminary economic analysis. During 2023, we completed a Technical Report Summary (the “Resources Report”) for our 6,138 acre “Evergreen Brine Unit” in Arkansas. The Resources Report included both “measured” and “indicated” resources in addition to the “inferred” category.
About TETRA TETRA Technologies, Inc., together with its consolidated subsidiaries, is a leading energy services and solutions company operating on six continents, focused on bromine-based completion fluids, calcium chloride, water management solutions, frac flowback, and production well testing services. We have two reportable segments - Completion Fluids & Products Division and Water & Flowback Services Division.
About TETRA TETRA Technologies, Inc., together with its consolidated subsidiaries, is an energy services and solutions company with operations on six continents focused on developing environmentally conscious services and solutions that help make people’s lives better.
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This raw material is a widely used, global commodity but the disruption to the current supply chain has caused some impact on their production which in turn has caused a reduction in delivered volumes of certain raw materials to our plant in Finland where we manufacture calcium chloride, which has decreased our calcium chloride production volumes and had some impact on our margins during the first half of 2022.
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In addition to providing products and services to the oil and gas industry and calcium chloride for diverse applications, TETRA is expanding into the low-carbon energy market with chemistry expertise, key mineral acreage, and global infrastructure, helping to meet the demand for sustainable energy in the twenty-first century.
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Our supplier has sourced their material from an alternative location and resumed supplying increased volumes to us during the third quarter of 2022 and returned to meet current customer demand levels in the fourth quarter of 2022. The magnitude of any future financial impact resulting from further supply chain disruptions is difficult to quantify at this time.
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We have two reportable segments - Completion Fluids & Products Division and Water & Flowback Services Division.
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We are also continuing to work with secondary and tertiary raw material providers on options to address the 4 situation and mitigate the financial impact. Our Board of Directors is continuing to monitor the situation and assess any current or future risk to our financial condition and results of operations.
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Our Water & Flowback Services Division provides onshore oil and gas operators with comprehensive water management services.
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We currently lease over 40,000 gross acres of brine leases near Magnolia, Arkansas, which contain bromine and lithium. See our disclosures titled “Bromine and Lithium Inferred Resources” set forth in Part I, “Item 2. Properties” of this Annual Report.
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In January 2024, we entered into a preferred supply agreement through December 31, 2027 in which Eos has agreed to purchase 100% of its requirement of zinc bromide products, including TETRA PureFlow zinc bromide, and 75% of its requirement of Eos’ proprietary electrolyte solution from TETRA, and has provided TETRA a right of first refusal prior to entering into a supply agreement for such products from a third-party.
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We also offer competitive benefits to attract and retain exceptional talent. 6 Safety Recognizing that safety, service quality, and environmental protection are conditions of employment, all employees and contractors are responsible for their safety, the safety of those around them, the quality of their work, and protection of the environment.
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In connection with the supply agreement, TETRA was granted a non-exclusive, non-sub-licensable, non-transferable license to Eos’s proprietary electrolyte formula, solely in connection with manufacturing and provision of Eos’ proprietary electrolyte solution to Eos.
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Proprietary Technology and Trademarks As of December 31, 2022, we owned or licensed 47 issued U.S. patents and had 8 patent applications pending in the United States. We also had 21 owned or licensed patents and 34 patent applications pending in various other countries.
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On May 25, 2023, we entered into the Third Amendment to Bromine Requirements Sales Agreement (the “Amendment”) with LANXESS, which provides for, among other things, revised volume requirements, pricing, and related terms. The Amendment was effective April 1, 2023 and was entered into in connection with the entry into a settlement agreement in the Company’s arbitration with LANXESS.
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The foreign patents and patent applications are primarily foreign counterparts to certain of our U.S. patents or patent applications. The issued patents expire at various times through 2040. We have elected to maintain certain other internally developed technologies, know-how, and inventions as trade secrets.
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Although this constraint has since resolved, we experienced decreased production volumes of calcium chloride in the first half of 2022. Should we experience similar supply constraints in the future, we may experience future financial impact, the magnitude of which is uncertain. We currently lease over 40,000 gross acres of brine leases near Magnolia, Arkansas, which contain bromine and lithium.
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The EPA issued a supplemental proposal in November 2022, which, among other items, sets forth specific revisions strengthening the first nationwide emission guidelines for states to limit emissions from existing oil and gas facilities.
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We do, however, continue to evaluate our strategy related to the Arkansas assets and their future development. In addition, we are party to agreements with Standard Lithium Ltd.
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As of October 1, 2022, the permits remain in administratively continued status pending finalization of a new NPDES General Permit.
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Demand for products and services of our Completion Fluids & Products Division remained resilient despite pandemic impacts on commodity prices in 2020. Following a period of depressed commodity prices during 2020, prices experienced significant recoveries beginning in the second half of 2021 and continuing through 2022, but declined slightly during 2023.
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In Europe, our Completion Fluids & Products Division’s calcium chloride operations market, distribute, sell or offer to sell calcium chloride products in certain European industries.
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We ask questions around diversity and inclusion, if employees would consider working for the company again, or if they recommend working for the company. Based on results, we believe that our relations with our employees are good.
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Under the final rules, operators of affected facilities will have two years to prepare and submit their plans to impose methane emission controls on existing sources.
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The Region 4 permit for the eastern Gulf of Mexico expired January 19, 2023, but the EPA is proposing to reissue the expired permit. This decision is currently pending following an extension of the public comment period to August 2023. The Region 4 permit remains in administratively continued status pending finalization of the reissuance.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

82 edited+54 added−21 removed127 unchanged
Biggest changeWhenever we have amounts outstanding under these facilities, our cash flows and results of operations will be subject to interest rate risk exposure associated with the debt balance outstanding. We currently are not a party to an interest rate swap contract or other derivative instrument designed to hedge our exposure to interest rate fluctuation risk.
Biggest changeThese credit facilities consist of floating rate loans that bear interest at an agreed upon percentage rate spread above the secured overnight financing rate (“SOFR”) or an alternate base rate. Whenever we have amounts outstanding under these facilities, our cash flows and results of operations will be subject to interest rate risk exposure associated with the debt balance outstanding.
Our business in the countries in which we currently operate and those in which we may operate in the future could be limited or disrupted by: • restrictions on repatriating cash back to the United States; • the impact of compliance with anti-corruption laws on our operations and competitive position in affected countries and the risk that actions taken by us or our agents may violate those laws; • government controls and government actions, such as expropriation of assets and changes in legal and regulatory environments; • import and export license requirements; • political, social, or economic instability; • trade restrictions; • changes in tariffs and taxes; and • our limited knowledge of these markets or our inability to protect our interests.
Our business in the countries in which we currently operate and those in which we may operate in the future could be limited or disrupted by: • restrictions on repatriating cash back to the United States; • the impact of compliance with anti-corruption laws on our operations and competitive position in affected countries and the risk that actions taken by us or our agents may violate those laws; • government controls and government actions, such as expropriation of assets and changes in legal and regulatory environments; • import and export license requirements; • political, social, or economic instability; • trade restrictions; • changes in tariffs and taxes; and 22 • our limited knowledge of these markets or our inability to protect our interests.
Our business and future profitability could be affected by numerous factors, including the availability of tax credits, exemptions, refunds and other benefits to reduce our tax liabilities, changes in the relative amount of our earnings subject to tax in the various jurisdictions in which we operate or have subsidiaries, the potential expansion of our business into or otherwise becoming subject to tax in additional jurisdictions, changes to our existing business structure and operations, the extent of our intercompany transactions, and the extent to which taxing authorities in the relevant jurisdictions respect those intercompany transactions.
Our business and future profitability could be affected by numerous factors, including the availability of tax credits, exemptions, refunds and other benefits to reduce our tax liabilities, changes in the relative amount of our earnings subject to tax in the various jurisdictions in which we operate or have subsidiaries, the potential expansion of our 24 business into or otherwise becoming subject to tax in additional jurisdictions, changes to our existing business structure and operations, the extent of our intercompany transactions, and the extent to which taxing authorities in the relevant jurisdictions respect those intercompany transactions.
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, and together with the DOT, implementing GHG emissions limits on vehicles manufactured for operation in the United States.
Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, 19 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, and together with the DOT, implementing GHG emissions limits on vehicles manufactured for operation in the United States.
We do carry insurance against these risks, although the potential damages we might incur could exceed our available insurance coverage. We also invest in security technology, perform penetration tests from time to time, and design our business processes to attempt to mitigate the risk of such breaches. However, there can be no assurance that security breaches will not occur.
We do carry insurance against these risks, although the potential damages we might incur could exceed our available insurance coverage. We also invest in security technology, perform penetration tests from time to time, and design our business processes to attempt to mitigate the risk of such breaches. However, there can be no assurance that future security breaches will not occur.
If new or more stringent federal, state, or local legal restrictions relating to the hydraulic fracturing process are adopted, our customers could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development or production activities, and perhaps even be precluded from drilling wells.
If new or more stringent federal, state, or local legal restrictions relating to the hydraulic fracturing process are adopted, our customers could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development or production activities, and perhaps even be precluded from 23 drilling wells.
Hydraulic fracturing typically is regulated by state oil and gas commissions or similar state agencies, but several federal agencies have asserted regulatory authority over certain aspects of the process in the U.S. For example, the EPA has issued rulemakings under several laws governing hydraulic fracturing activities and disposal of wastes associated with the process. In 2016, the U.S.
Hydraulic fracturing typically is regulated by state oil and gas commissions or similar state agencies, but several federal agencies have asserted regulatory authority over certain aspects of the process in the U.S. For example, the EPA has issued rulemakings under several laws governing hydraulic fracturing activities and disposal of wastes associated with the process.
Foreign Corrupt Practices Act, the U.K Bribery Act, or laws or legislation promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or other applicable anti-corruption regulations that generally prohibit the making of improper payments to foreign 20 officials for the purpose of obtaining or keeping business.
Foreign Corrupt Practices Act, the U.K Bribery Act, or laws or legislation promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or other applicable anti-corruption regulations that generally prohibit the making of improper payments to foreign officials for the purpose of obtaining or keeping business.
We cannot predict whether any federal, state or local laws or regulations will be enacted regarding hydraulic fracturing, and, if so, what actions any such laws or regulations would require or prohibit. Other jurisdictions where our products and services are used may impose similar or more 16 stringent restrictions.
We cannot predict whether any federal, state or local laws or regulations will be enacted regarding hydraulic fracturing, and, if so, what actions any such laws or regulations would require or prohibit. Other jurisdictions where our products and services are used may impose similar or more stringent restrictions.
If additional levels of regulation or permitting requirements were imposed on oil and gas operators through the adoption of new laws and regulations, the demand for certain of our products and services could be decreased or subject to delays. We operate in the U.S. Gulf of Mexico.
If additional levels of regulation or permitting requirements were imposed on oil and gas operators through the adoption of new laws and regulations, the demand for certain of our products and services could be decreased or subject to delays. 18 We operate in the U.S. Gulf of Mexico.
There is also a growing trend of the SEC or parties suing public companies for “greenwashing,” which is where a company makes unsubstantiated 18 statements designed to mislead consumers or shareholders into thinking that the company’s products or practices are more environmentally friendly than they are.
There is also a growing trend of the SEC or parties suing public companies for “greenwashing,” which is where a company makes unsubstantiated statements designed to mislead consumers or shareholders into thinking that the company’s products or practices are more environmentally friendly than they are.
Our 2021 results reflect an estimated unfavorable impact of $3.1 million due to the severe weather conditions during February that shut down fracking activity in several of our 12 key markets and negatively impacted the supply chain for our industrial chemicals operations.
Our 2021 results reflect an estimated unfavorable impact of $3.1 million due to the severe weather conditions during February that shut down fracking activity in several of our key markets and negatively impacted the supply chain for our industrial chemicals operations.
We are party to agreements in which Standard Lithium has the right to explore, produce and extract Lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California. The company receives cash and stock of Standard Lithium 10 under the terms of the arrangements.
We are party to agreements in which Standard Lithium has the right to explore, produce and extract Lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California. The company receives cash and stock of Standard Lithium under the terms of the arrangements.
We rely on our information technology systems to manage our business data, communications, supply chain, customer invoicing, employee information, and other business processes. We outsource certain business process functions to third-party providers and similarly rely on these third parties to maintain and store confidential information on their systems.
We rely on our information and operational technology systems to manage our business data, communications, supply chain, customer invoicing, employee information, and other business processes. We outsource certain business process functions to third-party providers and similarly rely on these third parties to maintain and store confidential information on their systems.
For example, at COP26, the Glasgow Financial Alliance for Net Zero (“GFANZ”) announced that commitments from over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals.
For example, at COP26, the Glasgow Financial Alliance for Net Zero (“GFANZ”) announced that commitments from 20 over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals.
This may force lease owners and operators of leases and other infrastructure in the Gulf of Mexico to obtain surety bonds or other forms of financial assurance, the costs of which could be significant.
This may force lease owners and operators of leases and other infrastructure in the Gulf of Mexico to obtain additional surety bonds or other forms of financial assurance, the costs of which could be significant.
Item 1A. Risk Factors. Certain Business Risks Although it is not possible to identify all of the risks we encounter, we have identified the following significant risk factors that could affect our actual results and cause actual results to differ materially from any such results that might be projected, forecasted, or estimated by us in this Annual Report.
Item 1A. Risk Factors. Although it is not possible to identify all of the risks we encounter, we have identified the following significant risk factors that could affect our actual results and cause actual results to differ materially from any such results that might be projected, forecasted, or estimated by us in this Annual Report.
To the extent alternative technologies are preferred, whether as a result of regulatory impacts, technological developments, or changes in industry practice, it may adversely impact our business or results of operation. Our operations in foreign countries exposes us to complex regulations and may present us with new obstacles to growth.
To the extent alternative technologies are preferred, whether as a result of regulatory impacts, technological developments, or changes in industry practice, it may adversely impact our business or results of operation. Our operations in foreign countries expose us to complex regulations and may present us with new obstacles to growth.
Although we have long-term supply agreements with LANXESS, there is no assurance that we will have an adequate supply of elemental bromine or the other raw materials required for all of our CBFs opportunities, or that such raw materials will be available at reasonable prices.
Although we have long-term supply agreements with LANXESS, there is no assurance that we will have an adequate supply of elemental bromine or the other raw materials required for all of our CBF opportunities, or that such raw materials will be available at reasonable prices.
Further, United States federal, state, and local and non-U.S. 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, and may have an adverse effect on our business and future profitability. Item 1B. Unresolved Staff Comments. None.
Further, United States federal, state, and local and non-U.S. 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, and may have an adverse effect on our business and future profitability. Item 1B. Unresolved Staff Comments. Not applicable.
The ABL Credit Agreement and Term Credit Agreement each contain certain affirmative and negative covenants, including covenants that restrict the ability of TETRA and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, (i) incurring debt, (ii) granting liens, (iii) engaging in mergers and other fundamental changes, (iv) making investments, (v) entering into, or amending, transactions with affiliates, (vi) paying dividends and making other restricted payments, (vii) prepaying other indebtedness, and (viii) selling assets.
The ABL Credit Agreement contains certain affirmative and negative covenants, including covenants that restrict the ability of TETRA and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, (i) incurring debt, (ii) granting liens, (iii) engaging in mergers and other fundamental changes, (iv) making investments, (v) entering into, or amending, transactions with affiliates, (vi) paying dividends and making other restricted payments, (vii) prepaying other indebtedness, and (viii) selling assets.
Increasing attention to, and societal expectations on companies to address, climate change and other environmental and social impacts, investor and societal expectations regarding voluntary ESG disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our customers’ products, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets.
Increasing attention to, and societal expectations on companies to address, climate change and other environmental and social impacts, investor, regulatory and societal expectations regarding voluntary and mandatory ESG-related disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our customers’ products, reduced profits, increased investigations and litigation, and negative impacts on our stock price and reduced access to capital markets.
To the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to our causation of or contribution to the asserted 19 damage, or to other mitigating factors.
To the extent that societal pressures, regulatory, political or other factors are involved, it is possible that such liability could be imposed without regard to our causation of or contribution to the asserted damage, or to other mitigating factors.
Our operations involve significant operating risks and insurance coverage may not be available or cost-effective. We are subject to operating hazards normally associated with the oilfield service industry, including automobile accidents, fires, explosions, blowouts, formation collapse, mechanical problems, abnormally pressured 11 formations, and environmental accidents.
Our operations involve significant operating risks and insurance coverage may not be available or cost-effective. We are subject to operating hazards normally associated with the oilfield service industry, including automobile accidents, fires, explosions, blowouts, formation collapses, mechanical problems, abnormally pressured formations, and environmental accidents.
Such physical risks may also impact our suppliers, which may adversely affect our ability to provide our products and services. Increased attention to ESG matters and conservation measures may adversely impact our or our customers’ business.
Such physical risks may also impact our suppliers, which may adversely affect our ability to provide our products and services. Increasing attention to ESG matters and conservation measures may adversely impact our or our customers’ business.
If oil and natural gas prices return to levels at or below those experienced in 2020 and early 2021 and supply and demand imbalances persist, there would be a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.
If oil and natural gas prices return to levels at or below those experienced during 2020 and 2021 and supply and demand imbalances persist, there would be a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.
Factors affecting the prices of oil and natural gas include: the level of supply and demand for oil and natural gas, worldwide; governmental regulations, including the policies of governments regarding the exploration for and production and development of their oil and natural gas reserves; weather conditions, natural disasters, and health or similar issues, such as pandemics or epidemics; worldwide political, military, and economic conditions such as the Russia-Ukraine conflict; the ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and non-OPEC countries, such as Russia, to set and maintain oil production levels; the levels of oil production in the U.S. and by other non-OPEC countries; oil refining capacity and shifts in end-customer preferences toward fuel efficiency and the use of natural gas; the cost of producing and delivering oil and natural gas; and acceleration of the development of, and demand for, alternative energy sources.
Factors affecting the prices of oil and natural gas include: the level of supply and demand for oil and natural gas, worldwide; governmental regulations, including the policies of governments regarding the exploration for and production and development of their oil and natural gas reserves; weather conditions, natural disasters, and health or similar issues, such as pandemics or epidemics; worldwide political, military, and economic conditions such as the Russia-Ukraine conflict, the conflict in the Israel-Gaza region and continued hostilities in the Middle East; the ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and non-OPEC countries, such as Russia, to set and maintain oil production levels; the levels of oil production in the U.S. and by other non-OPEC countries; oil refining capacity and shifts in end-customer preferences toward fuel efficiency and the use of natural gas; the cost of producing and delivering oil and natural gas; and acceleration of the development of, and demand for, alternative energy sources.
Our Arkansas brine leases currently only contain inferred resources of lithium and bromine, and we may never convert any of these resources to proven mineral reserves on these properties, or enough of them to justify the decision to engage in the extraction of lithium and/or bromine.
Our Arkansas brine leases currently contain inferred, indicated and measured resources of lithium and bromine, and we may never convert any of these resources to proven mineral reserves on these properties, or enough of them to justify the decision to engage in the extraction of lithium and/or bromine.
Department of the Interior issued a Notice to Lessees and Operators (“2016 NTL”) that strengthened requirements for the posting of 14 additional financial assurance by offshore lease owners and operators to assure that sufficient security is available to satisfy and extinguish decommissioning obligations with respect to offshore wells, platforms, pipelines and other facilities.
Department of the Interior issued a Notice to Lessees and Operators (“2016 NTL”) that strengthened requirements for the posting of additional financial assurance by offshore lease owners and operators to assure that sufficient security is available to satisfy and extinguish decommissioning obligations with respect to offshore wells, platforms, pipelines and other facilities. Although the U.S.
As a result, this could increase the risk that we may be required to step in and satisfy remaining decommissioning liabilities of Maritech and any buyer of the Maritech properties, including Orinoco, through our third-party indemnity agreements and private guarantees, which obligations could be significant and could adversely affect our business, results of operations, financial condition and cash flows.
As a result, this could increase the risk that we may be required to step in and satisfy remaining decommissioning liabilities of Maritech and any buyer of the Maritech properties, including Orinoco, through our third-party indemnity agreements and private guarantees, which obligations could be significant and could adversely affect our business, results of operations, financial condition and cash flows. 16 We are exposed to significant credit risks.
There are several raw materials for which there are only a limited number of suppliers or a single supplier. For example, we are currently required to purchase all of our requirements of elemental bromine, up to a certain specified maximum, from LANXESS under a long-term supply agreement.
There are several raw materials for which there are only a limited number of suppliers or a single supplier. For example, we are currently required to purchase all of our requirements of elemental bromine, up to a certain specified maximum and subject to a specified annual minimum, from LANXESS under a long-term supply agreement.
President Biden issued an executive order on January 27, 2021, that effectively paused new leasing activities, but not operations under existing leases, for oil and gas exploration and production on non-Indian federal lands and offshore waters 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.
President Biden issued an executive order on January 27, 2021, that effectively paused new leasing activities for oil and gas exploration and production on non-Indian federal lands and offshore waters 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.
While we cannot predict the final form or substance of the rule, this may result in additional costs to comply with any such disclosure requirements.
While we cannot predict the final form or substance of these rules, this may result in additional costs to comply with any such disclosure requirements.
Our operations and reputation may be impaired if our information technology systems fail to perform adequately or if we are the subject of a data breach or cyberattack. Our information technology systems are critically important to operating our business efficiently.
Our operations, reputation, and financial condition may be impaired if our information or operational technology systems fail to perform adequately or if we are the subject of a data breach or cyberattack. Our information and operational technology systems are critically important to operating our business.
Our low carbon energy initiatives may also depend in part on successful development of partnerships with other companies, such as our partnership and investment in CarbonFree, and such partners’ execution of their own respective projects and business strategies.
Our low carbon energy initiatives may also depend in part on successful development of partnerships with other companies, such as our partnership and investment in CarbonFree and our MOU and potential joint venture partnership with Saltwerx, and such partners’ execution of their own respective projects and business strategies.
The adoption of any federal, state or local laws or the implementation of additional regulations regarding hydraulic fracturing could potentially cause a decrease in the completion of new oil and gas wells and an associated decrease in demand for our services and increased compliance costs and time, which could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition. 21 Our proprietary rights may be violated or compromised, which could damage our operations.
The adoption of any federal, state or local laws or the implementation of additional regulations regarding hydraulic fracturing could potentially cause a decrease in the completion of new oil and gas wells and an associated decrease in demand for our services and increased compliance costs and time, which could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.
The market price of our common stock has fluctuated in the past and is subject to significant fluctuations in response to many factors, some of which are beyond our control, including the following: • our operational performance; • supply, demand, and prices of oil and natural gas; • the activity levels of our customers; • deviations in our earnings from publicly disclosed forward-looking guidance or analysts’ projections; • recommendations by research analysts that cover us and other companies in our industry; • risks related to acquisitions, divestitures and our growth strategy; • uncertainty about current global economic conditions; and • other general economic conditions.
The market price of our common stock has fluctuated in the past and is subject to significant fluctuations in response to many factors, some of which are beyond our control, including the following: • our operational performance; • supply, demand, and prices of oil and natural gas; • the activity levels of our customers; • deviations in our earnings from publicly disclosed forward-looking guidance or analysts’ projections; • recommendations by research analysts that cover us and other companies in our industry; • risks related to acquisitions, divestitures and our growth strategy; • uncertainty about current global economic conditions; and • other general economic conditions. 13 During 2023, the closing price for our common stock ranged from a high of $6.54 per share to a low of $2.48 per share.
West Texas Intermediate oil prices averaged $39.16, $68.14, and $94.90 per barrel during 2020, 2021, and 2022, respectively. 9 Over this same period, U.S. natural gas prices have also been volatile, with the Henry Hub price averaging $2.03, $3.89, and $6.45 per MMBtu during 2020, 2021, and 2022, respectively.
West Texas Intermediate oil prices averaged $68.14, $94.90, and $77.58 per barrel during 2021, 2022, and 2023, respectively. Over this same period, U.S. natural gas prices have also been volatile, with the Henry Hub price averaging $3.89, $6.45, and $2.53 per MMBtu during 2021, 2022, and 2023, respectively.
We are exposed to significant credit risks. We face credit risk associated with the significant amounts of accounts receivable we have with our customers in the energy industry.
We face credit risk associated with the significant amounts of accounts receivable we have with our customers in the energy industry.
If we elect to hold Standard Lithium stock received under these agreements, our operating results could be significantly affected by fluctuations in the market value of our stock holding. As of December 31, 2022, we also hold a $6.1 million investment in a convertible note issued by CarbonFree.
If we elect to hold Standard Lithium stock received under these agreements, our operating results could be significantly affected by fluctuations in the market value of Standard Lithium stock. As of December 31, 2023, we also hold an investment in a convertible note issued by CarbonFree valued at approximately $6.9 million.
The prolonged volatility and low levels of oil and natural gas prices and supply and demand imbalances depressed levels of exploration, development, and production activity during 2020 and early 2021.
The prolonged volatility and low levels of oil and natural gas prices and supply and demand imbalances generate depressed levels of exploration, development, and production activity.
Under the Maritech Asset Purchase Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases conveyed to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase Agreement, Orinoco assumed all other liabilities of Maritech, including the Legacy Liabilities, subject to limited exceptions unrelated to the decommissioning liabilities. Our guarantees may still cover these liabilities.
Under the Maritech Asset Purchase Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases conveyed to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase Agreement, Orinoco assumed all other liabilities of Maritech, including the Legacy Liabilities and liabilities pertaining to properties still operated by Maritech, subject to limited exceptions unrelated to the decommissioning liabilities.
While we continue to evaluate the next steps regarding the potential development of our brine leases, we have only very recently completed the initial assessment of the bromine resource, and we are not currently able to determine the economic viability of the extraction of the lithium and bromine from the leased acreage.
While we continue to evaluate the next steps regarding the potential development of our brine leases, we have only very recently completed a technical resources report for our Evergreen Brine Unit, and we are not currently able to determine the economic viability of the extraction of the lithium and bromine from the leased acreage.
Department of the Interior under the Trump Administration and, should the Biden Administration re-issue and fully implement guidance or rules analogous to, or more rigorous than, the 2016 NTL, such developments could increase operating costs for lease owners and operators in the Gulf of Mexico and reduce the availability of surety bonds due to the increased demands for such bonds.
Should the rule be finalized as proposed, or if the Biden Administration were to otherwise re-issue and fully implement guidance or rules analogous to, or more rigorous than, the 2016 NTL, such developments could increase operating costs for lease owners and operators in the Gulf of Mexico and reduce the availability of surety bonds due to the increased demands for such bonds.
In March 2018, pursuant to a series of transactions, Maritech sold the remaining offshore leases held by Maritech to Orinoco Natural Resources, LLC (“Orinoco”) and, immediately thereafter, we sold all equity interest in Maritech to Orinoco. The assignments for all of the offshore leases conveyed to Orinoco have now been approved by the U.S.
In March 2018, pursuant to a series of transactions, Maritech sold the remaining offshore leases held by Maritech to Orinoco Natural Resources, LLC (“Orinoco”) and, immediately thereafter, we sold all equity interest in Maritech to Orinoco.
Weather-Related Risks Certain of our operations are seasonal and depend, in part, on weather conditions. In certain markets, the Water & Flowback Services Division’s onshore water management services can be dependent on adequate water supplies being available to our customers.
Weather-Related Risks Certain of our operations are seasonal and depend, in part, on weather conditions. In addition, severe weather, including named windstorms, and severe winter weather, can cause damage and disruption to our businesses. In certain markets, the Water & Flowback Services Division’s onshore water management services can be dependent on adequate water supplies being available to our customers.
Additionally, the Securities and Exchange Commission published a proposed rule that would require registrants to make climate-related disclosures, including any climate targets and goals, and data on Scope 1 and 2 GHG emissions and, in certain cases, Scope 3.
Additionally, the Securities and Exchange Commission published a proposed rule that would require registrants to make climate-related disclosures, including any climate targets and goals, and data on Scope 1 and 2 GHG emissions and, in certain cases, Scope 3. Several states have also enacted or are considering enhanced climate-related disclosure requirements.
Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty, and a variety of other economic factors that are beyond our control. Oil prices fell beginning in early 2020 and recovered during 2021 and into early 2022.
Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty, and a variety of other economic factors that are beyond our control. 9 Although oil prices steadily rose during 2021 through early 2022, they fell slightly during 2023.
Our revenues and profitability are particularly dependent upon oil and natural gas industry activity and spending levels in this region. Our operations may also be affected by technological advances, cost of capital, and tax policies. Adverse changes in any of these other factors may have a material adverse effect on our revenues and profitability.
Our revenues and profitability are particularly dependent upon oil and natural gas industry activity and spending levels in this region. Our operations may also be affected by technological advances, cost of capital, and tax policies.
Consequently, we face credit risk associated with the ability of these companies to satisfy their decommissioning liabilities. If these companies are 15 unable to satisfy their obligations, it will increase the possibility that we will become liable for such decommissioning obligations in the future.
Consequently, we face credit risk associated with the ability of these companies to satisfy their decommissioning liabilities. If these companies are unable to satisfy their obligations, it will increase the possibility that we will become liable for such decommissioning obligations in the future. Our operating results and cash flows for certain of our subsidiaries are subject to foreign currency risk.
Economic sanctions and other regulations imposed by the United States and other international countries as a result of the conflict involving Russia and Ukraine may disrupt supplies or affect the prices of certain raw materials.
Economic sanctions and other regulations imposed by the United States and other international countries as a result of the conflict involving Russia and Ukraine, Israel and 11 Gaza region, hostilities in the Middle East, or maritime piracy attacks may disrupt supplies or affect the prices of certain raw materials.
We hold minority investments in both publicly-traded and privately-held companies. Over time, the fair value of these investments may fluctuate significantly causing volatility in our financial results. As of December 31, 2022, we hold approximately 3.7% of the outstanding CSI Compressco common units, which had a fair value of $7.0 million.
Over time, the fair value of these investments may fluctuate significantly causing volatility in our financial results. As of December 31, 2023, we hold approximately 3.7% of the outstanding CSI Compressco common units, which had a fair value of $8.5 million.
This strategy depends on our ability to effectively develop new technologies, expand application of our global infrastructure and chemistry expertise and on the economic viability of the extraction of lithium and bromine from the leased acreage.
Our future success may depend on our ability to effectively execute on our low carbon energy initiatives. This strategy depends on our ability to effectively identify, develop, and scale new technologies, expand application of our global infrastructure and chemistry expertise and on the economic viability of the extraction of lithium and bromine from the leased acreage.
Our long-term debt agreements contain covenants and other provisions that restrict our ability to take certain actions and may limit our ability to operate or grow our business in the future.
The volatility of our common stock may make it difficult to resell shares of our common stock at attractive prices. Our long-term debt agreements contain covenants and other provisions that restrict our ability to take certain actions and may limit our ability to operate or grow our business in the future.
To the extent Orinoco is unable to cover any such deficiency or we become liable for a significant portion of the Legacy Liabilities, our financial condition and results of operations may be negatively affected. Possible changes in the U.S.
If we become liable for decommissioning liabilities and Maritech or Orinoco is unable to cover any deficiency between any bond payment and the decommissioning liability, our financial condition and results of operations may be negatively affected. 15 Possible changes in the U.S.
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.
Disclosures reliant upon 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.
(“Maritech”), sold various oil and gas producing properties in numerous transactions to different buyers. In connection with those sales, the buyers generally assumed the decommissioning liabilities associated with the properties sold (the “Legacy Liabilities”) and generally became the successor operator. In some cases, Maritech retained certain liabilities and we provided guaranties of Maritech’s retained liabilities.
(“Maritech”), acquired, produced, and operated various oil and gas properties in the Gulf of Mexico and eventually sold of the various oil and gas producing properties in numerous transactions to different buyers. In connection with those sales, the buyers generally assumed the decommissioning liabilities associated with the properties sold (the “Legacy Liabilities”) and generally became the successor operator.
The exploration, development and extraction of brine and lithium from our Arkansas brine leases will likely require significant time and capital, and there is no guarantee of a return from these operations.
Even if successful, we could face increased costs from our pursuit of low carbon initiatives. For example, the exploration, development and extraction of brine and lithium from our Arkansas brine leases will likely require significant time and capital, and there is no guarantee of a return from these operations.
Our plans to grow our international operations could cause this exposure from fluctuating currencies to increase. Historically, exchange rates of foreign currencies have fluctuated significantly compared to the U.S. dollar, and this exchange rate volatility is expected to continue. Significant fluctuations in foreign currencies against the U.S. dollar could adversely affect our balance sheet and results of operations.
Historically, exchange rates of foreign currencies have fluctuated significantly compared to the U.S. dollar, and this exchange rate volatility is expected to continue. Significant fluctuations in foreign currencies against the U.S. dollar could adversely affect our balance sheet and results of operations. We are exposed to interest rate risks with regard to our credit facility debt and future refinancing thereof.
Some of these fluctuations have been unrelated to operating performance and are attributable, in part, to outside factors such as general economic conditions, including the impact of the COVID-19 pandemic, the ongoing Russia-Ukraine conflict and fear of a global recession. The volatility of our common stock may make it difficult to resell shares of our common stock at attractive prices.
Some of these fluctuations have been unrelated to operating performance and are attributable, in part, to outside factors such as general economic conditions, including the impact of the COVID-19 pandemic, the ongoing Russia-Ukraine conflict, conflict in the Israel-Gaza region, continued hostilities in the Middle East, maritime piracy attacks, and fear of a global recession.
To the extent severe drought or other weather-related conditions prevent our customers from obtaining needed water, frac water operations may not be possible and our Water & Flowback Services Division business may be negatively affected. Severe weather, including named windstorms, and severe winter weather, can cause damage and disruption to our businesses.
To the extent severe drought or other weather-related conditions prevent our customers from obtaining needed water, frac water operations may not be possible and our Water & Flowback Services Division business may be negatively affected. Further, a portion of our operations is susceptible to adverse weather conditions in the Gulf of Mexico, including hurricanes and other extreme weather conditions.
As of December 31, 2022, our total long-term debt outstanding of $156.5 million consisted of the carrying amount outstanding under our credit agreement (the “Term Credit Agreement”) [and our Asset-Based Credit Agreement (the “ABL Credit Agreement”)], both of which we entered into in September 2018, as well as borrowings under our revolving credit facility for seasonal working capital needs of subsidiaries in Sweden (“Swedish Credit Facility”), which was entered into in January 2022.
We also have availability under our Asset-Based Credit Agreement (the “ABL Credit Agreement”), which we entered into in September 2018, and under our revolving credit facility for seasonal working capital needs of subsidiaries in Sweden (“Swedish Credit Facility”), which was entered into in January 2022.
However, a successful breach or attack could have a material negative impact on our operations or business reputation and subject us to consequences such as litigation and direct costs associated with incident response. Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability.
However, a successful breach or attack could have a material negative impact on our operations or business reputation and subject us to consequences such as litigation costs, regulatory fines, remediation costs, and direct costs associated with incident response. No security measure is infallible.
Our continuing ability to comply with covenants in our Long-Term Debt Agreements depends largely upon our ability to generate adequate earnings and operating cash flow. 13 We have continuing exposure to abandonment and decommissioning obligations associated with oil and gas properties previously owned by Maritech. From 2001 to 2012, our former subsidiary, Maritech Resources, Inc.
We have continuing exposure to abandonment and decommissioning obligations associated with oil and gas properties previously owned by Maritech. From 2001 to 2012, our former subsidiary, Maritech Resources, Inc.
During 2022, the closing price for our common stock ranged from a high of $5.73 per share to a low of $2.74 per share. In recent years, the stock market in general has experienced extreme price and volume fluctuations that have affected the market price for companies in industries similar to ours.
In recent years, the stock market in general has experienced extreme price and volume fluctuations that have affected the market price for companies in industries similar to ours.
Our operating results and cash flows for certain of our subsidiaries are subject to foreign currency risk. The operations of certain of our subsidiaries are exposed to fluctuations between the U.S. dollar and certain foreign currencies, particularly the euro, the British pound, the Mexican peso, and the Argentinian peso.
The operations of certain of our subsidiaries are exposed to fluctuations between the U.S. dollar and certain foreign currencies, particularly the euro, the British pound, the Mexican peso, and the Argentinian peso. Our plans to grow our international operations could cause this exposure from fluctuating currencies to increase.
During the three-year period ending December 31, 2022, we recorded a total of $3.9 million of impairments and other charges for certain inventory and long-lived assets other than goodwill.
During the three-year period ending December 31, 2023, we recorded a total of $6.4 million of impairments and other charges for certain right-of-use lease assets, inventory and long-lived assets other than goodwill. See Note 6 - “Impairments and other charges” in the Notes to Consolidated Financial Statements for further discussion of impairments.
As a result, our operations as well as the operations of our oil and natural gas exploration and production customers and our suppliers 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. 17 In the United States, no comprehensive climate change legislation has been implemented at the federal level, though recently passed laws such as the IRA 2022 advance numerous climate-related objectives.
As a result, our operations as well as the operations of our oil and natural gas exploration and production customers and our suppliers 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.
There can be no assurance that any future exploration efforts on these properties will be successful. As a result of these uncertainties, no assurance can be given that any future exploration programs will result in the discovery of commercially viable mineral resources or reserves.
As a result of these uncertainties, no assurance can be given that any future exploration programs will result in the discovery of commercially viable mineral resources or reserves. 12 Failure to effectively and timely execute any of our low carbon energy initiatives could have an adverse effect on our business and financial condition.
We are subject to various complex and evolving United States federal, state, and local and non-U.S. taxes.
Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability. We are subject to various complex and evolving United States federal, state, and local and non-U.S. taxes.
President Biden has highlighted addressing climate change as a priority of his administration and has issued several executive orders addressing climate change. Moreover, following the U.S.
In the United States, no comprehensive climate change legislation has been implemented at the federal level, though recently passed laws such as the IRA 2022 advance numerous climate-related objectives. President Biden has highlighted addressing climate change as a priority of his administration and has issued several executive orders addressing climate change. Moreover, following the U.S.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions.
Damage to our overall reputation could have a negative impact on our financial results and require additional resources to rebuild our reputation. In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
Our ABL Credit Agreement is scheduled to mature on May 31, 2025. Our Term Loan Agreement is scheduled to mature on September 10, 2025. There can be no assurance that financial market conditions or borrowing terms at the times these existing debt agreements are renegotiated will be as favorable as the current terms and interest rates.
There can be no assurance that financial market conditions or borrowing terms at the times these existing debt agreements are renegotiated will be as favorable as the current terms and interest rates. We may be unable to obtain financing in the future for working capital, capital expenditures, acquisitions, debt service requirements, or other purposes.
To the extent that a buyer of these properties fails to perform the decommissioning work required, a previous owner, including Maritech, may be required to perform operations to satisfy the decommissioning liabilities.
In some cases, we provided guaranties of certain liabilities retained by Maritech, and we provided guaranties to the entities which originally sold the properties to Maritech. To the extent that a buyer, or subsequent buyer, of these properties fails to perform the decommissioning work required, Maritech or we may be required to perform operations to satisfy the Legacy Liabilities.
We may be unable to obtain financing in the future for working capital, capital expenditures, acquisitions, debt service requirements, or other purposes. Legal, Regulatory, and Political Risks Our operations are subject to extensive and evolving U.S. and foreign federal, state, and local laws and regulatory requirements that increase our operating costs and expose us to potential fines, penalties, and litigation.
If a license to resolve a claim were not available, we might not be able to continue providing a particular service or product. Our operations are subject to extensive and evolving U.S. and foreign federal, state, and local laws and regulatory requirements that increase our operating costs and expose us to potential fines, penalties, and litigation.
Additionally, in November 2021, EPA issued a proposed rule that, if finalized, would establish OOOOb new source and OOOOc first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities.
Additionally, in December 2023, EPA issued a final rule that established more stringent OOOOb new source and OOOOc first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities. Given the long-term trend toward increasing regulation, further federal GHG regulations of the oil and gas industry remain a significant possibility.
It is unclear how this self-insurance allowance relates to lease owners or operators with a guarantor presently in place. Although the U.S. Department of the Interior under the Trump Administration ultimately rescinded the 2016 NTL in 2020, the Biden Administration could seek to reconsider the changes made by the U.S.
Department of the Interior under the Trump Administration ultimately rescinded the 2016 NTL in 2020, the Biden Administration has taken steps to reconsider the changes made by the U.S. Department of the Interior under the Trump Administration.
The amount of cash necessary to satisfy these obligations could be significant and could adversely affect our business, results of operations, financial condition, and cash flows.
The amount of cash necessary to satisfy these obligations could be significant and, and if Maritech or Orinoco is unable to cover deficiency between any bond payment and the decommissioning liability, our financial condition and results of operations may be negatively affected.
Orinoco was required to replace the Initial Bonds delivered at closing with other non-revocable performance bonds but has not done so. See Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further discussion of status of bond replacement.
See Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further discussion of decommissioning liabilities and the Bonding Agreement.
The Term Credit Agreement also contains a requirement that the borrowers comply at the end of each fiscal quarter with a minimum Interest Coverage Ratio (as defined in the Term Credit Agreement) of 1.00 to 1.00.
The New Term Credit Agreement also requires the Company to maintain a Leverage Ratio (as defined in the new term loan credit agreement) of not more than 4.0 to 1.0 as of the end of each fiscal quarter and Liquidity (as defined in the New Term Credit Agreement) of not less than $50.0 million at all times.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeEven if we are able to determine that some of these resources meet the definition of an “indicated or measured resource,” the extraction of lithium and bromine from these brine leases would likely require a significant amount of time and capital, which we are not able to estimate at this time.
Biggest changeThe extraction of lithium and bromine from these brine leases would likely require a significant amount of time and capital, which we are not able to estimate at this time. We completed an initial preliminary economic assessment in early 2023 for a bromine extraction plant.
In addition, we own a 28,000 square foot technical facility in The Woodlands, Texas, to service our Completion Fluids & Products and Water & Flowback Services Divisions’ operations. Bromine and Lithium Inferred Resources Our Completion Fluids & Products Division leases approximately 40,000 gross acres of brine leases in Magnolia, Arkansas, which contain bromine and lithium.
In addition, we own a 28,000 square foot technical facility in The Woodlands, Texas, to service our Completion Fluids & Products and Water & Flowback Services Divisions’ operations. Bromine and Lithium Resources Our Completion Fluids & Products Division leases approximately 40,000 gross acres of brine leases in Magnolia, Arkansas, which contain bromine and lithium.
Item 2. Properties. Our facilities consist primarily of our corporate headquarters facility, chemical plants, processing plants and distribution facilities. We believe our facilities are adequate for our present needs. We also hold brine leases on 22 acreage which contains bromine and lithium.
Item 2. Properties. Our facilities consist primarily of our corporate headquarters facility, chemical plants, processing plants and distribution facilities. We believe our facilities are adequate for our present needs. We also hold brine leases on acreage which contains bromine and lithium.
The basis for the lithium and bromine inferred resource is that hypersaline formation water, or brine, associated with some of the world’s oilfields and/or geothermal fields contains confined reservoirs, or aquifers, that are known to contain anomalous concentrations of lithium, bromine and other elements of interest.
The basis for the lithium and bromine resources is that hypersaline formation water, or brine, associated with some of the world’s oilfields and/or geothermal fields contains confined reservoirs, or aquifers, that are known to contain anomalous concentrations of lithium, bromine and other elements of interest.
Only upon completion of an indicated resources study, pre-feasibility and/or feasibility study and attainment of capital commitment from either a joint venture partner, governments grants or loans, or other cost-effective sources of capital that will not over-lever TETRA, in addition to confirmation of a successful recapitalization of the long-duration zinc-bromide battery storage manufacturers, would we proceed to a final investment decision.
Only upon completion of a pre-feasibility and/or feasibility study and attainment of capital commitment from either a joint venture partner, government grants or loans, or other cost-effective sources of capital that will not over-lever TETRA, in addition to confirmation of a successful recapitalization of the long-duration zinc-bromide battery storage manufacturers, would we proceed to a final investment decision.
The following information describes facilities that we (i) leased or owned and (ii) leased acreage as of December 31, 2022.
The following information describes facilities that we (i) leased or owned and (ii) leased acreage as of December 31, 2023.
The report indicates the brine resource underlying the approximately 40,000 gross acres where we hold bromine mineral rights is estimated to contain an inferred resource of 5.25 million short tons of elemental bromine; and the brine resource underlying the approximately 5,000 gross acres where we hold dedicated lithium mineral rights is estimated to contain an inferred resource of 44,000 short tons of elemental lithium.
The report indicated the brine resource underlying the approximately 40,000 gross acres where we hold bromine mineral rights was estimated to contain an inferred resource of 5.25 million short tons of elemental bromine; and the brine resource underlying the approximately 5,000 gross acres where we hold dedicated lithium mineral rights was estimated to contain an inferred resource of 44,000 short tons of elemental lithium.
Using an elemental to Lithium Carbonate Equivalent (“LCE”) conversion ratio of 5.323, which is accepted in the industry, the acreage is estimated to contain an inferred resource of 234,000 short tons of LCE.
Using an elemental to Lithium Carbonate Equivalent (“LCE”) conversion ratio of 5.323, which is accepted in the industry, the acreage was estimated to contain 234,000 tons of LCE.
We expect that we will be able to develop or utilize evolving commercial technologies to economically remove the bromine and lithium from the brine underlying our acreage before the brine is reinjected back down into the subsurface aquifer.
We expect that we will be able to develop or utilize evolving commercial technologies to economically remove the bromine and lithium from the brine underlying our acreage before the brine is reinjected back down into the subsurface aquifer but whether we will ultimately be able to economically remove the bromine and lithium materials will depend on the outcome of further studies.
We completed an initial preliminary economic assessment in early 2023 for a bromine extraction plant. We expect an initial economic assessment to follow in late 2023 for a lithium extraction plant, subject to the progress of early engineering.
We expect an initial economic assessment to follow in the first half of 2024 for a lithium extraction plant, subject to the progress of early engineering.
During the third quarter of 2022, the maiden inferred bromine and lithium brine resource estimation report for our leased acreage in the Smackover Formation in Southwest Arkansas was completed.
Standard Lithium delivered a notice to exercise this option to acquire lithium rights in the optioned acreage on October 6, 2023. During the third quarter of 2022, the maiden inferred bromine and lithium brine resource estimation report for our leased acreage in the Smackover Formation in Southwest Arkansas was completed.
In addition to the production facilities described above, the Completion Fluids & Products Division owns or leases multiple service center facilities in the United States and in other countries. The Completion Fluids & Products Division also leases several offices and numerous terminal locations in the United States and in other countries.
The Completion Fluids & Products Division also leases several offices and numerous terminal locations in the United States and in other countries.
We have rights to the brine, including rights to the bromine and lithium contained in the brine underlying this acreage, pursuant to certain brine leases and brine deeds with various landowners. With respect to approximately 35,000 acres of that total acreage, we had previously entered into an agreement granting Standard Lithium an option to acquire the lithium rights.
We have rights to the brine, including rights to the bromine and lithium contained in the brine underlying this acreage, pursuant to certain brine leases and brine deeds with various landowners.
The two California locations consist of 29 square miles of leased mineral acreage and solar evaporation ponds, and related owned production and storage facilities. In April 2020, in response to market conditions, we began the process of discontinuing chemical production operations at our El Dorado calcium chloride facility in Arkansas.
The two California locations consist of 29 square miles of leased mineral acreage and solar evaporation ponds, and related owned production and storage facilities. 26 In addition to the production facilities described above, the Completion Fluids & Products Division owns or leases multiple service center facilities in the United States and in other countries.
Removed
We continued to manufacture and deliver products through early June 2020, at which time we began a sequenced shutdown of the manufacturing facility. As of December 31, 2020 and continuing through December 31, 2022, the plant was no longer operational.
Added
With respect to approximately 35,000 gross acres of that total acreage, we had previously entered into an agreement granting Standard Lithium an option to acquire the lithium rights in that acreage located outside of the Evergreen Brine Unit. The agreements governing this option contemplate a 2.5% royalty that Standard Lithium would pay us based on gross lithium revenues.
Removed
The agreements governing this option contemplate a 2.5% royalty that Standard Lithium would pay us based on gross lithium revenues. 23 During 2022, we completed the drilling of our Arkansas exploration well, obtained and analyzed fluid samples for multiple Smackover formation brine zones, and began a bromine front-end engineering design study and bromine initial assessment.
Added
In June 2023, we entered into the MOU with Saltwerx, LLC, an indirect wholly owned subsidiary of ExxonMobil Corporation, relating to a newly-proposed brine unit in the Smackover Formation in Southwest Arkansas (the “Evergreen Brine Unit”) and potential bromine and lithium production from brine produced from the unit.
Removed
We do not currently consider our current development efforts with regard to our inferred resources to be material mining operations within the meaning of SK1300 at this time. As of January 2023, the market price for lithium is approximately $71,000 per ton and the market price for bromine is approximately $3,800 per metric ton.
Added
We filed an amended unit application with the Arkansas Oil and Gas Commission (AOGC) covering approximately 6,138 acres, which combines brine acreage that is leased by each of TETRA and Saltwerx. On September 26, 2023, the AOGC held a public hearing and unanimously approved our application to establish the Evergreen Brine Unit.
Added
On October 17, 2023, the AOGC issued formal orders establishing the Evergreen Brine Unit and integrating all unleased owners within the Evergreen Brine Unit, subject to a 60-day statutory election period for each unleased party to elect whether or not to participate and share in costs of development of the Evergreen Brine Unit.
Added
The 60-day statutory election period expired on December 16, 2023 and such unleased parties were deemed integrated within the Evergreen Brine Unit as described in the formal orders.
Added
While bromine can be commercially extracted, among other events that must take place before we can commercially produce lithium from the Evergreen Brine Unit, the AOGC will need to establish an agreeable lithium royalty. 27 The MOU with Saltwerx includes provisions relating to: (i) initial brine ownership percentages within the Evergreen Brine Unit, including the bromine and lithium contained in the brine, (ii) the transfer of certain leased acres outside the proposed Evergreen Brine Unit from us to Saltwerx, (iii) reimbursement by Saltwerx of certain expenses that we incurred for the development of leased acreage to be included in the Evergreen Brine Unit, and (iv) an allocation of certain future costs for the drilling of a brine production test well and other development operations, including front-end engineering and design studies for bromine and lithium production facilities.
Added
During the second quarter of 2023, we also contracted a third-party firm to execute a front-end engineering and design (FEED) study for a lithium production facility. On January 8, 2024, we announced the completion of the Resources Report for our Evergreen Brine Unit in Arkansas. The Resources Report includes both “measured” and “indicated” resources in addition to the “inferred” category.
Added
The Resources Report estimated that the Evergreen Brine Unit contains (i) a measured resource, indicated resource and inferred resource of 329,000 tons, 543,000 tons and 541,000 tons of elemental bromine, respectively, and (ii) a measured resource, indicated resource and inferred resource of 32,000 tons, 53,000 tons and 52,000 tons of lithium, respectively.
Added
Using an elemental to LCE conversion ratio of 5.323, the acreage is estimated to contain 729,000 tons of LCE. As of January 2024, the market price for lithium is approximately $13,500 per ton and the market price for bromine is approximately $3,400 per metric ton.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAfter lengthy discussions, TETRA and LANXESS were unable to reach an agreement regarding the validity of the proposed price increase; therefore, TETRA filed for arbitration seeking declaratory relief, among other relief, declaring that the proposed price increase is invalid.
Biggest changeLANXESS notified TETRA of a proposed non-ordinary course increase to the price of bromine. After lengthy discussions, TETRA and LANXESS were unable to reach an agreement regarding the validity of the proposed price increase; therefore, TETRA filed for arbitration seeking declaratory relief, among other relief, declaring that the proposed price increase is invalid.
While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting 24 from such lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on our financial condition, results of operations or liquidity.
While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on our financial condition, results of operations or liquidity.
See Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further information. Item 4. Mine Safety Disclosures. None. 25 PART II
See Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements for further information. Item 4. Mine Safety Disclosures. None. 29 PART II
Removed
LANXESS notified TETRA of a proposed non-ordinary course increase to the price of bromine, which TETRA believes is not justified nor appropriate under the Sales Agreement.
Added
On September 19, 2022, LANXESS filed a counterclaim with the AAA seeking declaratory relief, among other relief. On May 25, 2023, TETRA entered into the Third Amendment to Bromine Requirements Sales Agreement (the “Amendment”) with LANXESS.
Removed
On September 19, 2022, LANXESS filed a counterclaim with the AAA seeking declaratory relief, among other relief, declaring that the proposed price increase was valid and seeking damages in the amount of the price increase from July 1, 2022 forward. On October 4, 2022, TETRA filed a reply to LANXESS’ counterclaim disputing the counterclaim and amending its original demand.
Added
The Amendment was effective April 1, 2023 and was entered into in connection with the entry into a settlement agreement in the Company’s arbitration with LANXESS. The Amendment provides for, among other things, revised volume requirements and related terms.
Removed
The arbitration is currently pending, and no final hearing date has been set. TETRA is presently unable to predict the duration, scope, or result of this proceeding. Discussions with LANXESS regarding this arbitration are ongoing. We are named defendants in numerous additional lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business.
Added
On June 14, 2023, in light of the settlement agreement, and in response to the parties’ stipulated motion to dismiss, the arbitration panel issued an Order of Dismissal, which dismissed all claims in the arbitration with prejudice. 28 We are named defendants in numerous additional lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−0 removed2 unchanged
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans For additional information about common stock authorized for issuance under equity compensation plans, see Note 13 - “Equity-Based Compensation and Other” in the Notes to Consolidated Financial Statements. Item 6. [Reserved] 26
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans For additional information about common stock authorized for issuance under equity compensation plans, see Note 13 - “Equity-Based Compensation and Other” in the Notes to Consolidated Financial Statements. 30 Rule 10b5-1 Trading Arrangements During the three months ended December 31, 2023, no director or officer of TETRA adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K Item 6. [Reserved] 31
Market Price of Common Stock The following graph compares the five-year cumulative total returns of our common stock, the Russell 2000 Index (“Russell 2000”) and the Philadelphia Oil Service Sector Index (“PHLX Oil Service”), assuming $100 invested in each stock or index on December 31, 2017, all dividends reinvested, and a fiscal year ending December 31 st .
Market Price of Common Stock The following graph compares the five-year cumulative total returns of our common stock, the Russell 2000 Index (“Russell 2000”), the Philadelphia Oil Service Sector Index (“PHLX Oil Service”) and a Peer Group Total Stock Return (“Peer Group TSR”), assuming $100 invested in each stock, index or group on December 31, 2018, all dividends reinvested, and a fiscal year ending December 31 st .
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Repurchases of Equity Securities. Common Stock Our common stock is traded on the New York Stock Exchange under the symbol “TTI.” As of February 24, 2023, there were approximately 210 holders of record of the common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Repurchases of Equity Securities. Common Stock Our common stock is traded on the New York Stock Exchange under the symbol “TTI.” As of February 23, 2024, there were approximately 200 holders of record of the common stock.
Added
The Peer Group consists of Flotek Industries, Inc., Forum Energy Technologies, Inc., Newpark Resources, Inc., Nine Energy Service, Inc., Oil States International, Inc, Patterson-UTI Energy, Inc., Precision Drilling Corporation, RPC, Inc., and Select Energy Services, Inc., with each company equally weighted.
Added
The Peer Group includes peer companies selected to measure our relative total shareholder return under our long-term incentive awards and were publicly traded during the entire period of the stock performance graph.

Item 7. Management's Discussion & Analysis

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

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Biggest changeGAAP measures, understanding the differences between the measures, and incorporating this knowledge into management’s decision-making processes. 32 The following table reconciles net income (loss) to Adjusted EBITDA for the periods indicated: Year Ended December 31, 2022 Completion Fluids & Products Water & Flowback Services Corporate SG&A Other and Eliminations Total (In Thousands, Except Percents) Revenue $ 273,373 $ 279,840 $ — $ — $ 553,213 Net income (loss) before taxes and discontinued operations 57,366 15,732 (45,077) (16,855) 11,166 Insurance recoveries (3,750) — — — (3,750) Impairments and other charges 562 2,242 — — 2,804 Exploration and pre-development costs 6,635 — — — 6,635 Adjustment to long-term incentives — — 4,510 — 4,510 Transaction, restructuring and other expenses 576 638 — — 1,214 Adjusted income (loss) before taxes and discontinued operations $ 61,389 $ 18,612 $ (40,567) $ (16,855) $ 22,579 Interest expense, net (1,346) 138 — 17,041 15,833 Depreciation and amortization 7,455 24,683 — 681 32,819 Equity-based compensation expense — — 6,880 — 6,880 Adjusted EBITDA $ 67,498 $ 43,433 $ (33,687) $ 867 $ 78,111 Adjusted EBITDA as % of revenue 24.7 % 15.5 % 14.1 % Year Ended December 31, 2021 Completion Fluids & Products Water & Flowback Services Corporate SG&A Other and Eliminations Total (In Thousands, Except Percents) Revenue $ 219,648 $ 168,624 $ — $ — $ 388,272 Net income (loss) before taxes and discontinued operations 54,981 (11,116) (39,990) (18,596) $ (14,721) Adjustment to long-term incentives — — 4,675 — 4,675 Transaction, restructuring and other expenses 1,531 1,718 2,419 — 5,668 Stock warrant fair value adjustment — — — (198) (198) Former CEO stock appreciation right expense — — 865 — 865 Impairments and other charges — — — 132 132 Allowance for bad debt — (230) — — (230) Adjusted income (loss) before taxes and discontinued operations $ 56,512 $ (9,628) $ (32,031) $ (18,662) $ (3,809) Adjusted interest expense, net (595) (512) — 17,483 16,376 Adjusted depreciation and amortization 6,885 25,045 — 889 32,819 Equity-based compensation expense — — 4,664 — 4,664 Adjusted EBITDA $ 62,802 $ 14,905 $ (27,367) $ (290) $ 50,050 Adjusted EBITDA as % of revenue 28.6 % 8.8 % 12.9 % Liquidity and Capital Resources We believe that our capital structure allows us to meet our financial obligations and fund future growth as needed, despite uncertain operating conditions and financial markets.
Biggest changeGAAP measures, understanding the differences between the measures, and incorporating this knowledge into management’s decision-making processes. 36 The following table reconciles net income (loss) to Adjusted EBITDA for the periods indicated: Year Ended December 31, 2023 Completion Fluids & Products Water & Flowback Services Corporate SG&A Other and Eliminations Total (In Thousands, Except Percents) Revenue $ 313,030 $ 313,232 $ — $ — $ 626,262 Net income (loss) before taxes and discontinued operations 78,314 25,724 (49,135) (23,204) 31,699 Insurance recoveries, net of related expenditures (2,678) — — — (2,678) Impairments and other charges 2,189 — 777 — 2,966 Exploration, pre-development costs and collaborative arrangements 2,838 — — — 2,838 Adjustment to long-term incentives — — 1,526 — 1,526 Former CEO stock appreciation right expense — — 237 — 237 Transaction, restructuring and other expenses — — 502 — 502 Unusual foreign exchange loss — 2,444 — — 2,444 Interest expense, net (647) 205 — 22,791 22,349 Depreciation, amortization and accretion 9,053 24,876 — 400 34,329 Equity-based compensation expense — — 10,622 — 10,622 Adjusted EBITDA $ 89,069 $ 53,249 $ (35,471) $ (13) $ 106,834 Adjusted EBITDA as % of revenue 28.5 % 17.0 % 17.1 % Year Ended December 31, 2022 Completion Fluids & Products Water & Flowback Services Corporate SG&A Other and Eliminations Total (In Thousands, Except Percents) Revenue $ 273,373 $ 279,840 $ — $ — $ 553,213 Net income (loss) before taxes and discontinued operations 57,366 15,732 (45,077) (16,855) $ 11,166 Insurance recoveries (3,750) — — — (3,750) Impairments and other charges 562 2,242 — — 2,804 Exploration and pre-development costs 6,635 — — — 6,635 Adjustment to long-term incentives — — 4,277 — 4,277 Former CEO stock appreciation right expense — — 233 — 233 Transaction, restructuring and other expenses 576 638 — — 1,214 Interest expense, net (1,346) 138 — 17,041 15,833 Depreciation, amortization and accretion 7,455 24,683 — 681 32,819 Equity-based compensation expense — — 6,880 — 6,880 Adjusted EBITDA $ 67,498 $ 43,433 $ (33,687) $ 867 $ 78,111 Adjusted EBITDA as % of revenue 24.7 % 15.5 % 14.1 % Liquidity and Capital Resources We believe that our capital structure allows us to meet our financial obligations and fund future growth as needed, despite uncertain operating conditions and financial markets.
Gross Profit Consolidated gross profit as a percentage of revenue increased due to margin improvements in both our Completion Fluids & Products and Water & Flowback Services divisions. See Divisional Comparisons section below for additional discussion.
Gross Profit Consolidated gross profit as a percentage of revenue increased due to revenue and margin improvements in both our Completion Fluids & Products and Water & Flowback Services divisions. See Divisional Comparisons section below for additional discussion.
We have rights to the brine underlying our approximately 40,000 gross acres of brine leases in the Smackover Formation in Southwest Arkansas, including rights to the bromine and lithium contained in the brine. Additional information on these inferred resources is described in Part I, “Item 2. Properties” in this Annual Report.
We have rights to the brine underlying our approximately 40,000 gross acres of brine leases in the Smackover Formation in Southwest Arkansas, including rights to the bromine and lithium contained in the brine. Additional information on these resources is described in Part I, “Item 2. Properties” in this Annual Report.
On January 29, 2021, we closed the GP Sale of the general partner of CSI Compressco, which included the sale of the incentive distribution rights (“IDRs”) in CSI Compressco and approximately 23.1% of the outstanding limited partner interests in CSI Compressco, referred to as the “GP Sale.” We have reflected the operations of our former Compression Division as discontinued operations for all periods 27 presented.
On January 29, 2021, we closed the GP Sale of the general partner of CSI Compressco, which included the sale of the incentive distribution rights (“IDRs”) in CSI Compressco and approximately 23.1% of the outstanding limited partner interests in CSI Compressco, referred to as the “GP Sale.” We have reflected the operations of our former Compression Division as discontinued operations for all periods 32 presented.
Statements in the following discussion may include forward-looking statements. These forward-looking statements involve risks and uncertainties. See “Item 1A. Risk Factors” for additional discussion of these factors and risks. For discussion of 2021 compared to 2020, see disclosures titled “Results of Operations” set forth in Item 7.
Statements in the following discussion may include forward-looking statements. These forward-looking statements involve risks and uncertainties. See “Item 1A. Risk Factors” for additional discussion of these factors and risks. For discussion of 2022 compared to 2021, see disclosures titled “Results of Operations” set forth in Item 7.
Only upon completion of an indicated resources study, pre-feasibility and/or feasibility study and attainment of capital commitment from either a joint venture partner, governments grants or loans, or other cost-effective sources of capital that will not over-lever TETRA, in addition to confirmation of a successful recapitalization of the long-duration zinc-bromide battery storage manufacturers, would we proceed to a final investment decision.
Only upon completion of a pre-feasibility and/or feasibility study and attainment of capital commitment from either a joint venture partner, governments grants or loans, or other cost-effective sources of capital that will not over-lever TETRA, in addition to confirmation of a successful recapitalization of the long-duration zinc-bromide battery storage manufacturers, would we proceed to a final investment decision.
GAAP financial measures such as revenues, gross profit, income (loss) before taxes, and net cash provided by operating activities, as well as certain non-GAAP financial measures, including Adjusted EBITDA, as performance measures for our business. Adjusted EBITDA .
Non-GAAP Financial Measures We use U.S. GAAP financial measures such as revenues, gross profit, income (loss) before taxes, and net cash provided by operating activities, as well as certain non-GAAP financial measures, including Adjusted EBITDA, as performance measures for our business. Adjusted EBITDA .
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 27, 2023.
As of December 31, 2022, we had approximately $3.0 thousand outstanding and availability of approximately $4.8 million under the Swedish Credit Facility. During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days. Borrowings bear interest at a rate of 2.95% per annum.
As of December 31, 2023, we had no balance outstanding and availability of approximately $5.0 million under the Swedish Credit Facility. During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days. Borrowings bear interest at a rate of 2.95% per annum.
Off Balance Sheet Arrangements As of December 31, 2022, we do not have any off balance sheet arrangements that may have a current or future material effect on our consolidated financial condition or results of operations. Litigation For information regarding litigation, including contingencies of discontinued operations, see Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.
For information on product purchase obligations, see - Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements. Off Balance Sheet Arrangements As of December 31, 2023, we do not have any off balance sheet arrangements that may have a current or future material effect on our consolidated financial condition or results of operations.
In addition, as of December 31, 2022, the market value of our equity holdings of CSI Compressco and Standard Lithium were $7.0 million and $1.2 million, respectively, with no holding restrictions on our ability to monetize our investments.
In addition, as of December 31, 2023, the market value of our equity holdings of CSI Compressco and Standard Lithium were $8.5 million and $1.6 million, respectively, with no holding restrictions on our ability to monetize our investments.
As of February 24, 2023, we have no outstanding borrowings under our ABL Credit Agreement and $8.3 million letters of credit, resulting in $71.7 million of availability. Swedish Credit Facility. In January 2022, the Company entered into a new revolving credit facility for seasonal working capital needs of subsidiaries in Sweden and Finland (“Swedish Credit Facility”).
As of February 23, 2024, we have no outstanding borrowings under our ABL Credit Agreement and $0.5 million letters of credit, resulting in $70.5 million of availability. Swedish Credit Facility. In January 2022, the Company entered into a new revolving credit facility for seasonal working capital needs of subsidiaries in Sweden and Finland (“Swedish Credit Facility”).
Completion Fluids & Products Division profitability in future periods will continue to be affected by the mix of its products and services, market demand for our products and services, drilling and completions activity and commodity prices. Completion Fluids & Products Division pretax income increased slightly during 2022 compared to the prior year.
Completion Fluids & Products Division profitability in future periods will continue to be affected by the mix of its products and services, market demand for our products and services, drilling and completions activity and commodity prices.
Financing Activities During the year ended December 31, 2022, consolidated net cash used in financing activities was breakeven, consisting of $12.5 million borrowings and $13.8 million repayments of our revolving credit facilities, as well as $1.3 million of payments of finance lease obligations in Latin America.
Financing Activities During the year ended December 31, 2023, consolidated net cash used in financing activities was $4.7 million, consisting of $100.5 million borrowings and $97.5 million repayments of our revolving credit facilities, as well as $1.7 million of payments of finance lease obligations in Latin America.
The early production facilities are longer-term, high-margin projects with stable and predictable cash flows and we anticipate commencing operation on a third early production facility in the first half of 2023. Our fleet of TETRA SandStorm TM advanced cyclone technology separators remains at high utilization with continued market penetration and positive pricing progression.
The early production facilities are longer-term, high-margin projects with stable and predictable cash flows. Our fleet of TETRA SandStorm TM advanced cyclone technology separators remains at high utilization with continued market penetration and positive pricing progression.
Our growth has been boosted from investments in our SandStorm advanced cyclone technology to significantly expand our fleet and capture market share within the water management business. In addition, two early production facilities in Latin America came on line beginning in the third quarter of 2022.
Our growth has been boosted from investments in our SandStorm advanced cyclone technology to significantly expand our fleet and capture market share. In addition, revenue increased from an entire year of operations of three early production facilities in Latin America which came on line beginning in the third quarter of 2022.
The Swedish Credit Facility expires on December 31, 2023 and the Company intends to renew it annually. Finland Credit Agreement. In January 2022, the Company also entered into an agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”).
The Swedish Credit Facility expires on December 31, 2024 and the Company intends to renew it annually. Finland Credit Agreement. In January 2022, the Company entered into an agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”). As of December 31, 2023, we had $1.5 million of letters of credit outstanding against the Finland Credit Agreement.
As of December 31, 2022, we had $2.9 million outstanding under the ABL Credit Agreement and, subject to compliance with the covenants, borrowing base, and other provisions of the agreement that may limit borrowings, we had an availability of $71.6 million under the ABL Credit Agreement.
As of December 31, 2023, we had no balance outstanding under the ABL Credit Agreement and, subject to compliance with the covenants, borrowing base, and other provisions of the agreement that may limit borrowings, we had availability of $68.8 million under the ABL Credit Agreement.
See Note 10 - “Long-Term Debt and Other Borrowings” in the Notes to Consolidated Financial Statements for further information. Other Sources and Uses of Cash In addition to the aforementioned credit facilities and senior notes, we fund our short-term liquidity requirements from cash generated by our operations and from short-term vendor financing.
Other Sources and Uses of Cash In addition to the aforementioned credit facilities and senior notes, we fund our short-term liquidity requirements from cash generated by our operations and from short-term vendor financing.
Our Water & Flowback Services revenues increased significantly compared to the prior year, due to margin expansion efforts driven by investments in technology, integration, digitalization, as well as two early production facilities in Latin America that became operational early in the third quarter of 2022.
Our Water & Flowback Services revenues increased compared to the prior year, due to margin expansion efforts driven by investments in technology, integration, digitalization, as well as the benefit of having two early production facilities in Latin America operating the entire year and a third beginning in May 2023.
Our Water & Flowback Services Division spent $30.4 million on capital expenditures, primarily to deploy additional SandStorm units to meet increased demands and maintain, automate and upgrade its water management and flowback equipment fleet.
Investing Activities Total cash capital expenditures during 2023 were $38.2 million. Our Water & Flowback Services Division spent $26.6 million on capital expenditures, primarily to deploy additional SandStorm units to meet increased demands and maintain, automate and upgrade its water management and flowback equipment fleet.
Improved market conditions lead to increased demand and volume and contributed to the increase in revenues compared to the prior period. Revenues also increased through leveraging opportunities to expand services to completion fluids customers.
Improved market conditions lead to increased demand and volume and contributed to the increase in revenues compared to the prior period.
GAAP and should not be considered an alternative to net income, operating income, cash flows from operating activities, or any other measure of financial performance presented in accordance with U.S. GAAP. This measure may not be comparable to similarly titled financial metrics of other entities, as other entities may not calculate Adjusted EBITDA in the same manner as we do.
Adjusted EBITDA is a financial measure that is not in accordance with U.S. GAAP and should not be considered an alternative to net income, operating income, cash flows from operating activities, or any other measure of financial performance presented in accordance with U.S. GAAP.
Liquidity is defined as unrestricted cash plus availability under our revolving credit facilities. 33 Our consolidated sources and uses of cash, including cash activity from our former Compression Division through closing of the GP Sale in January 2021, for the years ended December 31, 2022 and 2021 are as follows: Year Ended December 31, 2022 2021 (In Thousands) Operating activities $ 18,957 $ 4,657 Investing activities $ (36,504) $ (5,175) Financing activities $ 40 $ (50,054) Operating Activities Consolidated cash flows provided by operating activities totaled $19.0 million during 2022 compared to $4.7 million during the prior year, an increase of $14.3 million.
Liquidity is defined as unrestricted cash plus availability under our revolving credit facilities. 37 Our consolidated sources and uses of cash for the years ended December 31, 2023 and 2022 are as follows: Year Ended December 31, 2023 2022 (In Thousands) Operating activities $ 70,206 $ 18,957 Investing activities $ (27,027) $ (36,504) Financing activities $ (4,663) $ 40 Operating Activities Consolidated cash flows provided by operating activities totaled $70.2 million during 2023 compared to $19.0 million during the prior year, an increase of $51.2 million.
Business Overview We are an energy services and solutions company operating on six continents, focused on bromine-based completion fluids, calcium chloride, water management solutions, frac flowback, and production well testing services. Calcium chloride is used in the oil and gas industry, and also has broad industrial applications to the agricultural, road, food and beverage, and lithium production markets.
Business Overview We are an energy services and solutions company with operations on six continents focused on developing environmentally conscious services and solutions that help make people’s lives better. Calcium chloride is used in the oil and gas industry, and also has broad industrial applications to the agricultural, road, food and beverage, and lithium production markets.
We base these on historical experience, available information, and various other assumptions that we believe are reasonable. Our assumptions, estimates, and judgments may change as new events occur, as new information is acquired, and as changes in our operating environments are encountered. Actual results are likely to differ from our current estimates, and those differences may be material.
In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. We base these on historical experience, available information, and various other assumptions that we believe are reasonable. Our assumptions, estimates, and judgments may change as new events occur, as new information is acquired, and as changes in our operating environments are encountered.
Adjusted EBITDA is used as a supplemental financial measure by our management to: • evaluate the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis; and • determine our ability to incur and service debt and fund capital expenditures. Adjusted EBITDA is a financial measure that is not in accordance with U.S.
Adjusted EBITDA is used by management as a supplemental financial measure to assess financial performance, without regard to charges or credits that are considered by management to be outside of its normal operations and without regard to financing methods, capital structure or historical cost basis, and to assess the Company’s ability to incur and service debt and fund capital expenditures.
If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity. An increase of unpaid receivables would also negatively affect our borrowing availability under the ABL Credit Agreement and Swedish Credit Facility.
If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity.
We operate through two reporting segments - Completion Fluids & Products Division and Water & Flowback Services Division. Completion Fluids & Products Division revenues increased during 2022 as a result of the higher oil prices relative to the prior year continuing to drive demand, primarily due to increased completions activity in the Gulf of Mexico and international markets.
We operate through two reporting segments - Completion Fluids & Products Division and Water & Flowback Services Division. Completion Fluids & Products Division revenues increased during 2023 as a result of increased completions activity in the Gulf of Mexico and international markets, as well as higher volumes in Europe following resolution of raw materials limitations.
The increase in our Completion Fluids & Products division is primarily due to higher oil and gas activity, particularly in the Gulf of Mexico, and an increase in industrial chemicals product sales.
The increase in our Completion Fluids & Products division is primarily due to an increase in industrial chemicals product pricing and incremental volumes.
Water and Flowback Services Division capital expenditures also included expenditures related to construction of three early production facilities in Argentina, including approximately $2.0 million of costs that were reimbursed by customers. Our Completion Fluids & Products Division spent $9.4 million on capital expenditures during 2022, primarily supporting higher activity levels in the United States and Europe.
Water and Flowback Services Division capital expenditures also included expenditures related to construction of the third early production facility in Argentina which became operational in May 2023. Our Completion Fluids & Products Division spent $11.1 million on capital expenditures during 2023, primarily supporting higher activity levels in the United States and Europe.
Product Purchase Obligations In the normal course of our Completion Fluids & Products Division operations, we enter into supply agreements with certain manufacturers of various raw materials and finished products. For information on product purchase obligations, see - Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.
We are required to take certain actions in connection with the retirement of these assets. Product Purchase Obligations In the normal course of our Completion Fluids & Products Division operations, we enter into supply agreements with certain manufacturers of various raw materials and finished products.
Our liquidity at the end of the fourth quarter of 2022 was $85.2 million consisting of $13.6 million of unrestricted cash plus $71.6 million of availability under our credit agreements.
Our liquidity at the end of the fourth quarter of 2023 was $126.3 million consisting of $52.5 million of unrestricted cash plus $73.8 million of availability under our credit agreements.
Critical Accounting Policies and Estimates This discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. We prepared these financial statements in conformity with U.S. GAAP. In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported.
Litigation For information regarding litigation, including contingencies of discontinued operations, see Note 11 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements. Critical Accounting Policies and Estimates This discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. We prepared these financial statements in conformity with U.S. GAAP.
The Water & Flowback Services Division gross profit improved substantially from marginal profit in the prior year to double-digit profit in the current year, primarily due to higher revenues resulting from the increased activity levels described above and pricing improvements as activity levels improved and new projects commenced.
Revenues also include the sale of one early production facility to the operator in October 2023 for $5.4 million. The Water & Flowback Services Division gross profit improved primarily due to higher revenues resulting from the increased activity levels described above and pricing improvements as activity levels improved and new projects commenced.
Exploration and Pre-Development Costs Exploration and pre-development costs were $6.6 million during the current year due to the exploration drilling and sample analysis costs associated with our exploratory brine well in Arkansas, as well as front-end engineering design costs for the bromine project. 28 General and Administrative Expense Consolidated general and administrative expenses increased during 2022 compared to the prior year primarily due to a $17.7 million increase in wages and benefits from additional personnel to support the increase in activity, from increase in salaries for merit and inflationary factors as well as additional incentive compensation as a result of higher operational margin performance and adjustments to long term incentives associated with increases in the company’s stock price.
Exploration and Pre-Development Costs Exploration and pre-development costs increased $5.5 million compared to the prior year due to the increased activities surrounding our Arkansas strategic initiatives, which included additional front-end engineering design studies and completing a second exploration test well. 33 General and Administrative Expense Consolidated general and administrative expenses increased during 2023 compared to the prior year primarily due to a $5.1 million increase in employee compensation from additional headcount to support higher activity levels as well as merit and inflationary factors, and additional incentive compensation as a result of higher operational margin performance and the impact of increases in the company’s stock price on long-term incentive awards.
Consolidated Comparisons Year Ended December 31, Period to Period Change 2022 2021 2022 vs. 2021 % Change (In Thousands, Except Percentages) Revenues $ 553,213 $ 388,272 $ 164,941 42.5 % Gross profit 121,111 59,237 61,874 104.5 % Gross profit as a percentage of revenue 21.9 % 15.3 % Exploration and pre-development costs 6,635 — 6,635 100.0 % General and administrative expense 91,942 75,049 16,893 22.5 % General and administrative expense as a percentage of revenue 16.6 % 19.3 % Interest expense, net 15,833 16,377 (544) (3.3) % Other income, net (4,465) (17,468) 13,003 (74.4) % Income (loss) before taxes and discontinued operations 11,166 (14,721) 25,887 NM (1) Income (loss) before taxes and discontinued operations as a percentage of revenue 2.0 % (3.8) % Provision for income taxes 3,565 2,084 1,481 71.1 % Income (loss) before discontinued operations 7,601 (16,805) 24,406 (145.2) % Income from discontinued operations, net of taxes 195 120,407 (120,212) (99.8) % Net income 7,796 103,602 (95,806) (92.5) % (Income) loss attributable to noncontrolling interest 43 (269) 312 (116.0) % Net income attributable to TETRA stockholders $ 7,839 $ 103,333 $ (95,494) (92.4) % (1) Percent change is not meaningful Revenues Consolidated revenues for 2022 increased compared to the prior year due to higher activity in both our Completion Fluids & Products and Water & Flowback Services divisions, where revenue increased by $53.7 million and $111.2 million, respectively.
Consolidated Comparisons Year Ended December 31, Period to Period Change 2023 2022 2023 vs. 2022 % Change (In Thousands, Except Percentages) Revenues $ 626,262 $ 553,213 $ 73,049 13.2 % Gross profit 153,645 121,111 32,534 26.9 % Gross profit as a percentage of revenue 24.5 % 21.9 % Exploration and pre-development costs 12,119 6,635 5,484 82.7 % General and administrative expense 96,590 91,942 4,648 5.1 % General and administrative expense as a percentage of revenue 15.4 % 16.6 % Interest expense, net 22,349 15,833 6,516 41.2 % Other income, net (9,112) (4,465) (4,647) 104.1 % Income before taxes and discontinued operations 31,699 11,166 20,533 183.9 % Income before taxes and discontinued operations as a percentage of revenue 5.1 % 2.0 % Provision for income taxes 6,220 3,565 2,655 74.5 % Income before discontinued operations 25,479 7,601 17,878 235.2 % Income from discontinued operations, net of taxes 278 195 83 42.6 % Net income 25,757 7,796 17,961 230.4 % Loss attributable to noncontrolling interest 27 43 (16) (37.2) % Net income attributable to TETRA stockholders $ 25,784 $ 7,839 $ 17,945 228.9 % Revenues Consolidated revenues for 2023 increased compared to the prior year due to higher activity in both our Completion Fluids & Products and Water & Flowback Services divisions, where revenue increased by $39.7 million and $33.4 million, respectively.
During the year ended 34 December 31, 2021, consolidated net cash used in financing activities was $50.1 million, primarily related to the $50.5 million pay down of our Term Credit Agreement. We may supplement our existing cash balances and cash flow from operating activities with short-term borrowings, long-term borrowings, issuances of equity and debt securities, and other sources of capital.
We may supplement our existing cash balances and cash flow from operating activities with short-term borrowings, long-term borrowings, issuances of equity and debt securities, and other sources of capital. 38 Term Credit Agreement. As of December 31, 2023, the $163.1 million principal balance of the Term Credit Agreement was due on September 10, 2025.
Should additional capital be required, the ability to raise such capital through the issuance of additional debt or equity securities may currently be limited. Instability or volatility in the capital markets at the times we need to access capital may affect the cost of capital and the ability to raise capital for an indeterminable length of time.
Instability or volatility in the capital markets at the times we need to access capital may affect the cost of capital and the ability to raise capital for an indeterminable length of time. If it is necessary to issue additional equity to fund our capital needs, additional dilution of our common stockholders will occur.
Provision for Income Tax Our consolidated provision for income taxes during 2022 was primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes.
Provision for Income Tax Our consolidated provision for income taxes during 2023 was primarily attributable to taxes in certain foreign jurisdictions and state taxes. Our consolidated effective tax rate for the year ended December 31, 2023 and December 31, 2022 was 19.6% and 31.9% respectively.
Leases We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. See Note 2 - “Basis of Presentation and Significant Accounting Policies” and Note 9 - “Leases” in the Notes to Consolidated Financial Statements for further information our lease obligations.
See Note 2 - “Basis of Presentation and Significant Accounting Policies” and Note 9 - “Leases” in the Notes to Consolidated Financial Statements for further information on our lease obligations. Asset Retirement Obligations We operate facilities in various U.S. and foreign locations that are used in the manufacture, storage, and sale of our products, inventories, and equipment.
As the offshore market continues to improve, our pipeline of TETRA CS Neptune® completion fluid opportunities has continued to grow consistent with deepwater market growth. During the fourth quarter of 2022, TETRA successfully completed its first CS Neptune® project in the United Kingdom.
As the offshore market continues to improve, our pipeline of TETRA CS Neptune® completion fluid opportunities has continued to grow consistent with deepwater market growth. The division has also benefited from the December 2022 Peacock acquisition in Europe. We have also continued to successfully leverage opportunities to expand integrated services to completion fluids customers.
In challenging economic environments, we may experience increased delays and failures by customers to pay our invoices. Given the nature and significance of the COVID-19 pandemic and disruption in the oil and gas industry, we could experience delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies.
We periodically evaluate engaging in strategic transactions and may consider divesting non-core assets where our evaluation suggests such transaction is in the best interest of our business. In challenging economic environments, we may experience increased delays and failures by customers to pay our invoices. We could experience delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies.
Completion Fluids & Products Division gross profit during 2022 increased compared to the prior year due to higher revenue and margin growth as described above, as well as pricing improvements and good margin spot sale opportunities which more than offset increases in bromine supply costs and inflationary pressures in certain raw materials.
Revenues also increased through leveraging opportunities to expand services to completion fluids customers. 34 Completion Fluids & Products Division gross profit during 2023 increased compared to the prior year due to higher revenue and margin growth as described above, as well as pricing improvements.
However, we continue to review all capital expenditure plans carefully in an effort to conserve cash. We currently have no long-term capital expenditure commitments. If the forecasted demand for our products and services increases or decreases, the amount of planned expenditures on growth and expansion may be adjusted.
If the forecasted demand for our products and services increases or decreases, or we proceed with development of brine resources in Arkansas, the amount of planned expenditures on growth and expansion may be adjusted.
Investing activities for 2022 included a $3.8 million insurance settlement received in March 2022 from damage to our Lake Charles facility in 2020.
Investing activities for 2023 also included $6.7 million proceeds from sales of property, plant and equipment, $3.9 million of proceeds from the sale of marketable securities, and a $2.9 million insurance settlement received from damage to our Lake Charles facility in 2020.
As of December 31, 2022, we had $1.5 million of letters of credit outstanding against the Finland Credit Agreement. The Finland Credit Agreement expired on January 31, 2023 and has been renewed by the Company through January 31, 2024. As of December 31, 2022, we are in compliance with all covenants of our debt agreements.
The Finland Credit Agreement has been renewed by the Company through January 31, 2025. As of December 31, 2023, we are in compliance with all covenants of our debt agreements. See Note 10 - “Long-Term Debt and Other Borrowings” and Note 18 - “Subsequent Events” in the Notes to Consolidated Financial Statements for further information.
We repaid an additional $8.2 million of our term loan in July 2021 and $13.0 million of our term loan in December 2021. Asset-Based Credit Agreement . The amended ABL Credit Agreement provides for a senior secured revolving credit facility of up to $80 million, with a $20 million accordion.
The maturity date of the New Term Credit Agreement is January 12, 2030. As of February 23, 2024, $190.0 million in aggregate principal amount of our New Term Credit Agreement was outstanding. Asset-Based Credit Agreement . The amended ABL Credit Agreement provides for a senior secured revolving credit facility of up to $80 million, with a $20 million accordion.
Management compensates for the limitations of Adjusted EBITDA as analytical tools by reviewing the comparable U.S.
This measure may not be comparable to similarly titled financial metrics of other entities, as other entities may not calculate Adjusted EBITDA in the same manner as we do. Management compensates for the limitations of Adjusted EBITDA as analytical tools by reviewing the comparable U.S.
In addition, other general and administrative expenses increased $0.6 million primarily due to higher insurance costs associated with higher activity levels, and foreign exchange fluctuations were unfavorable by $1.9 million primarily in Europe. 30 Water & Flowback Services Division Year Ended December 31, Period to Period Change 2022 2021 2022 vs. 2021 % Change (In Thousands, Except Percentages) Revenues $ 279,840 $ 168,624 $ 111,216 66.0 % Gross profit 35,074 1,800 33,274 NM Gross profit as a percentage of revenue 12.5 % 1.1 % General and administrative expense 21,619 14,613 7,006 47.9 % General and administrative expense as a percentage of revenue 7.7 % 8.7 % Interest (income) expense, net 138 (511) 649 (127.0) % Other income, net (2,415) (1,186) (1,229) 103.6 % Income (loss) before taxes $ 15,732 $ (11,116) $ 26,848 (241.5) % Loss before taxes as a percentage of revenue 5.6 % (6.6) % Water & Flowback Services Division revenues increased during 2022 compared to the prior year primarily due to improved market conditions, with higher frac and rig counts leading to a continued increase in customer drilling and completion activity compared to prior year in all North America regions.
Water & Flowback Services Division Year Ended December 31, Period to Period Change 2023 2022 2023 vs. 2022 % Change (In Thousands, Except Percentages) Revenues $ 313,232 $ 279,840 $ 33,392 11.9 % Gross profit 47,138 35,074 12,064 34.4 % Gross profit as a percentage of revenue 15.0 % 12.5 % General and administrative expense 19,452 21,619 (2,167) (10.0) % General and administrative expense as a percentage of revenue 6.2 % 7.7 % Interest (income) expense, net 205 138 67 48.6 % Other (income) expense, net 1,757 (2,415) 4,172 NM (1) Income before taxes and discontinued operations $ 25,724 $ 15,732 $ 9,992 63.5 % Income before taxes and discontinued operations as a percentage of revenue 8.2 % 5.6 % (1) Percent change is not meaningful Water & Flowback Services Division revenues increased during 2023 compared to the prior year primarily due to improved market conditions.
The increase in our Water & Flowback Services division is primarily due to increasing customer activity levels from an improved commodity price environment in 2022 and early production facilities that came online during the year.
The increase in our Water & Flowback Services division is primarily from an entire year of operations of the first two early production facilities in Latin America which came on line beginning in the third quarter of 2022 and the third early production facility that came online during the second quarter of 2023.
Furthermore, general and administrative expenses increased primarily from a $3.6 million increase in wages and benefit expense due to additional personnel, increase in salaries for merit and inflationary factors as well as additional incentive compensation as a result of higher operational performance.
General and administrative expenses increased primarily due to a $1.9 million increase in employee compensation from additional headcount to support higher activity levels as well as merit and inflationary factors and a $0.5 million increase in professional services.
Operating cash flows increased compared to the prior year primarily due to increased activity levels and higher consolidated margins from changes in product mix, partially offset by the effect of working capital movements and $0.9 million of prior-year cash flows provided by operating activities generated by CSI Compressco in January 2021 prior to closing of the GP Sale.
Operating cash flows increased compared to the prior year primarily due to increased activity levels and higher consolidated margins from changes in product mix, as well as the effect of working capital movements. We continue to monitor customer credit risk in the current environment and focus on serving larger capitalized oil and gas operators and national oil companies.
We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, impairments, exploration and pre-development costs and certain non-cash charges and non-recurring adjustments.
We define Adjusted EBITDA as net income (loss) before taxes and discontinued operations, excluding impairments, exploration and pre-development costs, certain special, non-recurring or other charges (or credits), interest, depreciation and amortization, income from collaborative arrangement and certain non-cash items such as equity-based compensation expense. The most directly comparable GAAP financial measure is net income (loss) before taxes and discontinued operations.
Included in our deferred tax assets are $105.1 million of net operating loss carryforwards that may be available to offset future income tax liabilities in the U.S. as well as in certain international jurisdictions where net operating loss carryforwards exist. 29 Divisional Comparisons Completion Fluids & Products Division Year Ended December 31, Period to Period Change 2022 2021 2022 vs. 2021 % Change (In Thousands, Except Percentages) Revenues $ 273,373 $ 219,648 $ 53,725 24.5 % Gross profit 86,718 58,458 28,260 48.3 % Gross profit as a percentage of revenue 31.7 % 26.6 % Exploration and pre-development costs 6,635 — 6,635 100.0 % General and administrative expense 25,246 20,446 4,800 23.5 % General and administrative expense as a percentage of revenue 9.2 % 9.3 % Interest (income) expense, net (1,346) (596) (750) 125.8 % Other income, net (1,183) (16,373) 15,190 (92.8) % Income before taxes $ 57,366 $ 54,981 $ 2,385 4.3 % Income before taxes as a percentage of revenue 21.0 % 25.0 % Completion Fluids & Products Division revenues increased primarily due to higher oil and gas activity particularly in the Gulf of Mexico and an increase in industrial chemicals product sales.
Divisional Comparisons Completion Fluids & Products Division Year Ended December 31, Period to Period Change 2023 2022 2023 vs. 2022 % Change (In Thousands, Except Percentages) Revenues $ 313,030 $ 273,373 $ 39,657 14.5 % Gross profit 107,684 86,718 20,966 24.2 % Gross profit as a percentage of revenue 34.4 % 31.7 % Exploration and pre-development costs 12,119 6,635 5,484 82.7 % General and administrative expense 28,003 25,246 2,757 10.9 % General and administrative expense as a percentage of revenue 8.9 % 9.2 % Interest (income) expense, net (647) (1,346) 699 (51.9) % Other income, net (10,104) (1,183) (8,921) 754.1 % Income before taxes and discontinued operations $ 78,313 $ 57,366 $ 20,947 36.5 % Income before taxes and discontinued operations as a percentage of revenue 25.0 % 21.0 % Completion Fluids & Products Division revenues increased primarily due to incremental brominated product sales in the United States and Latin America, an increase in European calcium chloride pricing, and higher volumes in Europe as a result of resolution of raw materials limitations as well as the Peacock acquisition in December 2022.
Interest expense decreased primarily due to $50.5 million of repayments on our Term Credit Agreement during the prior year, offset by higher interest rates in the current year.
Interest Expense, Net Consolidated interest expense, net, increased in 2023 compared to the prior year primarily due to an increase in the interest rate on our Term Credit Agreement.
Corporate Overhead Year Ended December 31, Period to Period Change 2022 2021 2022 vs. 2021 % Change (In Thousands, Except Percentages) Depreciation and amortization $ 692 $ 1,032 $ (340) (32.9) % General and administrative expense 45,077 39,990 5,087 12.7 % Interest expense, net 17,041 17,483 (442) (2.5) % Other (income) expense, net (867) 93 (960) NM Loss before taxes $ (61,943) $ (58,598) $ (3,345) (5.7) % Corporate Overhead pretax loss increased slightly during 2022 compared to the prior year primarily due to increased general and administrative expense, partially offset by decreased depreciation and amortization expense.
Other (income) expense, net moved from income to expenses due to a $3.9 million swing in foreign exchange losses caused by exchange rate devaluation in Argentina. 35 Corporate Overhead Year Ended December 31, Period to Period Change 2023 2022 2023 vs. 2022 % Change (In Thousands, Except Percentages) Depreciation and amortization $ 400 $ 692 $ (292) (42.2) % General and administrative expense 49,135 45,077 4,058 9.0 % Interest expense, net 22,790 17,041 5,749 33.7 % Impairments and other charges 777 — 777 100.0 % Other (income) expense, net (763) (867) 104 (12.0) % Loss before taxes and discontinued operations $ (72,339) $ (61,943) $ (10,396) (16.8) % Corporate Overhead loss before taxes increased during 2023 compared to the prior year primarily due to higher interest expense due to an increase in the interest rate on our Term Credit Agreement, an increase in general administrative expenses primarily due to $4.1 million of increased salary related expense driven by a $2.7 million increase in short and long-term incentive and equity-based compensation expenses, and a $0.8 million impairment of our corporate office lease.
Removed
With this project, TETRA has now completed CS Neptune jobs with 100% success rates in the Gulf of Mexico, Norway and the United Kingdom. Our Completion Fluids & Products Division also continued to ship TETRA's high purity zinc bromine solution, TETRA PureFlow® to Eos Energy Enterprises, Inc. ("Eos") (NASDAQ: EOSE) under our strategic partnership.
Added
In June 2023, we entered into a MOU with Saltwerx, an indirect wholly owned subsidiary of ExxonMobil Corporation, relating to a newly formed Evergreen Brine Unit and potential bromine and lithium production from brine produced from the unit.
Removed
During the fourth quarter of 2022, TETRA received an order for TETRA PureFlow® from a second zinc-based energy storage battery provider. We have also continued to successfully leverage opportunities to expand integrated services to completion fluids customers.
Added
The MOU with Saltwerx includes provisions relating to: (i) initial brine ownership percentages within the Evergreen Brine Unit, including the bromine and lithium contained in the brine, (ii) the transfer of certain leased acres outside the proposed Evergreen Brine Unit from us to Saltwerx, (iii) reimbursement by Saltwerx of certain expenses that we incurred for the development of leased acreage to be included in the Evergreen Brine Unit, and (iv) an allocation of certain future costs for the drilling of a brine production test well and other development operations, including front-end engineering and design studies for bromine and lithium production facilities.
Removed
During 2022, we announced exclusive technology agreements with two innovative companies for oil and gas well produced water beneficial reuse. These strategic relationships are expected to allow us to create new, sustainable markets for produced water, reduce the industry’s reliance on disposal and preserve precious freshwater resources.
Added
The extraction of lithium and bromine from these brine leases would likely require a significant amount of time and capital, which we are not able to estimate at this time. We completed an initial preliminary economic assessment in early 2023 for a bromine extraction plant.
Removed
During 2022, we completed the maiden inferred bromine and lithium brine resource estimation report for our leased acreage in the Smackover Formation in Southwest Arkansas, as well as a front end engineering and design study for the design of a brine to bromine processing plant, pipeline and related assets.
Added
We expect an initial economic assessment to follow in early 2024 for a lithium extraction plant, subject to the progress of early engineering.
Removed
We are in the final stages of a reservoir analysis to further assess TETRA’s bromine and lithium assets in Arkansas. Completion of this front end engineering and design study and reservoir analysis were incremental steps for TETRA to complete an initial and preliminary economic analysis.
Added
Substantially all of our former Compression Division’s operations were conducted through our partially-owned CSI Compressco subsidiary.
Removed
Further steps are required before making a decision to develop the bromine assets, which may include drilling an additional well or wells, further studies to mature the resource and completion of a pre-feasibility and/or feasibility study. Substantially all of our former Compression Division’s operations were conducted through our partially-owned CSI Compressco subsidiary.
Added
Other Income, net Consolidated other (income) expense, net increased during 2023 compared to the prior year primarily due to a $9.3 million reimbursement from our partner associated with the collaborative arrangement related to our Arkansas resource development opportunity, partially offset by a $4.5 million increase in foreign exchange losses, including the impact of currency volatility in Argentina.
Removed
These increases were partially offset by a $1.9 million decrease in legal and other expenses primarily associated with the GP Sale in 2021.
Added
The increase in our tax provision compared to the prior year was primarily due to the increase in income before taxes, while our effective tax rate decreased because a significant portion of the increase in income was in jurisdictions for which we were able to utilize net operating losses for which we had established valuation allowances.
Removed
Interest Expense, Net Consolidated interest expense, net, decreased in 2022 compared to the prior year primarily due to interest income on the CarbonFree convertible note purchased in December 2021 and interest received on an escrow account related to a tax hearing in Latin America.
Added
Included in our deferred tax assets are $95.0 million of net operating loss carryforwards that may be available to offset future income tax liabilities in the U.S. as well as in certain international jurisdictions where net operating loss carryforwards exist.
Removed
Other Income, net Consolidated other (income) expense, net decreased during 2022 compared to the prior year primarily due to a $15.0 million decrease in other income primarily due to the gain realized in the fourth quarter of 2021 from the sale of our Standard Lithium shares.
Added
Completion Fluids & Products Division pretax income increased during 2023 compared to the prior year primarily due to the increase in gross profit, along with a $9.3 million increase in other income due to reimbursements from TETRA's partner for the Arkansas resource development, partially offset by the $0.8 million decrease in the unrealized gain on the CarbonFree convertible notes.
Removed
This decrease was partially offset by a $1.2 million increase in the value of our interest in CSI Compressco due to improvements in their unit price and a $0.8 million increase in the fair value of the embedded option to convert our CarbonFree convertible notes into equity.
Added
The increase in gross profit was also offset by a $5.5 million increase in exploration and pre-development costs due to increased activities for our Arkansas strategic initiatives, which included additional front-end engineering design studies and completing a second exploration test well.
Removed
Income (Loss) from Discontinued Operations Income from discontinued operations, net of taxes, was $0.2 million compared to $120.4 million for the prior year. The prior year income includes a $120.1 million primarily non-cash accounting gain from the GP Sale and deconsolidation of CSI Compressco.
Added
The Water & Flowback Services Division income before taxes increased during 2023 compared to prior year primarily due to the increase in gross profit.
Removed
Our consolidated effective tax rate for the year ended December 31, 2022 of 31.9% was primarily the result of income generated in certain non-U.S. jurisdictions for which a net operating loss carryforward are not available for offset and the local tax rate exceeded the US statutory tax rate .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−1 removed4 unchanged
Biggest changeInterest December 31, Scheduled Maturity Rate 2022 (In Thousands) Term credit agreement September 10, 2025 10.32% $ 163,072 Asset-based credit agreement May 31, 2025 8.75% 2,950 Total long-term debt $ 166,022 Exchange Rate Risk We have currency exchange rate risk exposure related to revenues, expenses, operating receivables, and payables denominated in foreign currencies.
Biggest changeBorrowings under the New Term Credit Agreement bear interest at a rate per annum equal to SOFR plus 5.75%. Exchange Rate Risk We have currency exchange rate risk exposure related to revenues, expenses, operating receivables, and payables denominated in foreign currencies.
Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period. As of December 31, 2022, we did not have any foreign currency exchange contracts outstanding. Item 8. Financial Statements and Supplementary Data.
Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period. As of December 31, 2023, we did not have any foreign currency exchange contracts outstanding. Item 8. Financial Statements and Supplementary Data.
Borrowings under our Asset-Based Credit Agreement bear interest at an agreed-upon percentage rate spread above LIBOR. The following table sets forth as of December 31, 2022, the principal amount due under our long-term debt obligations and their respective weighted average interest rates.
Borrowings under our Asset-Based Credit Agreement bear interest at an agreed-upon percentage rate spread above SOFR or an alternate base rate. The following table sets forth as of December 31, 2023, the principal amount due under our long-term debt obligations and their respective weighted average interest rates.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Interest Rate Risk The interest on our borrowings is subject to market risk exposure related to changes in applicable interest rates.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Interest Rate Risk The interest on our borrowings is subject to market risk exposure related to changes in applicable interest rates. Borrowings under the Term Credit Agreement bear interest at a rate per annum equal to SOFR plus a margin of 6.25% per annum.
Removed
Borrowings under the Term Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) LIBOR (subject to a 1% floor) plus a margin of 6.25% per annum or (ii) a base rate plus a margin of 5.25% per annum.
Added
Interest December 31, Scheduled Maturity Rate 2023 (In Thousands) Term credit agreement September 10, 2025 11.70% $ 163,072 Asset-based credit agreement May 31, 2025 8.75% — Swedish credit facility December 31, 2024 2.95% — Total long-term debt $ 163,072 On January 12, 2024, the Company entered into a New Term Credit Agreement consisting of a $190.0 million funded term loan and a $75.0 million delayed-draw term loan that refinanced the Company’s Term Credit Agreement outstanding as of December 31, 2023.

Other TTI 10-K year-over-year comparisons