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What changed in KLX Energy Services Holdings, Inc.'s 10-K — 2023 vs 2024

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

+323 added−312 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-08)

Top changes in KLX Energy Services Holdings, Inc.'s 2024 10-K

323 paragraphs added · 312 removed · 241 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

58 edited+16 added−21 removed158 unchanged
Biggest changeCurrently, the ultimate impact of these laws on our business is uncertain—the Governor of California has directed further consideration of the implementation deadlines for each of the laws, and there is potential for legal challenges to be filed with respect to the scope of the law—but, absent clarification or revisions to the law, alongside the SEC proposed rule, finalization and implementation may result in additional costs to comply with these disclosure requirements for us or our customers, as well as increased costs of and restrictions on access to capital for us or our customers.
Biggest changeAbsent clarification or revisions to the California laws, implementation may result in additional costs to comply with these disclosure requirements for us or our customers, as well as increased costs of and restrictions on access to capital for us or our customers.
The presumptive standards established under the final rule are generally the same for both new and existing sources and include enhanced leak detection survey requirements using optical gas imaging and other advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions, reduction of emissions by 95% through capture and control systems, zero-emission requirements for certain devices, limitations on flaring, and the establishment of a “super emitter” response program that allows third parties to make reports to the EPA of large methane emission events, triggering certain investigation and repair requirements.
The presumptive standards established under the final rule are generally the same for both new and existing sources and include enhanced leak detection survey requirements using optical gas imaging and other advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions, reduction of emissions by 95% through capture and control systems, zero-emission requirements for certain devices, limitations on flaring, and the establishment of a “super emitter” response program that allows third parties to make reports to the EPA of 19 large methane emission events, triggering certain investigation and repair requirements.
Our completions activities include a wide range of services: • coiled tubing and nitrogen services; • wireline services (including pump down perforating, logging and pipe recovery); • pressure control products and services; • wellhead and hydraulic fracturing rental products and services; • flowback and testing services; • thru-tubing technologies and services; • rig assist snubbing services; • cementing products and services; • acidizing and pressure pumping services; and • downhole completion tools, including: ◦ toe sleeves; ◦ wet shoe cementing bypass subs; ◦ composite plugs; ◦ dissolvable plugs; ◦ liner hangers; ◦ stage cementing tools, inflatables, float and casing equipment; and ◦ retrievable completion tools.
Our completions activities include a wide range of services: • coiled tubing and nitrogen services; • wireline services (including pump down perforating, logging and pipe recovery); • pressure control products and services; • wellhead and hydraulic fracturing rental products and services; • flowback and testing services; • thru-tubing technologies and services; • fishing services; • rig assist snubbing services; • cementing products and services; • acidizing and pressure pumping services; and • downhole completion tools, including: ◦ toe sleeves; ◦ wet shoe cementing bypass subs; ◦ composite plugs; ◦ dissolvable plugs; ◦ liner hangers; ◦ stage cementing tools, inflatables, float and casing equipment; and ◦ retrievable completion tools.
Our customers' access to water to be used in these processes may be adversely affected due to reasons such as changes in weather patterns due to climate change, periods of extended drought, private, third-party competition for water in localized areas or the implementation of local or state governmental programs to monitor or restrict the beneficial use of water subject to their jurisdiction for hydraulic fracturing to assure adequate local water supplies.
Our customers' access to water to be used in these processes may be adversely affected due to reasons such as changes in regulations, weather patterns due to climate change, periods of extended drought, private, third-party competition for water in localized areas or the implementation of local or state governmental programs to monitor or restrict the beneficial use of water subject to their jurisdiction for hydraulic fracturing to assure adequate local water supplies.
Occupational Safety and Health Administration ("OSHA") hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require maintenance of information about hazardous materials used or produced in operations and provision of this information to employees, state and local government authorities and citizens.
Occupational Safety and Health Administration ("OSHA") hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require maintenance of information about hazardous materials used or 16 produced in operations and provision of this information to employees, state and local government authorities and citizens.
Federal and state regulatory agencies can impose administrative, civil and criminal penalties, as well as injunctive relief, for non-compliance with air permits or other requirements of the CAA and associated state laws and regulations. Climate Change The threat of climate change continues to attract considerable attention in the United States and around the world.
Federal and state regulatory agencies can impose administrative, civil and criminal penalties, as 18 well as injunctive relief, for non-compliance with air permits or other requirements of the CAA and associated state laws and regulations. Climate Change The threat of climate change continues to attract considerable attention in the United States and around the world.
These climatic developments have the potential to cause physical damage to our and our customers’ assets or disrupt operations and thus could have an adverse effect on each of our operations. Additionally, changing 21 meteorological conditions, particularly temperature, may result in changes to the amount, timing, or location of demand for energy or its production.
These climatic developments have the potential to cause physical damage to our and our customers’ assets or disrupt operations and thus could have an adverse effect on each of our operations. Additionally, changing meteorological conditions, particularly temperature, may result in changes to the amount, timing, or location of demand for energy or its production.
Some states where we operate, such as New Mexico and Colorado, have also imposed new or more stringent methane emission regulations. The requirements of the EPA’s final methane rules and state methane emissions regulations could increase operating or compliance costs for our customers in these states and impact demand for our services.
In addition, some states where we operate, such as New Mexico and Colorado, have also imposed new or more stringent methane emission regulations. The requirements of the EPA’s final methane rules and state methane emissions regulations could increase operating or compliance costs for our customers in these states and impact demand for our services.
The Federal Motor Carrier Safety Administration regulates and provides safety oversight of commercial motor vehicles, the EPA establishes requirements to protect human health and the environment, the federal Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF") establishes requirements for the 16 safe use and storage of explosives, and the federal Nuclear Regulatory Commission establishes requirements for the protection against ionizing radiation.
The Federal Motor Carrier Safety Administration regulates and provides safety oversight of commercial motor vehicles, the EPA establishes requirements to protect human health and the environment, the federal Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF") establishes requirements for the safe use and storage of explosives, and the federal Nuclear Regulatory Commission establishes requirements for the protection against ionizing radiation.
While the EPA and Corps under the Trump Administration issued a final rule in January 2021 17 narrowing federal jurisdictional reach over waters of the United States, the EPA and Corps under President Biden issued a new rule in January 2023, the EPA and the Corps released a final revised definition of “waters of the United States” that again broadened federal jurisdiction over these waters.
While the EPA and Corps under the Trump Administration issued a final rule in January 2021 narrowing federal jurisdictional reach over waters of the United States, the EPA and the Corps under President Biden issued a new rule in January 2023, the EPA and the Corps released a final revised definition of “waters of the United States” that again broadened federal jurisdiction over these waters.
The listing of the Dunes Sagebrush Lizard or designation of its habitat could impact the availability of frac sand used by our customers. Additionally, in April 2023, the FWS published a proposed rule to list the Greater Sage Grouse as threatened under the ESA.
The listing of the Dunes 15 Sagebrush Lizard or designation of its habitat could impact the availability of frac sand used by our customers. Additionally, in April 2023, the FWS published a proposed rule to list the Greater Sage Grouse as threatened under the ESA.
NEPA requirements are subject to or influenced by regulations and guidance from the Council on Environmental Quality (“CEQ”), and the CEQ’s requirements and guidance for such reviews have altered several times during the past few years under different administrations, and are likely to continue to change.
NEPA requirements have been subject to or influenced by regulations and guidance from the Council on Environmental Quality (“CEQ”), and the CEQ’s requirements and guidance for such reviews have altered several times during the past few years under different administrations, and are likely to continue to change.
Numerous proposals have been made and could continue to be made at the international, national, 18 regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such future emissions. The U.S.
Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such future emissions. The U.S.
Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, 19 carbon taxes, reporting and tracking programs, and restriction of emissions.
Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
Hydraulic Fracturing Our businesses are dependent on our customers’ hydraulic fracturing and horizontal drilling activities. Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons, particularly natural gas, from tight formations, including shales.
Hydraulic Fracturing 21 Our businesses are dependent on our customers’ hydraulic fracturing and horizontal drilling activities. Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons, particularly natural gas, from tight formations, including shales.
For example, Texas 22 and Oklahoma have issued rules for wastewater disposal wells that impose certain permitting and operating restrictions and reporting requirements on disposal wells in proximity to faults.
For example, Texas and Oklahoma have issued rules for wastewater disposal wells that impose certain permitting and operating restrictions and reporting requirements on disposal wells in proximity to faults.
Concerns over silicosis and other potential adverse health effects, as well as concerns regarding potential liability from the use of hydraulic fracturing sand, may have the effect of discouraging our customers' use of hydraulic fracturing sand. Transportation Safety and Compliance Operating a fleet of over 1,800 vehicles, we are subject to regulation as a motor carrier by the U.S.
Concerns over silicosis and other potential adverse health effects, as well as concerns regarding potential liability from the use of hydraulic fracturing sand, may have the effect of discouraging our customers' use of hydraulic fracturing sand. Transportation Safety and Compliance Operating a fleet of over 1,500 vehicles, we are subject to regulation as a motor carrier by the U.S.
The U.S. geological survey has in the recent past identified six states with the most significant hazards from induced seismicity, which includes Oklahoma, Kansas, Texas, Colorado, New Mexico, and Arkansas. In response to these concerns, regulators in some states have adopted additional requirements related to seismicity and its potential association with hydraulic fracturing.
The U.S. geological survey has identified six states with the most significant hazards from induced seismicity, which includes Oklahoma, Kansas, Texas, Colorado, New Mexico, and Arkansas. In response to these concerns, regulators in some states have adopted additional requirements related to seismicity and its potential association with hydraulic fracturing.
Four of the 31 plug-and-perf units are our new Whisper™ Series units. These specialized units are electric/battery-powered and support 9 our and our customers' sustainability efforts by reducing carbon footprint and noise levels. Additionally, the significant fuel savings due to the units being electrically powered make these units more cost effective to operate.
Four of the 27 plug-and-perf units are our new Whisper™ Series units. These specialized units are electric/battery-powered and support 9 our and our customers' sustainability efforts by reducing carbon footprint and noise levels. Additionally, the significant fuel savings due to the units being electrically powered make these units more cost effective to operate.
We intend to continue to re-deploy additional directional drilling capacity into 2024, as market conditions warrant. 8 Completion: Our completions activities are focused on services that help our customers complete and stimulate extended reach horizontal laterals and more technical wellbores.
We intend to continue to re-deploy additional directional drilling capacity into 2025, as market conditions warrant. 8 Completion: Our completions activities are focused on services that help our customers complete and stimulate extended reach horizontal laterals and more technical wellbores.
At the federal level, the EPA has adopted rules 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, and impose new standards reducing methane emissions from oil and gas operations through limitations on venting and flaring and the implementation of enhanced emission leak detection and repair requirements.
The EPA has adopted rules 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, and impose new standards reducing methane emissions from oil and gas operations through limitations on venting and flaring and the implementation of enhanced emission leak detection and repair requirements.
Our latest generation dissolvable frac plug, the PhantM™, has been deployed successfully across major U.S. oil and natural gas basins in now more than 1,000 wells by more than 70 customers.
Our latest generation dissolvable frac plug, the PhantM™, has been deployed successfully across major U.S. oil and natural gas basins in now more than 1,200 wells by more than 70 customers.
Seismic Events and Water Availability In recent years, wells used for the disposal by injection of flowback water or certain other oilfield fluids below ground into non-producing formations have been associated with an increased number of seismic events, with research suggesting that the link between seismic events and wastewater disposal may vary by region and local geology.
Seismic Events and Water Availability Wells used for the disposal by injection of flowback water or certain other oilfield fluids below ground into non-producing formations have been associated with an increased number of seismic events, with research suggesting that the link between seismic events and wastewater disposal may vary by region and local geology.
To the extent the scope of the Clean Water Act's jurisdiction continues to change and expand in areas where we or our customers conduct operations, such developments could delay, restrict or halt the development of projects, result in longer permitting timelines, or increased compliance expenditures or mitigation costs for our customers’ operations, which may reduce our customers’ rate of production of oil and gas and reduce the demand for our products and services.
To the extent the scope of the CWA's jurisdiction continues to change and expand in areas where we or our customers conduct operations, such developments could delay, restrict or halt the development of projects, result in longer permitting timelines, or increased compliance expenditures or mitigation costs for our customers’ operations, which may reduce our customers’ rate of production of oil and gas and reduce the demand for our products and services.
Our nitrogen pumping units provide a non-combustible environment downhole and are used in support of other pressure control or well-servicing applications. As of December 31, 2023, we had a fleet of 39 coiled tubing units, 23 of which are large diameter coiled tubing units, across our geographical regions.
Our nitrogen pumping units provide a non-combustible environment downhole and are used in support of other pressure control or well-servicing applications. As of December 31, 2024, we had a fleet of 39 coiled tubing units, 21 of which are large diameter coiled tubing units, across our geographical regions.
Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending and investment practices that favor "clean" power sources, such as wind and solar, making those sources more attractive, and some of them may elect not to provide funding for fossil fuel energy companies.
Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending and investment practice that favors "clean" power sources, such as wind and solar, making those sources more attractive, and some of them may elect not to provide funding for fossil fuel energy companies.
As of December 31, 2023, our market share of the U.S. onshore drilling market was 6.0%, as compared to 7.4% as of December 31, 2022, as measured by the number of rigs we have worked on during the year as a proportion of the total number of rigs published by Baker Hughes.
As of December 31, 2024, our market share of the U.S. onshore drilling market was 4.9%, as compared to 6.0% as of December 31, 2023, as measured by the number of rigs we have worked on during the year as a proportion of the total number of rigs published by Baker Hughes.
Most of our sales are to major, large independent and regional oil and natural gas companies, and these sales have resulted in a diversified and geographically balanced portfolio of more than 680 customers within North America. Revenues from our five largest customers collectively represented approximately 26% of our revenues for the year ended December 31, 2023.
Most of our sales are to major, large independent and regional oil and natural gas companies, and these sales have resulted in a diversified and geographically balanced portfolio of more than 610 customers within North America. Revenues from our five largest customers collectively represented approximately 31% of our revenues for the year ended December 31, 2024.
We are not dependent on any single source of supply for those parts, supplies, materials or equipment and, as of December 31, 2023, no single supplier accounted for more than 5% of our total supply and procurement costs.
We are not dependent on any single source of supply for those parts, supplies, materials or equipment and, as of December 31, 2024, no single supplier accounted for more than 10% of our total supply and procurement costs.
Employees As of December 31, 2023, we had approximately 1,919 employees. Approximately 89% of our employees are engaged in operations, quality and purchasing, 4% in sales and marketing and 7% in finance, human resources, IT, management and general administration. Our employees are not unionized, and we consider our employee relations to be good.
Employees 22 As of December 31, 2024, we had approximately 1,726 employees. Approximately 89% of our employees are engaged in operations, quality and purchasing, 4% in sales and marketing and 7% in finance, human resources, IT, management and general administration. Our employees are not unionized, and we consider our employee relations to be good.
The Company has 68 wireline units in the fleet and 31, or 46%, are configured to run pump down or plug-and-perf operations. Our R&D organization also enables our operations to support our customers with cutting edge pump down operations that include greaseless wireline, addressable gun systems and addressable release tools, to provide our customers with high quality pump down services.
The Company has 62 wireline units in the fleet and 27, or 44%, are configured to run pump down or plug-and-perf operations. Our R&D organization also enables our operations to support our customers with cutting edge pump down operations that include greaseless wireline, addressable gun systems and addressable release tools, to provide our customers with high quality pump down services.
There continues to be uncertainty on the federal government's applicable jurisdictional reach under the CWA over “waters of the United States”, including wetlands, as the EPA and the Corps under the Obama, Trump and Biden Administrations have pursued multiple rulemakings since 2015 in an attempt to define the scope of such reach.
Army Corps of Engineers ("Corps") or an analogous state agency. 17 There continues to be uncertainty on the federal government's applicable jurisdictional reach under the CWA over “waters of the United States”, including wetlands, as the EPA and the Corps under the Obama, Trump and Biden Administrations have pursued multiple rulemakings since 2015 in an attempt to define the scope of such reach.
As a result, the demand for our services and products is highly sensitive to current and expected commodity prices. The oil and gas industry experienced significant increases in activity in late 2021 and 2022 due to the recovery from the COVID-19 pandemic and increasing demand for oil and gas.
As a result, the demand for our services and products is highly sensitive to current and expected commodity prices. The oil and gas industry experienced significant increases in activity in late 2021 and 2022 due to the recovery from the novel coronavirus (“COVID-19”) pandemic and increasing demand for oil and gas.
Many of the largest U.S. banks have made "net zero" carbon emission commitments and have announced that they will be assessing financed emissions across their portfolios and taking steps to quantify and reduce those emissions.
Many of the largest U.S. banks have made "net zero" carbon emission commitments and, while some of the commitments may be in flux, certain of the banks have announced that they will be assessing financed emissions across their portfolios and taking steps to quantify and reduce those emissions.
The SEC has also proposed a rule that would require registrants to make certain climate-related disclosures in registration statements and annual reports, including their governance of climate-related risks; material climate-related impacts on strategy, outlook and business model; climate risk management; Scope 1 and 2 GHG emissions and Scope 3 GHG emissions under certain circumstances; and if the registrant has set them, climate-related targets and goals.
In March 2024, the SEC finalized a rule that requires registrants to make certain climate-related disclosures in registration statements and annual reports, including their governance of climate-related risks; material climate-related impacts on strategy, outlook and business model; climate risk management; Scope 1 and 2 GHG emissions under certain circumstances; and if the registrant has set them, climate-related targets and goals.
While we will not be required to pay this fee, some of our customers may. The methane emissions charge, starting in calendar year 2024 at $900 per ton of methane, will increase to $1,200 in 2025 and be set at $1,500 for 2026 and each year after. Calculation of the fee is based on certain thresholds established in the IRA.
While we will not be required to pay this fee, some of our customers may. The methane emissions charge, starting in calendar year 2024 at $900 per ton of methane, will increase to $1,200 in 2025 and be set at $1,500 for 2026 and each year after.
However, several groups challenged the December 2020 decision, and, in October 2021, the EPA announced it would reconsider the decision. A draft assessment released in April 2022 indicated a preliminary conclusion that the December 2020 decision would stand, but uncertainty remains until a final decision is released.
However, several groups challenged the December 2020 decision, and, in October 2021, the EPA announced it would reconsider the decision. A draft assessment released in April 2022 indicated a preliminary conclusion that the December 2020 decision would stand, but uncertainty remains until a final decision is released. In August 2023, the EPA announced a new review of the ozone NAAQS.
While we cannot predict the outcome of these or any other future proposed or finalized listings, designation of previously unidentified endangered or threatened species, or other agency actions aimed at species conservation could indirectly cause us to incur additional costs, cause our or our oil and natural gas E&P customers' operations to become subject to operating restrictions or bans, result in new difficulties obtaining permits or other authorizations, and limit future development activity in affected areas, which could reduce demand for our products and services to those customers.
While we cannot predict the outcome of these or any other future proposed or finalized listings, or whether the Trump Administration may take action that would impact any currently listed species or otherwise change the compliance obligations under ESA implementing regulations, the designation of previously unidentified endangered or threatened species, or other agency actions aimed at species conservation could indirectly cause us to incur additional costs, cause our or our oil and natural gas E&P customers' operations to become subject to operating restrictions or bans, result in new difficulties obtaining permits or other authorizations, and limit future development activity in affected areas, which could reduce demand for our products and services to those customers.
The discharge of pollutants into regulated waters, including jurisdictional wetlands, is prohibited, except in accordance with the terms of a permit issued by the EPA or U.S. Army Corps of Engineers ("Corps") or an analogous state agency.
The discharge of pollutants into regulated waters, including jurisdictional wetlands, is prohibited, except in accordance with the terms of a permit issued by the EPA or U.S.
While we cannot predict what additional policies may result from these announcements, a material reduction in the capital available to us or our fossil fuel-related customers could make it more difficult to secure funding for exploration, development, production, transportation, and processing activities, which could reduce the demand for our products and services.
While we cannot predict how or to what extent sustainable lending and investment practice may impact our operations, a material reduction in the capital available to us or our fossil fuel-related customers could make it more difficult to secure funding for exploration, development, production, transportation, and processing activities, which could reduce the demand for our products and services.
For example, FWS recently published a rule listing two distinct population segments of the Lesser Prairie Chicken under the ESA, a species found in some states where we operate. Further, in July 2023, FWS issued a notice of proposed rulemaking to list the Dunes Sagebrush Lizard as an endangered species under 15 the ESA.
For example, FWS recently published a rule listing two distinct population segments of the Lesser Prairie Chicken under the ESA, a species found in some states where we operate. Further, in May 2024, FWS listed the Dunes Sagebrush Lizard as an endangered species under the ESA.
Average oil prices and natural gas prices and activity subsequently decreased in 2023 compared to 2022, before stabilizing in late 2023. Oil and natural gas prices have been, and may remain, volatile, which impacts demand for our business. Global supply and demand factors will likely continue to result in commodity price volatility, similar to that experienced in 2023.
Average oil prices and natural gas prices and activity subsequently decreased in 2023 and in 2024. Oil and natural gas prices have been, and may remain, volatile, which impacts demand for our business. Global supply and demand factors may continue to result in commodity price volatility.
These or similar federal actions, if taken in the future, could impose additional hydraulic fracturing limitations on our customers that could ultimately result in decreased demand for our products and services.
The Biden Administration pursued various legislative and regulatory initiatives to restrict hydraulic fracturing activities on federal lands. These or similar actions, if taken in the future, could impose additional hydraulic fracturing limitations on our customers that could ultimately result in decreased demand for our products and services.
In late 2016, the EPA also released its final report on the potential impacts of hydraulic fracturing on drinking water resources, concluding that "water cycle" activities associated with hydraulic fracturing may impact drinking water resources under certain circumstances. BLM under both the Obama and Trump Administrations has pursued rules governing hydraulic fracturing activities on federal lands.
In late 2016, the EPA also released its final report on the potential impacts of hydraulic fracturing on drinking water resources, concluding that "water cycle" activities associated with hydraulic fracturing may impact drinking water resources under certain circumstances.
Both the Dunes Sagebrush Lizard and the Greater Sage Grouse can be found in some areas where we and our customers operate. Those final rules are expected to be published in mid-2024.
Both the Dunes Sagebrush Lizard and the Greater Sage Grouse can be found in some areas where we and our customers operate.
To the extent that requirements or enforcement initiatives impose significant additional costs on us or our customers, we could be negatively impacted by the SEC’s regulatory or enforcement actions.
We cannot predict the impact that any future climate-related disclosure rule, if finalized, would have on our operations. To the extent that requirements or enforcement initiatives impose significant additional costs on us or our customers, we could be negatively impacted by the SEC’s regulatory or enforcement actions.
Under such laws, we could be required to remove previously disposed substances and wastes, remediate contaminated property, or perform remedial operations to prevent future contamination.
Under such laws, we could be required to remove previously disposed substances and wastes, remediate contaminated property, or perform remedial operations to prevent future contamination. The EPA has the power to make additional substances subject to CERCLA and RCRA, including certain Per- and Polyfluorinated Substances (PFAS).
Separately, the SEC has also announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege that an issuer's existing climate disclosures were misleading or deficient. We cannot predict the impact that any rule, if finalized, would have on our operations.
The SEC has previously announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege that an issuer's existing climate disclosures were misleading or deficient, although this focus is subject to change.
These incentives could accelerate the transition of the U.S. economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, reduce demand for our customers’ products, and thereby reduce demand for our services.
Although the President's action was challenged in court, to the extent funding disbursements under the IRA continue or any future similar legislation begins to provide such incentives, these incentives could accelerate the transition of the U.S. economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, reduce demand for our customers’ products, and thereby reduce demand for our services.
EPA has also announced enforcement initiatives aimed at reducing GHG emissions from the oil and gas sector.
EPA has also announced enforcement initiatives aimed at reducing GHG emissions from the oil and gas sector, although the extent to which these initiatives will change under the Trump Administration is uncertain.
Most recently, in January 2023 the CEQ issued new guidance on consideration of greenhouse gas ("GHG") emissions and climate change in NEPA environmental reviews. The guidance followed the publication of a final rule in April 2022 revoking some modifications made to the regulations under the Trump Administration and reincorporating consideration of direct, indirect, and cumulative effects of major federal actions.
The guidance followed the publication of a final rule in April 2022 revoking some modifications made to the regulations under the first Trump Administration and reincorporating consideration of direct, indirect, and cumulative effects of major federal actions. It is uncertain to what extent the Trump Administration may take action to revise or revoke existing NEPA guidance.
While we cannot predict the outcome of this rulemaking, restrictions or delays on our customers’ operations could in turn adversely impact demand for our products and services.
While we cannot predict the ultimate impact of these legal challenges to the NEPA-implementing regulations or subsequent changes in the regulations, any restrictions or delays on our customers’ operations as a result of permitting or environmental impact analysis regulatory requirements could in turn adversely impact demand for our products and services.
Additionally, in October 2023, the Governor of California signed the Climate Corporate Data Accountability Act (“CCDAA”) and Climate-Related Financial Risk Act (“CRFRA”) into law.
While these laws have been or are expected to be challenged, and neither are directly applicable to our business, they could result in significant financial obligations to our customers. Additionally, in October 2023, the Governor of California signed the Climate Corporate Data Accountability Act (“CCDAA”) and Climate-Related Financial Risk Act (“CRFRA”) into law.
In July 2023, the CEQ announced another proposed rule that would revise the implementing regulations of the procedural provisions of NEPA and implements the amendments to NEPA included in the Fiscal Responsibility Act of 2023. The public comment period for the proposed rule closed in September 2023, and the final rule is expected in the second quarter of 2024.
In May 2024, the CEQ finalized a rule that revises the implementing regulations of the procedural provisions of NEPA and implements the amendments to NEPA included in the Fiscal Responsibility Act of 2023. The final rule is being challenged by various states in the U.S.
The EPA has the power to make additional substances subject to CERCLA and RCRA, including certain Per- and Polyfluorinated Substances (PFAS), and is considering doing so at this time, which could result in additional remediation costs at certain properties in the future and could impose additional costs on some of our customers.
For example, in May 2024, the EPA adopted a final rule to list two PFAS (i.e., PFOA and PFOS) as CERCLA hazardous substances, which could result in additional remediation costs at certain properties in the future and could impose additional costs on some of our customers.
The IRA also requires the EPA to revise GHG reporting requirements for segments of the oil and gas sector, including portions of our customer base, by August 2024. The methane emissions charge and reporting revisions could increase our customers' operating or compliance costs and adversely affect their businesses, thereby reducing demand for our products and services.
We cannot predict whether, how, or when the Trump Administration or a future Congress might take action to alter either of these rules. The methane emissions charge and GHG reporting revisions could increase our customers' operating or compliance costs and adversely affect their businesses, thereby reducing demand for our products and services.
The impacts of these orders, pledges, agreements and any legislation or regulation promulgated to fulfill the United States' commitments under the Paris Agreement, COP26, COP28 or other international conventions cannot be predicted at this time. Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in federal political risks in the United States.
Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in federal political risks in the United States under the Biden Administration. There has also been action at the state level related to GHG emissions.
Additionally, there is the possibility that financial institutions will be pressured or required to adopt policies that limit funding for fossil fuel energy companies. In late 2020, the Federal Reserve announced that it had joined the Network for Greening the Financial System ("NGFS"), a consortium of financial regulators focused on addressing climate-related risks in the financial sector.
Additionally, there is the possibility that financial institutions will be pressured or required to adopt policies that limit funding for fossil fuel energy companies. However, this trend has waned more recently.
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The CEQ’s guidance, effective upon publication, alongside the proposed and final rules, could result in additional challenges to NEPA reviews performed in connection with our customers’ operations, which in turn could result in further permitting and approval delays or determinations about the availability of federal land for oil and gas operations.
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For example, in January 2023 the CEQ issued new guidance on consideration of greenhouse gas ("GHG") emissions and climate change in NEPA environmental reviews.
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On August 21, 2023, the EPA announced a new review of the ozone NAAQS to reflect updated ozone science in combination with the reconsideration of the December 2020 decision and expects to release its Integrated Review Plan in the fall of 2024.
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District Court for the District of North Dakota, and in February 2025, the court issued an order vacating the May 2024 rule after determining that the CEQ lacks authority to issue binding NEPA regulations. In November 2024, the U.S. Court of Appeals for the D.C. Circuit similarly determined that the CEQ lacks authority to issue binding NEPA regulations.
Removed
The IRA also instructs the EPA to revise GHG reporting requirements that apply to some of our customers’ operations. While we cannot predict the impact of any such revisions, if these revisions result in additional compliance costs for our customers, they could negatively impact the demand for our services.
Added
As a result of these rulings and the change in the U.S. presidential administration, there is uncertainty with respect to current and future requirements for NEPA analyses.
Removed
In addition, President Biden has made combating climate change arising from GHG emissions a priority under this Administration and has issued, and may continue to issue, executive orders or other regulatory initiatives in pursuit of this regulatory agenda.
Added
The Trump Administration may seek to take additional action with respect to these regulations, although the substance and the timing of such action cannot be predicted.
Removed
Fines and penalties for violations of these rules can be substantial. Once the EPA has made necessary determinations, compliance with the EPA’s new final rules would exempt an otherwise covered facility from the requirement to pay the methane fee imposed under the IRA, discussed above.
Added
The EPA's review remains ongoing and is not expected to be completed before the EPA's five-year cycle for NAAQS review in December 2025. More recently, in December 2024, the EPA issued a rule to revise the secondary NAAQS for sulfur oxides, but retained without revision the secondary standards for oxides of nitrogen and particulate matter.
Removed
Moreover, the international community gathered again in Glasgow in November 2021 at the 26th Conference of the Parties ("COP26"), during which multiple announcements (not having the effect of law) were made, including a call for parties to eliminate certain fossil fuel subsidies and pursue further action on non-CO2 GHGs.
Added
In November 2024, the EPA finalized a rule, applicable to oil and gas facilities that emit more than 25,000 metric tons of CO2 per year, to implement the methane emissions fee provisions of the IRA.
Removed
Relatedly, the United States and European Union jointly announced at COP26 the launch of a Global Methane Pledge, an initiative which over 100 counties joined, committing to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030, including "all feasible reductions" in the energy sector.
Added
The IRA also directed the EPA to revise GHG reporting requirements for segments of the oil and gas sector, including portions of our customer base, and in May 2024, the EPA finalized updates to the reporting requirements which will also impact the calculation of the methane emissions fee.
Removed
At the 28th Conference of the Parties (“COP28”) hosted by the United Arab Emirates in December 2023, the parties signed onto an agreement to transition “away from fossil fuels in energy systems in a just, orderly, and equitable manner” and increase renewable energy capacity so as to achieve net zero by 2050, although no timeline for doing so was set.
Added
However, in January 2025, President Trump issued an executive order pausing certain funding disbursements under the IRA; the potential impact of this action and any future similar attempts to limit the incentives under the IRA are uncertain.
Removed
President Biden has issued several executive orders calling for more expansive action to address climate change and suspend new oil and gas operations on federal lands and waters.
Added
Fines and penalties for violations of these rules can be substantial. The final rule is currently being challenged by 23 states and a coalition of industry groups in the U.S. Circuit Court of Appeals for the D.C. Circuit.
Removed
The suspension of the federal leasing activities prompted legal action by several states against the Biden Administration, resulting in issuance of a nationwide preliminary injunction by a federal district judge in Louisiana in June 2021, effectively halting implementation of the leasing suspension.
Added
During this challenge, Quad Ob remains in effect and we cannot predict the outcome or impact this case may have on the rule at this time. The Trump Administration may also take action to alter the methane rule, but we cannot predict whether such action will occur or its timing.
Removed
In November 2022 the federal Bureau of Land Management (“BLM”) proposed a rule that would limit flaring from well sites on federal and Tribal lands, as well as allow the delay or denial of permits if BLM finds that an operator’s methane waste minimization plan is insufficient. The final rule is expected in 2024.
Added
Subsequent United Nations climate conferences have called for additional action to transition away from fossil fuels and control or otherwise reduce GHG emissions, though none have been legally binding.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeMoreover, failure to comply with applicable requirements or the occurrence of an explosive incident may also result in the loss of our ATF or analogous state license to store and handle explosives, which would have a material adverse effect on our business, results of operations and financial conditions. 43 The ESA and comparable laws intended to protect certain species of wildlife govern our and our oil and natural gas E&P customers’ operations, which constraints could have an adverse impact on our ability to expand some of our existing operations or limit our customers’ ability to develop new oil and natural gas wells.
Biggest changeMoreover, failure to comply with applicable requirements or the occurrence of an explosive incident may also result in the loss of our ATF or analogous state license to store and handle explosives, which would have a material adverse effect on our business, results of operations and financial conditions.
The federal ESA and comparable state laws were established to protect endangered and threatened species. Under the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species' habitat. Similar protections are offered to migratory birds under MBTA. See Part I, Item 1.
The federal ESA and comparable state laws were established to protect endangered and threatened species. Under the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species' habitat. Similar protections are offered to migratory birds under the MBTA. See Part I, Item 1.
Additional factors over which we have no control that could affect our customers’ willingness to undertake drilling, completion, production, and intervention spending activities include: • the level of prices, and expectations about prices, for oil and natural gas; • the level of domestic and global oil and natural gas production; • the level of domestic and global oil and natural gas inventories; • the availability, pricing and perceived safety of pipeline, trucking, train storage and other transportation capacity; • the supply of and demand for oilfield services and equipment; • lead times associated with acquiring equipment and availability of qualified personnel; • the cost of exploring for, developing, producing and delivering oil and natural gas; • the expected rates of decline in production from existing and prospective wells; • the discovery rates of new oil and natural gas reserves; • any prolonged reduction in the overall level of oil and natural gas E&P activities, whether resulting from changes in oil and natural gas prices or otherwise; • uncertainty in capital and commodities markets and the ability of oil and natural gas E&P companies to raise equity capital and debt financing; • federal, state and local regulation of hydraulic fracturing and other oilfield service activities, as well as E&P activities, including public pressure on governmental bodies and regulatory agencies to regulate the oil and gas industry; • moratoriums on drilling activity resulting in a cessation of operation or a failure to expand operations; • adverse weather conditions, including rain, tropical storms, hurricanes and severe cold weather, that can affect oil and natural gas operations over a wide area; • oil refining capacity; • merger and divestiture activity among oil and gas producers; • the availability of water resources and suitable proppants in sufficient quantities and on acceptable terms for use in hydraulic fracturing operations; • the availability, capacity and cost of disposal and recycling services for used hydraulic fracturing fluids; • the political environment in oil and natural gas producing regions, including uncertainty or instability resulting from civil disorder, terrorism or war, such as the continuing conflicts in Ukraine and Israel; • worldwide political, military and economic conditions; 24 • global or national health pandemics, epidemics or concerns, such as the COVID-19 pandemic, which reduced and may further reduce demand for oil and natural gas and related products due to reduced global or national economic activity; • actions of the Organization of the Petroleum Exporting Countries ("OPEC"), its members and other state-controlled oil companies relating to oil and natural gas price and production levels, including announcements of potential changes to such levels; • advances in exploration, development and production technologies or in technologies affecting energy consumption; • stockholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil and natural gas; • the potential acceleration of the energy transition and development of alternative fuels; and • the price and availability of alternative fuels and energy sources.
Additional factors over which we have no control that could affect our customers’ willingness to undertake drilling, completion, production, and intervention spending activities include: • the level of prices, and expectations about prices, for oil and natural gas; • the level of domestic and global oil and natural gas production; • the level of domestic and global oil and natural gas inventories; • the availability, pricing and perceived safety of pipeline, trucking, train storage and other transportation capacity; • the supply of and demand for oilfield services and equipment; • lead times associated with acquiring equipment and availability of qualified personnel; • the cost of exploring for, developing, producing and delivering oil and natural gas; • the expected rates of decline in production from existing and prospective wells; • the discovery rates of new oil and natural gas reserves; • any prolonged reduction in the overall level of oil and natural gas E&P activities, whether resulting from changes in oil and natural gas prices or otherwise; • uncertainty in capital and commodities markets and the ability of oil and natural gas E&P companies to raise equity capital and debt financing; • federal, state and local regulation of hydraulic fracturing and other oilfield service activities, as well as E&P activities, including public pressure on governmental bodies and regulatory agencies to regulate the oil and gas industry; • moratoriums on drilling activity resulting in a cessation of operation or a failure to expand operations; • adverse weather conditions, including rain, tropical storms, hurricanes and severe cold weather, that can affect oil and natural gas operations over a wide area; • oil refining capacity; • merger and divestiture activity among oil and gas producers; • the availability of water resources and suitable proppants in sufficient quantities and on acceptable terms for use in hydraulic fracturing operations; • the availability, capacity and cost of disposal and recycling services for used hydraulic fracturing fluids; • the political environment in oil and natural gas producing regions, including uncertainty or instability resulting from civil disorder, terrorism or war, such as the continuing conflicts in Ukraine and Israel; • worldwide political, military and economic conditions; • global or national health pandemics, epidemics or concerns, such as the COVID-19 pandemic, which reduced and may further reduce demand for oil and natural gas and related products due to reduced global or national economic activity; • actions of the Organization of the Petroleum Exporting Countries ("OPEC"), its members and other state-controlled oil companies relating to oil and natural gas price and production levels, including announcements of potential changes to such levels; • advances in exploration, development and production technologies or in technologies affecting energy consumption; • stockholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil and natural gas; • the potential acceleration of the energy transition and development of alternative fuels; and • the price and availability of alternative fuels and energy sources.
These locations and activities are susceptible to the physical effects of climate change, such as increased frequency or severity storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions. Risks Relating to Financial Considerations We have operated at a loss, and there is no assurance of our profitability in the future.
These locations and activities are susceptible to the physical effects of climate change, such as increased frequency or severity storm systems, hurricanes, droughts, floods, extreme winter weather, or geologic/geophysical conditions. 31 Risks Relating to Financial Considerations We have operated at a loss, and there is no assurance of our profitability in the future.
Even if we are able to increase our prices in future periods, we may not be able to do so at a rate that is sufficient to offset any rising costs, which could have a material adverse effect on our business, financial condition and results of operations. We have been expanding our available products and services in recent periods.
Even if we are able to increase our prices in future periods, we may not be able to do so at a rate that is sufficient to offset any rising costs, which could have a material adverse effect on our business, financial condition and results of operations. 26 We have been expanding our available products and services in recent periods.
Although we monitor individual customer financial viability in granting such credit arrangements and maintain reserves we believe are adequate to cover exposure for doubtful accounts, in weak economic environments, customers’ delays and failures to pay often increase due to, among other reasons, a reduction in our customers’ cash flow from operations and their access to credit markets.
Although we monitor individual customer financial viability in granting such credit arrangements and maintain reserves we believe are adequate to cover 34 exposure for doubtful accounts, in weak economic environments, customers’ delays and failures to pay often increase due to, among other reasons, a reduction in our customers’ cash flow from operations and their access to credit markets.
In recent years, oilfield services companies have been the subject of a significant volume of wage and hour-related litigation, including claims brought under the Fair Labor Standards Act, in which employee pay practices have been challenged. We have previously been named as defendants in these lawsuits, and we do 30 not maintain insurance for alleged wage and hour-related litigation.
In recent years, oilfield services companies have been the subject of a significant volume of wage and hour-related litigation, including claims brought under the Fair Labor Standards Act, in which employee pay practices have been challenged. We have previously been named as defendants in these lawsuits, and we do not maintain insurance for alleged wage and hour-related litigation.
The ABL Facility includes financial, operating and negative covenants that limit our ability to incur indebtedness, to create liens or other encumbrances, to make certain payments and investments, including dividend payments, to engage in transactions with affiliates, to engage in sale/leaseback transactions, to guarantee indebtedness and to sell or otherwise dispose of assets and merge or consolidate with other entities.
The New ABL Facility includes financial, operating and negative covenants that limit our ability to incur indebtedness, to create liens or other encumbrances, to make certain payments and investments, including dividend payments, to engage in transactions with affiliates, to engage in sale/leaseback transactions, to guarantee indebtedness and to sell or otherwise dispose of assets and merge or consolidate with other entities.
In accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant, and Equipment, we assess potential impairment to long-lived assets (property and equipment and amortized intangible assets) when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered.
In accordance with Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment, we assess potential impairment to long-lived assets (property and equipment and amortized intangible assets) when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered.
We may be adversely affected by disputes regarding intellectual property rights and the value of our intellectual property rights is uncertain. We may become involved in claims, litigation or dispute resolution proceedings from time to time to maintain, protect or enforce our intellectual property rights against potential third-party infringers, which could be costly and time-consuming.
We may be adversely affected by disputes regarding intellectual property rights and the value of our intellectual property rights is uncertain. 37 We may become involved in claims, litigation or dispute resolution proceedings from time to time to maintain, protect or enforce our intellectual property rights against potential third-party infringers, which could be costly and time-consuming.
Risks Relating to Our Business 23 Our business depends on domestic capital spending by the oil and natural gas industry, and reductions in capital spending could have a material adverse effect on our business, financial condition and results of operations. Our revenues are generated primarily from customers who are engaged in drilling for and production of oil and natural gas.
Risks Relating to Our Business Our business depends on domestic capital spending by the oil and natural gas industry, and reductions in capital spending could have a material adverse effect on our business, financial condition and results of operations. Our revenues are generated primarily from customers who are engaged in drilling for and production of oil and natural gas.
However, despite this general allocation of risk, we might not succeed in enforcing such contractual allocation, might incur an unforeseen liability falling outside the scope of such allocation or may be required to enter into a service agreement with terms that vary from the above allocations of risk.
However, despite this general allocation of risk, we might not succeed in enforcing such contractual allocation, might incur an 43 unforeseen liability falling outside the scope of such allocation or may be required to enter into a service agreement with terms that vary from the above allocations of risk.
Such ratings are used by some investors to inform their investment and voting decisions. Additionally, certain investors use these scores to benchmark companies against their peers and, if a company is perceived as lagging, these investors may engage with companies to require improved ESG disclosure or performance.
Such ratings are used by some investors to inform their investment and voting decisions. Additionally, certain investors use these scores to benchmark companies against their peers and, if a company is perceived as lagging, these investors may engage with 41 companies to require improved ESG disclosure or performance.
Volatility or weakness in oil prices or natural gas prices (or the perception that oil prices or natural gas prices will decrease) affects the spending patterns of our customers and may result in the drilling of fewer new wells. This, in turn, could lead to lower demand for our services and may cause lower utilization of our assets.
Volatility or weakness in oil prices or natural gas prices (or the perception that oil prices or natural gas prices will decrease) affects the spending patterns of our customers and may result in the drilling of fewer new wells. 24 This, in turn, could lead to lower demand for our services and may cause lower utilization of our assets.
All of these indicators are generally 25 driven by commodity prices, which are affected by both domestic and global supply and demand factors. In particular, while U.S. oil and natural gas prices are correlated with global oil price movements, they are also affected by local markets, weather and consumption patterns.
All of these indicators are generally driven by commodity prices, which are affected by both domestic and global supply and demand factors. In particular, while U.S. oil and natural gas prices are correlated with global oil price movements, they are also affected by local markets, weather and consumption patterns.
Global pandemics and the actions taken by third parties, including, but not limited to, governmental authorities, businesses, and consumers, in response to such pandemics, including the COVID-19 pandemic, have previously adversely impacted and may in the future adversely impact the global economy, resulting in 28 significant volatility in the oil and gas industry.
Global pandemics and the actions taken by third parties, including, but not limited to, governmental authorities, businesses, and consumers, in response to such pandemics, including the COVID-19 pandemic, have previously adversely impacted and may in the future adversely impact the global economy, resulting in significant volatility in the oil and gas industry.
Risks Relating to Our Common Stock Future sales of our Common Stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership interest. 44 We may sell shares of Common Stock in the future.
Risks Relating to Our Common Stock Future sales of our Common Stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership interest. We may sell shares of Common Stock in the future.
If our customers delay or fail to pay a significant amount of outstanding receivables, it could reduce our availability under our ABL Facility or otherwise have a material adverse effect on our liquidity, financial condition, results of operations and cash flows.
If our customers delay or fail to pay a significant amount of outstanding receivables, it could reduce our availability under our New ABL Facility or otherwise have a material adverse effect on our liquidity, financial condition, results of operations and cash flows.
These data privacy laws are not uniform and as the privacy legal landscape continues to develop, we will likely be required to expend significant resources to continue to modify or 39 enhance our compliance measures to comply with such laws, rules and regulations.
These data privacy laws are not uniform and as the privacy legal landscape continues to develop, we will likely be required to expend significant resources to continue to modify or enhance our compliance measures to comply with such laws, rules and regulations.
One or more of these developments could decrease completion of our customers’ oil and gas wells, increase our and our customers’ compliance costs and reduce demand for our products and 40 services, which could have a material adverse effect on our business, results of operations, and financial condition.
One or more of these developments could decrease completion of our customers’ oil and gas wells, increase our and our customers’ compliance costs and reduce demand for our products and services, which could have a material adverse effect on our business, results of operations, and financial condition.
The lenders or other investors who hold debt that we fail to service or on which we otherwise default could also accelerate amounts due, which could in such an instance potentially trigger a default or acceleration of other debt we may incur.
The lenders or other investors 32 who hold debt that we fail to service or on which we otherwise default could also accelerate amounts due, which could in such an instance potentially trigger a default or acceleration of other debt we may incur.
Specifically, we typically have experienced a pause by our customers around the holiday season in the fourth quarter, which may be compounded as our customers exhaust their annual 31 capital spending budgets towards year end.
Specifically, we typically have experienced a pause by our customers around the holiday season in the fourth quarter, which may be compounded as our customers exhaust their annual capital spending budgets towards year end.
While we believe that we will be able to make satisfactory alternative arrangements in the event of any interruption in the supply of these materials 36 and/or products by one of our suppliers, we may not always be able to make alternative arrangements.
While we believe that we will be able to make satisfactory alternative arrangements in the event of any interruption in the supply of these materials and/or products by one of our suppliers, we may not always be able to make alternative arrangements.
As our competitors and others use or develop new technologies in the future, we may be placed at a competitive disadvantage if we fail to keep pace with technological advancements within our industry.
As our competitors and others use or develop new technologies in the future, we may be placed at a competitive 36 disadvantage if we fail to keep pace with technological advancements within our industry.
A failure to comply with the obligations contained in the ABL Facility could result in an event of default, which could permit acceleration of the debt, termination of undrawn commitments and enforcement against any liens securing the debt.
A failure to comply with the obligations contained in the New ABL Facility could result in an event of default, which could permit acceleration of the debt, termination of undrawn commitments and enforcement against any liens securing the debt.
Moreover, some of our customers’ drilling and completion activities 42 may take place on federal land or Tribal lands, requiring leases and other approvals from the federal government or Tribes to conduct such drilling and completion activities.
Moreover, some of our customers’ drilling and completion activities may take place on federal land or Tribal lands, requiring leases and other approvals from the federal government or Tribes to conduct such drilling and completion activities.
ITEM 1A. RISK FACTORS (U.S. dollars in millions, except per unit data) Investing in our Common Stock involves a high degree of risk. You should carefully consider the information in this Annual Report, including the matters addressed under “Cautionary Note Regarding Forward-Looking Statements” and the following risks before making an investment decision.
ITEM 1A. RISK FACTORS (U.S. dollars in millions, except per unit data) Investing in our Common Stock involves a high degree of risk. You should carefully consider the information in this Annual Report, including the matters addressed under “Cautionary Statement Regarding Forward-Looking Statements” and the following risks before making an investment decision.
To date, we have not experienced any material losses relating to cyberattacks; however, there can be no assurance that we will not suffer such losses in the future.
To date, we have not experienced any 38 material losses relating to cyberattacks; however, there can be no assurance that we will not suffer such losses in the future.
Our past acquisition activity and any future acquisitions may not be successful in delivering expected performance post-acquisition, which could have a material adverse effect on our business, financial condition and results of operations. Our business was created largely through a series of acquisitions, including most recently the Greene's Acquisition (as defined below).
Our past acquisition activity and any future acquisitions may not be successful in delivering expected performance post-acquisition, which could have a material adverse effect on our business, financial condition and results of operations. Our business was created largely through a series of acquisitions, including the Greene's Acquisition (as defined below).
We are also at risk that we may be required to refund amounts collected from a customer during the period immediately prior to that customer’s bankruptcy filing, and the amount we ultimately collect from the customer’s bankruptcy estate may be significantly less. 35 Customer bankruptcies may also reduce our availability under our ABL Facility.
We are also at risk that we may be required to refund amounts collected from a customer during the period immediately prior to that customer’s bankruptcy filing, and the amount we ultimately collect from the customer’s bankruptcy estate may be significantly less. Customer bankruptcies may also reduce our availability under our New ABL Facility.
If we cannot service our debt or repay or refinance our debt as it becomes due, we may be forced to sell assets or take other disadvantageous actions, including (1) reducing financing in the future for working capital, capital expenditures and other general corporate purposes or (2) dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness.
To service and repay our debt as it becomes due, we may be forced to sell assets or take other disadvantageous actions, including (1) reducing financing in the future for working capital, capital expenditures and other general corporate purposes and (2) dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness.
Among other things, the EDA Amendment allows for debt for equity exchanges in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”). During the three and twelve months ended December 31, 2023, the Company did not sell any shares of Common Stock and incurred legal and administrative fees of $0.1 and $0.5, respectively.
Among other things, the EDA Amendment allows for debt-for-equity exchanges in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”). During the three and twelve months ended December 31, 2024, the Company did not sell any shares of Common Stock and incurred legal and administrative fees of $0.3 and $0.5, respectively.
Our future operating performance and ability to refinance such indebtedness will be affected by prevailing economic and political conditions, the level of drilling, completion, production and intervention services activity for North American onshore oil and natural gas resources, the willingness of capital providers to lend to our industry and other financial and business factors, many of which are beyond our control.
Our future operating performance will be affected by prevailing economic and political conditions, the level of drilling, completion, production and intervention services activity for North American onshore oil and natural gas resources, the willingness of capital providers to lend to our industry and other financial and business factors, many of which are beyond our control.
Significant factors that are likely to affect commodity prices in current and future periods include, but are not limited to, price reductions or increased production by OPEC members and other oil exporting nations, the effect of U.S. energy, monetary and trade policies, U.S. and global economic conditions, U.S. and global political and economic developments, including initiatives introduced by the Biden Administration and resulting energy and environmental policies, war or other military conflict, including the continuing conflict between Russia and Ukraine, the impact of the COVID-19 pandemic, and conditions in the U.S. oil and gas industry and the resulting demand for domestic land oilfield services.
Significant factors that are likely to affect commodity prices in current and future periods include, but are not limited to, price reductions or increased production by OPEC members and other oil exporting nations, the effect of U.S. energy, monetary and trade policies, U.S. and global economic conditions, U.S. and global political and economic developments, including initiatives introduced by the Trump Administration and resulting energy and environmental policies, war or other military conflict, including the continuing conflict between Russia and Ukraine, and conditions in the U.S. oil and gas industry and the resulting demand for domestic land oilfield services.
The U.S. inflation rate began increasing significantly in 2021 and has remained at an elevated level as of year-end 2023.
The U.S. inflation rate began increasing significantly in 2021 and has remained at an elevated level as of year-end 2024.
Any Common Stock offered and sold in the ATM Offering will be issued pursuant to our shelf registration statement on Form S-3 (Registration No. 333-256149) filed with the SEC on May 14, 2021 and declared effective on June 11, 2021 (the “Registration Statement”), the prospectus supplement relating to the ATM Offering filed with the SEC on June 14, 2021 and any applicable additional prospectus supplements related to the ATM Offering that form a part of the Registration Statement.
Shares of Common Stock offered and sold in the ATM Offering were issued pursuant to the Company's shelf registration statement on Form S-3 (Registration No. 333-256149) filed with the SEC on May 14, 2021 and declared effective on June 11, 2021 (the “Registration Statement”), the prospectus supplement relating to the ATM Offering filed with the SEC on June 14, 2021 and any applicable additional prospectus supplements related to the ATM Offering that form a part of the Registration Statement.
Our significant level of indebtedness may limit our ability to borrow additional funds or capitalize on acquisition or other business opportunities. The indenture that governs the Senior Notes and the credit agreement that governs the ABL Facility have significant financial and operating restrictions that may have an adverse effect on our business, financial condition and results of operations.
Our significant level of indebtedness may limit our ability to borrow additional funds or capitalize on acquisition or other business opportunities. The 2030 Senior Notes Indenture and the New ABL Facility have significant financial and operating restrictions that may have an adverse effect on our business, financial condition and results of operations.
For the year ended December 31, 2023, no single customer accounted for more than 10% of our revenues. Our top five customers for the year ended December 31, 2023 together accounted for approximately 26% of our revenues.
For the year ended December 31, 2024, no single customer accounted for more than 10% of our revenues. Our top five customers for the year ended December 31, 2024 together accounted for approximately 31% of our revenues.
Certain regulatory authorities have delayed or suspended the issuance of permits while the potential environmental impacts associated with issuing such permits can be studied and appropriate mitigation measures evaluated. Also, in some cases, federal agencies have sought to cancel proposed leases for federal lands and refused or delayed required approvals.
Certain regulatory authorities have delayed or suspended the issuance of permits while the potential environmental impacts associated with issuing such permits can be studied and appropriate mitigation measures evaluated. At times, federal agencies have sought to cancel proposed leases for federal lands and refused or delayed required approvals.
“Business – Government Regulation and Environmental, Health and Safety Matters” for more discussion on permitting and leasing matters, including actions under the Biden Administration that may adversely affect oil and natural gas leasing and permitting activities.
“Business – Government Regulation and Environmental, Health and Safety Matters” for more discussion on permitting and leasing matters, including actions that may adversely affect oil and natural gas leasing and permitting activities.
In addition, insurance may not be available in the future at rates that we consider reasonable and commercially justifiable, compelling us to have larger deductibles or self-insured retentions to effectively manage expenses.
The current trend in the insurance industry is towards larger deductibles and self-insured retentions. In addition, insurance may not be available in the future at rates that we consider reasonable and commercially justifiable, compelling us to have larger deductibles or self-insured retentions to effectively manage expenses.
During the year ended December 31, 2023, based on total purchase cost, our ten largest suppliers of goods and services represented approximately 25% of all such purchases.
During the year ended December 31, 2024, based on total purchase cost, our ten largest suppliers of goods and services represented approximately 27% of all such purchases.
On June 14, 2021, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Piper Sandler & Co. as sales agent (the “Agent”).
On June 14, 2021, we entered into an Equity Distribution Agreement (as amended from time to time, the “Equity Distribution Agreement”) with Piper Sandler & Co. as sales agent (the “Agent”).
Fuel conservation measures, alternative fuel requirements, increasing consumer demand for or legislative incentives for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices could reduce demand for oil and natural gas.
Risks Relating to Our Industry Conservation measures and technological advances could reduce demand for oil and natural gas. 28 Fuel conservation measures, alternative fuel requirements, increasing consumer demand for or legislative incentives for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices could reduce demand for oil and natural gas.
We also may not be able to raise the substantial capital required for acquisitions and integrations on satisfactory terms, if at all.
Beyond twelve months, we may not be able to raise the substantial capital required for acquisitions and integrations on satisfactory terms, if at all.
Our amended and restated bylaws designate courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a different judicial forum for intra-corporate disputes with us or our directors, officers, employees or agents.
These provisions may also prevent or discourage attempts to remove and replace incumbent directors. 46 Our amended and restated bylaws designate courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a different judicial forum for intra-corporate disputes with us or our directors, officers, employees or agents.
As a result of market conditions, premiums and deductibles for certain of our insurance policies may substantially increase. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. Our insurance has deductibles or self-insured retentions and contains certain coverage exclusions. The current trend in the insurance industry is towards larger deductibles and self-insured retentions.
As a result of market conditions, premiums and deductibles for certain of our insurance policies may substantially increase. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. 29 Our insurance has deductibles or self-insured retentions and contains certain coverage exclusions.
On March 9, 2021, the Company filed claims in the District Court of Harris County, Texas against Magellan E&P Holdings, Inc.
On March 9, 2021, the Company filed claims in the District Court of Harris County, Texas against Magellan E&P Holdings, Inc. (“Magellan”), Redmon-Keys Insurance Group, Inc.
The indenture also contains customary events of default including, among other things, the failure to pay interest for 30 days, failure to pay principal when due, failure to observe or perform any other covenants or agreement in the Indenture subject to grace periods, cross- 34 acceleration to indebtedness with an aggregate principal amount in excess of $50.0, material impairment of liens, failure to pay certain material judgments and certain events of bankruptcy.
The 2030 Senior Notes Indenture also contains customary events of default including, among other things, the failure to pay interest for three business days, failure to pay principal when due, failure to observe or perform any other covenants or agreement in the 2030 Senior Notes Indenture subject to grace periods, cross-acceleration to indebtedness with an aggregate principal amount in excess of $7.5, material impairment of liens, failure to pay certain material judgments and certain events of bankruptcy.
Opposition towards oil and gas drilling and development activity has been growing globally and is particularly pronounced in the United States.
Opposition towards oil and gas drilling and development activity has been growing globally including in the United States.
However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or effectively prevent an acquisition that our Board determines is not in the best interests of our 46 company and our stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.
However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or effectively prevent an acquisition that our Board determines is not in the best interests of our company and our stockholders.
Our ability to continue to achieve our goals may depend upon our ability to effectively identify attractive businesses, access financing sources on acceptable terms, negotiate favorable transaction terms and successfully integrate any businesses we acquire, achieve cost efficiencies and manage these businesses as part of our company. Our acquisition and merger activities may involve unanticipated delays, costs and other problems.
Our ability to continue to achieve our goals may depend upon our ability to 27 effectively identify attractive businesses, access financing sources on acceptable terms, negotiate favorable transaction terms and successfully integrate any businesses we acquire, achieve cost efficiencies and manage these businesses as part of our company.
Price competition, equipment availability, location and suitability, experience of the workforce, safety records, reputation, operating integrity and the condition of equipment are all factors used by customers in awarding contracts. Our competitors are numerous and may have greater financial and technological resources than we do. Contracts are traditionally awarded on the basis of competitive bids or direct negotiations with customers.
Price competition, equipment availability, location and suitability, experience of the workforce, safety records, reputation, operating integrity and the condition of equipment are all factors used by customers in awarding contracts. Our competitors are numerous and may 30 have greater financial and technological resources than we do.
We cannot predict any future trends in the rate of inflation and a significant increase in inflation, to the extent we are unable to timely pass through the cost increases to our customers, would negatively impact our business, financial condition and results of operations.
We cannot predict any future trends in the rate of inflation and a significant increase in inflation, to the extent we are unable to timely pass through the cost increases to our customers, would negatively impact our business, financial condition and results of operations. We may be unable to maintain existing prices or implement price increases on our services.
The competitive environment has intensified as mergers among E&P companies have reduced the number of available customers and may further increase if E&P company bankruptcies further reduce the number of available customers or our existing and potential customers may develop their own service businesses.
Contracts are traditionally awarded on the basis of competitive bids or direct negotiations with customers. The competitive environment has intensified as mergers among E&P companies have reduced the number of available customers and may further increase if E&P company bankruptcies further reduce the number of available customers or our existing and potential customers may develop their own service businesses.
If debt and equity capital or alternative financing plans are not available on favorable terms or at all, we would be required to either get the necessary consents to amend the terms of our debt to allow us to pursue additional financing alternatives or curtail our capital spending, and our ability to sustain or improve our profits may be adversely affected.
If debt and equity capital or alternative financing plans are not available on favorable terms or at all, we may be required to get the necessary consents to amend the terms of our debt to allow us to pursue additional financing alternatives.
The inability to effectively and efficiently manage our assets to meet the current and future needs of our customers, which may vary widely from what is originally forecast due to a number of factors beyond our control, including periods of adverse weather, difficult market conditions or slowdowns in oil and natural gas exploration in the various regions in which we operate, could have an adverse effect on our business, financial condition and results of operations. 27 Possible decreased revenues, difficulty in obtaining access to financing and increased funding costs we experience may be exacerbated by the geographic concentrations of our completion and production operations.
The inability to effectively and efficiently manage our assets to meet the current and future needs of our customers, which may vary widely from what is originally forecast due to a number of factors beyond our control, including periods of adverse weather, difficult market conditions or slowdowns in oil and natural gas exploration in the various regions in which we operate, could have an adverse effect on our business, financial condition and results of operations.
We may not be able to sufficiently reduce our costs or increase our revenues to achieve profitability and generate positive operating income. We may incur further operating losses and experience negative operating cash flow, which may be significant.
We may not be able to sufficiently reduce our costs or increase our revenues to achieve profitability and generate positive operating income. We may incur further operating losses and experience negative operating cash flow, which may be significant. Our assets require capital for maintenance, upgrades and refurbishment, and we may require capital expenditures for new equipment.
Although oil prices were higher in 2022 and 2023, compared to 2021, the industry still has not fully recovered, and is currently still at a lower rig count than before the COVID-19 pandemic. We cannot assure you these conditions will not continue to exist throughout 2024.
Although oil prices have increased since the COVID-19 pandemic, the industry has still not fully recovered, and is currently still at a lower rig count than before the COVID-19 pandemic. We cannot assure you these conditions will not continue to exist throughout 2025.
Additionally, competition or advances in technology within our industry may require us to update our products and services. Such demands on our capital or reductions in demand and the increase in cost to maintain labor necessary for such maintenance and improvement, in each case, could have a material adverse effect on our business, financial condition and results of operations.
Such demands on our capital or reductions in demand and the increase in cost to maintain labor necessary for such maintenance and improvement, in each case, could have a material adverse effect on our business, financial condition and results of operations.
The borrowing base of our ABL Facility is dependent upon our receivables, which may be significantly lower in the future due to reduced activity levels or decreases in pricing for our services. The industry in which we operate has undergone and may continue to undergo consolidation.
The borrowing base of our New ABL Facility is dependent upon our receivables, which may be significantly lower in the future due to reduced activity levels or decreases in pricing for our services.
For example, they could: • increase our vulnerability to adverse economic and industry conditions; • require us to dedicate a substantial portion of cash from operations to the payment of debt service, thereby reducing the availability of cash to fund working capital, capital expenditures and other general corporate purposes; • limit our ability to obtain additional financing for working capital, capital expenditures, general corporate purposes or acquisitions; • place us at a disadvantage compared to our competitors that are less leveraged; • limit our flexibility in planning for, or reacting to, changes in our business and in our industry; and • make us vulnerable to increases in interest rates if we borrow under our ABL Facility, as any such borrowings would be made at variable interest rates.
For example, they could: • increase our vulnerability to adverse economic and industry conditions; • require us to dedicate a substantial portion of cash from operations to the payment of debt service, including making mandatory quarterly redemptions of the 2030 Senior Notes, thereby reducing the availability of cash to fund working capital, capital expenditures and other general corporate purposes; • limit our ability to obtain additional financing for working capital, capital expenditures, general corporate purposes or acquisitions; • place us at a disadvantage compared to our competitors that are less leveraged; • limit our flexibility in planning for, or reacting to, changes in our business and in our industry; and • make us vulnerable to increases in interest rates with respect to the outstanding 2030 Senior Notes and amounts borrowed under our New ABL Facility.
Termination of the manufacturing relationship with any of these manufacturers could affect our ability to provide such products and services to our customers. Although we believe other alternate sources of supply for our proprietary products exist, we would need to establish relationships with new manufacturers, which could potentially involve significant expense, delay or potential changes to certain product components.
Although we believe other alternate sources of supply for our proprietary products exist, we would need to establish relationships with new manufacturers, which could potentially involve significant expense, delay or potential changes to certain product components.
The oil and gas industry experienced significant increases in activity in late 2021 and 2022 due to the recovery from the COVID-19 pandemic and increasing demand for oil and gas. Average oil prices and natural gas prices and activity subsequently decreased in 2023 compared to 2022, before stabilizing in late 2023.
The oil and gas industry experienced significant increases in activity in late 2021 and 2022 due to the recovery from the COVID-19 pandemic and increasing demand for oil and gas.
“Business – Government Regulation and Environmental, Health and Safety Matters” for more discussion on climate change and ESG matters that may pose a risk to our business, such as regulatory actions taken by the Biden Administration and the proposed SEC rule relating to climate disclosures. 41 We may be required to assume responsibility for environmental and other liabilities of companies we have acquired or will acquire.
“Business – Government Regulation and Environmental, Health and Safety Matters” for more discussion on climate change and ESG matters that may pose a risk to our business. We may be required to assume responsibility for environmental and other liabilities of companies we have acquired or will acquire.
Sales of or other transactions relating to shares of our Common Stock by our significant stockholders, directors, officers or employees could cause a perception in the marketplace that adverse events or trends have occurred or may be occurring at our company or that it is otherwise an advantageous time to sell shares of our Common Stock.
Sales of substantial amounts of our Common Stock (including shares issued in connection with an acquisition or shares held by stockholders with registration rights), or the perception that such sales could occur, may adversely affect prevailing market prices of our Common Stock. 45 Sales of or other transactions relating to shares of our Common Stock by our significant stockholders, directors, officers or employees could cause a perception in the marketplace that adverse events or trends have occurred or may be occurring at our company or that it is otherwise an advantageous time to sell shares of our Common Stock.
Further, to the extent COVID-19 or any other pandemic adversely affects our business or the global economic conditions more generally, it may also have the effect of heightening many of the other risks described in this report. Risks Relating to Our Industry Conservation measures and technological advances could reduce demand for oil and natural gas.
Further, to the extent COVID-19 or any other pandemic adversely affects our business or the global economic conditions more generally, it may also have the effect of heightening many of the other risks described in this report.
During the past five years, WTI has ranged from a low of $(36.98) per barrel ("Bbl") in April 2020 to a high of $123.64 per Bbl in March 2022. As of December 31, 2023, WTI closed at $71.89 per Bbl, a 10.3% decrease compared to the closing price of WTI on December 31, 2022.
During the past five years, West Texas Intermediate (“WTI”) has ranged from a low of $(36.98) per barrel (“Bbl”) in April 2020 to a high of $123.64 per Bbl in March 2022. As of December 31, 2024, WTI closed at $72.44 per Bbl, a 0.8% increase compared to the closing price of WTI on December 31, 2023.
Our reliance on such suppliers could increase the difficulty of obtaining such goods and services in the event of a disruption to the supply chain or upon a bankruptcy of one or more of these suppliers or upon a shortage in our industry. Price increases, delays in delivery and interruptions in supply may require us to incur higher operating costs.
Our reliance on such suppliers could increase the 35 difficulty of obtaining such goods and services in the event of a disruption to the supply chain or upon a bankruptcy of one or more of these suppliers or upon a shortage in our industry.
Our ability to pay the principal and interest on our long-term debt and to satisfy our other liabilities will depend on our future operating performance and ability to refinance our debt as it becomes due.
Our ability to pay the principal and interest on our debt as it becomes due, including the quarterly redemptions of the 2030 Senior Notes, and to satisfy our other liabilities will depend on our future operating performance.
While we cannot predict whether, or in what form, any legislation or regulatory and executive actions that change existing trucking legal requirements will occur, we may incur increased expenses associated with new or changed trucking laws, regulatory and executory actions, or other restrictions, which could negatively impact our business, financial condition and results of operations.
While we cannot predict whether, or in what form, any legislation or regulatory and executive actions that change existing trucking legal requirements will occur, we may incur increased expenses associated with new or changed trucking laws, regulatory and executory actions, or other restrictions, which could negatively impact our business, financial condition and results of operations. 39 Legal requirements relating to hydraulic fracturing could increase our customers’ costs of doing business, limit the areas in which our customers can operate and reduce oil and natural gas production by our customers, which could adversely impact our business, financial condition and results of operations.
Explosive incidents arising out of dangerous materials used in our business could disrupt operations and result in bodily injuries and property damages, which occurrences could have a material adverse effect our business, results of operations and financial conditions.
Explosive incidents arising out of dangerous materials used in our business could disrupt operations and result in bodily injuries and property damages, which occurrences could have a material adverse effect our business, results of operations and financial conditions. 42 Our operations include the licensing, storage and handling of explosive materials that are subject to regulation by the ATF and analogous state agencies.
In addition, these risks may be greater for us upon the acquisition of another company that has not allocated significant resources and management focus to safety and has a poor safety record. 29 We maintain what we believe is customary and reasonable insurance to protect our business against most potential losses, but we are not fully insured against all risks inherent in our business and such insurance may not be adequate to cover our liabilities, especially as the inherent risks in our operations increase with increasing well complexity.
We maintain what we believe is customary and reasonable insurance to protect our business against most potential losses, but we are not fully insured against all risks inherent in our business and such insurance may not be adequate to cover our liabilities, especially as the inherent risks in our operations increase with increasing well complexity.
("Magellan"), Redmon-Keys Insurance Group, Inc. and certain underwriters at Lloyd's to recover $4.6 owed on invoices duly issued by the Company for services rendered on behalf of the defendants in response to an offshore well blowout near Bob Hall Pier in Corpus Christi, Texas.
(“Redmon-Keys”) and certain underwriters at Lloyd's (the “Magellan Underwriters”) to recover $4.6 owed on invoices duly issued by the Company for services rendered on behalf of the defendants in response to an offshore well blowout near Bob Hall Pier in Corpus Christi, Texas. On March 30, 2021, Magellan filed for bankruptcy pursuant to Chapter 7 of the U.S. bankruptcy code.
On March 30, 2021, Magellan filed for bankruptcy pursuant to Chapter 7 of the U.S. bankruptcy code. The bankruptcy proceedings are ongoing. During the fiscal year ended January 31, 2021, the Company reserved the full amount of its invoices totaling $4.6 as a prudent action in light of the Chapter 7 filing.
During the fiscal year ended January 31, 2021, the Company reserved the full amount of its invoices totaling $4.6 as a prudent action in light of the Chapter 7 filing.
Any inability to maintain our pricing or to increase our pricing from reduced levels could have a material adverse effect on our business, financial condition and results of operations.
We cannot predict the magnitude or duration of volatility in oil and gas prices and therefore on the prices we charge our customers. Any inability to maintain our pricing or to increase our pricing from reduced levels could have a material adverse effect on our business, financial condition and results of operations.
The costs of components and labor have increased in the past and may increase in the 32 future with increases in demand, which will require us to incur additional costs to upgrade any equipment we may acquire in the future. Our equipment typically does not generate revenue while it is undergoing maintenance, refurbishment or upgrades.
Our equipment requires periodic capital investment in maintenance, upgrades and refurbishment to maintain its competitiveness. The costs of components and labor have increased in the past and may increase in the future with increases in demand, which will require us to incur additional costs to upgrade any equipment we may acquire in the future.
Some of our largest customers have consolidated in recent years and are using their size and purchasing power to achieve economies of scale and pricing concessions. This consolidation may result in reduced capital spending by E&P customers or the acquisition of one or more of our other primary customers, which may lead to decreased demand for our products and services.
This consolidation may result in reduced capital spending by E&P customers or the acquisition of one or more of our other primary customers, which may lead to decreased demand for our products and services.
If our cash flows, existing cash balances, and borrowings under our ABL Facility are insufficient to fund future capital expenditures, we may consider additional financing or refinancing alternatives.
If our future cash flows and available borrowings under our New ABL Facility are insufficient to fund our operating expenses, we may be forced to consider additional financing alternatives.
The indenture governing the Senior Notes contains customary affirmative and negative covenants restricting, among other things, the Company’s ability to incur indebtedness and liens, pay dividends or make other distributions, make certain other restricted payments or investments, sell assets, enter into restrictive agreements, enter into transactions with the Company’s affiliates, and merge or consolidate with other entities or sell substantially all of the Company’s assets.
The 2030 Senior Notes Indenture also restricts, among other things, the Company’s ability to incur indebtedness and liens, pay dividends or make other distributions, make certain other restricted payments or investments, sell assets, enter into restrictive agreements, enter into transactions with the Company’s affiliates, and merge or consolidate with other entities or convey, transfer or lease all or substantially all of the Company’s properties and assets to another person, which, in each case, is subject to certain limitations and exceptions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur VP of IT has over thirty years 48 of IT background in a variety of industries, with experience developing security frameworks, training on cyber security best practices, and emergency response and remediation. 49
Biggest changeTo facilitate effective oversight, our Vice President of IT holds discussions on cybersecurity risks, incident trends, and the effectiveness of cybersecurity measures as necessitated by emerging material cyber risks. 48 Our Vice President of IT has over thirty years of IT background in a variety of industries, with experience developing security frameworks, training on cyber security best practices, and emergency response and remediation. 49
ITEM 1C. CYBERSECURITY 47 Risk Management and Strategy IT plays a crucial role in all of our operations.
ITEM 1C. CYBERSECURITY Risk Management and Strategy 47 IT plays a crucial role in all of our operations.
Our audit committee oversees management’s activities related to our cybersecurity risk program. Our cybersecurity committee, which includes Vice President of IT, Chief Financial Officer, Chief Compliance Officer/General Counsel and other senior management, reports to the audit committee on a quarterly basis regarding information security and cybersecurity matters, including cybersecurity risks, or as needed.
Our cybersecurity committee, which includes Vice President of IT, Chief Financial Officer, Chief Compliance Officer/General Counsel and other senior management, reports to the audit committee on a quarterly basis regarding information security and cybersecurity matters, including cybersecurity risks, or as needed, and the audit committee reports to the Board.
Our Vice President of IT leads our IT department, which is responsible for assessing, identifying, and managing risks from cybersecurity threats. Our Vice President of IT reports to the Company’s Chief Financial Officer, including with respect to emerging cybersecurity incidents.
Our Vice President of IT reports to the Company’s Chief Financial Officer, including with respect to emerging cybersecurity incidents.
Removed
To facilitate effective oversight, our Vice President of IT holds discussions on cybersecurity risks, incident trends, and the effectiveness of cybersecurity measures as necessitated by emerging material cyber risks.
Added
Our audit committee oversees management’s activities related to our cybersecurity risk program.
Added
Our IT department is made up of experienced professionals with an extensive background in information security, risk management and incident response. Our Vice President of IT leads our IT department, which is responsible for assessing, identifying, and managing risks from cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe currently own or lease over 50 service facilities, including the following material facilities: Leased or Owned Expiration of Lease Rocky Mountains LaSalle, CO Lease 11/1/2027 Mills, WY Lease 10/31/2026 Nunn, CO Lease 11/30/2027 Platteville, CO Own N/A Williston, ND Own N/A Southwest Odessa, TX Lease 6/30/2027 Odessa, TX Lease 6/30/2028 Willis, TX Own N/A Northeast/Mid-Con Bossier City, LA Lease 5/31/2024 Bridgeport, WV Lease 8/31/2028 Oklahoma City, OK Lease 6/30/2026 Union City, OK Own N/A We believe that our facilities are adequate for our current operations and allow us to efficiently serve our customers.
Biggest changeWe currently own or lease over 50 service facilities, including the following material facilities: Leased or Owned Expiration of Lease Rocky Mountains LaSalle, CO Lease 11/1/2027 Mills, WY Lease 10/31/2026 Nunn, CO Lease 11/30/2027 Williston, ND Own N/A Southwest Odessa, TX Lease 6/30/2027 Odessa, TX Lease 6/30/2028 Odessa, TX Lease 5/31/2030 Willis, TX Own N/A Northeast/Mid-Con Bossier City, LA Lease 5/31/2026 Bridgeport, WV Lease 8/31/2028 Oklahoma City, OK Lease 6/30/2026 Union City, OK Own N/A We believe that our facilities are adequate for our current operations and allow us to efficiently serve our customers.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest change("Magellan"), Redmon-Keys Insurance Group, Inc. and certain underwriters at Lloyd's to recover $4.6 owed on invoices duly issued by the Company for services rendered on behalf of the defendants in response to an offshore well blowout near Bob Hall Pier in Corpus Christi, Texas.
Biggest change(“Redmon-Keys”) and certain underwriters at Lloyd's (the “Magellan Underwriters”) to recover $4.6 owed on invoices duly issued by the Company for services rendered on behalf of the defendants in response to an offshore well blowout near Bob Hall Pier in Corpus Christi, Texas. On March 30, 2021, Magellan filed for bankruptcy pursuant to Chapter 7 of the U.S. bankruptcy code.
On March 9, 2021, the Company filed claims in the District Court of Harris County, Texas against Magellan E&P Holdings, Inc.
On March 9, 2021, the Company filed claims in the District Court of Harris County, Texas against Magellan E&P Holdings, Inc. (“Magellan”), Redmon-Keys Insurance Group, Inc.
On March 30, 2021, Magellan filed for bankruptcy pursuant to Chapter 7 of the U.S. bankruptcy code. The bankruptcy proceedings are ongoing. During the fiscal year ended January 31, 2021, the Company reserved the full amount of its invoices totaling $4.6 as a prudent action in light of the Chapter 7 filing. See Note 10.
During the fiscal year ended January 31, 2021, the Company reserved the full amount of its invoices totaling $4.6 as a prudent action in light of the Chapter 7 filing.
Added
Through the bankruptcy proceedings, the Company recovered $1.0 in March 2024 and, following a settlement by the Chapter 7 Trustee with the Magellan Underwriters in December 2024 and approved by the Court in January 2025, the Company expects to receive an additional $1.0 to $1.3 in 2025. The Company continues to pursue claims against Redmon-Keys. See Note 10.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Equity Securities None in the three months ended December 31, 2023.
Biggest changeOther than as described above or as previously reported in a Form 8-K, there were no unregistered sales of equity securities for the three months ended December 31, 2024.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table presents the total number of shares of our Common Stock that we repurchased during the three months ended December 31, 2023: Period Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs October 1, 2023 - October 31, 2023 0 $ — — $ 48,859,603 November 1, 2023 - November 30, 2023 0 $ — — $ 48,859,603 December 1, 2023 - December 31, 2023 0 $ — — $ 48,859,603 Total — — (1) The average price paid per share of Common Stock repurchased under the share repurchase program includes commissions paid to the brokers.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table presents the total number of shares of our Common Stock that we repurchased during the three months ended December 31, 2024: 51 Period Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs October 1, 2024 - October 31, 2024 0 $ — — $ 48,859,603 November 1, 2024 - November 30, 2024 0 $ — — $ 48,859,603 December 1, 2024 - December 31, 2024 0 $ — — $ 48,859,603 Total — — (1) The average price paid per share of Common Stock repurchased under the share repurchase program includes commissions paid to the brokers.
As of such date, based on information provided to us by Computershare, our transfer agent, we had 660 registered holders, and because many of these shares are held by brokers and other institutions on behalf of the beneficial holders, we are unable to estimate the number of beneficial stockholders represented by these holders of record.
As of such date, based on information provided to us by Computershare, our transfer agent, we had 498 registered holders, and because many of these shares are held by brokers and other institutions on behalf of the beneficial holders, we are unable to estimate the number of beneficial stockholders represented by these holders of record.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock is quoted on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “KLXE”. On February 29, 2024, the last reported sale price of our Common Stock as reported by Nasdaq was $8.12 per share.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock is quoted on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “KLXE”. On February 28, 2025, the last reported sale price of our Common Stock as reported by Nasdaq was $4.67 per share.
Added
Recent Sales of Unregistered Equity Securities In November 2024, we entered into the Exchange Agreement with a noteholder of our 2025 Senior Notes. Pursuant to the Exchange Agreement, the noteholder exchanged $1.0 in aggregate principal amount of the Company’s outstanding 2025 Senior Notes for an aggregate of 190,476 shares of our Common Stock.
Added
The shares of Common Stock issued in the Exchange were issued to existing holders of the Company’s securities without commission in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.
Added
In connection with the Refinancing, on March 12, 2025, we issued Warrants to purchase, in aggregate, up to 2,373,187 shares of Common Stock at an exercise price of $0.01 per share, subject to adjustment.
Added
The Warrants were not, and the shares of Common Stock issuable upon the exercise of the Warrants will not be, registered under the Securities Act in reliance upon the exemption from registration provided by Section 4(a)(2) thereof as a transaction not involving any public offering.

Item 7. Management's Discussion & Analysis

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

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Biggest changeFor the year ended December 31, 2023, cost of sales was $672.5, or 75.7% of revenues, as compared to $621.3, or 79.5% of revenues, in the year ended December 31, 2022. The increase in dollar amount was primarily due to increased activity and to a lesser degree, increased pricing due to inflation.
Biggest changeDecreased weighted average price contributed to approximately 52% of the decrease in dollar amount, and decreased weighted average volume contributed to approximately 48%. Cost of sales . For the year ended December 31, 2024, cost of sales was $549.7, or 77.5% of revenues, as compared to $672.5, or 75.7% of revenues, in the year ended December 31, 2023.
Our liquidity requirements consist of working capital needs, debt service obligations and ongoing capital expenditure requirements. Our primary requirements for working capital are directly related to the activity level of our operations. 60 This Annual Report includes net working capital, which is a “non-GAAP financial measure” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Our liquidity requirements consist of working capital needs, debt service obligations and ongoing capital expenditure requirements. Our primary requirements for working capital are directly related to the activity level of our operations. This Annual Report includes net working capital, which is a “non-GAAP financial measure” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Revenues from product sales are recognized when the customer obtains control of the product, which occurs at a point in time, typically upon delivery in accordance with the terms of the field ticket or work order. 63 Recent Accounting Pronouncements See Note 2 - Recent Accounting Pronouncements to our consolidated financial statements for a discussion of recently issued accounting pronouncements.
Revenues from product sales are recognized when the customer obtains control of the product, which occurs at a point in time, typically upon delivery in accordance with the terms of the field ticket or work order. Recent Accounting Pronouncements See Note 2 - Recent Accounting Pronouncements to our consolidated financial statements for a discussion of recently issued accounting pronouncements.
The ABL Facility includes financial, operating and negative covenants that limit our ability to incur indebtedness, to create liens or other encumbrances, to make certain payments and investments, including dividend payments, to engage in transactions with affiliates, to engage in sale/leaseback transactions, to guarantee indebtedness and to sell or otherwise dispose of assets and merge or consolidate with other entities.
The New ABL Facility includes financial, operating and negative covenants that limit our ability to incur indebtedness, to create liens or other encumbrances, to make certain payments and investments, including dividend payments, to engage in transactions with affiliates, to engage in sale/leaseback transactions, to guarantee indebtedness and to sell or otherwise dispose of assets and merge or consolidate with other entities.
We exclude the items listed above in arriving at Adjusted EBITDA (Loss) because these amounts can vary substantially from company to company within our industry depending upon accounting methods, book values of assets, capital structures and the method by which the assets were acquired.
We exclude the items listed above in arriving at Adjusted EBITDA (Loss) because these amounts can vary substantially from company to company 66 within our industry depending upon accounting methods, book values of assets, capital structures and the method by which the assets were acquired.
Senior Notes In conjunction with the acquisition of Motley Services, LLC (“Motley”) in 2018, we issued $250.0 principal amount of the Senior Notes offered pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons outside the United States in compliance with Regulation S under the Securities Act.
Senior Notes 2025 Senior Notes In conjunction with the acquisition of Motley Services, LLC (“Motley”) in 2018, we issued $250.0 principal amount of the 2025 Senior Notes offered pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons outside the United States in compliance with Regulation S under the Securities Act.
Certain accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis.
Certain accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and 64 assumptions on a regular basis.
Personal property was valued using a combination of market approach and replacement cost approach. The estimated fair value of the assets acquired, net of liabilities assumed, exceeds the purchase consideration, resulting in a bargain purchase gain. 62 When determining the fair value of assets acquired, including real property and personal property, and liabilities assumed, we make significant estimates and assumptions.
Personal property was valued using a combination of market approach and replacement cost approach. The estimated fair value of the assets acquired, net of liabilities assumed, exceeds the purchase consideration, resulting in a bargain purchase gain. When determining the fair value of assets acquired, including real property and personal property, and liabilities assumed, we make significant estimates and assumptions.
A failure to comply with the obligations contained in the ABL Facility could result in an event of default, which could permit acceleration of the debt, termination of undrawn commitments and enforcement against any liens securing the debt.
A failure to comply with the obligations contained in the New ABL Facility could result in an event of default, which could permit acceleration of the debt, termination of undrawn commitments and enforcement against any liens securing the debt.
The total consideration for the Greene’s 52 Acquisition under the Purchase Agreement consisted of the issuance of approximately 2.4 million shares of the Company's Common Stock, par value $0.01 per share, subject to customary post-closing adjustments, representing 14.7% of the fully diluted Common Stock of the Company with an implied enterprise value of approximately $30.3 based on a 30-day volume weighted average price as of March 7, 2023 less acquired cash.
The total consideration for the Greene’s Acquisition under the Purchase Agreement consisted of the issuance of approximately 2.4 million shares of the 53 Company's Common Stock, par value $0.01 per share, subject to customary post-closing adjustments, representing 14.7% of the fully diluted Common Stock of the Company with an implied enterprise value of approximately $30.3 based on a 30-day volume weighted average price as of March 7, 2023 less acquired cash.
Despite the decrease in commodity prices during the fiscal year ended December 31, 2023, the Company remained focused on building a leaner and more profitable set of service offerings, which allowed us to make meaningful positive impacts to our revenue, operating margins, cash flows and Adjusted EBITDA (as defined below).
Despite the decrease in commodity prices during the fiscal year ended December 31, 2024, the Company remained focused on building a leaner and more profitable set of service offerings, which allowed us to make meaningful positive impacts to our revenue, operating margins, cash flows and Adjusted EBITDA (as defined below).
To what extent these and other external factors (such as government action with respect to climate change regulation) ultimately impact 54 our future business, liquidity, financial condition, and results of operations is highly uncertain and dependent on numerous factors, including future developments, that are not within our control and cannot be accurately predicted.
To what extent these and 55 other external factors (such as government action with respect to climate change regulation) ultimately impact our future business, liquidity, financial condition, and results of operations is highly uncertain and dependent on numerous factors, including future developments, that are not within our control and cannot be accurately predicted.
While oil prices declined in the first half of 2023 from their 2022 highs, oil prices rebounded in the third quarter of 2023 due to stronger than anticipated economic growth and sustained production cuts from Saudi Arabia and Russia, followed by oil price decreases in the fourth quarter of 2023 due to a decrease in demand as the overall economy declined.
While oil prices declined in the first half of 2023 from their 2022 highs, oil prices rebounded in the third quarter of 2023 due to stronger than anticipated economic growth and sustained production cuts from Saudi Arabia and Russia, followed by oil price stabilization, through decreases, in the fourth quarter of 2023 due to a decrease in demand as the overall economy declined.
Any required impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to operating results. For the years ended December 31, 2023 and December 31, 2022, there were no impairments of long-lived assets.
Any required impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to operating results. For the years ended December 31, 2024 and December 31, 2023, there were no impairments of long-lived assets.
Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” The following discussion and analysis addresses the results of our operations for the year ended December 31, 2023, as compared to the year ended December 31, 2022. In addition, the discussion and analysis addresses our liquidity, financial condition and other matters for these periods.
Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” The following discussion and analysis addresses the results of our operations for the year ended December 31, 2024, as compared to the year ended December 31, 2023. In addition, the discussion and analysis addresses our liquidity, financial condition and other matters for these periods.
We believe we are well positioned as a company to service customers when they are drilling and completing complex wells, and remediating both newer and older legacy wells. 53 We invest in innovative technology and equipment designed for modern production techniques that increase efficiencies and production for our customers.
We believe we are well positioned as a company to service customers when they are drilling and completing complex wells, and remediating both newer and older legacy wells. 54 We invest in innovative technology and equipment designed for modern production techniques that increase efficiencies and production for our customers.
Our innovative and adaptive approach to proprietary tool design has been employed by our in-house R&D organization and, in selected instances, by our technology partners to develop tools covered by 38 patents and 9 pending patent applications, which we believe differentiates us from our regional competitors and also allows us to deliver more focused service and better outcomes in our specialized services than larger national competitors that do not discretely dedicate their resources to the services we provide.
Our innovative and adaptive approach to proprietary tool design has been employed by our in-house R&D organization and, in selected instances, by our technology partners to develop tools covered by 36 patents and 8 pending patent applications, which we believe differentiates us from our regional competitors and also allows us to deliver more focused service and better outcomes in our specialized services than larger national competitors that do not discretely dedicate their resources to the services we provide.
During the year ended December 31, 2023, there were no additional borrowings under our ABL Facility and no sales under our ATM Offering program. Off-Balance Sheet Arrangements Indemnities, Commitments and Guarantees In the normal course of our business, we make certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions.
During the year ended December 31, 2024, there were no additional borrowings under our Prior ABL Facility and no sales under our ATM Offering program. Off-Balance Sheet Arrangements Indemnities, Commitments and Guarantees In the normal course of our business, we make certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions.
Our required maintenance capital expenditures tend to be lower than other oilfield service providers due to the generally asset-light nature of our services, the lower average age of our assets and our ability to charge back a portion of asset maintenance to customers for a number of our assets. 55 Results of Operations Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenue .
Our required maintenance capital expenditures tend to be lower than other oilfield service providers due to the generally asset-light nature of our services, the lower average age of our assets and our ability to charge back a portion of asset maintenance to customers for a number of our assets. 56 Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue .
Our future operating performance and ability to refinance such indebtedness will be affected by prevailing economic and political conditions, the level of drilling, completion, production and intervention services activity for North American onshore oil and natural gas resources, the willingness of capital providers to lend to our industry and other financial and business factors, many of which are beyond our control.
Our future operating performance will be affected by prevailing economic and 58 political conditions, the level of drilling, completion, production and intervention services activity for North American onshore oil and natural gas resources, the willingness of capital providers to lend to our industry and other financial and business factors, many of which are beyond our control.
On a net basis, after taking into consideration the debt issuance costs for the Senior Notes, total debt as of December 31, 2023 was $234.4. The Senior Notes bear interest at an annual rate of 11.5%, payable semi-annually in arrears on May 1 and November 1. Accrued interest as of December 31, 2023 was $4.5.
On a net basis, after taking into consideration the debt issuance costs for the 2025 Senior Notes, total debt as of December 31, 2024 was $235.1. The 2025 Senior Notes bear interest at an annual rate of 11.5%, payable semi-annually in arrears on May 1 and November 1. Accrued interest as of December 31, 2024 was $4.5.
Under the ASC 805 acquisition method of accounting, we allocate the fair value of purchase consideration transferred to the tangible assets and intangible assets acquired, if any, and liabilities assumed based on their estimated fair values on the date of the acquisition.
Under the FASB ASC Topic 805, Business Combinations acquisition method of accounting, we allocate the fair value of purchase consideration transferred to the tangible assets and intangible assets acquired, if any, and liabilities assumed based on their estimated fair values on the date of the acquisition.
We continuously monitor collections and payments from our customers and maintain an allowance for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. The allowance for doubtful accounts at December 31, 2023 and December 31, 2022 was $5.5 and $5.7, respectively.
We continuously monitor collections and payments from our customers and maintain an allowance for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. The allowance for doubtful accounts at December 31, 2024 and December 31, 2023 was $4.2 and $5.5, respectively.
The cash used in investing 61 activities for the year ended December 31, 2023 was primarily driven by increased maintenance and growth capital spending to support our growing business operations.
The cash used in investing activities for the year ended December 31, 2024 was primarily driven by increased maintenance and growth capital spending to support our business operations.
During the three and twelve months ended December 31, 2023, the Company did not sell any shares of Common Stock and incurred legal and administrative fees of $0.1 and $0.5, respectively.
During the three and twelve months ended December 31, 2024, the Company did not sell any shares of Common Stock and incurred legal and administrative fees of $0.3 and $0.5, respectively.
In light of our substantial leverage position, as market conditions warrant and subject to our contractual restrictions, liquidity position and other factors, we may access the public or private debt and equity markets or seek to recapitalize, refinance or otherwise restructure our capital structure.
As market conditions warrant and subject to our contractual restrictions, liquidity position and other factors, we may further access the public or private debt and equity markets or seek to recapitalize, refinance or otherwise restructure our capital structure.
The Indenture also contains customary events of default including, among other things, the failure to pay interest for 30 days, failure to pay principal when due, failure to observe or perform any other covenants or agreement in the Indenture subject to grace periods, cross-acceleration to indebtedness with an aggregate principal amount in excess of $50.0, material impairment of liens, failure to pay certain material judgments and certain events of bankruptcy.
The 2030 Senior Notes Indenture also contains customary events of default including, among other things, the failure to pay interest for three business days, failure to pay principal when due, failure to observe or perform any other covenants or agreement in the 2030 Senior Notes Indenture subject to grace periods, cross-acceleration to indebtedness with an aggregate principal amount in excess of $7.5, material impairment of liens, failure to pay certain material judgments and certain events of bankruptcy.
The ABL Facility became effective on September 14, 2018 and is scheduled to mature on the ABL Maturity Date in 2025. Borrowings under the ABL Facility bear interest at a rate equal to Term SOFR (as defined in the ABL Facility) plus the Applicable Margin (as defined in the ABL Facility).
The Prior ABL Facility became effective on September 14, 2018 and was scheduled to mature in 2025. Borrowings under the Prior ABL Facility bore interest at a rate equal to Term SOFR (as defined in the Prior ABL Facility) plus the Applicable Margin (as defined in the Prior ABL Facility).
The decrease in cost of sales as a percentage of revenues was generally consistent across our segments and a result of better leverage of fixed costs due to increased activity. The two largest components of cost of sales are labor and repair & maintenance.
The decrease in dollar amount was primarily due to decreased activity. The increase in cost of sales as a percentage of revenues was generally consistent across our segments and a result of fixed costs leverage due to lower activity. The two largest components of cost of sales are labor and repair & maintenance.
Looking ahead to the year ending December 31, 2024, assuming economic activity holds at the recent level and commodity prices remain volatile, we anticipate that our customers will continue to cautiously allocate capital and operating expense spending.
Looking ahead to the year ending December 31, 2025, assuming commodity prices remain volatile, we anticipate that our customers will continue to cautiously allocate capital and operating expense spending.
Although cost of sales as a percentage of revenues decreased, labor costs per employee increased by 1.7% as compared with the year ended December 31, 2022. Repair & maintenance costs as a percentage of revenues increased by 2.2% as compared to the year ended December 31, 2022. Selling, general and administrative expenses ("SG&A") .
As cost of sales decreased, labor costs per employee decreased by (9.3)% as compared with the year ended December 31, 2023. Repair & maintenance costs as a percentage of revenues increased by 15.9% as compared to the year ended December 31, 2023. Selling, general and administrative expenses ("SG&A") .
Net working capital is calculated as current assets, excluding cash, less current liabilities, excluding accrued interest, operating lease obligations and finance lease obligations. As of December 31, 2023, total current assets excluding cash decreased by $19.5 and total current liabilities excluding accrued interest, operating lease obligations and finance lease obligations increased by $5.4.
Net working capital is calculated as current assets, excluding cash, less current liabilities, excluding accrued interest, operating lease obligations and finance lease obligations. As of December 31, 2024, total current assets excluding cash decreased by $36.4 and total current liabilities excluding accrued interest, operating lease obligations and finance lease obligations decreased by $14.9.
R&D costs during the year ended December 31, 2023 were $1.4, as compared to $0.6 in the year ended December 31, 2022, reflecting our continued focus on maintaining an in-house R&D function while scaling costs to adjust to current levels of customer demand. 56 Operating income .
R&D costs were $1.4 during both the year ended December 31, 2024 and the year ended December 31, 2023, reflecting our continued focus on maintaining an in-house R&D function while scaling costs to adjust to current levels of customer demand. 57 Operating income (loss) .
The ABL Facility is secured by, among other things, a first priority lien on the Company’s accounts receivable and inventory and contains customary conditions precedent to borrowing and affirmative and negative covenants. $50.0 was outstanding under the ABL Facility as of December 31, 2023. The effective interest rate under the ABL Facility was approximately 7.96% on December 31, 2023.
The Prior ABL Facility was secured by, among other things, a first priority lien on the Company’s accounts receivable and inventory and contained customary conditions precedent to borrowing and affirmative and negative covenants. $50.0 was outstanding under the Prior ABL Facility as of December 31, 2024.
The following table sets forth our cash flows for the periods presented below: Year Ended December 31, 2023 December 31, 2022 Net cash provided by operating activities $ 115.6 $ 15.7 Net cash used in investing activities (39.7) (18.7) Net cash (used in) provided by financing activities (20.8) 32.4 Net change in cash 55.1 29.4 Cash balance end of period $ 112.5 $ 57.4 Net cash provided by operating activities Net cash provided by operating activities was $115.6 for the year ended December 31, 2023, as compared to net cash provided by operating activities of $15.7 for the year ended December 31, 2022.
The following table sets forth our cash flows for the periods presented below: 63 Year Ended December 31, 2024 December 31, 2023 Net cash provided by operating activities $ 54.2 $ 115.6 Net cash used in investing activities (51.1) (39.7) Net cash used in financing activities (24.0) (20.8) Net change in cash (20.9) 55.1 Cash balance end of period $ 91.6 $ 112.5 Net cash provided by operating activities Net cash provided by operating activities was $54.2 for the year ended December 31, 2024, as compared to net cash provided by operating activities of $115.6 for the year ended December 31, 2023.
For the year ended December 31, 2023, each of our segments demonstrated improvement in operating income (loss) compared to the year ended December 31, 2022, driven by the increase in pricing and utilization outpacing increases in operating costs and labor in the year ended December 31, 2023.
For the year ended December 31, 2024, each of our segments demonstrated lower operating income compared to the year ended December 31, 2023, driven by the decrease in pricing and utilization outpacing decreases in operating costs and labor in the year ended December 31, 2024.
Looking ahead, the Company continues to pursue strategic, accretive consolidation opportunities that further strengthen the Company’s competitive positioning and capital structure and drive efficiencies, accelerate growth and create long‑term stockholder value.
Looking ahead, the Company continues to pursue strategic, accretive consolidation opportunities that further strengthen the Company’s competitive positioning and capital structure and drive efficiencies, accelerate growth and create long‑term stockholder value. Greene’s Acquisition On March 8, 2023, the Company completed the acquisition of all of the equity interests of Greene’s.
Our ability to pay the principal and interest on our long-term debt and to satisfy our other liabilities will depend on our future operating performance and ability to refinance our debt as it becomes due.
Our ability to pay the principal and interest on our debt and to satisfy our other liabilities will depend on our future operating performance.
The following table sets forth the reconciliation of current assets and current liabilities to net working capital: As of December 31, 2023 December 31, 2022 Current assets $ 290.3 $ 254.7 Less: Cash 112.5 57.4 Net current assets 177.8 197.3 Current liabilities 164.1 154.4 Less: Accrued interest 4.6 4.8 Less: Operating lease obligations 6.9 14.2 Less: Finance lease obligations 22.0 10.2 Net current liabilities 130.6 125.2 Net Working Capital $ 47.2 $ 72.1 Net working capital as of December 31, 2023 was $47.2, a decrease of $24.9 as compared to net working capital of $72.1 as of December 31, 2022.
The following table sets forth the reconciliation of current assets and current liabilities to net working capital: As of December 31, 2024 December 31, 2023 Current assets $ 233.0 $ 290.3 Less: Cash 91.6 112.5 Net current assets 141.4 177.8 Current liabilities 140.1 164.1 Less: Accrued interest 4.5 4.6 Less: Operating lease obligations 6.9 6.9 Less: Finance lease obligations 13.0 22.0 Net current liabilities 115.7 130.6 Net Working Capital $ 25.7 $ 47.2 Net working capital as of December 31, 2024 was $25.7, a decrease of $21.5 as compared to net working capital of $47.2 as of December 31, 2023.
In addition, incurring additional debt in excess of our existing outstanding indebtedness would result in increased interest expense and financial leverage, and issuing Common Stock may result in dilution to our current stockholders.
In addition, incurring additional debt in excess of our existing outstanding indebtedness would result in increased interest expense and financial leverage, and issuing Common Stock may result in dilution to our current stockholders. We actively manage our capital spending and are focused primarily on required maintenance spending.
Net cash (used in) provided by financing activities Net cash used in financing activities was $20.8 for the year ended December 31, 2023, compared to net cash provided by financing activities of $32.4 for the year ended December 31, 2022.
Net cash used in financing activities Net cash used in financing activities was $24.0 for the year ended December 31, 2024, compared to net cash used in financing activities of $20.8 for the year ended December 31, 2023.
We believe based on our current forecasts, our cash on hand, the ABL Facility availability, together with our cash flows, will provide us with the ability to fund our operations, including planned capital expenditures, for at least the next twelve months. 57 We have substantial indebtedness.
Based on our current forecasts, we believe our cash on hand, availability under the New ABL Facility and our cash flows will provide us with the ability to fund our operations for at least the next twelve months.
The following is a summary of operating income (loss) by segment: Year Ended December 31, 2023 December 31, 2022 % Change Operating income (loss): Rocky Mountains $ 46.1 $ 27.3 68.9 % Southwest 19.3 14.5 33.1 % Northeast/Mid-Con 40.6 39.1 3.8 % Corporate and other (49.1) (48.4) (1.4) % Total operating income $ 56.9 $ 32.5 75.1 % For the year ended December 31, 2023, operating income was $56.9, as compared to operating income of $32.5 in the year ended December 31, 2022, largely driven by an improvement in revenues due to increased activity .
The following is a summary of operating income (loss) by segment: Year Ended December 31, 2024 December 31, 2023 % Change Operating income (loss): Rocky Mountains $ 23.8 $ 46.1 (48.4) % Southwest 3.7 19.3 (80.8) % Northeast/Mid-Con 2.3 40.6 (94.3) % Corporate and other (45.3) (49.1) 7.7 % Total operating (loss) income $ (15.5) $ 56.9 NM For the year ended December 31, 2024, operating loss was $15.5, as compared to operating income of $56.9 in the year ended December 31, 2023, largely driven by a decrease in revenues due to lower activity .
At December 31, 2023, we had $112.5 of cash and cash equivalents and $41.9 available on the ABL Facility. We have taken several actions to continue to improve our liquidity position, including efficiencies gained from the QES Merger, equity issuances under our ATM Offering program, debt for equity exchanges that have reduced interest burden and monetized non-core and obsolete assets.
We have taken several actions to continue to improve our liquidity position, including efficiencies gained from the QES Merger, equity issuances under our ATM Offering program, debt-for-equity exchanges that have reduced interest burden and monetized non-core and obsolete assets.
WTI's average daily price per barrel decreased by approximately $17.32, or 18.3%, to $77.58 per Bbl during the year ended December 31, 2023, compared to the average daily price per barrel of $94.90 during the year ended December 31, 2022. As of December 31, 2023, U.S. rig count stood at 622, a decrease of 20.2% since December 31, 2022.
WTI's average daily price per barrel decreased by approximately $0.95, or 1.2%, to $76.63 per Bbl during the year ended December 31, 2024, compared to the average daily price per barrel of $77.58 during the year ended December 31, 2023. As of December 31, 2024, U.S. rig count stood at 589, a decrease of 5.3% since December 31, 2023.
Any Common Stock offered and sold in the ATM Offering will be issued pursuant to the Company’s Registration Statement, the prospectus supplement relating to the ATM Offering filed with the SEC on June 14, 2021 and any applicable additional prospectus supplements related to the ATM Offering that form a part of the Registration Statement.
Shares of Common Stock offered and sold in the ATM Offering were issued pursuant to the Company's shelf registration statement on Form S-3 (Registration No. 333-256149) filed with the SEC on May 14, 2021 and declared effective on June 11, 2021 (the “Registration Statement”), the prospectus supplement relating to the ATM Offering filed with the SEC on June 14, 2021 and any applicable additional prospectus supplements related to the ATM Offering that form a part of the Registration Statement.
The decrease in net current assets was primarily related to a decrease of $27.3 in accounts receivable-trade, net and an increase of $7.8 in inventory. The increase in total current liabilities was due to an increase of $3.7 in accounts payable and an increase of $1.7 in accrued liabilities.
The decrease in net current assets was primarily related to a decrease of $30.1 in accounts receivable-trade, net and a decrease of $2.5 in inventory. The decrease in total current liabilities was due to a decrease of $13.5 in accounts payable and a decrease of $1.4 in accrued liabilities.
Income tax expense . Income tax expense was $3.0 for the year ended December 31, 2023, and was comprised of federal, state and local taxes, as compared to income tax expense of $0.6 in the year ended December 31, 2022, which was comprised primarily of state and local taxes. Net income (loss) .
Income tax expense was comprised of federal, state and local taxes for each year reported. Net (loss) income . Net loss for the year ended December 31, 2024 was $53.0, as compared to net income of $19.2 in the year ended December 31, 2023, primarily due to lower activity in the most recent year.
The following table provides revenues by segment and product line for the periods indicated: Year Ended December 31, 2023 December 31, 2022 % Change Revenue: Rocky Mountains $ 271.3 $ 229.0 18.5 % Southwest 304.9 255.2 19.5 % Northeast/Mid-Con 312.2 297.4 5.0 % Total revenue $ 888.4 $ 781.6 13.7 % Year Ended December 31, 2023 December 31, 2022 % Change Revenue: Drilling $ 220.2 $ 218.7 0.7 % Completion 468.5 393.3 19.1 % Production 117.8 94.2 25.1 % Intervention 81.9 75.4 8.6 % Total revenue $ 888.4 $ 781.6 13.7 % For the year ended December 31, 2023, revenues of $888.4 increased by $106.8 or 13.7% as compared with the year ended December 31, 2022.
The following table provides revenues by segment and product line for the periods indicated: Year Ended December 31, 2024 December 31, 2023 % Change Revenue: Rocky Mountains $ 228.9 $ 271.3 (15.6) % Southwest 269.3 304.9 (11.7) % Northeast/Mid-Con 211.1 312.2 (32.4) % Total revenue $ 709.3 $ 888.4 (20.2) % Year Ended December 31, 2024 December 31, 2023 % Change Revenue: Drilling $ 156.1 $ 220.2 (29.1) % Completion 372.7 468.5 (20.4) % Production 110.7 117.8 (6.0) % Intervention 69.8 81.9 (14.8) % Total revenue $ 709.3 $ 888.4 (20.2) % For the year ended December 31, 2024, revenues of $709.3 decreased by $179.1 or (20.2)% as compared with the year ended December 31, 2023.
The Company’s shares of Common Stock issued in connection with the Exchanges were not registered under the Securities Act, and were issued to existing holders of the Company’s securities without commission in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.
Pursuant to the Exchange Agreement, the noteholder exchanged $1.0 in aggregate principal amount of the Company’s outstanding 2025 Senior Notes for an aggregate of 190,476 shares of our Common Stock through the Exchange. 60 The Company’s shares of Common Stock issued in connection with the debt-for-equity exchanges were not registered under the Securities Act, and were issued to existing holders of the Company’s securities without commission in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.
The Indenture contains customary affirmative and negative covenants restricting, among other things, the Company’s ability to incur indebtedness and liens, pay dividends or make other distributions, make certain other restricted payments or investments, sell assets, enter into restrictive agreements, enter into transactions with the Company’s affiliates, and merge or consolidate with other entities or sell substantially all of the Company’s assets.
The 2030 Senior Notes Indenture also restricts, among other things, the Company’s ability to incur indebtedness and liens, pay dividends or make other distributions, make certain other restricted payments or investments, sell assets, enter into restrictive agreements, enter into transactions with the Company’s affiliates, and merge or consolidate with other entities or convey, transfer or lease all or substantially all of the Company’s properties and assets to another person, which, in each case, is subject to certain limitations and exceptions.
Net cash used in investing activities Net cash used in investing activities was $39.7 for the year ended December 31, 2023, as compared to net cash used in investing activities of $18.7 for the year ended December 31, 2022.
The decrease in operating cash flows was primarily attributable to the decrease in revenues across all operating segments. Net cash used in investing activities Net cash used in investing activities was $51.1 for the year ended December 31, 2024, as compared to net cash used in investing activities of $39.7 for the year ended December 31, 2023.
Liquidity and Capital Resources Overview We require capital to fund ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, debt service obligations, investments and acquisitions. Our primary sources of liquidity to date have been capital contributions from our equity and note holders, borrowings under the Company’s ABL Facility and cash flows from operations.
Liquidity and Capital Resources Overview We require capital to fund ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, debt service obligations, investments and acquisitions.
Revenue Recognition Revenue is recognized upon the customer obtaining control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services.
Estimated useful lives requires significant judgment which is influenced by our historical experience in operating property and equipment, technological developments, and expectations of future demand. Revenue Recognition Revenue is recognized upon the customer obtaining control of promised goods or services, in an amount that reflects the consideration which is expected to be received in exchange for those goods or services.
Cash Flows At December 31, 2023, we had $112.5 of cash and cash equivalents. Cash on hand at December 31, 2023 increased by $55.1 during the year then ended, due to $115.6 of cash flows provided by operating activities, partially offset by $20.8 of cash flows used in financing activities and $39.7 of cash flows used in investing activities.
Cash on hand at December 31, 2024 decreased by $20.9 during the year then ended, due to $54.2 of cash flows provided by operating activities, partially offset by $24.0 of cash flows used in financing activities and $51.1 of cash flows used in investing activities.
Based on current industry conditions and our significant investments in capital expenditures over the past several years, we expect to incur between $50.0 and $60.0 in capital expenditures for the year ending December 31, 2024, out of which approximately 75% is earmarked for maintenance capital spending.
Capital Expenditures Our capital expenditures were $65.1 during the year ended December 31, 2024, compared to $57.1 in the year ended December 31, 2023. Based on current industry conditions and our significant investments in capital expenditures over the past several years, we expect to incur between $45.0 and $55.0 in capital expenditures for the year ending December 31, 2025.
Rocky Mountains segment operating income improved by $18.8 or 68.9% from $27.3 in the year ended December 31, 2022 to $46.1 in the year ended December 31, 2023. Southwest segment operating income improved by $4.8 or 33.1% from $14.5 in the year ended December 31, 2022 to $19.3 in the year ended December 31, 2023.
Rocky Mountains segment operating income decreased by $22.3 or (48.4)% from $46.1 in the year ended December 31, 2023 to $23.8 in the year ended December 31, 2024. Southwest segment operating income decreased by $15.6 or (80.8)% from $19.3 in the year ended December 31, 2023 to $3.7 in the year ended December 31, 2024.
Natural gas prices also declined in the fourth quarter of 2023. Oil and natural gas prices have been, and may remain, volatile, which impacts demand for our business.
Natural gas prices also declined since the fourth quarter of 2023, bottoming out in the first quarter of 2024 and remaining near historic lows for the remainder of the year, before increasing in early 2025 to a two-year high. Oil and natural gas prices have been, and may remain, volatile, which impacts demand for our business.
SG&A expenses during the twelve months ended December 31, 2023, were $86.7, or 9.8% of revenues, as compared with $70.4, or 9.0% of revenues, in the year ended December 31, 2022. SG&A increased by $16.3 due to increased labor costs and professional fees.
SG&A expenses during the twelve months ended December 31, 2024, were $79.6, or 11.2% of revenues, as compared with $86.7, or 9.8% of revenues, in the year ended December 31, 2023. SG&A decreased by $7.1 due to management of costs as activity decreased. SG&A as a percentage of revenues increased primarily due to certain fixed costs within SG&A.
Northeast/Mid-Con segment operating income improved by $1.5 or 3.8% from $39.1 in the year ended December 31, 2022 to $40.6 in the year ended December 31, 2023. The 1.4% increase in operating loss in our Corporate and other segment in the year ended December 31, 2023 was primarily driven by higher professional service fees and incentive bonus costs.
Northeast/Mid-Con segment operating income decreased by $38.3 or (94.3)% from $40.6 in the year ended December 31, 2023 to $2.3 in the year ended December 31, 2024. The 7.7% decrease in operating loss in our Corporate and other in the year ended December 31, 2024 was primarily driven by higher one-off expenses in the year ended December 31, 2023.
The ABL Facility includes a springing financial covenant which requires the Company’s fixed-charge coverage ratio (“FCCR”) to be at least 1.0 to 1.0 if availability falls below the greater of $15.0 or 20% of the borrowing base.
After giving effect to the foregoing, we had approximately $39,900,000.0 of available borrowing capacity under the New ABL Facility. The New ABL Facility includes a springing financial covenant which requires the Company’s consolidated fixed charge coverage ratio to be at least 1.0 to 1.0 if availability under the Revolving Facility falls below $7.0.
Under the terms of the Equity Distribution Agreement, the Company will pay the Agent a commission equal to 3% of the gross sales price of the Common Stock sold.
Under the terms of the Equity Distribution Agreement, the Company will pay the Agent a commission equal to 3% of the gross sales price of the Common Stock sold. 62 The Company used the net proceeds from the ATM Offering, after deducting the Agent’s commissions and the Company’s offering expenses, for general corporate purposes, which included funding acquisitions, capital expenditures and working capital.
As of December 31, 2023, we had total outstanding long-term indebtedness of $284.3 under our ABL Facility and Senior Notes as described in greater detail under “—ABL Facility” and “—Senior Notes” below.
Most recently, we completed a refinancing of our long-term indebtedness on March 12, 2025, as described in greater detail under “—Refinancing”, “—New ABL Facility” and “—2030 Senior Notes” below.
Net income for the year ended December 31, 2023 was $19.2, as compared to net loss of $3.1 in the year ended December 31, 2022, primarily due to increased pricing and improved margins for our services.
Income tax expense . Income tax expense was $0.6 for the year ended December 31, 2024, as compared to income tax expense of $3.0 for the year ended December 31, 2023. The decrease in income tax expense was primarily due to the decrease in pre-tax income.
On a segment basis, Rocky Mountains segment revenue increased by $42.3 or 18.5%. Increased weighted average price contributed to approximately 83% of the dollar increase, and increased weighted average volume contributed to approximately 17%. Southwest segment revenue increased by $49.7 or 19.5%.
The overall decrease in revenues reflects decreased demand for our services during the year. Decreased weighted average price contributed to approximately 15% of the decrease in dollar amount, and decreased weighted average volume contributed to approximately 85%. On a segment basis, Rocky Mountains segment revenue decreased by $42.4 or (15.6)%.
The Senior Notes exchanged represent approximately 5.1% of the outstanding principal amount of outstanding Senior Notes prior to the Exchanges. Following the Exchanges, approximately $237.3 in aggregate principal amount of Senior Notes remained outstanding. 59 Capital Expenditures Our capital expenditures were $57.1 during the year ended December 31, 2023, compared to $35.6 in the year ended December 31, 2022.
No 2025 Senior Notes were exchanged in 2023 and there were approximately $237.3 in aggregate principal amount of the 2025 Senior Notes outstanding as of December 31, 2023.
Removed
Greene’s Acquisition On March 8, 2023, the Company completed the acquisition of all of the equity interests of Greene’s, including $1.7 in cash remaining at Greene's, which was subsequently adjusted to $1.1 due to a $0.6 working capital adjustment.
Added
So far in the year ending December 31, 2025, WTI prices have remained largely unchanged, while Organisation for Economic Co-operation and Development (“OECD”) crude inventories are expected to remain around the same level as at the end of 2024.
Removed
So far in the year ending December 31, 2024, WTI prices have noted a slight increase of 10%, as demand for oil and gas products persists.
Added
Production from OPEC and its allies (“OPEC+”) and other oil producing nations is expected to increase in the low single digits over the next twelve months.
Removed
Currently, global oil inventories supplied from OPEC and its allies (“OPEC+”) and other oil producing nations are expected to transition to inventory decreases throughout the majority of 2024 from inventory builds during the first half of 2023.
Added
This modest increase along with weather-related challenges across the country and a cautious approach to drilling expansion are expected to be some of the driving factors for activity in our industry through December 31, 2025.
Removed
This persisting demand and expectation of decreased inventory is balanced against weather-related challenges across the country as well as a cautious approach to drilling expansion, as evidenced by the U.S. rig count being flat through January 29, 2024.
Added
This decrease was driven entirely by a decrease in weighted average volume. Southwest segment revenue decreased by $35.6 or (11.7)%. This decrease was driven entirely by a decrease in weighted average volume. Northeast/Mid-Con segment revenue decreased by $101.1 or (32.4)% .
Removed
The overall increase in revenues reflects increased demand for our services and a positive pricing environment in the first half of 2023, even as activity fell and then stabilized in the second half of the year. This increase was driven entirely by an increase in weighted average price.
Added
Our primary sources of liquidity to date have been capital contributions from our equity and note holders, borrowings under our Prior ABL Facility and New ABL Facility and cash flows from operations. At December 31, 2024, we had $91.6 of cash and cash equivalents and $20.4 of available capacity under the Prior ABL Facility.
Removed
This increase was driven by the Greene's Acquisition, offset by activity declines in the base business, as well as modestly improved pricing. Northeast/Mid-Con segment revenue increased by $14.8 or 5.0% . This increase was driven entirely by an increase in weighted average volume. Cost of sales .
Added
For the past couple of years, due to increasing oil prices leading to an increase in demand for our services, our operating cash flow has been positive.
Removed
SG&A as a percentage of revenues increased primarily due to an increase in insurance costs along with certain costs related to the acquisition and integration of Greene's.
Added
Refinancing On March 7, 2025, the Company and certain of our subsidiaries party thereto entered into a Securities Purchase Agreement with certain holders (the “Investors”) of our 2025 Senior Notes, pursuant to which the Company agreed to issue and sell to the Investors (a) approximately $232.2 in aggregate principal amount of 2030 Senior Notes and (b) Warrants entitling the holders thereof to purchase, in the aggregate, up to 2,373,187 shares of Common Stock, at an exercise price of $0.01 per share, subject to adjustment in exchange for (i) approximately $78.4 in aggregate cash consideration and (ii) approximately $143.6 aggregate principal amount of the 2025 Senior Notes, which will be cancelled by the Company upon receipt thereof (collectively, the “Refinancing”).

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