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What changed in FORUM ENERGY TECHNOLOGIES, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FORUM ENERGY TECHNOLOGIES, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+248 added−234 removedSource: 10-K (2024-03-05) vs 10-K (2023-02-28)

Top changes in FORUM ENERGY TECHNOLOGIES, INC.'s 2023 10-K

248 paragraphs added · 234 removed · 189 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

40 edited+3 added−4 removed60 unchanged
Biggest changeHazardous substances and waste The Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes, regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. Under the auspices of the Environmental Protection Agency (“EPA”), the individual states administer some or all of the provisions of the RCRA, sometimes in conjunction with their own, more stringent requirements.
Biggest changeUnder the auspices of the Environmental Protection Agency (“EPA”), the individual states administer some or all of the provisions of the RCRA, sometimes in conjunction with their own, more stringent requirements. We are required to manage the transportation, storage and disposal of hazardous and non-hazardous wastes in compliance with the RCRA.
We also manufacture pressure control products that are used for well intervention operations that are sold domestically and internationally to oilfield service companies and equipment rental companies. Products we supply include blowout preventers for coiled tubing and wireline units and our Hydraulic Latch Assembly, which is used to facilitate efficient zipper fracturing operations.
We also manufacture pressure control products that are used for well intervention operations and sold domestically and internationally to oilfield service companies and equipment rental companies. Products we supply include blowout preventers for coiled tubing and wireline units and our Hydraulic Latch Assembly, which is used to facilitate efficient zipper fracturing operations.
Department of Energy, are analyzing, or have been requested to review, a variety of environmental issues associated with shale development, including hydraulic fracturing. Moreover, various political groups and officials are requesting or have discussed implementing a ban on hydraulic fracturing, or oil & gas extraction generally, on federal lands.
Department of Energy, are analyzing, or have been requested to review, a variety of environmental issues associated with shale development, including hydraulic fracturing. Moreover, various political groups and officials are requesting or have discussed implementing a ban on hydraulic fracturing, or oil and gas extraction generally, on federal lands.
Our engineered capital products are directed at drilling rig equipment for constructing new or upgrading existing rigs, subsea construction and development projects, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and capital equipment for renewable energy projects.
Our capital products are directed at drilling rig equipment for constructing new or upgrading existing rigs, subsea construction and development projects, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and capital equipment for renewable energy projects.
For more information, please read “Risk Factors-Potential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products.” Operating risk and insurance We maintain insurance coverage of types and amounts that we believe to be customary and reasonable for companies of our size and with similar operations.
For more information, please see “Risk Factors-Potential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products.” Operating risk and insurance We maintain insurance coverage of types and amounts that we believe to be customary and reasonable for companies of our size and with similar operations.
Although our patents, trademarks, licenses, trade secrets and know how are material to us in the aggregate, we do not regard any single piece of intellectual property to be material to our business as a whole. Raw materials We acquire component parts, products and raw materials from suppliers, including foundries, forge shops, and original equipment manufacturers.
Although our patents, trademarks, licenses, trade secrets and know how are material to us in the aggregate, we do not regard any single piece of intellectual property to be material to our business as a whole. 8 Table of Contents Raw materials We acquire component parts, products and raw materials from suppliers, including foundries, forge shops, and original equipment manufacturers.
The products and related services consist primarily of: (i) capital and consumable products sold to the pressure pumping, hydraulic fracturing and flowback services markets, including hydraulic fracturing pumps, cooling systems, high-pressure flexible hoses and flow iron as well as wireline cable and pressure control equipment used in the well completion and intervention service markets; and (ii) coiled tubing strings and coiled line pipe and related services.
The products and solutions consist primarily of: (i) capital and consumable products sold to the pressure pumping market, including hydraulic fracturing pumps, cooling systems, high-pressure flexible hoses and flow iron, as well as wireline cable and pressure control equipment used in the well completion and intervention service markets; and (ii) coiled tubing strings and coiled line pipe and related services.
Item 1. Business Forum Energy Technologies, Inc., a Delaware corporation (the “Company,” “FET,” “Forum,” “we,” “our” or “us”), is a global company serving the oil, natural gas, industrial and renewable energy industries.
Item 1. Business Forum Energy Technologies, Inc., a Delaware corporation (the “Company,” “FET,” “we,” “our” or “us”), is a global manufacturing company serving the oil, natural gas, industrial and renewable energy industries.
The market for ROVs can be segmented into three broad classes of vehicles based on size and category of operations: (1) large work-class vehicles and trenchers for construction and installation activities, (2) drilling-class vehicles deployed from and for use around an offshore rig and (3) observation-class vehicles for inspection and light manipulation.
The market for ROVs can be segmented 5 Table of Contents into three broad classes of vehicles based on size and category of operations: (1) large work-class vehicles and trenchers for construction and installation activities, (2) drilling-class vehicles deployed from and for use around an offshore rig and (3) observation-class vehicles for inspection and light manipulation.
We design and manufacture these ROV components for incorporation into our own vehicles as well as for sale to other ROV manufacturers. We also provide a broad suite of subsea tooling and technical services. COMPLETIONS SEGMENT Our Completions segment designs, manufactures and supplies products and provides related services to the coiled tubing, well stimulation and intervention markets.
We design and manufacture these ROV components for incorporation into our own vehicles as well as for sale to other ROV manufacturers. We also provide a broad suite of subsea tooling and technical services. COMPLETIONS SEGMENT Our Completions segment designs, manufactures and supplies products and solutions to the coiled tubing, well stimulation and intervention markets.
Moreover, 8 Table of Contents accidental releases or spills of regulated substances may occur in the course of our operations, and if so, we may incur significant costs and liabilities as a result of such releases or spills, including any third-party claims for damage to property, natural resources or persons.
Moreover, accidental releases or spills of regulated substances may occur in the course of our operations, and if so, we may incur significant costs and liabilities as a result of such releases or spills, including any third-party claims for damage to property, natural resources or persons.
Our bookings, which consist of written orders or commitments for our products or related services, during the years ended December 31, 2022 and 2021 were approximately $780.7 million and $632.3 million, respectively. Customers No customer represented more than 10% of consolidated revenue in any of the last two years. Seasonality Our business is not significantly impacted by seasonality.
Our bookings, which consist of written orders or commitments for our products or related services, during the years ended December 31, 2023 and 2022 were approximately $724.3 million and $780.7 million, respectively. Customers No customer represented more than 10% of consolidated revenue in any of the last two years. Seasonality Our business is not significantly impacted by seasonality.
Our Downhole Technologies product line is impacted by the level of well completion activity and complexity of well construction and completion. Our Subsea Technologies product line is affected by global offshore activity, defense spending, subsea equipment and pipeline installation, repair and maintenance expenditures, and growth in offshore windfarm development. Drilling Technologies.
Our Downhole Technologies product line is impacted by the level of well completion activity and complexity of well construction and completion. Our Subsea Technologies 4 Table of Contents product line is affected by global offshore activity, defense spending, subsea equipment and pipeline installation, repair and maintenance expenditures, and growth in offshore windfarm development. Drilling Technologies.
Of our total employees, approximately 1,100 were in the U.S., 150 were in the United Kingdom, 100 were in Germany, 100 were in Canada and 50 were in other locations. We are not a party to any collective bargaining agreements, other than in our Hamburg, Germany facility.
Of our total employees, approximately 1,100 were in the U.S., 200 were in the United Kingdom, 100 were in Germany, 100 were in Canada and 100 were in other locations. We are not a party to any collective bargaining agreements, other than in our Hamburg, Germany facility.
We expect that the world's long-term energy demand will continue to rise. We also expect hydrocarbons will continue to play a vital role in meeting the world's long-term energy needs while renewable energy sources continue to develop. As such, we remain focused on serving our customers in both oil and natural gas as well as renewable energy applications.
We also expect hydrocarbons will continue to play a vital role in meeting the world’s long-term energy needs while renewable energy sources develop to scale. As such, we remain focused on serving our customers in both oil and natural gas as well as renewable energy applications.
Depending on the product, our valves are manufactured to conform to the standards of one or more of the API, American National Standards Institute, American Bureau of Shipping, and International Organization for Standardization and/or other relevant standards governing the design and manufacture of industrial valves. 6 Table of Contents Business history Forum was incorporated in 2005 and formed through a series of acquisitions.
Depending on the product, our valves are manufactured to conform to the standards of one or more of the API, American National Standards Institute, American Bureau of Shipping, and International Organization for Standardization and/or other relevant standards governing the design and manufacture of industrial valves. Business history FET was incorporated in 2005 and formed through a series of acquisitions.
Currently, our insurance program includes coverage for, among other things, general liability, umbrella liability, sudden and accidental pollution, personal property, vehicles, workers’ compensation, and employer’s liability coverage. Employees As of December 31, 2022, we had approximately 1,500 employees.
Currently, our insurance program includes coverage for, among other things, general liability, umbrella liability, sudden and accidental pollution, personal property, vehicles, workers’ compensation, and employer’s liability coverage. Employees As of December 31, 2023, we had approximately 1,600 employees.
The products and related services consist primarily of: (i) engineered process systems, production equipment, as well as specialty separation equipment; and (ii) a wide range of industrial valves focused on serving oil and natural gas customers as well as power generation, renewable energy and other general industrial applications.
The products and solutions consist primarily of: (i) engineered process systems, production equipment, as well as specialty separation equipment; and (ii) a wide range of industrial valves focused on oil and natural gas as well as power generation, renewable energy and other general industrial applications.
We also manufacture electro-mechanical wireline cables as well as innovative EnviroLite branded (greaseless) cables. We also conduct aftermarket refurbishment and recertification services for pressure control equipment. 5 Table of Contents Our primary customers in the Stimulation and Intervention product line are pressure pumping, wireline and flowback service companies. In addition, we sell directly to pressure pumping unit original equipment manufacturers.
We also manufacture electro-mechanical wireline cables as well as innovative EnviroLite branded (greaseless) cables. We also conduct aftermarket refurbishment and recertification services for pressure control equipment. Our primary customers in the Stimulation and Intervention product line are pressure pumping, wireline and flowback service companies. In addition, we sell directly to pressure pumping original equipment manufacturers. Coiled Tubing .
We consider our relations with our employees to be satisfactory. 9 Table of Contents
We consider our relations with our employees to be satisfactory. 10 Table of Contents
We have a core focus on the design 4 Table of Contents and manufacture of remotely operated vehicle (“ROV”) systems, other specialty subsea vehicles, and rescue submarines, as well as critical components of these vehicles. Many of our related technical services complement our vehicle offerings. Subsea vehicles.
We have a core focus on the design and manufacture of ROV systems, other specialty subsea vehicles, and rescue submarines, as well as critical components of these vehicles. Many of our related technical services complement our vehicle offerings. Subsea vehicles.
DRILLING AND DOWNHOLE SEGMENT Our Drilling & Downhole segment designs, manufactures and supplies products and provides related services to the drilling, well construction, artificial lift and subsea energy construction markets, including applications in oil and natural gas, renewable energy, defense, and communications.
DRILLING AND DOWNHOLE SEGMENT Our Drilling & Downhole segment designs, manufactures and supplies products and solutions to the drilling, artificial lift and subsea markets, including applications in oil and natural gas, renewable energy, defense and communications.
We are also continuing to develop products to help oil and natural gas operators lower their emissions while also deploying our existing product technologies in renewable energy applications and seeking to develop innovative equipment. Our reporting segments align with business activity drivers and the manner in which management reviews and evaluates operating performance.
We are continuing to develop products to help oil and gas operators lower expenses, increase production, and reduce their emissions while also deploying our technologies in renewable energy applications. Our reporting segments align with business activity drivers and the manner in which management reviews and evaluates operating performance.
There are several large national and multinational companies that have longer operating histories, greater financial, technical and other resources and greater name recognition. In addition, we have several smaller competitors who compete with us on a regional or local basis.
Competition The markets in which we operate are highly competitive. We compete with a number of companies of varying sizes. There are several large national and multinational companies that have longer operating histories, greater financial, technical and other resources and greater name recognition. In addition, we have several smaller competitors who compete with us on a regional or local basis.
In the future, while we anticipate inflationary pressures will improve, and supply chain constraints will continue to ease, the timing of any reduction in inflation is unknown, and it is unclear whether we will be able to continue purchasing raw materials on a timely basis or at acceptable prices.
During 2023, inflationary pressures began to improve, but the timing of any further reduction in inflation is unknown, and it is unclear whether we will be able to continue purchasing raw materials on a timely basis or at acceptable prices in the future.
We incorporate by reference the segment and geographic information for the last two years set forth in Note 17 Business Segments , and the information with respect to an acquisition set forth in Note 4 Acquisition .
We incorporate by reference the segment and geographic information for the last two years set forth in Note 17 Business Segments , and the information with respect to our acquisition (the “Variperm Acquisition”) of Variperm Holdings Ltd. (“Variperm”) set forth in Note 4 Acquisition .
Coiled Tubing . We manufacture Global Tubing® branded coiled tubing strings, including DURACOIL (quench and temper), and coiled line pipe, and provide related services. Coiled tubing strings are consumable components utilized to perform well completion and intervention activities. Our coiled line pipe offering serves as an alternative to conventional line pipe and composite flexibles in onshore and offshore applications.
We manufacture Global Tubing® branded coiled tubing strings, including DURACOIL (quench and temper), and coiled line pipe, and provide related services. Coiled tubing strings are consumable components utilized to perform well completion and intervention activities.
Overview We are a global company serving the oil, natural gas, industrial and renewable energy industries. FET provides value added solutions aimed at improving the safety, efficiency, and environmental impact of our customers' operations. We are an environmentally and socially responsible company headquartered in Houston, Texas with manufacturing, distribution and service facilities strategically located throughout the world.
Overview We are a global manufacturing company serving the oil, natural gas, industrial and renewable energy industries. With headquarters in Houston, Texas, FET provides value added solutions aimed at improving the safety, efficiency, and environmental impact of our customers’ operations. Our highly engineered products include capital equipment and consumable products.
Please see “Risk factors—Risks related to our business—We rely on relationships with key suppliers to operate and maintain our business.” Timely receipt of raw materials is critical to our business. In 2021, we were negatively impacted by various transportation and other supply chain constraints, which caused manufacturing delays for some of our products.
Please see “Risk factors—Risks related to our business—We rely on relationships with key suppliers to operate and maintain our business.” Timely receipt of raw materials is critical to our business. In 2022, raw material prices for many of our product lines were negatively impacted by inflationary pressures.
The following is a summary of the more significant existing environmental, health and safety laws and regulations to which our business operations are subject and for which compliance may have a material adverse impact on our capital expenditures, results of operations or financial position.
The following is a summary of the more significant existing environmental, health and safety laws and regulations to which our business operations are subject and for which compliance may have a material adverse impact on our capital expenditures, results of operations or financial position. 9 Table of Contents Hazardous substances and waste The Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes, regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes.
It is difficult to predict how much of our current backlog may be delayed or terminated, or subject to changes, as well as our ability to collect termination or change fees.
However, customers are generally required to pay us for work performed as well as other costs and fees as a result of such changes or termination. It is difficult to predict how much of our current backlog may be delayed or terminated, or subject to changes, as well as our ability to collect termination or change fees.
In August 2010, Forum Oilfield Technologies, Inc. was renamed Forum Energy Technologies, Inc., when four other companies were merged into Forum. On April 17, 2012, we completed our initial public offering.
In August 2010, Forum Oilfield Technologies, Inc. was renamed Forum Energy Technologies, Inc., when four other companies were merged into FET.
Furthermore, a small portion of the revenue we generate from select Canadian operations often benefits from higher first quarter activity levels, as operators take advantage of the winter freeze to gain access to remote drilling and production areas. Competition The markets in which we operate are highly competitive. We compete with a number of companies of varying sizes.
Furthermore, a portion of the revenue we generate from Canadian operations often benefits from higher first quarter activity levels, as operators take advantage of the winter freeze to gain access to remote drilling and production areas; however, these Canadian operations are also subject to decreased activity levels in the second quarter due to the winter thaw.
Backlog As we provide a mix of consumable products, capital goods, and repair parts and services, the majority of orders and commitments included in our backlog as of December 31, 2022 are scheduled to be delivered within six months. Our backlog was approximately $264.8 million at December 31, 2022 and approximately $196.5 million at December 31, 2021.
On April 17, 2012, we completed our initial public offering. 7 Table of Contents Backlog As we provide a mix of consumable products, capital goods, and repair parts and services, the majority of orders and commitments included in our backlog as of December 31, 2023 are scheduled to be delivered within six months.
In 2022, over 68% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services.
In 2023, over 60% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services. We expect that the world’s long-term energy demand will continue to rise for many decades.
Although we have no single competitor across all of our product lines, the companies we compete with across the greatest number of our product lines include National Oilwell Varco, Inc., Cameron International Corporation (a subsidiary of Schlumberger), TechnipFMC plc, Tenaris S.A., and Caterpillar, Inc. 7 Table of Contents Patents, trademarks and other intellectual property We currently hold multiple U.S. and international patents and trademarks, have a number of pending patent and trademark applications and have developed a significant amount of trade secrets or other know how in the areas where we compete.
Although we have no single competitor across all of our product lines, the companies we compete with across the greatest number of our product lines include National Oilwell Varco, Inc., Cameron International Corporation (a subsidiary of Schlumberger), TechnipFMC plc, Tenaris S.A., and Caterpillar, Inc.
The products and related services consist primarily of (i) capital equipment and a broad line of expendable products consumed in the drilling process; (ii) well construction casing and cementing equipment and protection products for artificial lift equipment and cables; and (iii) subsea remotely operated vehicles and trenchers, submarine rescue vehicles, specialty components and tooling, and complementary subsea technical services. 3 Table of Contents There are several factors that drive demand for our Drilling & Downhole segment.
The products and solutions consist primarily of (i) capital equipment and consumable products used in the drilling process; (ii) products designed to safeguard artificial lift equipment and cables, and well construction casing and cementing equipment; and (iii) subsea remotely operated vehicles (“ROVs”) and trenchers, submarine rescue vehicles, specialty components and tooling, and technical services.
In addition, our coiled line pipe offering can be utilized for carbon capture projects to transport carbon for injection into underground storage. The product line’s primary customers are domestic and international service companies that provide coiled tubing services and oil and gas operators.
The product line’s primary customers are domestic and international service companies that provide coiled tubing services and oil and gas operators. PRODUCTION SEGMENT Our Production segment designs, manufactures and supplies products and solutions for the production and infrastructure markets.
Substantially all of the projects currently in our backlog are subject to change and our customers may seek to terminate these orders. However, customers are generally required to pay us for work performed as well as other costs and fees as a result of such changes or termination.
Our backlog was approximately $241.6 million at December 31, 2023 and approximately $264.8 million at December 31, 2022. Substantially all of the projects currently in our backlog are subject to change and our customers may seek to terminate these orders.
Our products include highly engineered capital equipment as well as consumable products. These consumable products are used in drilling, well construction and completions activities and at processing centers and refineries.
FET’s customers include oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, pipeline and refinery operators, and renewable energy and new energy companies. Consumable products are used by our customers in drilling, well construction and completion activities and at processing centers and refineries.
Removed
We design, manufacture and supply high quality reliable products that create value for our diverse customer base, which includes, among others, oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, subsea construction and service companies, and pipeline and refinery operators. In addition, we offer some of our products to renewable energy and new energy companies.
Added
There are several factors that drive demand for our Drilling & Downhole segment.
Removed
PRODUCTION SEGMENT Our Production segment designs, manufactures and supplies products and provides related equipment and services for production and infrastructure markets.
Added
Our coiled line pipe offering serves as an alternative to 6 Table of Contents conventional line pipe and flexible composite alternatives in onshore and offshore applications. In addition, our coiled line pipe offering can be utilized to transport carbon for injection into underground storage.
Removed
During 2022, supply chain constraints eased; however, raw material prices for many of our product lines were negatively impacted by inflationary pressures.
Added
Patents, trademarks and other intellectual property We currently hold multiple U.S. and international patents and trademarks, have a number of pending patent and trademark applications and have developed a significant amount of trade secrets or other know how in the areas where we compete.
Removed
We are required to manage the transportation, storage and disposal of hazardous and non-hazardous wastes in compliance with the RCRA.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

73 edited+35 added−12 removed174 unchanged
Biggest changeThese transactions also involve risks, and we cannot ensure that: • any acquisitions we attempt will be completed on the terms announced, or at all; • any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits; • any acquisitions would be successfully integrated into our operations and internal controls; • the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure, including under the U.S.
Biggest changeThese transactions also involve risks, and we cannot ensure that: • any acquisitions we attempt will be completed on the terms announced, or at all; • any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits; 19 Table of Contents • any acquisitions would be successfully integrated into our operations and internal controls; • the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure, including under the FCPA, or that we will appropriately quantify the exposure from known risks; • any disposition would not result in decreased earnings, revenue, or cash flow; • use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses; or • any dispositions, investments, or acquisitions, including integration efforts, would not divert management resources.
Foreign Corrupt Practices Act as well as trade sanctions administered by the Office of Foreign Assets Control and the Commerce Department, as well as similar laws in non-U.S. jurisdictions that govern our operations by virtue of our presence or activities there. • Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows and could have an adverse effect on our results of operations.
Foreign Corrupt Practices Act (“FCPA”) as well as trade sanctions administered by the Office of Foreign Assets Control and the Commerce Department, as well as similar laws in non-U.S. jurisdictions that govern our operations by virtue of our presence or activities there. • Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows and could have an adverse effect on our results of operations.
If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where our oil and natural gas exploration and production customers operate, they could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development, and production activities, and perhaps even be precluded from drilling wells, some or all of which could adversely affect demand for our products and services from those customers. 20 Table of Contents Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and development activity in response to significant environmental incidents or climate change actions.
If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where our oil and natural gas exploration and production customers operate, they could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development, and production activities, and perhaps even be precluded from drilling wells, some or all of which could adversely affect demand for our products and services from those customers. 22 Table of Contents Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and development activity in response to significant environmental incidents or climate change actions.
Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and similar regulations in non-U.S. jurisdictions also pose a risk to us. We cannot provide products or services to certain countries, companies or individuals subject to U.S. and other countries’ trade sanctions.
Department of the Treasury’s Office of Foreign Assets Control and similar regulations in non-U.S. jurisdictions also pose a risk to us. We cannot provide products or services to certain countries, companies or individuals subject to U.S. and other countries’ trade sanctions.
Other effects of such public health crises, pandemics and epidemics, including the COVID-19 pandemic, have included and may continue to include significant volatility and disruption of the global financial markets; continued volatility of oil and natural gas prices and related uncertainties around OPEC+ production; disruption of our operations; impact to costs; loss of workers; labor shortages; operational and supply chain disruptions; material or equipment shortages; logistics constraints; customer demand for our products and services and industry demand generally; capital spending by oil and natural gas companies; our liquidity; the price of our securities and trading markets with respect thereto; our ability to access capital markets; asset impairments and other accounting changes; certain of our customers experiencing bankruptcy or otherwise becoming unable to pay vendors, including us; and employee impacts from illness, travel restrictions, including border closures and other community response measures.
Other effects of such public health crises, pandemics and epidemics have included and may continue to include significant volatility and disruption of the global financial markets; continued volatility of oil and natural gas prices and related uncertainties around OPEC+ production; disruption of our operations; impact to costs; loss of workers; labor shortages; operational and supply chain disruptions; material or equipment shortages; logistics constraints; customer demand for our products and services and industry demand generally; capital spending by oil and natural gas companies; our liquidity; the price of our securities and trading markets with respect thereto; our ability to access capital markets; asset impairments and other accounting changes; certain of our customers experiencing bankruptcy or otherwise becoming unable to pay vendors, including us; and employee impacts from illness, travel restrictions, including border closures and other community response measures.
Legal and Regulatory Risks: • Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that affect our and our customers’ costs, prohibit or curtail our customers’ operations in certain areas, limit the demand for our products and services or restrict our operations. 10 Table of Contents • Potential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products. • Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and development activity in response to significant environmental incidents or climate change actions. • Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities. • Tariffs imposed by the U.S. government could have a further severe adverse effect on our results of operations. • We are subject to litigation risks that may not be covered by insurance. • The number and cost of our current and future asbestos claims could be substantially higher than we have estimated and the timing of payment of claims could be sooner than we have estimated. • Our products are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and, as a result, we are exposed to potential liabilities that could affect our financial condition and reputation. • Climate change legislation or regulations restricting emissions of greenhouse gases and related divestment and other efforts could increase our operating costs or reduce demand for our products.
Legal and Regulatory Risks: • Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that affect our and our customers’ costs, prohibit or curtail our customers’ operations in certain areas, limit the demand for our products and services or restrict our operations. • Potential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products. • Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and development activity in response to significant environmental incidents or climate change actions. • Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities. • Tariffs imposed by the U.S. government could have a further severe adverse effect on our results of operations. • We are subject to litigation risks that may not be covered by insurance. • The number and cost of our current and future asbestos claims could be substantially higher than we have estimated and the timing of payment of claims could be sooner than we have estimated. • Our products are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and, as a result, we are exposed to potential liabilities that could affect our financial condition and reputation. • Climate change legislation or regulations restricting emissions of greenhouse gases (“GHGs”) and related divestment and other efforts could increase our operating costs or reduce demand for our products.
In the past, global economic conditions, and expectations for future global economic conditions, have sometimes experienced significant deterioration in a relatively short period of time and there can be no assurance that global economic conditions or expectations for future global economic conditions will recover in the near term or not quickly deteriorate again due to one or more factors. 15 Table of Contents We may not be able to satisfy technical requirements, testing requirements, code requirements or other specifications under contracts and contract tenders.
In the past, global economic conditions, and expectations for future global economic conditions, have sometimes experienced significant deterioration in a relatively short period of time and there can be no assurance that global economic conditions or expectations for future global economic conditions will recover in the near term or not quickly deteriorate again due to one or more factors. 16 Table of Contents We may not be able to satisfy technical requirements, testing requirements, code requirements or other specifications under contracts and contract tenders.
If our products or services fail to meet specifications or are involved in accidents or failures, we could face 22 Table of Contents warranty, contract or other litigation claims, which could expose us to substantial liability for personal injury, wrongful death, property damage, loss of oil and natural gas production, and pollution or other environmental damages.
If our products or services fail to meet specifications or are involved in accidents or failures, we could face 24 Table of Contents warranty, contract or other litigation claims, which could expose us to substantial liability for personal injury, wrongful death, property damage, loss of oil and natural gas production, and pollution or other environmental damages.
Such factors include: • domestic and foreign supply of and demand for oil and natural gas; • prices, and expectations about future prices, of oil and natural gas; • ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and other major producers to set and maintain production limits; • cost of exploring for, developing, producing and delivering oil and natural gas; • levels of drilling and completions activity; • expected decline in rates of current and future production, or faster than anticipated declines in production; • discovery rates of new oil and natural gas reserves; • COVID-19 and related public health measures implemented by governments worldwide and the occurrence or threat of other epidemic or pandemic diseases, including variants of COVID-19, and any government response to such occurrence or threat; • ability of our customers to access new markets or areas of production or to continue to access current markets, including as a result of trade restrictions; • weather conditions, including hurricanes and tornadoes, that can affect oil and natural gas operations; • natural disasters, catastrophes or other events resulting in severe property damage; • governmental regulations, including those instituted in connection with a response to climate change; • prohibitions, moratoriums or similar limitations on drilling or hydraulic fracturing activity resulting in a cessation or disruption of operations; • domestic and worldwide economic and political conditions, including inflationary pressures, further increases in interest rates and the cost of capital, a general economic slowdown or recession, political tensions and war (including future developments in the ongoing Russia-Ukraine conflict); • financial stability of our customers and other industry participants; • political instability in oil and natural gas producing countries; • increased pressures to invest in sustainable energy sources, shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil and natural gas; • investors reducing, or ceasing to provide, funding to the oil and natural gas industry in response to initiatives to limit climate change; • conservation measures and technological advances affecting energy consumption; • price and availability of alternative energy resources and fuels; • uncertainty in capital and commodities markets, and the ability of oil and natural gas companies to raise equity capital and debt financing; and • merger and divestiture activity among oil and natural gas producers, drilling contractors and oilfield service companies.
Such factors include: • domestic and foreign supply of and demand for oil and natural gas; • prices, and expectations about future prices, of oil and natural gas; • ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and other major producers to set and maintain production limits; • cost of exploring for, developing, producing and delivering oil and natural gas; • levels of drilling and completions activity; • expected decline in rates of current and future production, or faster than anticipated declines in production; • discovery rates of new oil and natural gas reserves; • the occurrence or threat of epidemic or pandemic diseases and any government response to such occurrence or threat; • ability of our customers to access new markets or areas of production or to continue to access current markets, including as a result of trade restrictions; • weather conditions, including hurricanes and tornadoes, that can affect oil and natural gas operations; • natural disasters, catastrophes or other events resulting in severe property damage; • governmental regulations, including those instituted in connection with a response to climate change; • prohibitions, moratoriums or similar limitations on drilling or hydraulic fracturing activity resulting in a cessation or disruption of operations; • domestic and worldwide economic and political conditions, including inflationary pressures, further increases in interest rates and the cost of capital, a general economic slowdown or recession, political tensions and war (including future developments in the ongoing Russia-Ukraine conflict); • financial stability of our customers and other industry participants; • political instability in oil and natural gas producing countries; • increased pressures to invest in sustainable energy sources, shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil and natural gas; • investors reducing, or ceasing to provide, funding to the oil and natural gas industry in response to initiatives to limit climate change; • conservation measures and technological advances affecting energy consumption; • price and availability of alternative energy resources and fuels; • uncertainty in capital and commodities markets, and the ability of oil and natural gas companies to raise equity capital and debt financing; and • merger and divestiture activity among oil and natural gas producers, drilling contractors and oilfield service companies.
Our business and our customers’ businesses may be significantly affected by: • federal, state and local U.S. and non-U.S. laws and other regulations relating to oilfield operations, worker safety and protection of the environment; • changes in these laws and regulations; 19 Table of Contents • the level of enforcement of these laws and regulations; and • interpretation of existing laws and regulations.
Our business and our customers’ businesses may be significantly affected by: • federal, state and local U.S. and non-U.S. laws and other regulations relating to oilfield operations, worker safety and protection of the environment; 21 Table of Contents • changes in these laws and regulations; • the level of enforcement of these laws and regulations; and • interpretation of existing laws and regulations.
As of December 31, 2022, our subsidiary has a net liability of $0.3 million for the estimated indemnity cost associated with the resolution of its current open claims and future claims anticipated to be filed during the next five years.
As of December 31, 2023, our subsidiary has a net liability of $0.3 million for the estimated indemnity cost associated with the resolution of its current open claims and future claims anticipated to be filed during the next five years.
Finally, increasing attention to the risks of climate change has resulted in an increased possibility of lawsuits or investigations brought by public and private entities against oil and natural gas companies in connection with their greenhouse gas emissions.
Finally, increasing attention to the risks of climate change has resulted in an increased possibility of lawsuits or investigations brought by public and private entities against oil and natural gas companies in connection with their GHG emissions.
In addition, the U.S. government issued a final determination pursuant to an anti-dumping duty order on 21 Table of Contents certain hot-rolled steel products from Japan, in which it found imports of the subject merchandise were sold in the United States at prices below normal value during the October 2019 to September 2020 time period.
In addition, the U.S. government issued a final determination pursuant to an anti-dumping duty order on certain hot-rolled steel products from Japan, in which it found imports of the subject merchandise were sold in the United States at prices below normal value during the October 2019 to September 2020 time period.
Furthermore, we may be adversely affected by disputes regarding intellectual property rights. • We may incur liabilities, fines, penalties or additional costs, or we may be unable to sell to certain customers if we do not maintain safe operations. • If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. • The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations. • Facility consolidations or expansions may subject us to risks of operating inefficiencies, construction delays and cost overruns. • Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our business, consolidated results of operations and consolidated financial condition. • A natural disaster, catastrophe or other event could result in severe property damage, which could curtail our operations.
Furthermore, we may be adversely affected by disputes regarding intellectual property rights. • We may incur liabilities, fines, penalties or additional costs, or we may be unable to sell to certain customers if we do not maintain safe operations. • If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. • The impact and effects of public health crises, pandemics and epidemics could have a material adverse effect on our business, financial condition and results of operations. • Facility consolidations or expansions may subject us to risks of operating inefficiencies, construction delays and cost overruns. • Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated. • A natural disaster, catastrophe or other event could result in severe property damage, which could curtail our operations.
Moreover, as a result of the currently depressed levels of customer activity, we may be unable to allocate sufficient amounts of capital to research and new product development activities, which may limit our ability to compete in the market and generate revenue. 16 Table of Contents Our success will be affected by the use and protection of our proprietary technology.
Moreover, as a result of the currently depressed levels of customer activity, we may be unable to allocate sufficient amounts of capital to research and new product development activities, which may limit our ability to compete in the market and generate revenue. Our success will be affected by the use and protection of our proprietary technology.
The UK Bribery Act 2010 is broader in scope than the FCPA, applies to public and private sector corruption, and contains no facilitating payments exception. A violation of any of these laws, even if prohibited by our policies, could have a 24 Table of Contents material adverse effect on our business.
The UK Bribery Act 2010 is broader in scope than the FCPA, applies to public and private sector corruption, and contains no facilitating payments exception. A violation of any of these laws, even if prohibited by our policies, could have a material adverse effect on our business.
These provisions include: • a classified board of directors, so that only approximately one-third of our directors are elected each year; • authority of our board to fill vacancies and determine its size; • the ability of our board of directors to issue preferred stock without stockholder approval; • limitations on the removal of directors; and • limitations on the ability of our stockholders to call special meetings.
These provisions include: • a classified board of directors, so that only approximately one-third of our directors are elected each year; 28 Table of Contents • authority of our board to fill vacancies and determine its size; • the ability of our board of directors to issue preferred stock without stockholder approval; • limitations on the removal of directors; and • limitations on the ability of our stockholders to call special meetings.
If any of these events were to occur, our ability to respond quickly to customer demands may be inhibited and our growth potential could be impaired. We rely on relationships with key suppliers to operate and maintain our business. Certain of our product lines depend on a limited number of third-party suppliers.
If any of these events were to occur, our ability to respond quickly to customer demands may be inhibited and our growth potential could be impaired. 15 Table of Contents We rely on relationships with key suppliers to operate and maintain our business. Certain of our product lines depend on a limited number of third-party suppliers.
In addition, a portion of our work force is made up of newer employees who are less experienced and therefore more prone to injury. As a result, new employees require ongoing training and a higher degree of oversight. We incur additional costs to encourage training and ensure proper oversight of these shorter service employees.
In addition, a portion of our workforce is made up of newer employees who are less experienced and therefore more prone to injury. As a result, new employees require ongoing training and a higher degree of oversight. We incur additional costs to encourage training and ensure proper oversight of these shorter service employees.
In many countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by the regulations applicable to us. The U.S.
In many countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by the regulations applicable to us.
Our indenture and Credit Facility contain, and any future indebtedness we incur may contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: • pay dividends on, purchase or redeem our common stock; • make certain investments; • incur or guarantee additional indebtedness or issue certain types of equity securities; • create certain liens; • sell assets, including equity interests in our restricted subsidiaries; • redeem or prepay subordinated debt or debt that is unsecured or secured on a basis junior to our notes; • restrict dividends or other payments of our restricted subsidiaries; • consolidate, merge or transfer all or substantially all of our assets; • engage in transactions with affiliates; • create unrestricted subsidiaries; or • execute our acquisition strategy.
Our debt agreements contain, and any future indebtedness we incur may contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: • pay dividends on, purchase or redeem our common stock; • make certain investments; • incur or guarantee additional indebtedness or issue certain types of equity securities; • create certain liens; • sell assets, including equity interests in our restricted subsidiaries; • redeem or prepay subordinated debt or debt that is unsecured or secured on a basis junior to our notes; • restrict dividends or other payments of our restricted subsidiaries; • consolidate, merge or transfer all or substantially all of our assets; • engage in transactions with affiliates; • create unrestricted subsidiaries; or 27 Table of Contents • execute our acquisition strategy.
Finally, some scientists have concluded that increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events.
Finally, some scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events.
As a result of this concentration in part of our supply chain, our business and operations may be negatively affected if our key suppliers were to experience significant disruptions affecting the price, quality, availability or timely delivery of their products, such as from COVID-19, or if they were to decide to terminate their relationships with us.
As a result of this concentration in part of our supply chain, our business and operations may be negatively affected if our key suppliers were to experience significant disruptions affecting the price, quality, availability or timely delivery of their products, or if they were to decide to terminate their relationships with us.
In addition, any future significant cancellations or deferrals of product orders or the return of previously sold products could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations.
In addition, any future significant cancellations or deferrals of product orders or the return of previously sold products 14 Table of Contents could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations.
Although, during the year oil and gas prices and demand increased significantly from the historic lows seen in the first half of 2020, it is uncertain whether prices will maintain current levels, decline or increase.
Although during 2022 and 2023, oil and gas prices and demand increased significantly from the historic lows seen in the first half of 2020, it is uncertain whether prices will maintain current levels, decline or increase.
Furthermore, there can be no assurance that the demand or pricing for oil and natural gas will follow historic patterns, including as a result of increased availability of alternative energy sources.
Furthermore, there can be no assurance that the demand or pricing for oil and 13 Table of Contents natural gas will follow historic patterns, including as a result of increased availability of alternative energy sources.
We are also exposed to the impact of labor cost increases resulting from other factors such as high employment levels, increased wages offered 14 Table of Contents by employers in other industries, and government regulations.
We are also exposed to the impact of labor cost increases resulting from other factors such as high employment levels, increased wages offered by employers in other industries, and government regulations.
As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities 25 Table of Contents or finance future operations or capital needs.
As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.
Our ability to borrow under the Credit Facility and comply with some of the covenants, ratios or tests contained in our indenture and Credit Facility may be affected by events beyond our control.
Our ability to borrow under the Credit Facility and comply with some of the covenants, ratios or tests contained in our debt agreements may be affected by events beyond our control.
The identification of a material weakness in the future could also cause investors to lose confidence in the reliability of our financial statements and could result in a decrease in the value of our common stock.
The identification of a 18 Table of Contents material weakness in the future could also cause investors to lose confidence in the reliability of our financial statements and could result in a decrease in the value of our common stock.
Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, and fear of such events have adversely impacted and may continue to adversely impact our operations, the operations of our customers and the global economy, including the worldwide demand for oil and natural gas and the level of demand for our products and services.
Public health crises, pandemics and epidemics and fear of such events have adversely impacted and may continue to adversely impact our operations, the operations of our customers and the global economy, including the worldwide demand for oil and natural gas and the level of demand for our products and services.
Consequently, legislation and regulatory programs to reduce emissions of greenhouse gases could have a material adverse effect on our business, financial condition and results of operations.
Consequently, legislation and regulatory programs to reduce emissions of GHGs could have a material adverse effect on our business, financial condition and results of operations.
Should our IT systems materially fail in the future, it may result in numerous other adverse consequences, including reduced effectiveness and efficiency of our operations, inappropriate disclosure or loss of confidential or sensitive information, increased overhead costs, and loss of intellectual property, which could lead to liability to third parties or otherwise and have a material adverse effect on our business and results of operations.
Should our systems, or those of the third parties we rely on, materially fail or be subject to disruption or compromise in the future, it may result in numerous other adverse consequences, including reduced effectiveness and efficiency of our operations, inappropriate disclosure or loss of confidential or sensitive information, increased overhead costs, and loss of intellectual property, which could lead to liability to third parties or otherwise and have a material adverse effect on our business and results of operations.
If we are unable to maintain effective internal controls and, as a result, fail to provide reliable financial reports and effectively prevent fraud, our reputation and operating results would be harmed. 17 Table of Contents The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to maintain effective internal controls and, as a result, fail to provide reliable financial reports and effectively prevent fraud, our reputation and operating results would be harmed. The impact and effects of public health crises, pandemics and epidemics could have a material adverse effect on our business, financial condition and results of operations.
In addition, we may be required to incur significant costs to prevent damage caused by these disruptions or security breaches in the future. Further, cyber attacks on a communications network or power grid could cause operational disruption resulting in loss of revenues.
In addition, we may be required to incur significant costs to prevent or mitigate damage caused by these disruptions or security incidents in the future. Further, cyber incidents on a communications network could cause operational disruption resulting in loss of revenues.
Risks Related to our Common Stock, Indebtedness and Financial Condition: • Our common stock price has been volatile, and we expect it to continue to remain volatile in the future. • The indenture governing our 2025 Notes and our Credit Facility contain operating and financial restrictions that restrict our business and financing activities. • Our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions and credit rating. • Provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock. • We have incurred impairment charges and we may incur additional impairment charges in the future. 11 Table of Contents Risks Related to our Business and Operations: The success of our business largely depends on activity levels in the oil and natural gas industry, which can be affected by the amount and volatility of oil and natural gas prices.
Risks Related to our Common Stock, Indebtedness and Financial Condition: • Our common stock price has been volatile, and we expect it to continue to remain volatile in the future. • Our debt agreements contain operating and financial restrictions that restrict our business and financing activities. • Our variable rate indebtedness may subject us to interest rate risk, which could cause our debt service obligations to increase significantly. • Our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions and credit rating. • Provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock. • We have incurred impairment charges and we may incur additional impairment charges in the future. 12 Table of Contents Risks Related to our Business and Operations: The success of our business largely depends on activity levels in the oil and natural gas industry, which can be affected by the amount and volatility of oil and natural gas prices.
Our success depends on our ability to implement new technologies and services more efficiently and quickly than our competitors. Our success depends on our ability to develop and implement new product designs and improvements that meet our customer’s needs in a manner equal to or more effective than those offered by our competitors.
Our success depends on our ability to develop and implement new product designs and improvements that meet our customers’ needs in a manner equal to or more effective than those offered by our competitors.
Increased costs of raw materials and other components, and inflationary pressure, may result in increased operating expenses. • A deterioration of global economic conditions could adversely affect our financial condition and results of operations. • We may not be able to satisfy technical requirements, testing requirements, code requirements or other specifications under contracts and contract tenders. • A failure or breach of our information technology infrastructure, including as a result of cyber attacks or failures of data protection measures, could adversely impact our business and results of operations and expose us to potential liabilities. • Our success depends on our ability to implement new technologies and services more efficiently and quickly than our competitors. • Our success will be affected by the use and protection of our proprietary technology.
Increased costs of raw materials and other components, and inflationary pressure, may result in increased operating expenses. • A deterioration of global economic conditions could adversely affect our financial condition and results of operations. • We may not be able to satisfy technical requirements, testing requirements, code requirements or other specifications under contracts and contract tenders. • Our information technology systems infrastructure could be subject to disruption, compromise or failure and our data protection measures may be insufficient to protect our information, including as a result of cyber incidents adversely impacting our business. • Our success depends on our ability to implement new technologies and services more efficiently and quickly than our competitors. • Our success will be affected by the use and protection of our proprietary technology.
In December 2009, the EPA determined that emissions of carbon dioxide, methane and certain other GHGs endanger public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the Earth’s atmosphere and other climatic changes.
The EPA has attempted to regulate GHG emissions under the federal Clean Air Act: • In December 2009, the EPA determined that emissions of carbon dioxide, methane and certain other GHGs endanger public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the Earth’s atmosphere and other climatic changes.
We expect our stock price to continue to remain volatile given the cyclical nature of our industry and our limited public float. The indenture governing our 2025 Notes and our Credit Facility contain operating and financial restrictions that restrict our business and financing activities.
We expect our stock price to continue to remain volatile given the cyclical nature of our industry and our limited public float. Our debt agreements contain operating and financial restrictions that restrict our business and financing activities.
In addition, recent laws and regulations governing data privacy and the unauthorized disclosure of confidential information, including the European Union General Data Protection Regulation and laws enacted in certain U.S. jurisdictions, pose increasingly complex compliance challenges and potentially elevate our costs.
In addition, laws and regulations governing data protection and the unauthorized disclosure of confidential information, including the European Union General Data Protection Regulation and laws enacted in certain U.S. jurisdictions, are evolving, can vary significantly by jurisdiction, and pose increasingly complex compliance challenges and may potentially elevate our compliance costs.
The U.S. government recently entered into tariff agreements with the European Union, Japan, and the United Kingdom to ease Section 232 tariffs on the close allies and trade partners, but Section 232 tariffs still remain in effect with respect to the other nations.
In 2019, the U.S. government entered into tariff agreements with Mexico and Canada to remove Section 232 tariffs, and, in 2021 and 2022, the U.S. government entered into tariff agreements with the European Union, Japan, and the United Kingdom to ease Section 232 tariffs on the close allies and trade partners, but Section 232 tariffs still remain in effect with 23 Table of Contents respect to the other nations.
We may be held responsible for violations by our employees, contractors and agents for violations of anti-corruption laws. We may also be held responsible for violations by an acquired company that occur prior to an acquisition, or subsequent to an acquisition but before we are able to institute our compliance procedures.
We may also be held 26 Table of Contents responsible for violations by an acquired company that occur prior to an acquisition, or subsequent to an acquisition but before we are able to institute our compliance procedures.
Congress has considered adopting comprehensive legislation to reduce emissions of GHGs, and almost half of the states have already taken legal measures to reduce emissions of GHGs, primarily through measures to promote the use of renewable energy and/or regional GHG cap-and-trade programs. The EPA has attempted to regulate greenhouse gas emissions under the federal Clean Air Act.
Congress has considered adopting comprehensive legislation to reduce emissions of GHGs, and approximately half of the states have already taken legal measures to reduce emissions of GHGs, primarily through measures to promote the use of renewable energy and/or regional GHG cap-and-trade programs.
These projects, and any other capital asset construction projects that we may commence, are subject to similar risks of delay or cost overruns inherent in any construction project resulting from numerous factors, including the following: • difficulties or delays in obtaining land; • shortages of key equipment, materials or skilled labor; • unscheduled delays in the delivery of ordered materials and equipment; • unanticipated cost increases; • weather interferences; and • difficulties in obtaining necessary permits or in meeting permit conditions. 18 Table of Contents Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.
These projects, and any other capital asset construction projects that we may commence, are subject to similar risks of delay or cost overruns inherent in any construction project resulting from numerous factors, including the following: • difficulties or delays in obtaining land; • shortages of key equipment, materials or skilled labor; • unscheduled delays in the delivery of ordered materials and equipment; • unanticipated cost increases; • weather interferences; and • difficulties in obtaining necessary permits or in meeting permit conditions.
However, in November 2021, the EPA proposed new source performance standards (“NSPS”) updates and emission guidelines to reduce methane and other pollutants from the oil and gas industry. In December 2022, the EPA issued a supplemental proposal to update, strengthen, and expand the November 2021 NSPS updates and further reduce methane and other pollutants from the oil and gas industry.
In December 2022, the EPA issued a supplemental proposal to update, strengthen, and expand the November 2021 NSPS updates and further reduce methane and other pollutants from the oil and gas industry. The final rule was issued in December 2023.
For example, our Coiled Tubing product line was unable to source a sufficient amount of steel during the third and fourth quarters of 2021 to satisfy customer orders on a timely basis.
For example, our Coiled Tubing product line was unable to source a sufficient amount of steel during the third and fourth quarters of 2021 to satisfy customer orders on a timely basis. In addition, because many of our products are manufactured out of steel, we are particularly susceptible to fluctuations in steel prices and tariffs.
Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions, including the UK Bribery Act 2010, (“anti-corruption laws”) prohibit corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity.
The FCPA and similar anti-corruption laws in other jurisdictions, including the UK Bribery Act 2010, (“anti-corruption laws”) prohibit corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity. We may be held responsible for violations by our employees, contractors and agents for violations of anti-corruption laws.
In August 2022, President Biden also signed into law the Inflation Reduction Act, which contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies, which could increase operating costs within the oil and gas industry and accelerate the transition away from fossil fuels.
In August 2022, President Biden signed into law the Inflation Reduction Act, which contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources and technologies, which could increase operating costs within the oil and gas industry and accelerate the transition away from fossil fuels. 25 Table of Contents Efforts have also been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues.
Likewise, the market price of our common stock has varied significantly in the past. For example, in 2022, the market price of our common stock reached a high of $31.36 per share on December 20, 2022, and a low of $16.79 per share on January 5, 2022.
Likewise, the market price of our common stock has varied significantly in the past. For example, in 2023, the market price of our common stock reached a high of $33.84 per share on February 10, 2023, and a low of $19.31 per share on December 12, 2023.
In November 2021, the United States and other countries entered into the Glasgow Climate Pact, which includes a range of measures designed to address climate change, including but not limited to the phase-out of fossil fuel subsidies, reducing methane emissions 30% by 2030, and cooperating toward the advancement of the development of clean energy. 23 Table of Contents The adoption of additional legislation or regulatory programs to reduce emissions of greenhouse gases could require us to incur increased operating costs to comply with new emissions-reduction or reporting requirements.
In November 2021, the U.S. and other countries entered into the Glasgow Climate Pact, which includes a range of measures designed to address climate change, including but not limited to the phase-out of fossil fuel subsidies, reducing methane emissions 30% by 2030, and cooperating toward the advancement of the development of clean energy.
Environmental advocacy groups and regulatory agencies in the U.S. and other countries have focused considerable attention on the emissions of carbon dioxide, methane and other greenhouse gases and their potential role in climate change.
Climate change legislation or regulations restricting emissions of GHGs and related divestment and other efforts could increase our operating costs or reduce demand for our products. Environmental advocacy groups and regulatory agencies in the U.S. and other countries have focused considerable attention on the emissions of carbon dioxide, methane and other GHGs and their potential role in climate change.
A failure or breach of our information technology infrastructure, including as a result of cyber attacks or failures of data protection measures, could adversely impact our business and results of operations and expose us to potential liabilities. The efficient operation of our business is dependent on our information technology (“IT”) systems.
Our information technology infrastructure could be subject to disruption, compromise or failure and our data protection measures may be insufficient to protect our information, including as a result of cyber incidents adversely impacting our business. The efficient operation of our business is dependent on our information technology (“IT”) systems (“systems”).
In certain instances, our IT systems have failed to perform as anticipated, resulting in disruptions in operations and other adverse consequences.
Geopolitical tensions or conflicts may further heighten the risk of cyber threats. In certain instances, our systems have failed to perform as anticipated, resulting in disruptions in operations and other adverse consequences.
Under the Paris Agreement, the Biden Administration has committed the United States to reducing its greenhouse gas emissions by 50 - 52% from 2005 levels by 2030.
Although the U.S. had withdrawn from the Paris Agreement in November 2020, the Biden Administration officially reentered the U.S. into the agreement in February 2021. Under the Paris Agreement, the Biden Administration has committed the United States to reducing its GHG emissions by 50 - 52% from 2005 levels by 2030.
The fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization. 26 Table of Contents If we determine that the carrying value of our long-lived assets is less than their fair value, we would be required to record additional charges in the future, which could adversely affect our financial condition and results of operations.
If we determine that the carrying value of our long-lived assets is less than their fair value, we would be required to record additional charges in the future, which could adversely affect our financial condition and results of operations. Item 1B. Unresolved Staff Comments None.
In addition, many of our suppliers, such as those for certain of our standardized valves, require a longer lead time to provide products than our customers demand for delivery of our finished products.
In addition, many of our suppliers, such as those for certain of our standardized valves, require a longer lead time to provide products than our customers demand for delivery of our finished products. If we underestimate customer demand or if insufficient manufacturing capacity is available, we would miss revenue opportunities and potentially lose market share and damage our customer relationships.
We rely on suppliers to provide required materials and in many instances these materials must meet certain specifications. Managing a geographically diverse supply base poses inherently significant logistical challenges. Furthermore, the ability of third-party suppliers to deliver materials to our specifications may be affected by events beyond our control.
Some of our contracts require us to compensate customers if we do not meet specified delivery obligations. We rely on suppliers to provide required materials and in many instances these materials must meet certain specifications. Managing a geographically diverse supply base poses inherently significant logistical challenges.
As a result, there is a risk that we could experience diminished supplier performance resulting in longer than expected lead times and/or product quality issues. For example, in the past, we have experienced issues with the quality of certain forgings used to produce materials utilized in our products.
Furthermore, the ability of third-party suppliers to deliver materials to our specifications may be affected by events beyond our control. As a result, there is a risk that we could experience diminished supplier performance resulting in longer than expected lead times and/or product quality issues.
Despite our implementation of security measures, our IT systems are vulnerable to computer viruses, natural disasters, incursions by intruders or hackers, failures in hardware or software, power fluctuations, cyber terrorists and other similar disruptions. Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, may further heighten the risk of cyber attacks.
Despite our implementation of security measures, which we believe are reasonable to mitigate the risks of a cybersecurity threat, our systems, and those of the third parties we engage, are vulnerable to computer viruses, malware, incursions by intruders or hackers, cyber terrorists, failures in hardware or software, power fluctuations, natural disasters, and other similar disruptions.
As a result of these factors, our business may not generate sufficient cash flow from operations to enable us to meet our debt obligations. Our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions and credit rating.
Our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions and credit rating.
Any failure by us to comply with these laws and regulations, including as a result of a security or privacy breach, could result in significant penalties and liabilities for us. Additionally, if we acquire a company that has violated or is not in compliance with applicable data protection laws, we may incur significant liabilities and penalties as a result.
Any failure by us to comply with these laws and regulations, including as a result of a cybersecurity or data protection incident, could result in a loss of sensitive information, regulatory inquiries, litigation, and significant penalties and liabilities for us.
We continually seek opportunities to maximize efficiency and value through various transactions, including purchases or sales of assets, businesses, investments, or joint venture interests. These transactions are intended to (but may not) result in the realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or the reduction of risk.
Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated. We continually seek opportunities to maximize efficiency and value through various transactions, including purchases or sales of assets, businesses, investments, or joint venture interests.
In August 2020, the EPA rescinded methane and volatile organic compound emissions standards for new and modified oil and gas transmission and storage infrastructure previously promulgated in 2016, as well as methane limits for new and modified oil and gas production and processing equipment. The EPA also relaxed requirements for oil and gas operators to monitor emissions leaks.
In May 2023, the EPA proposed to vacate the ACE rule and establish control methods to reduce the GHG emissions of power generation sector through control methods that include carbon capture and storage, low-GHG hydrogen co-firing and natural gas co-firing. • In August 2020, the EPA rescinded methane and volatile organic compound emissions standards for new and modified oil and gas transmission and storage infrastructure previously promulgated in 2016, as well as methane limits for new and modified oil and gas production and processing equipment.
In addition to the impact of COVID-19 and related supply chain and operational disruptions, the availability and cost of necessary raw materials and finished products may be impacted by macroeconomic demand, various national, regional, local, economic and political factors, and inflationary pressures. Some of our contracts require us to compensate customers if we do not meet specified delivery obligations.
Our results of operations may be adversely affected by our inability to manage the rising costs and availability of raw materials and components used in our products. The availability and cost of raw materials and finished products may be impacted by macroeconomic demand, various national, regional, local, economic and political factors, supply chain disruptions and inflationary pressures.
As a result, we were required to seek alternative suppliers for those forgings, which resulted in increased costs and a disruption in our supply chain. We have also been required in certain circumstances to provide better economic terms to some of our suppliers in exchange for their agreement to increase their capacity to satisfy our supply needs.
For example, in the past, we have experienced issues with the quality of certain forgings used to produce materials utilized in our products. As a result, we were required to seek alternative suppliers for those forgings, which resulted in increased costs and a disruption in our supply chain.
Acquisition transactions may use cash on hand or be financed by additional borrowings or by the issuance of our common stock. These transactions may also affect our business, consolidated results of operations and consolidated financial condition.
These transactions may also affect our business, consolidated results of operations and consolidated financial condition.
Our Credit Facility also contains covenants, which, among other things, require us in certain circumstances, on a consolidated basis, to maintain specified financial ratios or conditions.
Our senior secured asset-based lending facility (the “Credit Facility”) and our second lien seller term loan credit agreement we entered into to fund a portion of the purchase price of the Variperm Acquisition (the “Seller Term Loan”) also contain covenants, which, among other things, require us in certain circumstances, on a consolidated basis, to maintain specified financial ratios or conditions.
Accordingly, we rely upon the capacity, reliability and security of our IT hardware and software infrastructure and our ability to expand and update this infrastructure in response to our changing needs, including remote connectivity.
Accordingly, we rely upon the capacity, reliability and security of our IT hardware and software infrastructure, much of which are outsourced to third parties, including in “cloud”-based platforms. Furthermore, we continuously expand and update our IT infrastructure to ensure it is secured from outside threats.
The public comment period on the proposed rule ended on January 5, 2023. The EPA has also adopted rules requiring the reporting of greenhouse gas emissions from specified large greenhouse gas emission sources in the U.S., including oil and natural gas systems.
The EPA has also adopted rules requiring the reporting of GHG emissions from specified large GHG emission sources in the U.S., including oil and natural gas systems. In July 2023, the EPA proposed to add reporting that would capture “other large release events” such as abnormal methane emission events that are not fully accounted for using existing methods.
For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Conditions.” Facility consolidations or expansions may subject us to risks of operating inefficiencies, construction delays and cost overruns. We have consolidated and may continue to consolidate facilities to achieve operating efficiencies and reduce costs.
Such public health crises, pandemics and epidemics are continuously evolving and the extent to which our business operations and financial results continue to be affected depends on various factors beyond our control. Facility consolidations or expansions may subject us to risks of operating inefficiencies, construction delays and cost overruns. We may consolidate facilities to achieve operating efficiencies and reduce costs.
The occurrence of any of the foregoing factors would have a negative impact on our ability to deliver products to customers within committed time frames. A deterioration of global economic conditions could adversely affect our financial condition and results of operations.
A deterioration of global economic conditions could adversely affect our financial condition and results of operations.
The amount of the impairment is measured as the difference between the carrying value and the estimated fair value of the asset.
The amount of the impairment is measured as the difference between the carrying value and the estimated fair value of the asset. The fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization.
Removed
During the year ended December 31, 2022, ongoing COVID-19 outbreaks and related work restrictions impacted demand for oil and natural gas and caused disruptions in global 12 Table of Contents supply chains, which have contributed to price volatility and inflationary pressures for certain goods and services.
Added
Risks Related to the Variperm Acquisition: • We may not be able to integrate Variperm successfully or manage the combined business effectively, and the benefits of acquiring Variperm may not be realized or may not be realized within the expected time frame. • Variperm may have liabilities that are not known, probable or estimable at this time. 11 Table of Contents • We will incur significant costs in connection with the Variperm Acquisition, which may be in excess of those anticipated. • Failure to retain key employees and attract new talent to fill new roles created by the integration or vacant roles created by attrition could diminish the anticipated benefits of the Variperm Acquisition and otherwise harm our business.
Removed
These forecasts have been particularly challenging to develop as a result of uncertainty created by COVID-19 outbreaks and related work restrictions, and U.S. recessionary pressures and supply chain inefficiencies preventing our customers from receiving finished goods.
Added
We have also been required in certain circumstances to provide better economic terms to some of our suppliers in exchange for their agreement to increase their capacity to satisfy our supply needs. The occurrence of any of the foregoing factors would have a negative impact on our ability to deliver products to customers within committed time frames.
Removed
If we underestimate customer demand or if insufficient manufacturing capacity is available, we would miss revenue opportunities and potentially lose market share and damage our 13 Table of Contents customer relationships.
Added
Additionally, if we acquire a company that has violated or is not in compliance with applicable data protection laws, we may incur significant liabilities and penalties. In the past we have experienced, and in the future we may again experience, cybersecurity incidents.
Removed
In particular, because many of our products are manufactured out of steel, we are particularly susceptible to fluctuations in steel prices and tariffs. Our results of operations may be adversely affected by our inability to manage the rising costs and availability of raw materials and components used in our products.

… 40 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following table describes the significant facilities owned or leased by us as of December 31, 2022, for our Drilling & Downhole (“D&D”), Completions (“C”) and Production (“P”) segments: Country Location Number of facilities Description Leased or Owned Segments Canada Red Deer 2 Service/Distribution Leased C Calgary 1 Manufacturing Leased C Edmonton 2 Service/Distribution Leased Shared Grande Prairie 1 Service/Distribution Leased C Germany Hamburg 1 Manufacturing Leased D&D Saudi Arabia Dammam 1 Manufacturing/Distribution Owned Shared UAE Jebel Ali 1 Service/Distribution Leased D&D United Kingdom Aberdeen 1 Service/Distribution Leased D&D Kirkbymoorside 1 Manufacturing Owned D&D United States Broussard, LA 1 Manufacturing/Service/Distribution Leased Shared Bryan, TX 1 Manufacturing Leased Shared Clearfield, PA 1 Manufacturing/Service/Distribution Owned P Dayton, TX 1 Manufacturing Owned C Fort Worth, TX 1 Manufacturing/Service Leased C Guthrie, OK 1 Manufacturing Leased P Houston, TX 2 Corporate/Manufacturing Leased Shared Humble, TX 1 Manufacturing Leased C Midland, TX 1 Service/Distribution Leased C Odessa, TX 1 Service/Distribution Leased C Odessa, TX 1 Service/Distribution Leased D&D Pearland, TX 1 Manufacturing/Distribution Owned D&D Plantersville, TX 1 Manufacturing/Distribution Leased D&D Smock, PA 1 Service Leased C Stafford, TX 1 Manufacturing/Distribution Leased P Stafford, TX 1 Manufacturing Owned D&D Tyler, TX 1 Distribution Leased D&D Williston, ND 1 Service/Distribution Leased Shared We believe our facilities are suitable for their present and intended purposes, and are adequate for our current and anticipated level of operations.
Biggest changeProperties The following table describes the significant facilities owned or leased by us as of December 31, 2023, for our Drilling & Downhole (“D&D”), Completions (“C”) and Production (“P”) segments: Country Location Number of facilities Description Leased or Owned Segments Canada Red Deer 2 Service/Distribution Leased C Calgary 1 Manufacturing Leased C Edmonton 2 Service/Distribution Leased Shared Grande Prairie 1 Service/Distribution Leased C Germany Hamburg 1 Manufacturing Leased D&D Saudi Arabia Dammam 1 Manufacturing/Distribution Owned Shared UAE Jebel Ali 1 Service/Distribution Leased D&D United Kingdom Aberdeen 1 Service/Distribution Leased D&D Kirkbymoorside 1 Manufacturing Owned D&D United States Broussard, LA 1 Manufacturing/Service/Distribution Leased Shared Bryan, TX 1 Manufacturing Leased Shared Clearfield, PA 1 Manufacturing/Service/Distribution Owned P Dayton, TX 1 Manufacturing Owned C Fort Worth, TX 1 Manufacturing/Service Leased C Guthrie, OK 1 Manufacturing Leased P Houston, TX 2 Corporate/Manufacturing Leased Shared Humble, TX 1 Manufacturing Leased C Midland, TX 1 Service/Distribution Leased C Odessa, TX 1 Service/Distribution Leased C Odessa, TX 1 Service/Distribution Leased D&D Pearland, TX 1 Manufacturing/Distribution Owned D&D Plantersville, TX 1 Manufacturing/Distribution Leased D&D Smock, PA 1 Service Leased C Stafford, TX 1 Manufacturing/Distribution Leased P Stafford, TX 1 Manufacturing Owned D&D Tyler, TX 1 Distribution Leased D&D Williston, ND 1 Service/Distribution Leased Shared We believe our facilities are suitable for their present and intended purposes, and are adequate for our current and anticipated level of operations.
We incorporate by reference the information set forth in Item 1 and Item 7 of this Annual Report on Form 10-K and the information set forth in Note 6 Property and Equipment, Note 9 Leases and Note 12 Commitments and Contingencies . 28 Table of Contents
We incorporate by reference the information set forth in Item 1 and Item 7 of this Annual Report on Form 10-K and the information set forth in Note 6 Property and Equipment, Note 9 Leases and Note 12 Commitments and Contingencies . 32 Table of Contents
Removed
During 2022, the Company sold and leased back the properties located in Broussard, Louisiana; Bryan, Texas; Odessa, Texas; and, Plantersville, Texas. Refer to the information set forth in Note 6 Property and Equipment and Note 9 Leases .

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

9 edited+7 added−5 removed6 unchanged
Biggest changeLyle Williams 53 Executive Vice President and Chief Financial Officer John C. Ivascu 45 Executive Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary Michael D. Danford 60 Senior Vice President and Chief Human Resources Officer C. Christopher Gaut . Mr.
Biggest changeIvascu 46 Executive Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary Michael D. Danford 61 Senior Vice President and Chief Human Resources Officer Katherine C. Keller 40 Senior Vice President and Chief Accounting Officer Mark Brookes 48 Senior Vice President – Operations Steven Pounds 51 Senior Vice President – Operations Neal A. Lux. Mr.
Prior to joining Forum, from August 2007 through November 2007, he worked at Trico Marine Services Inc., a privately held provider of subsea and marine support vessels and services to the oil and natural gas industry, as Vice President - Human Resources. From 1997 through July 2007, Mr.
Prior to joining FET, from August 2007 through November 2007, he worked at Trico Marine Services Inc., a privately held provider of subsea and marine support vessels and services to the oil and natural gas industry, as Vice President - Human Resources. From 1997 through July 2007, Mr.
Williams has held various financial and operations roles, including Senior Vice President - Operations; Vice President - Corporate Development and Treasurer; Vice President - Operations Finance; Vice President - Finance and Accounting, Drilling and Subsea Segment; Senior Vice President - Downhole Technologies; Vice President - Subsea Products; and Vice President - Capital Equipment. Prior to joining Forum, Mr.
Williams has held various financial and operations roles, including Senior Vice President - Operations; Vice President - Corporate Development and Treasurer; Vice President - Operations Finance; Vice President - Finance and Accounting, Drilling and Subsea Segment; Senior Vice President - Downhole Technologies; Vice President - Subsea Products; and Vice President - Capital Equipment. Prior to joining FET, Mr.
Danford served as Director of Human Resources and Vice President - Human Resources for Hydril Company, a publicly traded manufacturer of connections used for oil and natural gas drilling and production. From 1991 to 1997, Mr. Danford served in various human resources roles for Baker Hughes Incorporated, a publicly traded oilfield services company.
Danford served as Director of Human Resources and Vice President 33 Table of Contents - Human Resources for Hydril Company, a publicly traded manufacturer of connections used for oil and natural gas drilling and production. From 1991 to 1997, Mr. Danford served in various human resources roles for Baker Hughes Incorporated, a publicly traded oilfield services company.
Lux was appointed as President and Chief Executive Officer of Forum and as a director on Forum's board of directors effective February 18, 2022. Mr. Lux previously served as the Company's Executive Vice President and Chief Operating Officer from December 2020 to February 2022. From January 2009 to February 2022, Mr.
Lux was appointed as President and Chief Executive Officer of FET and as a director on FET’s board of directors effective February 18, 2022. Mr. Lux previously served as the Company’s Executive Vice President and Chief Operating Officer from December 2020 to February 2022. From January 2009 to February 2022, Mr.
Ivascu holds a B.B.A. from the Stephen M. Ross School of Business at the University of Michigan, and a J.D. from Brooklyn Law School. Michael D. Danford . Mr. Danford has served as Senior Vice President and Chief Human Resources Officer since June 2020. Prior to that, Mr.
Ross School of Business at the University of Michigan, and a J.D. from Brooklyn Law School. Michael D. Danford . Mr. Danford has served as Senior Vice President and Chief Human Resources Officer since June 2020. Prior to that, Mr.
Ivascu practiced corporate law at Vinson & Elkins L.L.P., representing public and private companies and 29 Table of Contents investment banking firms in capital markets offerings, mergers and acquisitions, and corporate governance and bankruptcy matters. From 2004 to 2006, Mr. Ivascu served as an attorney for the U.S. Securities & Exchange Commission, Division of Enforcement. Mr.
Ivascu practiced corporate law at Vinson & Elkins L.L.P., representing public and private companies and investment banking firms in capital markets offerings, mergers and acquisitions, and corporate governance and bankruptcy matters. From 2004 to 2006, Mr. Ivascu served as an attorney for the U.S. Securities & Exchange Commission, Division of Enforcement. Mr. Ivascu holds a B.B.A. from the Stephen M.
Prior to joining Baker Hughes, from 1990 to 1991, Mr. Danford served as a recruiter and as an employee relations representative in the human resources department for Compaq Computer, a publicly traded developer and manufacturer of computer systems. Mr.
Prior to joining Baker Hughes, from 1990 to 1991, Mr. Danford served as a recruiter and as an employee relations representative in the human resources department for Compaq Computer, a publicly traded developer and manufacturer of computer systems. Mr. Danford holds a B.S. degree in Computer Science from the University of Louisiana at Monroe (formerly Northeast Louisiana University). Katherine C.
Item 4. Mine Safety Disclosures Not applicable. Information About Our Executive Officers The following table indicates the names, ages and positions of the executive officers of Forum as of February 24, 2023: Name Age Position C. Christopher Gaut 66 Executive Chairman of the Board Neal Lux 47 President and Chief Executive Officer D.
Item 4. Mine Safety Disclosures Not applicable. Information About Our Executive Officers The following table indicates the names, ages and positions of the executive officers of FET as of February 29, 2024: Name Age Position Neal A. Lux 48 President and Chief Executive Officer D. Lyle Williams 54 Executive Vice President and Chief Financial Officer John C.
Removed
Gaut currently serves as Executive Chairman of the Board, having previously served as President and Chief Executive Officer of Forum from November 2018 until his retirement from those positions in February 2022, and as Chairman of the Board from December 2017.
Added
Keller. Ms. Keller has served as Senior Vice President and Chief Accounting Officer since February 2024. Prior to that, she acted as the Company’s Vice President and Principal Accounting Officer from August 2022 to January 2024. From January 2012 to December 2015, and March 2018 to July 2022, she held various accounting roles of increasing responsibility, most recently Corporate Controller.
Removed
Prior to that, from May 2017 to December 2017, he served as Executive Chairman of the Board, and as Chief Executive Officer from May 2016 to May 2017. From August 2010 to May 2016, he served as President, Chief Executive Officer and Chairman of the Board, and as one of our directors since December 2006.
Added
Prior to joining the Company, Ms. Keller held positions of increasing responsibility with the Apollo Education Group from May 2009 to January 2012, most recently serving as Financial Reporting & Equity Accounting Manager. From July 2005 to May 2009, she served as a Senior Auditor for Ernst and Young LLP.
Removed
He served as a consultant to SCF Partners from November 2009 to August 2010, and an industry advisor from May 2017 to November 2018. Mr. Gaut served at Halliburton Company, a leading diversified oilfield services company, as President of the Drilling and Evaluation Division and prior to that as Chief Financial Officer, from March 2003 through April 2009.
Added
She holds a B.S. in Accounting from Bucknell University and is a Certified Public Accountant in Pennsylvania. Mark Brookes. Mr. Brookes has served as the Company’s Senior Vice President – Operations since February 2022. From November 2017 to January 2022, Mr. Brookes served as the Company’s Vice President – Subsea Products and Services. Prior to joining the Company, Mr.
Removed
From April 2009 through November 2009, Mr. Gaut was a private investor. Prior to joining Halliburton Company in 2003, Mr. Gaut was a Co-Chief Operating Officer of Ensco International, a provider of offshore contract drilling services. He also served as Ensco's Chief Financial Officer from 1988 until 2003. Neal Lux. Mr.
Added
Brookes was employed by Oceaneering International from February 2012 to November 2017 in various roles, including General Manager – Specialty Connection Systems and General Manager – Subsea Field Development. From June 2007 to January 2012, Mr. Brookes held various roles as a Project and Operations Director for Cameron International. Mr.
Removed
Danford holds a B.S. degree in Computer Science from the University of Louisiana at Monroe (formerly Northeast Louisiana University). 30 Table of Contents PART II
Added
Brookes earned a Master of Industrial Engineering and Management from Oklahoma State University and a B.S. in Engineering and Management from Brunel University, London. Steven Pounds. Mr. Pounds has served as the Company’s Senior Vice President – Operations since February 2022. From January 2018 to January 2022, Mr.
Added
Pounds held various positions of increasing responsibility, most recently Vice President – Production. Mr. Pounds served as Chief Operating Officer of Top-Co Inc. from October 2014 until its merger with Rubicon Oilfield International in November 2016, and continued as a Senior Advisor until January 2017. Prior to that, Mr.
Added
Pounds held various positions of increasing responsibility with Baker Hughes International, most recently as Senior Director – Strategic Sourcing. Mr. Pounds holds a B.S. in Mechanical Engineering from The University of Texas at Austin. 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total number of shares purchased (a) Average price paid per share Total number of shares purchased as part of publicly announced plan or programs (a) Maximum value of shares that may yet be purchased under the plan or program (in thousands) (a) October 1, 2022 - October 31, 2022 27,925 $ 24.94 27,925 $ 8,243 November 1, 2022 - November 30, 2022 — $ — — 8,243 December 1, 2022 - December 31, 2022 75,169 $ 30.62 75,169 5,941 Total 103,094 $ 29.08 103,094 (a) In November 2021, our board of directors approved a program for the repurchase of outstanding shares of our common stock with an aggregate purchase amount of up to $10.0 million.
Biggest changePurchase of Equity Securities In November 2021, our board of directors approved a program for the repurchase of outstanding shares of our common stock with an aggregate purchase amount of up to $10.0 million.
In calculating the number of shareholders, we consider clearing agencies and security position listings as one shareholder for each agency or listing. No dividends were declared or issued during 2022 or 2021, and we do not currently have any plans to pay cash dividends in the future.
In calculating the number of shareholders, we consider clearing agencies and security position listings as one shareholder for each agency or listing. No dividends were declared or issued during 2023 or 2022, and we do not currently have any plans to pay cash dividends in the future.
The program may be executed using open market purchases pursuant to Rule 10b-18 under the Securities Exchange Act of 1934 (the "Exchange Act"), in privately negotiated agreements or by way of issuer tender offers, Rule 10b5-1 plans or other transactions.
The program may be executed using open market purchases pursuant to Rule 10b-18 under the Securities Exchange Act of 1934 (the “Exchange Act”), in privately negotiated agreements or by way of issuer tender offers, Rule 10b5-1 plans or other transactions.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the NYSE under the trading symbol “FET.” As of February 24, 2023, there were approximately 36 common stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades on the NYSE under the trading symbol “FET.” As of February 29, 2024, there were approximately 45 common stockholders of record.
From the inception of the program through December 31, 2022, we have repurchased approximately 159 thousand shares of our common stock for aggregate consideration of $4.1 million. Remaining authorization under this program is $5.9 million. Item 6. [Reserved]. 31 Table of Contents
From the inception of the program through December 31, 2023, we have repurchased approximately 298 thousand shares of our common stock for aggregate consideration of $7.6 million. Remaining authorization under this program is $2.4 million. No shares were purchased during the three months ended December 31, 2023. Item 6. Reserved. 35 Table of Contents
Our future dividend policy is within the discretion of our board of directors and will depend upon various factors, including our results of operations, financial condition, capital requirements, investment opportunities, and restrictions under our loan agreements. Purchase of Equity Securities Following is a summary of our repurchases of our common stock during the three months ended December 31, 2022.
Our future dividend policy is within the discretion of our board of directors and will depend upon various factors, including our results of operations, financial condition, capital requirements, investment opportunities, and restrictions under our loan agreements.

Item 7. Management's Discussion & Analysis

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

59 edited+14 added−23 removed40 unchanged
Biggest changeThe table below shows the amount of total inbound orders by segment for the years ended December 31, 2022 and 2021: (in millions of dollars) 2022 2021 Orders: Drilling & Downhole $ 305.8 $ 282.6 Completions 278.5 207.0 Production 196.4 142.7 Total Orders $ 780.7 $ 632.3 34 Table of Contents Results of operations Year ended December 31, Change (in thousands of dollars, except per share information) 2022 2021 $ % Revenues Drilling & Downhole $ 304,565 $ 239,895 $ 64,670 27.0 % Completions 264,951 185,018 79,933 43.2 % Production 131,519 116,710 14,809 12.7 % Eliminations (1,122) (555) (567) * Total revenues $ 699,913 $ 541,068 $ 158,845 29.4 % Cost of sales Drilling & Downhole $ 206,976 $ 170,610 $ 36,366 21.3 % Completions 201,371 146,240 55,131 37.7 % Production 104,162 101,432 2,730 2.7 % Eliminations (1,122) (555) (567) * Total cost of sales $ 511,387 $ 417,727 $ 93,660 22.4 % Gross profit Drilling & Downhole $ 97,589 $ 69,285 $ 28,304 40.9 % Completions 63,580 38,778 24,802 64.0 % Production 27,357 15,278 12,079 79.1 % Total gross profit $ 188,526 $ 123,341 $ 65,185 52.8 % Selling, general and administrative expenses: Drilling & Downhole $ 65,388 $ 64,536 $ 852 1.3 % Completions 52,015 43,310 8,705 20.1 % Production 27,800 29,632 (1,832) (6.2) % Corporate 34,268 31,408 2,860 9.1 % Total selling, general and administrative expenses $ 179,471 $ 168,886 $ 10,585 6.3 % Segment operating income (loss) Drilling & Downhole $ 32,201 $ 4,749 $ 27,452 578.1 % Operating margin % 10.6 % 2.0 % Completions 11,565 (4,532) 16,097 355.2 % Operating margin % 4.4 % (2.4) % Production (443) (14,354) 13,911 96.9 % Operating margin % (0.3) % (12.3) % Corporate (34,268) (31,408) (2,860) (9.1) % Total segment operating income (loss) $ 9,055 $ (45,545) $ 54,600 119.9 % Operating margin % 1.3 % (8.4) % Gain on sale-leaseback transactions (7,000) — (7,000) * Gain on disposal of assets and other (1,271) (1,052) (219) * Operating income (loss) 17,326 (44,493) 61,819 138.9 % Interest expense 31,525 32,009 (484) (1.5) % Foreign exchange losses (gains) and other, net (24,548) 217 (24,765) * Loss on extinguishment of debt — 5,290 (5,290) * Total other expense 6,977 37,516 (30,539) * Income (loss) before income taxes 10,349 (82,009) 92,358 112.6 % Income tax expense 6,637 642 5,995 * Net income (loss) $ 3,712 $ (82,651) $ 86,363 104.5 % Weighted average shares outstanding Basic 5,747 5,643 Diluted 5,951 5,643 Earnings (loss) per share Basic $ 0.65 $ (14.65) Diluted $ 0.62 $ (14.65) * not meaningful 35 Table of Contents Revenues Our revenue for the year ended December 31, 2022 was $699.9 million, an increase of $158.8 million, or 29.4%, compared to the year ended December 31, 2021.
Biggest changeActive Rigs 687 723 The table below shows the amount of total inbound orders by segment for the years ended December 31, 2023 and 2022: (in millions of dollars) 2023 2022 Orders: Drilling & Downhole $ 337.0 $ 305.8 Completions 251.9 278.5 Production 135.4 196.4 Total Orders $ 724.3 $ 780.7 38 Table of Contents Results of operations Year ended December 31, Change (in thousands of dollars, except per share information) 2023 2022 $ % Revenue Drilling & Downhole $ 329,576 $ 304,565 $ 25,011 8.2 % Completions 265,628 264,951 677 0.3 % Production 145,864 131,519 14,345 10.9 % Eliminations (2,204) (1,122) (1,082) * Total revenue $ 738,864 $ 699,913 $ 38,951 5.6 % Cost of sales Drilling & Downhole $ 222,933 $ 206,976 $ 15,957 7.7 % Completions 203,057 201,371 1,686 0.8 % Production 110,925 104,162 6,763 6.5 % Eliminations (2,204) (1,122) (1,082) * Total cost of sales $ 534,711 $ 511,387 $ 23,324 4.6 % Gross profit Drilling & Downhole $ 106,643 $ 97,589 $ 9,054 9.3 % Completions 62,571 63,580 (1,009) (1.6) % Production 34,939 27,357 7,582 27.7 % Total gross profit $ 204,153 $ 188,526 $ 15,627 8.3 % Selling, general and administrative expenses: Drilling & Downhole $ 72,876 $ 65,388 $ 7,488 11.5 % Completions 51,783 52,015 (232) (0.4) % Production 28,477 27,800 677 2.4 % Corporate 27,253 34,268 (7,015) (20.5) % Total selling, general and administrative expenses $ 180,389 $ 179,471 $ 918 0.5 % Segment operating income (loss) Drilling & Downhole $ 33,767 $ 32,201 $ 1,566 4.9 % Operating margin % 10.2 % 10.6 % Completions 10,788 11,565 (777) (6.7) % Operating margin % 4.1 % 4.4 % Production 6,462 (443) 6,905 1,558.7 % Operating margin % 4.4 % (0.3) % Corporate (27,253) (34,268) 7,015 20.5 % Total segment operating income $ 23,764 $ 9,055 $ 14,709 162.4 % Operating margin % 3.2 % 1.3 % Transaction expenses 2,892 — 2,892 * Gain on sale-leaseback transactions — (7,000) 7,000 * Loss (gain) on disposal of assets and other 156 (1,271) 1,427 * Operating income 20,716 17,326 3,390 19.6 % Interest expense 18,297 31,525 (13,228) (42.0) % Foreign exchange losses (gains) and other, net 10,233 (24,548) 34,781 * Total other expense 28,530 6,977 21,553 * Income (loss) before income taxes (7,814) 10,349 (18,163) (175.5) % Income tax expense 11,062 6,637 4,425 * Net income (loss) $ (18,876) $ 3,712 $ (22,588) (608.5) % Weighted average shares outstanding Basic 10,212 5,747 Diluted 10,212 5,951 Earnings (loss) per share Basic $ (1.85) $ 0.65 Diluted $ (1.85) $ 0.62 * not meaningful 39 Table of Contents Revenues Our revenue for the year ended December 31, 2023 was $738.9 million, an increase of $39.0 million, or 5.6%, compared to the year ended December 31, 2022.
Net cash used in financing activities Net cash used in financing activities was $5.1 million for the year ended December 31, 2022 including $3.8 million of repurchase of our common stock and $1.3 million of repayments of debt.
Net cash used in financing activities was $5.1 million for the year ended December 31, 2022 including $3.8 million of cash used to repurchase of our common stock and $1.3 million of repayments of debt.
This may be the result of various factors, including, but not limited to, those factors discussed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K. Item 7A. Quantitative and qualitative disclosures about market risk Not required under Regulation S-K for “smaller reporting companies.” 42
This may be the result of various factors, including, but not limited to, those factors discussed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K. Item 7A. Quantitative and qualitative disclosures about market risk Not required under Regulation S-K for “smaller reporting companies.” 46
Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Annual Report on Form 10-K are reasonable, forward- 41 Table of Contents looking statements are not guarantees of future performance and involve risks and uncertainties that may cause actual results to differ materially from our plans, intentions or expectations.
Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Annual Report on Form 10-K are reasonable, forward- 45 Table of Contents looking statements are not guarantees of future performance and involve risks and uncertainties that may cause actual results to differ materially from our plans, intentions or expectations.
The estimated annual effective tax rates for the years ended December 31, 2022 and 2021 were impacted by losses in jurisdictions where the recording of a tax benefit is not available. Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company’s relative mix of earnings and losses by jurisdiction.
The estimated annual effective tax rates for the years ended December 31, 2023 and 2022 were impacted by losses in jurisdictions where the recording of a tax benefit is not available. Furthermore, the tax expense or benefit recorded can vary from period to period depending on the Company’s relative mix of earnings and losses by jurisdiction.
Corporate costs include, among other items, payroll related costs for management, administration, finance, legal, and human resources personnel; professional fees for legal, accounting and related services; and marketing costs. 36 Table of Contents Other items not included in segment operating income (loss) Several items are not included in segment operating income (loss), but are included in the total operating income (loss).
Corporate costs include, among other items, payroll related costs for management, administration, finance, legal, and human resources personnel; professional fees for legal, accounting and related services; and marketing costs. 40 Table of Contents Other items not included in segment operating income (loss) Several items are not included in segment operating income (loss), but are included in the total operating income.
Net cash provided by investing activities Net cash provided by investing activities was $27.1 million for the year ended December 31, 2022 including $32.1 million of cash proceeds from sale of land and buildings that were subsequently leased back, partially offset by $7.5 million of capital expenditures.
Net cash provided by investing activities for the year ended December 31, 2022 including $32.1 million of cash proceeds from sale of land and buildings that were subsequently leased back, partially offset by $7.5 million of capital expenditures.
Off-balance sheet arrangements As of December 31, 2022, we had no off-balance sheet instruments or financial arrangements, other than letters of credit entered into in the ordinary course of business. For additional information, refer to Note 12 Commitments and Contingencies.
Off-balance sheet arrangements As of December 31, 2023, we had no off-balance sheet instruments or financial arrangements, other than letters of credit entered into in the ordinary course of business. For additional information, refer to Note 12 Commitments and Contingencies.
Although terms of our contracts may vary considerably, the 7% of revenues recognized over time relate to certain contracts in our Subsea and Production Equipment product lines which are typically based on a fixed amount for the entire contract.
Although terms of our contracts may vary considerably, the 6% of revenues recognized over time relate to certain contracts in our Subsea and Production Equipment product lines which are typically based on a fixed amount for the entire contract.
Our engineered capital products are directed at drilling rig equipment for constructing new and upgrading existing rigs, subsea construction and development projects, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and capital equipment for renewable energy projects.
Our capital products are directed at drilling rig equipment for constructing new or upgrading existing rigs, subsea construction and development projects, pressure pumping equipment, the placement of production equipment on new producing wells, downstream capital projects and capital equipment for renewable energy projects.
The products and related services consist primarily of: (i) capital and consumable products sold to the pressure pumping, hydraulic fracturing and flowback services markets, including hydraulic fracturing pumps, cooling systems, high-pressure flexible hoses and flow iron as well as wireline cable and pressure control equipment used in the well completion and intervention service markets; and (ii) coiled tubing strings and coiled line pipe and related services. • Production .
The products and solutions consist primarily of: (i) capital and consumable products sold to the pressure pumping market, including hydraulic fracturing pumps, cooling systems, high-pressure flexible hoses and flow iron, as well as wireline cable and pressure control equipment used in the well completion and intervention service markets; and (ii) coiled tubing strings and coiled line pipe and related services. • Production .
Any changes in our judgment as to the realizability of our deferred tax assets are recorded as an adjustment to the deferred tax asset valuation allowance in the period the change occurs. For the year ended December 31, 2021, we recognized tax expense for valuation allowances totaling $31.1 million.
Any changes in our judgment as to the realizability of our deferred tax assets are recorded as an adjustment to the deferred tax asset valuation allowance in the period the change occurs. For the year ended December 31, 2022, we recognized tax expense for valuation allowances totaling $8.1 million.
For the years ended December 31, 2022 and 2021, we recognized inventory write downs totaling $2.7 million and $8.1 million, respectively. These charges are all included in “ Cost of sales ” in the consolidated statements of comprehensive income (loss).
For the years ended December 31, 2023 and 2022, we recognized inventory write downs totaling $2.8 million and $2.7 million, respectively. These charges are all included in “ Cost of sales ” in the consolidated statements of comprehensive income (loss).
The guarantees of the 2025 Notes are (i) pari passu in right of payment with all existing and future senior indebtedness of such guarantor, including all obligations under our Credit Facility; (ii) secured by certain collateral of such guarantor, subject to permitted liens under the indenture governing the 2025 Notes; (iii) effectively senior to all unsecured indebtedness of that guarantor, to the extent of the value of the collateral securing the 2025 Notes (after giving effect to the liens securing our Credit Facility and any other senior liens on the collateral); and (v) senior in right of payment to any future subordinated indebtedness of that guarantor. 38 Table of Contents In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor subsidiaries of the 2025 Notes, the non-guarantor subsidiaries of such notes will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Company or to any guarantors.
The guarantees of the 2025 Notes are (i) pari passu in right of payment with all existing and future senior indebtedness of such guarantor, including all obligations under our Credit Facility and the Seller Term Loan; (ii) secured by certain collateral of such guarantor, subject to permitted liens under the indenture governing the 2025 Notes; (iii) effectively senior to all unsecured indebtedness of that guarantor, to the extent of the value of the collateral securing the 2025 Notes (after giving effect to the liens securing our Credit Facility and any other senior liens on the collateral); and (iv) senior in right of payment to any future subordinated indebtedness of that guarantor. 42 Table of Contents In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor subsidiaries of the 2025 Notes, the non-guarantor subsidiaries of such notes will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Company or to any guarantors.
We expect that the world's long-term energy demand will continue to rise. We also expect hydrocarbons will continue to play a vital role in meeting the world's long-term energy needs while renewable energy sources continue to develop. As such, we remain focused on serving our customers in both oil and natural gas as well as renewable energy applications.
We also expect hydrocarbons will continue to play a vital role in meeting the world’s long-term energy needs while renewable energy sources develop to scale. As such, we remain focused on serving our customers in both oil and natural gas as well as renewable energy applications.
Liquidity and capital resources Sources and uses of liquidity Our internal sources of liquidity are cash on hand and cash flows from operations, while our primary external sources include trade credit, the Credit Facility and the 2025 Notes.
Liquidity and capital resources Sources and uses of liquidity Our internal sources of liquidity are cash on hand and cash flows from operations, while our primary external sources include trade credit, the Credit Facility, the 2025 Notes and the Seller Term Loan.
The products and related services consist primarily of: (i) engineered process systems, production equipment, as well as specialty separation equipment; and (ii) a wide range of industrial valves focused on serving oil and natural gas customers as well as power generation, renewable energy and other general industrial applications. 32 Table of Contents Market Conditions Demand for our products and services is directly related to the capital and operating budgets of our customers.
The products and solutions consist primarily of: (i) engineered process systems, production equipment, as well as specialty separation equipment; and (ii) a wide range of industrial valves focused on oil and natural gas as well as power generation, renewable energy and other general industrial applications. 36 Table of Contents Market Conditions Demand for our products and services is directly related to our customers’ capital and operating budgets.
We are presenting the following summarized financial information for the Company and the subsidiary guarantors (collectively referred to as the "Obligated Group") pursuant to Rule 13-01 of Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.
We are presenting the following summarized financial information for the Company and the subsidiary guarantors (collectively referred to as the “Obligated Group”) pursuant to Rule 13-01 of Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.
In addition, based on existing market conditions and our expected liquidity needs, among other factors, we may use a portion of our cash flows from operations, proceeds from divestitures, securities offerings or other eligible capital to reduce the principal amount of our 2025 Notes outstanding or repurchase shares of our common stock under our repurchase program.
In addition, based on existing market conditions and our expected liquidity needs, among other factors, we may use a portion of our cash flows from operations, proceeds from divestitures, securities offerings or other eligible capital to reduce outstanding debt or repurchase shares of our common stock under our repurchase program.
These items include Gain on sale-leaseback transactions and Gain on disposal of assets and other. For further information related to Gain on sale-leaseback transactions, see Notes 6 Property and Equipment and 9 Leases. Other income and expense Other income and expense includes interest expense, loss on extinguishment of debt and foreign exchange losses.
These items include Transaction expenses, Gain on sale-leaseback transactions and Loss (gain) on disposal of assets and other. For further information related to Gain on sale-leaseback transactions, see Notes 6 Property and Equipment and 9 Leases. Other income and expense Other income and expense includes interest expense and foreign exchange gains and losses.
While we have policies for calculating and recording reserves against inventory carrying values, we exercise judgment in establishing and applying these policies. As of December 31, 2022 and 2021, our inventory reserve balances were $39.3 million and $62.9 million, respectively.
While we have policies for calculating and recording reserves against inventory carrying values, we exercise judgment in establishing and applying these policies. As of December 31, 2023 and 2022, our inventory reserve balances were $38.2 million and $39.3 million, respectively.
Furthermore, availability under our Credit Facility will fluctuate directionally based on the level of our eligible accounts receivable and inventory subject to applicable sublimits. In addition, we expect total 2023 capital expenditures to be less than $15.0 million, consisting of, among other items, replacing end of life machinery and equipment.
Furthermore, availability under our Credit Facility will fluctuate directionally based on the level of our eligible accounts receivable and inventory subject to applicable sublimits. In addition, we expect total 2024 capital expenditures to be approximately $10 million, consisting of, among other items, replacing end of life machinery and equipment.
During the year ended December 31, 2022, net working capital cash usage was $65.1 million, primarily attributed to an increase in inventory to meet customer demand, compared to net working capital cash usage of $6.7 million for the year ended December 31, 2021.
During the year ended December 31, 2023, net working capital cash usage was $21.5 million, primarily attributed to an increase in inventory to meet customer demand, compared to net working capital cash usage of $65.1 million for the year ended December 31, 2022.
This segment designs, manufactures and supplies products and provides related services to the drilling, well construction, artificial lift and subsea energy construction markets, including applications in oil and natural gas, renewable energy, defense, and communications.
This segment designs, manufactures and supplies products and solutions to the drilling, artificial lift and subsea markets, including applications in oil and natural gas, renewable energy, defense and communications.
The change in operating income (loss) and segment operating margin percentage for each segment is explained as follows: Drilling & Downhole segment — Segment operating income was $32.2 million, or 10.6%, for the year ended December 31, 2022 compared to $4.7 million, or 2.0%, for the year ended December 31, 2021.
The change in operating income (loss) and operating margin percentage for each segment is explained as follows: Drilling & Downhole segment — Segment operating income was $33.8 million, or 10.2%, for the year ended December 31, 2023 compared to segment operating income of $32.2 million, or 10.6%, for the year ended December 31, 2022.
For the year ended December 31, 2022, approximately 93% of our revenue was recognized from goods transferred to customers at a point in time while 7% of our revenue was recognized from goods transferred to customers over time.
For the year ended December 31, 2023, approximately 94% of our revenue was recognized from goods transferred to customers at a point in time while 6% of our revenue was recognized from goods transferred to customers over time.
Shares may be repurchased under the program from time to time, in amounts and at prices that the company deems appropriate, subject to market and 37 Table of Contents business conditions, applicable legal requirements and other considerations. In the fourth quarter of 2022, we repurchased approximately 103 thousand shares of our common stock for aggregate consideration of approximately $3.0 million.
Shares may be repurchased under the program from time to time, in amounts and at prices that the company deems appropriate, subject to market and 41 Table of Contents business conditions, applicable legal requirements and other considerations. During 2023, we repurchased approximately 139 thousand shares of our common stock for aggregate consideration of approximately $3.5 million.
This segment designs, manufactures and supplies products and provides related services to the coiled tubing, well stimulation and intervention markets.
This segment designs, manufactures and supplies products and solutions to the coiled tubing, well stimulation and intervention markets.
We are also continuing to develop products to help oil and gas operators lower their current emissions while also deploying our existing product technologies in renewable energy applications and seeking to develop innovative equipment. A summary of the products and services offered by each segment is as follows: • Drilling & Downhole .
We are continuing to develop products to help oil and gas operators lower expenses, increase production, and reduce their emissions while also deploying our technologies in renewable energy applications. A summary of the products and services offered by each segment is as follows: • Drilling & Downhole .
For the year ended December 31, 2022, our Drilling & Downhole segment, Completions segment, and Production segment comprised 43.5%, 37.7% and 18.8% of our total revenues, respectively, compared to 44.3%, 34.1% and 21.6%, respectively, for the year ended December 31, 2021.
For the year ended December 31, 2023, our Drilling & Downhole segment, Completions segment, and Production segment comprised 44.6%, 35.7% and 19.7% of our total revenues, respectively, compared to 43.5%, 37.7% and 18.8%, respectively, for the year ended December 31, 2022.
This decline was partially offset by an improvement in net income adjusted for non-cash items which provided $48.1 million of cash for the year ended December 31, 2022 compared to using $9.1 million of cash for the year ended December 31, 2021.
This improvement was partially offset by a decline in net income adjusted for non-cash items which provided $29.6 million of cash for the year ended December 31, 2023 compared to provided $48.1 million of cash for the year ended December 31, 2022.
Taxes We recorded tax expense of $6.6 million for the year ended December 31, 2022 compared to a tax benefit of $0.6 million for the year ended December 31, 2021.
Taxes We recorded tax expense of $11.1 million for the year ended December 31, 2023 compared to a tax expense of $6.6 million for the year ended December 31, 2022.
See Note 5 Inventories for further information related to these charges. 40 Table of Contents Long-lived assets As of December 31, 2022, our long-lived assets included property and equipment, definite lived intangibles, and operating lease right of use assets with balances of $63.0 million, $191.5 million and $57.3 million, respectively.
See Note 5 Inventories for further information related to these charges. 44 Table of Contents Long-lived assets As of December 31, 2023, our long-lived assets included property and equipment, definite lived intangibles, and operating lease right of use assets with balances of $61.4 million, $168.0 million and $55.4 million, respectively.
These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company’s control. All statements, other than statements of historical fact, included in this Annual Report on Form 10-K regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements.
All statements, other than statements of historical fact, included in this Annual Report on Form 10-K regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements.
The changes in revenues by operating segment consisted of the following: Drilling & Downhole segment — Revenues were $304.6 million for the year ended December 31, 2022, an increase of $64.7 million, or 27.0%, compared to the year ended December 31, 2021.
The changes in revenues by operating segment consisted of the following: Drilling & Downhole segment — Revenues were $329.6 million for the year ended December 31, 2023, an increase of $25.0 million, or 8.2%, compared to the year ended December 31, 2022.
Our cash flows for the years ended December 31, 2022 and 2021 are presented below (in thousands): Year ended December 31, 2022 2021 Net cash used in operating activities $ (17,054) $ (15,775) Net cash provided by investing activities 27,139 10,698 Net cash used in financing activities (5,076) (76,243) Effect of exchange rate changes on cash (838) (439) Net increase (decrease) in cash, cash equivalents and restricted cash $ 4,171 $ (81,759) Net cash used in operating activities Net cash used in operating activities was $17.1 million for the year ended December 31, 2022 compared to $15.8 million for the year ended December 31, 2021.
Our cash flows for the years ended December 31, 2023 and 2022 are presented below (in thousands): Year ended December 31, 2023 2022 Net cash provided by (used in) operating activities $ 8,183 $ (17,054) Net cash provided by (used in) investing activities (6,573) 27,139 Net cash used in financing activities (7,582) (5,076) Effect of exchange rate changes on cash 1,108 (838) Net increase (decrease) in cash, cash equivalents and restricted cash $ (4,864) $ 4,171 Net cash provided by (used in) operating activities Net cash provided by operating activities was $8.2 million for the year ended December 31, 2023 compared to net cash used in $17.1 million for the year ended December 31, 2022.
Segment operating income (loss) and segment operating margin percentage Segment operating income for the year ended December 31, 2022 was $9.1 million compared to a loss of $45.5 million for the year ended December 31, 2021. For the year ended December 31, 2022, segment operating margin percentage was 1.3% compared to (8.4)% for the year ended December 31, 2021.
Segment operating income (loss) and segment operating margin percentage Segment operating income for the year ended December 31, 2023 was $23.8 million compared to an income of $9.1 million for the year ended December 31, 2022. For the year ended December 31, 2023, segment operating margin percentage was 3.2% compared to 1.3% for the year ended December 31, 2022.
For additional information, see Note 4 Acquisition . We may pursue acquisitions in the future, which may be funded with cash and/or equity. Our ability to make significant acquisitions for cash may require us to pursue additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.
Our ability to make significant acquisitions for cash may require us to pursue additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.
Summarized financial information was as follows (in thousands): Year ended December 31, (in thousands) 2022 2021 Revenues $ 547,256 $ 401,876 Cost of sales 417,131 323,914 Operating income (loss) 35,321 (46,827) Net income (loss) 3,712 (82,651) Year ended December 31, (in thousands) 2022 2021 Current assets $ 378,812 $ 327,281 Noncurrent assets 279,389 298,172 Current liabilities 175,155 144,487 Payables to non-guarantor subsidiaries 132,839 125,281 Noncurrent liabilities 293,150 259,622 39 Table of Contents Critical accounting policies and estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
Summarized financial information was as follows (in thousands): Year ended December 31, (in thousands) 2023 2022 Revenues $ 552,216 $ 547,256 Cost of sales 422,369 417,131 Operating income (loss) 5,304 35,321 Net income (loss) (18,876) 3,712 Year ended December 31, (in thousands) 2023 2022 Current assets $ 388,817 $ 378,812 Noncurrent assets 251,901 279,389 Current liabilities 144,493 175,155 Payables to non-guarantor subsidiaries 190,816 132,839 Noncurrent liabilities 178,811 293,150 43 Table of Contents Critical accounting policies and estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
Completions segment — Revenues were $265.0 million for the year ended December 31, 2022, an increase of $79.9 million, or 43.2%, compared to the year ended December 31, 2021.
Completions segment — Revenues were $265.6 million for the year ended December 31, 2023, an increase of $0.7 million, or 0.3%, compared to the year ended December 31, 2022.
Corporate — Selling, general and administrative expenses for Corporate were $34.3 million for the year ended December 31, 2022, a $2.9 million increase compared to the year ended December 31, 2021. This increase was primarily related to higher variable compensation costs.
Corporate — Selling, general and administrative expenses for Corporate were $27.3 million for the year ended December 31, 2023, a $7.0 million decrease compared to the year ended December 31, 2022. This decrease was primarily related to lower variable compensation costs.
Overview We are a global company serving the oil, natural gas, industrial and renewable energy industries. FET provides value added solutions aimed at improving the safety, efficiency, and environmental impact of our customers' operations. We are an environmentally and socially responsible company headquartered in Houston, Texas with manufacturing, distribution and service facilities strategically located throughout the world.
Overview We are a global manufacturing company serving the oil, natural gas, industrial and renewable energy industries. With headquarters in Houston, Texas, FET provides value added solutions aimed at improving the safety, efficiency, and environmental impact of our customers’ operations. Our highly engineered products include capital equipment and consumable products.
This segment designs, manufactures and supplies products and provides related equipment and services for production and infrastructure markets.
This segment designs, manufactures and supplies products and solutions for the production and infrastructure markets.
Our future success and growth will be highly dependent on our ability to generate positive operating cash flow and access outside sources of capital. During the year ended December 31, 2021, we repurchased $59.9 million principal amount of our 2025 Notes and repaid the $13.1 million outstanding under our revolving Credit Facility.
Our future success and growth will be highly dependent on our ability to generate positive operating cash flow and access outside sources of capital. We had outstanding $134.2 million principal amount of 2025 Notes and no borrowings under our Credit Facility as of December 31, 2023.
Cautionary note regarding forward-looking statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Cautionary note regarding forward-looking statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company’s control.
The products and related services consist primarily of: (i) capital equipment and a broad line of expendable products consumed in the drilling process; (ii) well construction casing and cementing equipment and protection products for artificial lift equipment and cables; and (iii) subsea remotely operated vehicles and trenchers, submarine rescue vehicles, specialty components and tooling, and complementary subsea technical services. • Completions.
The products and solutions consist primarily of: (i) capital equipment and consumable products used in the drilling process; (ii) products designed to safeguard artificial lift equipment and cables, and well construction casing and cementing equipment; and (iii) ROVs and trenchers, submarine rescue vehicles, specialty components and tooling, and technical services. • Completions.
Offshore Rigs Land 1,528 1,172 Offshore 221 193 Global Active Rigs 1,749 1,365 U.S. Commodity Target Oil 574 379 Gas 147 98 Other 2 1 Total U.S. Active Rigs 723 478 U.S. Well Path Horizontal 659 431 Vertical 25 22 Directional 39 25 Total U.S.
Offshore Rigs Land 1,566 1,528 Offshore 246 221 Global Active Rigs 1,812 1,749 U.S. Commodity Target Oil 549 574 Gas 135 147 Other 3 2 Total U.S. Active Rigs 687 723 U.S. Well Path Horizontal 620 659 Vertical 17 25 Directional 50 39 Total U.S.
In 2022, over 68% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services.
In 2023, over 60% of our revenue was derived from consumable products and activity-based equipment, while the balance was primarily derived from capital products with a small amount from rental and other services. We expect that the world’s long-term energy demand will continue to rise for many decades.
This increase includes a $46.7 million, or 48.3%, increase in revenues for our Drilling Technologies product line primarily due to higher sales volumes of consumable products and capital equipment from the 28.1% year-over-year increase in global rig count.
This increase includes a $27.3 million, or 19.0%, increase in revenues for our Drilling Technologies product line primarily due to higher sales volumes of both consumable products and capital equipment driven by increased international market activity.
Net cash used in financing activities was $76.2 million for the year ended December 31, 2021 including $58.6 million of cash used to repurchase 2025 Notes and $13.1 million of repayments of the revolving Credit Facility.
Net cash used in financing activities Net cash used in financing activities was $7.6 million for the year ended December 31, 2023 including $6.0 million of cash used to repurchase of our common stock and $1.3 million of repayments of debt.
In addition, average natural gas prices were 65.8% higher in 2022 compared to 2021. 33 Table of Contents The table below shows the average number of active drilling rigs operating by geographic area and drilling for different purposes based on the weekly rig count information published by Baker Hughes Company. 2022 2021 Active Rigs by Location United States 723 478 Canada 175 132 International 851 755 Global Active Rigs 1,749 1,365 Land vs.
The table below shows average crude oil and natural gas prices for WTI, Brent, and Henry Hub: 2023 2022 Average global oil, $/bbl West Texas Intermediate $ 77.58 $ 94.90 United Kingdom Brent $ 82.49 $ 100.93 Average North American Natural Gas, $/Mcf Henry Hub $ 2.53 $ 6.45 37 Table of Contents The table below shows the average number of active drilling rigs operating by geographic area and drilling for different purposes based on the weekly rig count information published by Baker Hughes Company. 2023 2022 Active Rigs by Location United States 687 723 Canada 177 175 International 948 851 Global Active Rigs 1,812 1,749 Land vs.
Completions segment — Segment operating income was $11.6 million, or 4.4%, for the year ended December 31, 2022 compared to a loss of $4.5 million, or (2.4)% for the year ended December 31, 2021.
Completions segment — Segment operating income of $10.8 million, or 4.1%, for the year ended December 31, 2023 was comparable to segment operating income of $11.6 million, or 4.4% for the year ended December 31, 2022. The slight decline in operating income is attributed to unfavorable sales mix.
See Note 8 Debt for further details related to the terms for our 2025 Notes and Credit Facility. As of December 31, 2022, we had cash and cash equivalents of $51.0 million and $156.1 million of availability under our Credit Facility. We anticipate that our future working capital requirements for our operations will fluctuate directionally with revenues.
As of December 31, 2023, we had cash and cash equivalents of $46.2 million and $147.1 million of availability under our Credit Facility. Upon closing of the Variperm Acquisition on January 4, 2024, our net availability under our Credit Facility was approximately $73.1 million. We anticipate that our future working capital requirements for our operations will fluctuate directionally with revenues.
Net cash provided by investing activities for the year ended December 31, 2021 includes $10.8 million of cash received to settle a note receivable from the 2019 sale of our equity interest in Ashtead Technology and $7.0 million of proceeds from the sale of property and equipment, partially offset by $3.4 million of cash paid for the acquisition of Hawker and $2.4 million of capital expenditures.
Net cash provided by (used in) investing activities Net cash used in investing activities was $6.6 million for the year ended December 31, 2023 including $7.9 million of capital expenditures, partially offset by $1.4 million of proceeds from the sale of property and equipment.
The $16.1 million improvement in segment operating results includes higher gross profit from the 43.2% increase in revenues discussed above, partially offset by higher freight and employee related costs. Production segment — Segment operating loss was $0.4 million, or (0.3)%, for the year ended December 31, 2022 compared to $14.4 million, or (12.3)% for the year ended December 31, 2021.
Production segment — Segment operating income was $6.5 million, or 4.4%, for the year ended December 31, 2023 compared to segment operating loss of $0.4 million, or 0.3% for the year ended December 31, 2022. The $6.9 million increase in segment operating results was driven by the increase in revenues, lower freight costs, as well as increased operating leverage.
Production segment — Revenues were $131.5 million for the year ended December 31, 2022, an increase of $14.8 million, or 12.7%, compared to the year ended December 31, 2021. Of the total segment’s increase in revenues, $8.9 million or 14.6% was due to higher project revenues for our processing and treatment equipment within our Production Equipment product line.
Production segment — Revenues were $145.9 million for the year ended December 31, 2023, an increase of $14.3 million, or 10.9%, compared to the year ended December 31, 2022.
We incurred $31.5 million of interest expense during the year ended December 31, 2022, which is comparable to the year ended December 31, 2021. The foreign exchange gains and losses are primarily the result of movements in the British pound, Euro and Canadian dollar relative to the U.S. dollar.
See Note 8 Debt for further details related to the 2025 Notes and Credit Facility. The foreign exchange gains and losses are primarily the result of movements in the British pound, Euro and Canadian dollar relative to the U.S. dollar.
Revenues for our Downhole Technologies product line increased by $15.8 million, or 22.8%, primarily due to higher sales volumes of artificial lift products due to the increase in the number of well completions and workovers in the current year compared to prior year. Revenues for our Subsea Technologies product line were comparable with the prior year.
Revenues for our Downhole Technologies product line increased by $5.5 million, or 6.4%, primarily due to higher sales volumes of artificial lift products in 2023 compared to 2022. Revenues for our Subsea Technologies product line decreased by $7.7 million, or 10.1%, from lower project revenue recognized from ROVs and cable management systems, partially offset by an increase in part sales.
Our products include highly engineered capital equipment as well as consumable products. These consumable products are used in drilling, well construction and completions activities and at processing centers and refineries.
FET’s customers include oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, pipeline and refinery operators, and renewable energy and new energy companies. Consumable products are used by our customers in drilling, well construction and completion activities and at processing centers and refineries.
Removed
We design, manufacture and supply high quality reliable products that create value for our diverse customer base, which includes, among others, oil and natural gas operators, land and offshore drilling contractors, oilfield service companies, subsea construction and service companies, and pipeline and refinery operators. In addition, we offer some of our products to renewable energy and new energy companies.
Added
Oil and natural gas prices softened in the first half 2023 as a result of global recessionary fears, but rebounded somewhat during the second half of 2023 as supply tightened from further OPEC+ production cuts and growing geopolitical tensions in the Middle East. These tensions could lead to a disruption to world energy markets and international supply chains.
Removed
In 2021, distribution of vaccines and reopening of certain economies led to an increase in demand for oil and natural gas following an unprecedented decline from the COVID-19 pandemic. At the same time, the supply of oil and natural gas was impacted by ongoing capacity constraints by OPEC+ and North American exploration and production companies.
Added
Despite these near-term macroeconomic challenges, we expect that the world’s long-term energy demand will continue to rise and may outpace global supply as OPEC+ remains committed to maintaining stable oil prices. We expect that hydrocarbons will continue to play a vital role in meeting the world’s long-term energy needs while renewable energy sources become increasingly prominent.
Removed
As a result of these supply and demand factors, commodity prices increased substantially in 2021. During 2022, the supply of oil and natural gas was further impacted by political and social responses to the Russia and Ukraine war resulting in further increases in energy prices, especially in Europe.
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The price of oil has varied dramatically over the last several years. The spot prices for West Texas Intermediate (“WTI”) and United Kingdom Brent (“Brent”) crude oil fell from $61.14 and $67.77 per barrel, respectively, as of December 31, 2019 to lows below $15.00 per barrel in April 2020.
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In addition, ongoing COVID-19 outbreaks, related work restrictions and other worldwide labor constraints continue to cause disruptions in global supply chains. These disruptions, together with various governmental responses thereto, have led to inflationary pressures. In response, the Federal Reserve raised interest rates significantly in 2022, and further rate increases are expected.
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Since that time, oil prices rebounded to highs above $120.00 per barrel in March 2022 but have softened in 2023 to an average of $71.89 and $77.69 for WTI and Brent, respectively. In addition, average natural gas prices were 60.8% lower in 2023 compared to 2022.
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These macroeconomic conditions could lead to a global or regional recession, which may lower demand for commodities, such as oil and natural gas, and have a direct impact on commodity prices.
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Our revenues, over the long-term, are highly correlated to the global drilling rig count, which increased 3.6% in 2023 compared to average global rig count in 2022. The increase was driven by growth in international rig count in 2023 of 9.6% compared to 2022, while the average U.S. rig count for 2023 was 5.0% lower than 2022.
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Our revenues are highly correlated to the U.S. drilling rig count, which has increased to 779 rigs as of the end of 2022 from a low of 244 rigs in August 2020. The level of active hydraulic fracturing fleets also increased substantially in 2022 in order to meet increasing oil and natural gas demand.
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International markets grew throughout 2023 and outpaced the U.S. and are expected to continue to grow in 2024. In the U.S., publicly owned exploration and production companies are expected to continue to exercise disciplined capital spending while privately owned exploration and production companies fluctuate their activity in response to changes in oil and natural gas prices.
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Despite these improvements, drilling and completions activity remains below pre-pandemic levels. Publicly owned exploration and production companies in North America remain under pressure by investors to constrain capital expenditures in order to generate positive cash flows. Privately owned exploration and production companies will fluctuate their drilling and completions activity in response to changes in oil and natural gas prices.
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The overall increase in revenues is primarily related to increases in the global rig count, with the increase in international rig count more than offsetting a decline in U.S. rig count in 2023 compared to 2022.
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It is generally expected that public and private exploration and production companies will continue to make investments in a similar fashion for at least the next twelve months. Activity levels have also increased in international markets, as well as in global offshore and subsea activity.
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This change includes a revenue increase of $2.0 million, or 1.3%, for our Stimulation and Intervention product line primarily due to higher demand of radiators, wireline cable and high-pressure hoses, partially offset by lower sales volumes in power ends.
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As a result, demand for our drilling and subsea offerings increased during 2022 due to an improved outlook for our international drilling and subsea customers.
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The increase of $12.1 million or 17.3%, was primarily due to the project revenue recognized from our process oil treatment equipment within our Production Equipment product line, and a $2.3 million or 3.7%, increase in sales of our valve products.
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The table below shows average crude oil and natural gas prices for West Texas Intermediate crude oil (“WTI”), United Kingdom Brent crude oil (“Brent”), and Henry Hub natural gas: 2022 2021 Average global oil, $/bbl West Texas Intermediate $ 94.90 $ 68.13 United Kingdom Brent $ 100.93 $ 70.86 Average North American Natural Gas, $/Mcf Henry Hub $ 6.45 $ 3.89 The price of oil has varied dramatically over the last three years.
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The $1.6 million increase in segment operating results was primarily attributable to increased operating leverage on higher revenues for our Drilling Technologies and Downhole Technologies product lines.
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The spot prices for WTI and Brent fell to lows below $15.00 per barrel in April 2020 and rebounded to $48.35 and $51.22, respectively, by December 31, 2020. Prices continued to rebound during 2021 and ended the year up more than 50%.

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