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

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Paragraph-level year-over-year comparison of MAMMOTH ENERGY SERVICES, 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.

+467 added−520 removedSource: 10-K (2024-03-01) vs 10-K (2023-02-24)

Top changes in MAMMOTH ENERGY SERVICES, INC.'s 2023 10-K

467 paragraphs added · 520 removed · 335 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

86 edited+29 added−30 removed191 unchanged
Biggest changeRisks Related to Our Business and the Industries We Serve • Failure by PREPA to pay the amounts owed to our infrastructure subsidiary Cobra for services performed would materially and adversely affect our financial condition, results of operations and cash flows. • Our ability to generate sufficient cash in the next nine months necessary to repay or refinance our existing revolving credit facility at or prior to maturity is subject to a number of risks and uncertainties. • Our customer base is concentrated and the loss of one or more of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue to decline substantially. • We may experience losses in excess of our recorded reserves for receivables. • Our business and operations have been and will likely continue to be adversely affected by the COVID-19 pandemic. 18 • Our revolving credit facility imposes, and any of our future credit facilities may impose, restrictions on us that may affect our ability to successfully operate our business. • Volatility in the oil and natural gas markets has negatively impacted our business in the past, and could negatively impact our oilfield services business in the future. • Governmental laws, policies, regulations and subsidies, including initiatives to promote the use of renewable energy sources could create commodity volatility and negatively impact our oilfield services business. • A transition of the global energy sector from primarily a fossil fuel-based system to renewable energy sources could affect our customers ’ level of expenditures. • Shortages, delays in delivery and interruptions in supply of major components, replacement parts or, other equipment, supplies or materials may adversely affect our pressure pumping business and our drilling business. • Our business depends upon our ability to obtain specialized equipment and parts from third-party suppliers, and we may be vulnerable to delayed deliveries and future price increases. • Our failure to receive payment for contract change orders or adequately recover on claims brought by us against customers related to payment terms and costs could materially and adversely affect our business. • We may not accurately estimate the costs associated with infrastructure services provided under fixed price contracts, which could adversely affect our business, financial condition and cash flows. • We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for performance and surety bonds could reduce availability under our credit facility. • The nature of our infrastructure services business exposes us to potential liability for warranty claims and faulty engineering, which may reduce our profitability. • Delays and reductions in government appropriations can negatively impact energy infrastructure engineering, design, construction, maintenance and repair projects and may impair the ability of our energy infrastructure customers to timely pay for products or services provided or result in their insolvency or bankruptcy. • Future performance of our natural sand proppant services business will depend on our ability to appropriately react to potential fluctuations in the demand for and supply of frac sand. • Increasing transportation and related costs could have a material adverse effect on our business. • Diminished access to water and inability to secure or maintain necessary permits may adversely affect operations of our frac sand processing plants. • Development of permanent infrastructure in the Canadian oil sands region or other locations where we locate our remote accommodations could negatively impact our remote accommodations business. • In the course of our business, we may become subject to lawsuits, indemnity or other claims, which could materially and adversely affect our business, results of operations and cash flows. • We rely on a few key employees and skilled and qualified workers whose absence or loss could adversely affect our business. • Our operations may be limited or disrupted in certain parts of the continental U.S. and Canada during severe weather conditions. • Our operations require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could limit our ability to grow or conduct our business. • We may have difficulties in identifying and financing suitable, accretive acquisition opportunities and integrating businesses, assets and personnel. • Our liquidity needs could restrict our operations and make us more vulnerable to adverse economic conditions. • Our revolving credit facility provides, and any future credit facilities may provide, for fluctuating interest rates, which may increase or decrease our interest expense. • Our operations are subject to hazards inherent in the oil and natural gas and energy infrastructure industries, which could expose us to substantial liability and cause us to lose customers and substantial revenue. • We are subject to extensive environmental, health and safety laws, trucking and other regulations that may subject us to increased costs and/or substantial liability. • Our operations in our natural sand proppant services business are dependent on our rights and ability to mine our properties and on our having renewed or received the required permits and approvals from governmental authorities and other third parties. • Changes in tax laws and regulations or adverse outcomes resulting from examination of our tax returns may adversely affect our business, results of operations, financial condition and cash flow. • A cyber incident could occur and result in information theft or other loss, data corruption, operational disruption and/or financial loss. 19 Risks Inherent to Our Common Stock • Our largest stockholder controls a significant percentage of our common stock, and its interests may conflict with those of our other stockholders. • A significant reduction by our largest stockholder, Wexford of its ownership interests in us could adversely affect us. • Sales of shares of our common stock by our largest stockholders or sales of substantial amounts of our common stock by other stockholders could adversely affect the market price of our common stock. • The corporate opportunity provisions in our certificate of incorporation could enable Wexford or other affiliates of ours to benefit from corporate opportunities that might otherwise be available to us. • We have engaged and expect to continue to engage in transactions with our affiliates, the terms of which and the resolution of any conflicts thereunder may not always be in our or our stockholders’ best interests. • If our operating results do not meet expectations of securities and financial analysts, the price of our common stock could decline. • We may issue preferred stock adversely affecting the voting power or value of our common stock. • Provisions in our certificate of incorporation and bylaws and Delaware law make it more difficult to effect a change in control of the company, which could adversely affect the price of our common stock. • The exclusive forum provisions of our certificate of incorporation could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees. • The declaration of dividends on our common stock is within the discretion of our board of directors, and there is no guarantee that we will pay any dividends in the future or at levels anticipated by our stockholders.
Biggest changeRisks Related to Our Business and the Industries We Serve • Failure by PREPA to pay the amounts owed to our infrastructure subsidiary Cobra for services performed would materially and adversely affect our financial condition, results of operations and cash flows. • Our customer base is concentrated and the loss of one or more of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue to decline substantially. • We may experience losses in excess of our recorded reserves for receivables. • Our revolving credit facility and term credit facility impose restrictions on us that may affect our ability to successfully operate our business. • Volatility in the oil and natural gas markets has negatively impacted our business in the past, and could negatively impact our oilfield services business in the future. • Governmental laws, policies, regulations and subsidies, including initiatives to promote the use of renewable energy sources could create commodity volatility and negatively impact our oilfield services business. • A transition of the global energy sector from primarily a fossil fuel-based system to renewable energy sources could affect our customers ’ level of expenditures. • Shortages, delays in delivery and interruptions in supply of major components, replacement parts or, other equipment, supplies or materials may adversely affect our pressure pumping business and our drilling business. • Our business depends upon our ability to obtain specialized equipment and parts from third-party suppliers, and we may be vulnerable to delayed deliveries and future price increases. • Our failure to receive payment for contract change orders or adequately recover on claims brought by us against customers related to payment terms and costs could materially and adversely affect our business. • We may not accurately estimate the costs associated with infrastructure services provided under fixed price contracts, which could adversely affect our business, financial condition and cash flows. • We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for performance and surety bonds could reduce availability under our credit facility. • The nature of our infrastructure services business exposes us to potential liability for warranty claims and faulty engineering, which may reduce our profitability. • Delays and reductions in government appropriations can negatively impact energy infrastructure engineering, design, construction, maintenance and repair projects and may impair the ability of our energy infrastructure customers to timely pay for products or services provided or result in their insolvency or bankruptcy. • Future performance of our natural sand proppant services business will depend on our ability to appropriately react to potential fluctuations in the demand for and supply of frac sand. • Increasing transportation and related costs could have a material adverse effect on our business. • Diminished access to water and inability to secure or maintain necessary permits may adversely affect operations of our frac sand processing plants. • Development of permanent infrastructure in the Canadian oil sands region or other locations where we locate our remote accommodations could negatively impact our remote accommodations business. • In the course of our business, we may become subject to lawsuits, indemnity or other claims, which could materially and adversely affect our business, results of operations and cash flows. 19 • We rely on a few key employees and skilled and qualified workers whose absence or loss could adversely affect our business. • Our operations may be limited or disrupted in certain parts of the continental U.S. and Canada during severe weather conditions. • Our operations require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could limit our ability to grow or conduct our business. • We may have difficulties in identifying and financing suitable, accretive acquisition opportunities and integrating businesses, assets and personnel. • Our liquidity needs could restrict our operations and make us more vulnerable to adverse economic conditions. • Our revolving credit facility and term credit facility provide for fluctuating interest rates, which may increase or decrease our interest expense. • Our operations are subject to hazards inherent in the oil and natural gas and energy infrastructure industries, which could expose us to substantial liability and cause us to lose customers and substantial revenue. • We are subject to extensive environmental, health and safety laws, trucking and other regulations that may subject us to increased costs and/or substantial liability. • Our operations in our natural sand proppant services business are dependent on our rights and ability to mine our properties and on our having renewed or received the required permits and approvals from governmental authorities and other third parties. • Changes in tax laws and regulations or adverse outcomes resulting from examination of our tax returns may adversely affect our business, results of operations, financial condition and cash flow. • Cyber incidents or intrusions may result in information theft or other loss, data corruption, operational disruption and/or financial loss.
Our remote accommodations business provides housing, kitchen and dining, and recreational service facilities for oilfield workers located in remote areas away from readily available lodging. We provide a turnkey solution for our customers’ accommodation needs. These modular camps, when assembled together, form large dormitories, with kitchen/dining facilities and recreation areas.
Remote Accommodations. Our remote accommodations business provides housing, kitchen and dining, and recreational service facilities for oilfield workers located in remote areas away from readily available lodging. We provide a turnkey solution for our customers’ accommodation needs. These modular camps, when assembled together, form large dormitories, with kitchen/dining facilities and recreation areas.
These 11 regulatory authorities exercise broad powers, governing activities such as the authorization to engage in motor carrier operations, driver licensing and insurance requirements, financial reporting and review of certain mergers, consolidations and acquisitions, and transportation of hazardous materials (HAZMAT). Our trucking operations are subject to possible regulatory and legislative changes that may increase our costs.
These regulatory authorities exercise broad powers, governing activities such as the authorization to engage in motor carrier 11 operations, driver licensing and insurance requirements, financial reporting and review of certain mergers, consolidations and acquisitions, and transportation of hazardous materials (HAZMAT). Our trucking operations are subject to possible regulatory and legislative changes that may increase our costs.
Such environmental activism and initiatives aimed at limiting climate change and reducing air pollution could interfere with our business activities, 14 operations and ability to access capital. Furthermore, claims have been made against certain energy companies alleging that GHG emissions from oil and natural gas operations constitute a public nuisance under federal and/or state common law.
Such environmental activism and initiatives aimed at limiting climate change and reducing air pollution could interfere with our business activities, operations and ability to access capital. Furthermore, claims have been made against certain energy companies alleging that GHG emissions from oil and natural gas operations constitute a public nuisance under federal and/or state common law.
If new laws or regulations that significantly restrict hydraulic fracturing are adopted, such laws could make it more difficult or costly for us to perform fracturing to stimulate production from tight formations as well as make it easier for third parties opposing the hydraulic fracturing process to initiate legal proceedings 16 based on allegations that specific chemicals used in the fracturing process could adversely affect groundwater.
If new laws or regulations that significantly restrict hydraulic fracturing are adopted, such laws could make it more difficult or costly for us to perform fracturing to stimulate production from tight formations as well as make it easier for third parties opposing the hydraulic fracturing process to initiate legal proceedings based on allegations that specific chemicals used in the fracturing process could adversely affect groundwater.
Depth and complexity of the well and drill site conditions are the principal factors in determining the specifications of the rig selected for a particular job. Power requirements for drilling jobs may vary considerably, but most of our mechanical drilling rigs employ six engines to generate between 800 and 1,200 horsepower, depending on well depth and rig design.
Depth 4 and complexity of the well and drill site conditions are the principal factors in determining the specifications of the rig selected for a particular job. Power requirements for drilling jobs may vary considerably, but most of our mechanical drilling rigs employ six engines to generate between 800 and 1,200 horsepower, depending on well depth and rig design.
An unfavorable ruling in any such case could significantly impact our operations and could have an adverse impact on our financial condition. Moreover, climate change may cause more extreme weather conditions such as more intense hurricanes, thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels and increased volatility in seasonal temperatures.
An unfavorable ruling in any such case could significantly impact our operations and could have an adverse impact on our financial condition. 14 Moreover, climate change may cause more extreme weather conditions such as more intense hurricanes, thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels and increased volatility in seasonal temperatures.
However, on August 13, 2020, in response to an executive order by former President Trump to review and 15 revise unduly burdensome regulations, the EPA amended the 2012 and 2016 New Source Performance standards to ease regulatory burdens, including rescinding standards applicable to transmission or storage segments and eliminating methane requirements altogether.
However, on August 13, 2020, in response to an executive order by former President Trump to review and revise unduly burdensome regulations, the EPA amended the 2012 and 2016 New Source Performance standards to ease regulatory burdens, including rescinding standards applicable to transmission or storage segments and eliminating methane requirements altogether.
To complement our organic growth and subject to our liquidity needs, we intend to pursue selected, accretive acquisitions of businesses and assets, primarily related to our infrastructure services, completion and production services and industrial based companies, that can meet our targeted returns on invested capital and enhance our portfolio of products and services, market positioning and/or geographic presence.
To complement our organic growth and subject to our liquidity needs, we intend to pursue selected, accretive acquisitions of businesses and assets, primarily related to our infrastructure 9 services, completion and production services and industrial based companies, that can meet our targeted returns on invested capital and enhance our portfolio of products and services, market positioning and/or geographic presence.
Generally, our MSAs, including those relating to our hydraulic fracturing services, specify payment terms, audit rights and insurance requirements and allocate certain operational risks through indemnity and similar provision. Infrastructure Services Our infrastructure services business provides engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry.
Generally, our MSAs, including those relating to our hydraulic fracturing services, specify payment terms, audit rights and insurance requirements and allocate certain operational risks through indemnity and similar provision. 2 Infrastructure Services Our infrastructure services business provides engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry.
We continue to focus on operational execution and pursue opportunities within this sector as we strategically structure our service offerings for growth, intending to increase our infrastructure services activity and 3 expand both our geographic footprint and depth of projects, especially in fiber maintenance and installation projects.
We continue to focus on operational execution and pursue opportunities within this sector as we strategically structure our service offerings for growth, intending to increase our infrastructure services activity and expand both our geographic footprint and depth of projects, especially in fiber maintenance and installation projects.
Demand for our services is driven by the repair and construction of transmission lines, substations and distribution networks and is determined by the level of expenditures of utility companies. While expansion of the electrical grid is occurring, the majority of capital expenditures spent in recent years has surrounded the repair and maintenance of existing networks.
Demand for our services is driven by the repair and construction of transmission lines, fiber lines, substations and distribution networks and is determined by the level of expenditures of utility companies. While expansion of the electrical grid is occurring, the majority of capital expenditures spent in recent years has surrounded the repair and maintenance of existing networks.
We maintain commercial general liability, workers’ compensation, business auto, commercial property, motor truck cargo, umbrella liability, professional liability, in certain instances, excess liability, and directors and officers insurance policies providing coverages of risks and amounts that we believe to be customary in our industry.
We maintain commercial general liability, workers’ compensation, business auto, commercial property, motor truck cargo, umbrella liability, professional liability, cybersecurity, in certain instances, excess liability, and directors and officers insurance policies providing coverages of risks and amounts that we believe to be customary in our industry.
Our Services Our revenues, operating income (loss) and identifiable assets are primarily attributable to four reportable segments: well completion services, infrastructure services, natural sand proppant services and drilling services. Well Completion Services Pressure Pumping . We provide pressure pumping services, also known as hydraulic fracturing, to exploration and production companies.
Our Services Our revenues, operating income (loss) and identifiable assets are primarily attributable to four reportable segments: well completion services, infrastructure services, natural sand proppant services and drilling services. 1 Well Completion Services Pressure Pumping . We provide pressure pumping services, also known as hydraulic fracturing, to exploration and production companies.
We provided pressure control services in the Eagle Ford Shale and the Permian Basin. 6 • Nitrogen Services. Nitrogen services involve the use of nitrogen, an inert gas, in various pressure pumping operations. When provided as a stand-alone service, nitrogen is used in displacing fluids in various oilfield applications.
We provided pressure control services in the Eagle Ford Shale and the Permian Basin. • Nitrogen Services. Nitrogen services involve the use of nitrogen, an inert gas, in various pressure pumping operations. When provided as a stand-alone service, nitrogen is used in displacing fluids in various oilfield applications.
Such legislative or regulatory changes could cause us or our customers to incur substantial compliance costs, and compliance or the consequences of any failure to comply by us could have a material adverse effect on our financial condition and results of operations.
Such legislative or regulatory changes could cause us or our customers to incur substantial compliance costs, and compliance or the consequences of any failure to comply by us could have a material adverse 16 effect on our financial condition and results of operations.
The low acid-solubility increases the integrity of Northern White frac sand relative to other proppants with higher acid-solubility, especially in shales where hydrogen sulfide and other 7 acidic chemicals are co-mingled with the targeted hydrocarbons.
The low acid-solubility increases the integrity of Northern White frac sand relative to other proppants with higher acid-solubility, especially in shales where hydrogen sulfide and other acidic chemicals are co-mingled with the targeted hydrocarbons.
Our operational division heads have long-term relationships with our largest customers. We intend to leverage these relationships and our operational management team’s expertise to deliver innovative, client focused and services to our customers. 9 • Expand through selected, accretive acquisitions.
Our operational division heads have long-term relationships with our largest customers. We intend to leverage these relationships and our operational management team’s expertise to deliver innovative, client focused and services to our customers. • Expand through selected, accretive acquisitions.
We believe their knowledge of our industries and business lines enhances our ability to provide innovative, client-focused and basin-specific customer service, which we also believe strengthens our relationships with our customers. • Young fleet of equipment .
We believe their knowledge of our industries and business lines enhances our ability to provide innovative, client-focused and basin-specific customer service, which we also believe strengthens our relationships with our customers. • Fleet of equipment .
None of these prior spills were significant, and we have not experienced any incidents, citations or legal proceeding relating to our hydraulic fracturing or crude hauling services for environmental concerns.
None of these prior spills were significant, and we have not experienced any material incidents, citations or legal proceeding relating to our hydraulic fracturing or crude hauling services for environmental concerns.
We continue to maintain our equipment and monitor market conditions to determine if and when we will recommence these services. Flowback . Our flowback services consisted of production testing, solids control, hydrostatic testing and torque services.
We continue to maintain our equipment and monitor market conditions to determine if and when we will recommence these services. 5 Flowback . Our flowback services consisted of production testing, solids control, hydrostatic testing and torque services.
As of December 31, 2022, we had a total of four nitrogen pumping units capable of pumping at a rate of up to 3,000 standard cubic feet per minute with pressures up to 10,000 psi. Pumping at these rates and pressures is typically required for the unconventional oil and natural gas resource plays we serve. • Fluid Pumping Services.
As of December 31, 2023, we had a total of four nitrogen pumping units capable of pumping at a rate of up to 3,000 standard cubic feet per minute with pressures up to 10,000 psi. Pumping at these rates and pressures is typically required for the unconventional oil and natural gas resource plays we serve. • Fluid Pumping Services.
The Department of Transportation periodically conducts compliance reviews and may revoke registration privileges based on certain safety performance criteria which could result in a suspension of operations. The rating scale consists of “satisfactory,” “conditional” and “unsatisfactory” ratings. As of December 31, 2022, all of our trucking operations have “satisfactory” ratings with the Department of Transportation.
The Department of Transportation periodically conducts compliance reviews and may revoke registration privileges based on certain safety performance criteria which could result in a suspension of operations. The rating scale consists of “satisfactory,” “conditional” and “unsatisfactory” ratings. As of December 31, 2023, all of our trucking operations have “satisfactory” ratings with the Department of Transportation.
We believe this approach will help facilitate the strategic expansion of our customer base, geographic presence and service offerings. We also believe that our industry contacts and those of Wexford Capital LP, or Wexford, our largest stockholder, may help us identify acquisition opportunities. We may use our common stock as consideration for accretive acquisitions.
We believe this approach will help facilitate the strategic expansion of our customer base, geographic presence and service offerings. We also believe that our industry contacts and those of Wexford Capital LP (“Wexford”), our largest stockholder, may help us identify acquisition opportunities. We may use our common stock as consideration for accretive acquisitions.
These new standards, to the extent implemented, as well as any future laws and their implementing regulations, may require us to obtain pre-approval for the expansion or modification of existing facilities or the construction of new facilities expected to produce air emissions, impose stringent air permit requirements, or mandate the use of specific equipment or technologies to control emissions.
These new standards, as well as any future laws and their implementing regulations, may require us to obtain pre-approval for the expansion or modification of existing facilities or the construction of new facilities expected to produce air emissions, impose stringent air permit requirements, or mandate the use of specific equipment or technologies to control emissions.
During 2019, we expanded our trucking operations to include brokering and hauling of general freight throughout the United States. As of December 31, 2022, we had a fleet of six trucks. Crude Oil Hauling . We provided crude transportation services in the Permian Basin and mid-continent region.
During 2019, we expanded our trucking operations to include brokering and hauling of general freight throughout the United States. As of December 31, 2023, we had a fleet of six trucks. Crude Oil Hauling . We provided crude transportation services in the Permian Basin and mid-continent region.
Cementing services involve preparing and pumping cement into place in a wellbore to support and protect well casings and help achieve zonal isolation. Acidizing services involve pumping acid into a wellbore to improve productivity or injectivity. As of December 31, 2022, we owned four acidizing pumps. Coil Tubing .
Cementing services involve preparing and pumping cement into place in a wellbore to support and protect well casings and help achieve zonal isolation. Acidizing services involve pumping acid into a wellbore to improve productivity or injectivity. As of December 31, 2023, we owned four acidizing pumps. Coil Tubing .
Five of these units are coiled tubing double pump units capable of output of up to eight barrels per minute, and are rated for pressures up to 15,000 psi. Two of these units are quintuplex pump units capable of output of up to 15 barrels per minute, and are rated for pressures up to 15,000 psi. Full Service Transportation .
Three of these units are coiled tubing double pump units capable of output of up to eight barrels per minute and are rated for pressures up to 15,000 psi. Two of these units are quintuplex pump units capable of output of up to 15 barrels per minute and are rated for pressures up to 15,000 psi. Full Service Transportation .
Energy Infrastructure Industry The energy infrastructure industry involves the construction and maintenance of the electrical power grid, including, but not limited to, power generation, high voltage transmission lines, substations and low voltage distribution lines, all of which connect power generation facilities to end users. The industry also provides storm repair and restoration services in response to storms and other disasters.
Energy Infrastructure Industry The energy infrastructure industry involves the construction and maintenance of the electrical power grid, including power generation, high voltage transmission lines, substations and low voltage distribution lines, all of which connect power generation facilities to end users. The industry also provides storm repair and restoration services in response to storms and other disasters.
Marketing and Customers Our customers consist primarily of independent oil and natural gas producers, land-based drilling contractors, private utilities, IOUs, and Co-Ops in North America. For the years ended December 31, 2022, 2021 and 2020, we had approximately 410, 480 and 530 customers, respectively, including Hilcorp Energy, Devon Energy Corporation, Arsenal Resources, Camino Natural Resources, LLC and Overland Contracting Inc.
Marketing and Customers Our customers consist primarily of independent oil and natural gas producers, land-based drilling contractors, private utilities, IOUs, and Co-Ops in North America. For the years ended December 31, 2023, 2022 and 2021, we had approximately 360, 410 and 480 customers, respectively, including Hilcorp Energy, Devon Energy Corporation, Arsenal Resources, Camino Natural Resources, LLC and Overland Contracting Inc.
Our drilling rigs have rated maximum depth capabilities ranging from 12,500 feet to 20,000 feet. Of these drilling rigs, seven are electric rigs and five are mechanical rigs.
Our drilling rigs have rated maximum depth capabilities ranging from 12,500 feet to 20,000 feet. Of these drilling rigs, six are electric rigs and five are mechanical rigs.
As of December 31, 2022, we had a capacity of 878 rooms, 612 of which are at Sand Tiger Lodge, our camp in northern Alberta, Canada, and 266 of which are available to be leased as rental equipment to a third party. On average, 172 rooms were utilized per night during the year ended December 31, 2022. Equipment Manufacturing.
As of December 31, 2023, we had a capacity of 878 rooms, 612 of which are at Sand Tiger Lodge, our camp in northern Alberta, Canada, and 266 of which are available to be leased as rental equipment to a third party. On average, 178 rooms were utilized per night during the year ended December 31, 2023. Equipment Manufacturing.
Ceasing or suppressing production during the completion phase of an unconventional well could result in formation damage impacting the overall recovery of reserves. Our pressure control services helped operators minimize the risk of such damage during completion activities. As of December 31, 2022, we had a total of four nitrogen pumping units and seven fluid pumping units.
Ceasing or suppressing production during the completion phase of an unconventional well could result in formation damage impacting the overall recovery of reserves. Our pressure control services helped operators minimize the risk of such damage during completion activities. As of December 31, 2023, we had a total of four nitrogen pumping units and five fluid pumping units.
As of December 31, 2022, we owned four MWD kits and one EM kit used in vertical, horizontal and directional drilling applications, 89 mud motors, 16 air motors and an inventory of related parts and equipment. Currently, we perform our directional drilling services in the Utica Shale, Anadarko Basin, Arkoma Basin, Powder River Basin and Permian Basin. Contract Drilling .
As of December 31, 2023, we owned four MWD kits and one EM kit used in vertical, horizontal and directional drilling applications, 89 mud motors, nine air motors and an inventory of related parts and equipment. Currently, we perform our directional drilling services in the Utica Shale, Anadarko Basin, Arkoma Basin, Powder River Basin and Permian Basin. Contract Drilling .
On June 30, 2021, President Biden signed into law a joint resolution of Congress disapproving the 2020 amendments (with the exception of some technical changes) thereby reinstating the 2012 and 2016 New Source Performance standards. The EPA expects owners and operators of regulated sources to take "immediate steps" to comply with these standards.
On June 30, 2021, President Biden signed into law a joint resolution of Congress disapproving the 2020 amendments (with the exception of some technical changes) thereby reinstating the 2012 and 2016 New Source Performance standards. The EPA expects owners and operators of regulated sources to take “immediate steps” to comply with these standards.
Our operational division heads have an extensive track record in the oilfield and infrastructure service businesses with an average of over 30 years of oilfield services experience and over 25 years of infrastructure services experience. In addition, our field managers have expertise in the areas in which they operate and understand the challenges that our customers face.
Our operational division heads have an extensive track record in the oilfield and infrastructure service businesses with an average of over 31 years of oilfield services experience and over 26 years of infrastructure services experience. In addition, our field managers have expertise in the areas in which they operate and understand the challenges that our customers face.
The IRA could accelerate the transition of the economy away from the use of fossil fuels towards lower or zero carbon emissions alternatives, which could decrease demand for our well completion, natural sand proppant and other services related to the oil and natural gas industry.
These incentives and regulations could accelerate the transition of the economy away from the use of fossil fuels towards lower or zero carbon emissions alternatives, which could decrease demand for our well completion, natural sand proppant and other services related to the oil and natural gas industry.
We provided flowback services in the Appalachian Basin, the Eagle Ford Shale, the Haynesville Shale and mid-continent markets. As of December 31, 2022, we owned five production testing packages, 20 solids control packages, four hydrostatic testing packages and seven torque service packages. Cementing and Acidizing . We provided cementing and acidizing services in the Permian Basin.
We provided flowback services in the Appalachian Basin, the Eagle Ford Shale, the Haynesville Shale and mid-continent markets. As of December 31, 2023, we owned 20 solids control packages, four hydrostatic testing packages and seven torque service packages. Cementing and Acidizing . We provided cementing and acidizing services in the Permian Basin.
Our operational division heads have an extensive track record in the oilfield service and infrastructure businesses with an average of over 30 years of oilfield services experience and over 25 years of infrastructure services experience. They bring valuable expertise and long-term customer relationships to our business.
Our operational division heads have an extensive track record in the oilfield service and infrastructure businesses with an average of over 31 years of oilfield services experience and over 26 years of infrastructure services experience. They bring valuable expertise and long-term customer relationships to our business.
Fluid pumping services consist of maintaining well pressure, pumping down wireline tools, assisting coiled tubing units and the removal of fluids and solids from the wellbore for clean-out operations. As of December 31, 2022, we had seven fluid pumping units.
Fluid pumping services consist of maintaining well pressure, pumping down wireline tools, assisting coiled tubing units and the removal of fluids and solids from the wellbore for clean-out operations. As of December 31, 2023, we had five fluid pumping units.
Demand for most of our oil and natural gas products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry. The levels of capital expenditures of our customers are predominantly driven by the prices of oil and natural gas.
Demand for most of our oil and natural gas products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry. The levels of capital expenditures of our customers are driven by many factors, including the prices of oil and natural gas.
Our top five customers accounted for approximately 36%, 35% and 50%, respectively, of our revenue for the years ended December 31, 2022, 2021 and 2020.
Our top five customers accounted for approximately 35%, 36% and 35%, respectively, of our revenue for the years ended December 31, 2023, 2022 and 2021.
As part of our contract drilling services, we provided both vertical and horizontal drilling services to customers in the Permian Basin of West Texas. As of December 31, 2022, we owned 12 land drilling rigs, ranging from 800 to 1,600 horsepower, eight of which are specifically designed for drilling horizontal and directional wells.
As part of our contract drilling services, we provided both vertical and horizontal drilling services to customers in the Permian Basin of West Texas. As of December 31, 2023, we owned 11 land drilling rigs, ranging from 800 to 1,600 horsepower, seven of which are specifically designed for drilling horizontal and directional wells.
On August 30, 2021, a federal court struck down the replacement rule and, on December 30, 2022, the EPA and the Corps published a final rule that would restore water protections that were in place prior to 2015.
On August 30, 2021, a federal court struck down the replacement rule and, on January 18, 2023, the EPA and the Corps published a final rule that would restore water protections that were in place prior to 2015.
Also, numerous departments and agencies, both federal and state, are authorized by statute to issue rules and regulations that are binding on the oil and natural gas industry and its individual members, some of which carry substantial penalties for failure to comply.
Also, numerous departments and agencies, both federal and state, are authorized by statute to issue rules and regulations that are binding on the oil and natural gas industry and its individual members, some of which carry substantial penalties for failure to comply. These binding rules and regulations are subject to changes in interpretation or enforcement.
To the extent the rules expand the range of properties subject to the Clean Water Act’s jurisdiction, certain energy companies could face increased costs and delays with respect to obtaining permits for dredge and fill activities in wetland areas.
However, to the extent the EPA and the Corps broadly interpret their jurisdiction and expand the range of properties subject to the Clean Water Act’s jurisdiction, certain energy companies could face increased costs and delays with respect to obtaining permits for dredge and fill activities in wetland areas.
Additionally, on November 15, 2021, the EPA published a proposed rule that would expand and strengthen emission reduction requirements for both new and existing sources in the oil and natural gas industry by requiring increased monitoring of fugitive emissions, imposing new requirements for pneumatic controllers and tank batteries and prohibiting venting of natural gas in certain situations.
Additionally, on December 2, 2023, the EPA announced a final rule that would expand and strengthen emission reduction requirements for both new and existing sources in the oil and natural gas industry by requiring increased monitoring 15 of fugitive emissions, imposing new requirements for pneumatic controllers and tank batteries and prohibiting venting of natural gas in certain situations.
Funding for projects in the infrastructure space remains strong with added opportunities expected from the Infrastructure Investment and Jobs Act, which was signed into law on November 15, 2021. We anticipate the federal spending to begin fueling this sector in 2023.
Funding for projects in the infrastructure space remains strong with added opportunities expected from the Infrastructure Investment and Jobs Act, which was signed into law on November 15, 2021. We anticipate the federal spending to begin fueling additional projects in this sector and expect bidding activity to ramp up in 2024.
The oil and natural gas industry is also impacted by general domestic and international economic conditions, political instability in oil producing countries, government regulations (both in the United States and elsewhere), levels of customer demand, the availability of pipeline capacity and other conditions and factors, including global and national health concerns, that are beyond our control.
The oil and natural gas industry is also impacted by general domestic and international economic conditions, political instability in oil producing countries, government regulations (both in the United States and elsewhere), levels of customer demand, the availability of pipeline capacity, storage capacity, shortages of equipment and materials and other conditions and factors that are beyond our control.
Flowback involves the process of allowing fluids to flow from the well following a treatment, either in preparation for an impending phase of treatment or to return the well to production. Our flowback equipment consists of manifolds, accumulators, valves, flare stacks and other associated equipment that combine to form up to a total of five well-testing spreads.
Flowback involves the process of allowing fluids to flow from the well following a treatment, either in preparation for an impending phase of treatment or to return the well to production. Our flowback equipment consists of manifolds, accumulators, valves, flare stacks and other associated equipment.
As of December 31, 2022, we owned 14 trucks specifically tailored to move rigs and seven cranes. Other Services We also offer a variety of other services including aviation services, equipment rental services, remote accommodation services and equipment manufacturing services.
As of December 31, 2023, we owned 15 trucks specifically tailored to move rigs. Other Services We also offer a variety of other services including aviation services, equipment rental services, remote accommodation services and equipment manufacturing services.
During 2019, we commenced equipment manufacturing operations at our facility located in Oklahoma. These operations have initially served our internal needs for our pressure pumping, water transfer, equipment rental and infrastructure businesses, but we have the ability to expand into third party sales in the future.
Our equipment manufacturing operations, which are located at our facility in Oklahoma, have primarily served our internal needs for our pressure pumping, water transfer, equipment rental and infrastructure businesses, but we have the ability to expand into third party sales in the future.
Our Industries Oil and Natural Gas Industry The oil and natural gas industry has traditionally been volatile and is influenced by a combination of long-term, short-term and cyclical trends, including the domestic and international supply and demand for oil and natural gas, current and expected future prices for oil and natural gas and the perceived stability and sustainability of those prices, production depletion rates and the resultant levels of cash flows generated and allocated by exploration and production companies to their drilling, completion and related services and products budget.
As of December 31, 2023, we had a fleet of 13 crude oil hauling trucks. 6 Our Industries Oil and Natural Gas Industry The oil and natural gas industry has traditionally been volatile and is influenced by a combination of long-term, short-term and cyclical trends, including the domestic and international supply and demand for oil and natural gas, current and expected future prices for oil and natural gas and the perceived stability and sustainability of those prices, production depletion rates and the resultant levels of cash flows generated and allocated by exploration and production companies to their drilling, completion and related services and products budgets.
As of December 31, 2022, we owned one coiled tubing unit capable of running 25,000 feet of two and five eighths inch coil rated at 15,000 pounds per square inch, or psi, two coiled tubing units capable of running 23,500 feet of two and three eighths inch coil rated at 15,000 psi, one coiled tubing unit capable of running 24,500 feet of two inch coil rated at 15,000 psi, two coiled tubing units capable of running 22,500 feet of two inch coil rated at 10,000 psi and one coiled tubing unit capable of running 20,500 feet of two and three eighths inch coil rated at 15,000 psi.
As of December 31, 2023, we owned two coiled tubing units capable of running 23,500 feet of two and three eighths inch coil rated at 15,000 psi, one coiled tubing unit capable of running 24,500 feet of two inch coil rated at 15,000 psi, two coiled tubing units capable of running 22,500 feet of two inch coil rated at 10,000 psi and one coiled tubing unit capable of running 20,500 feet of two and three eighths inch coil rated at 15,000 psi.
We believe that the coarseness, conductivity, sphericity, acid-solubility, and crush-resistant properties of our Northern White sand reserves and our facilities’ connectivity to rail and other transportation infrastructure afford us a cost advantage over many of our competitors and make us one of a select group of sand producers capable of delivering high volumes of frac sand that is optimal for oil and natural gas production to all major unconventional resource basins currently producing throughout North America.
In addition, its crush resistant properties enable Northern White frac sand to be used in deeper drilling applications than the frac sand produced from many native mineral deposits. 7 We believe that the coarseness, conductivity, sphericity, acid-solubility, and crush-resistant properties of our Northern White sand reserves and our facilities’ connectivity to rail and other transportation infrastructure afford us a cost advantage over many of our competitors and make us one of a select group of sand producers capable of delivering high volumes of frac sand that is optimal for oil and natural gas production to all major unconventional resource basins currently producing throughout North America.
We intend to leverage our existing customer relationships and operational track record to cross sell our services and increase our exposure and product offerings to our existing customers, broaden our customer base and expand opportunistically to other geographic regions in which our customers have operations, as well as to create operational efficiencies for our customers. • Capitalize on activity in the unconventional resource plays.
We intend to leverage our existing customer relationships and operational track record to cross sell our services and increase our exposure and product offerings to our existing customers, broaden our customer base and expand opportunistically to other geographic regions in which our customers have operations, as well as to create operational efficiencies for our customers. • Expand our energy infrastructure business.
Another factor that significantly influences the level of spending in the industry are natural disasters, which impact the electrical grid. These natural disasters include, but are not limited to, thunderstorms, ice storms, snow storms, tornadoes, hurricanes, earthquakes, wildfires and lightning strikes.
Another factor that significantly influences the level of spending in the industry are natural disasters, including thunderstorms, ice storms, snow storms, tornadoes, hurricanes, earthquakes, wildfires and lightning strikes, all of which can impact the electrical grid.
The resulting Paris Agreement calls for the parties to undertake “ambitious efforts” to limit the average global temperature, and to conserve and enhance sinks and reservoirs of GHGs. The Paris Agreement went into effect on November 4, 2016. The Paris Agreement establishes a framework for the parties to cooperate and report actions to reduce GHG emissions.
The resulting Paris Agreement calls for the parties to undertake “ambitious efforts” to limit the average global temperature, and to conserve and enhance sinks and reservoirs of GHGs. The Paris Agreement went into effect on November 4, 2016.
In addition, the IRA imposes the first ever federal fee on the emission of GHGs through a methane emissions charge, which will be phased-in starting in 2024.
In addition, the IRA imposes the first ever federal fee on the emission of GHGs through a methane emissions charge, which will be phased-in starting in 2024. On January 12, 2024, the EPA announced a proposed rule to implement the methane emissions charge.
In November 2021, in connection with the 26th Conference of the Parties in Glasgow, Scotland, the United States and other world leaders made further commitments to reduce greenhouse gas emission, including reducing global methane emissions by at least 30% by 2030 to meet this objective.
In November 2021, in connection with the 26th Conference of the Parties in Glasgow, Scotland, the United States and other world leaders made further commitments to reduce greenhouse gas emission, including reducing global methane emissions by at least 30 percent by 2030 (from 2020 levels) to meet this objective. More than 150 countries have now signed on to this pledge.
As of December 31, 2022, we owned four helicopters. Equipment Rentals . Our equipment rental services provide a wide range of oilfield related equipment used in drilling, flowback and hydraulic fracturing services. Our equipment rentals consist of cranes, light plants, generators and other oilfield related equipment. We provide equipment rental in the Utica Shale, Eagle Ford Shale and mid-continent region.
As of December 31, 2023, we owned two helicopters. Equipment Rentals . Our equipment rental services provide a wide range of oilfield related equipment used in drilling, flowback and hydraulic fracturing services. Our equipment rentals consist of cranes, light plants, generators and other oilfield related equipment. We provide equipment rental in the Permian Basin, Utica Shale and Marcellus Shale.
As of December 31, 2022, our pressure pumping business included six high-pressure fleets consisting of an aggregate 128 high-pressure fracturing units with pump nameplate capacity of 310,000 horsepower. Currently, five of our six pressure pumping 2 fleets are staffed and providing services in the northeast and mid-continent regions.
As of December 31, 2023, our pressure pumping business included six high-pressure fleets consisting of an aggregate 128 high-pressure fracturing units with pump nameplate capacity of 310,000 horsepower. One of our six pressure pumping fleets was staffed and providing services in the northeast region as of December 31, 2023.
Natural sand proppant, also known as frac sand, is the most widely used type of proppant due to its broad applicability in unconventional oil and natural gas wells and its cost advantage relative to other proppants.
In the past, we have also bought processed sand from suppliers on the spot market for resale. Natural sand proppant, also known as frac sand, is the most widely used type of proppant due to its broad applicability in unconventional oil and natural gas wells and its cost advantage relative to other proppants.
In August 2022, President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law. The IRA contains billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
For example, the Infrastructure Investment and Jobs Act of 2021 and the Inflation Reduction Act of 2022 (the “IRA”) include billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
As of December 31, 2022, we owned 121 water transfer pumps and 91 miles of layflat hose. Master Services Agreements . We contract with most of our well completion customers under master service agreements, or MSAs.
Water Transfer . Our water transfer services provide water sourcing and water transfer services primarily for completion activities in the mid-continent region. As of December 31, 2023, we owned 121 water transfer pumps and 91 miles of layflat hose. Master Services Agreements . We contract with most of our well completion customers under master service agreements, or MSAs.
On December 13, 2016, the EPA released a study examining the potential for hydraulic fracturing activities to impact drinking water resources, finding that, under some circumstances, the use of water in hydraulic fracturing activities can impact drinking water resources.
There are certain governmental reviews either underway or being proposed that focus on the environmental aspects of hydraulic fracturing practices. On December 13, 2016, the EPA released a study examining the potential for hydraulic fracturing activities to impact drinking water resources, finding that, under some circumstances, the use of water in hydraulic fracturing activities can impact drinking water resources.
Natural frac sand may be used as proppant in all but the highest pressure and temperature environments and is being employed in nearly all major U.S. unconventional oil and natural gas producing basins, including those in which we operate.
Natural frac sand may be used as proppant in all but the highest pressure and temperature environments and is being employed in nearly all major U.S. unconventional oil and natural gas producing basins, including those in which we operate. 3 At our Barron County and Jackson County, Wisconsin plants, we mine and process sand into premium monocrystalline sand, a specialized mineral that is used as frac sand.
We seek to maintain a conservative balance sheet, which allows us to better react to changes in commodity prices and related demand for our services, as well as overall market conditions. • Expand our services to meet expanding customer demand. The scope of services for horizontal wells is greater than that for conventional wells.
We seek to maintain a conservative balance sheet, which allows us to better react to changes in commodity prices and related demand for our services, as well as overall market conditions.
This technology, coupled with our complementary services, allows our customers to drill wellbores to specific objectives within narrow location parameters within target horizons. The evolution of unconventional resource reserve recovery has increased the need for the precise placement of a wellbore. Wellbores often travel across long-lateral intervals within narrow formations as thin as ten feet.
The evolution of unconventional resource reserve recovery has increased the need for the precise placement of a wellbore. Wellbores often travel across long-lateral intervals within narrow formations as thin as ten feet.
With respect to our hydraulic fracturing operations, coverage would be available under our policy for any surface or subsurface environmental clean-up and liability to third parties arising from any surface or subsurface contamination.
With respect to our hydraulic fracturing operations, coverage would be available under our policy for any surface or subsurface environmental clean-up and liability to third parties arising from any surface or subsurface contamination. We also have certain specific coverages for some of our businesses, including our remote accommodation services, pressure pumping services, directional drilling services and infrastructure engineering services.
“Risk Factors—Risks Related to Our Business and the Industries We Serve” included elsewhere in this annual report for more information regarding these delinquent balances as well as other legal actions and governmental investigations related to our work for PREPA.
Commitments and Contingencies to our consolidated financial statements and Item 1A., and “Risk Factors—Risks Related to Our Business and the Industries We Serve” included elsewhere in this annual report for more information regarding these delinquent balances as well as other legal actions and governmental investigations related to our work for PREPA, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Cobra Assignment Agreement” for additional information regarding the assignment agreement with SPCP Group.
In the fourth quarter of 2022, we entered into two sand supply agreements with third-party service providers with terms of 12 months and 21 months, respectively, beginning on January 1, 2023. Under the terms of the agreements, we have agreed to supply, in aggregate, approximately 1.75 million tons of sand over the contract periods.
In the fourth quarter of 2023, we entered into a sand supply agreement with a third-party service provider. Under the terms of the agreement, we have agreed to supply, in aggregate, approximately 709 thousand tons of sand over the contract period of 12 months.
This is expected to bring new opportunities in the infrastructure industry, including new fiber-related projects. We consistently monitor market conditions and intend to expand the capacity and scope of our energy infrastructure services as demand warrants in geographic areas in which we currently operate, as well as in new geographic areas. • Maintain a conservative balance sheet.
We consistently monitor market conditions and intend to expand the capacity and scope of our energy infrastructure services as demand warrants in geographic areas in which we currently operate, as well as in new geographic areas. • Capitalize on activity in the unconventional resource plays.
Over the past two years, we have converted 30 of our units to include dynamic gas blending, or DGB, capabilities to meet recent shifts in customer demand.
Over the past two years, we have converted two fleets to include dynamic gas blending, or DGB, capabilities to meet recent shifts in customer demand. Further, subject to market conditions and liquidity requirements, we have plans to upgrade one additional fleet in 2024.
We believe that we are well-positioned to compete for new projects due to the experience of our infrastructure management team, combined with our vertically integrated service offerings. We are seeking to leverage this experience and our service offerings to grow our customer base and increase our revenues in the continental United States over the coming years.
We work for multiple utilities primarily across the northeastern, southwestern, midwestern and western portions of the United States. We believe that we are well-positioned to compete for new projects due to the experience of our infrastructure management team, combined with our vertically integrated service offerings.
Our directional drilling equipment includes mud motors used to propel drill 4 bits and kits for measurement-while-drilling, or MWD, and electromagnetic, or EM, technology. MWD kits are down-hole tools that provide real-time measurements of the location and orientation of the bottom-hole assembly, which is necessary to adjust the drilling process and guide the wellbore to a specific target.
MWD kits are down-hole tools that provide real-time measurements of the location and orientation of the bottom-hole assembly, which is necessary to adjust the drilling process and guide the wellbore to a specific target. This technology, coupled with our complementary services, allows our customers to drill wellbores to specific objectives within narrow location parameters within target horizons.
In addition, over the past three years we have converted 30 of our pressure pumping units to include DGB capabilities to meet recent shifts in customer demand and expect to convert 52 more units during 2023, subject to liquidity and supply chain constraints.
In addition, we have converted two fleets of our pressure 8 pumping units to include DGB capabilities to meet recent shifts in customer demand and expect to convert one additional fleet during 2024, subject to market conditions and liquidity requirements.
Our sand hauling services provide last-mile trucking and logistics services for proppant used in completion activities in the Utica Shale and SCOOP/STACK. As of December 31, 2022, we owned a fleet of 36 trucks. Water Transfer . Our water transfer services provide water sourcing and water transfer services primarily for completion activities in the mid-continent region.
See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview of Our Industries—Oil and Natural Gas Industry” for additional information. Sand Hauling . Our sand hauling services provide last-mile trucking and logistics services for proppant used in completion activities in the Utica Shale and SCOOP/STACK. As of December 31, 2023, we owned a fleet of 39 trucks.
We believe that our fleet of quality equipment will allow us to provide a high level of service to our customers.
Our oilfield service fleet is predominantly comprised of equipment designed to optimize recovery from unconventional wells and our infrastructure service fleet is predominantly comprised of equipment designed to construct and repair electric transmission and distribution lines. We believe that our fleet of quality equipment will allow us to provide a high level of service to our customers.
Drilling Services During certain of the periods discussed in this report, we offered contract land and directional drilling services as well as rig moving services. Due to market conditions, we temporarily shut-down our contract land drilling operations beginning in December 2019.
Drilling Services Due to market conditions, we temporarily shut-down our rig moving services in April 2020 and our contract land drilling operations beginning in December 2019. We continue to maintain our equipment and monitor market conditions to determine if and when we will recommence these services. Directional Drilling .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOn January 18, 2023, the Court entered an order extending the stay and directing the parties to file a further status report addressing (i) the status of any administrative appeals in connection with the November and December determination memorandums regarding the second contract, (ii) the status of the criminal proceeding against the former Cobra president and the FEMA official that concluded in December 2022, and (iii) a summary of the outstanding and unpaid amounts arising from the first and second contracts and whether PREPA disputes Cobra’s entitlement to these amounts with the Court by July 31, 2023.
Biggest changeOn January 19, 2024, the Court extended the previously ordered stay in the proceedings through April 5, 2024, and directed the parties to file a joint status report addressing (i) the status of any administrative appeals in connection with the November 2022 and December 2022 determination memoranda regarding the second contract, (ii) the status of any remaining approved, but unpaid invoices, and (iii) whether the parties are actively engaged in mediation to resolve their outstanding issues by March 27, 2024.
Our certificate of incorporation provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: • Any derivative action or proceeding brought on our behalf; 43 • Any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; • Any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law; or • Any other action asserting a claim against us that is governed by the internal affairs doctrine.
Our certificate of incorporation provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: 43 • Any derivative action or proceeding brought on our behalf; • Any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; • Any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law; or • Any other action asserting a claim against us that is governed by the internal affairs doctrine.
Further, construction and upgrade projects are subject to risks of delay or significant cost overruns inherent in any large construction project from numerous factors, including the following: • shortages of equipment, materials or skilled labor; • unscheduled delays in the delivery of ordered materials and equipment or shipyard construction; • failure of equipment to meet quality and/or performance standards; • financial or operating difficulties of equipment vendors; • unanticipated actual or purported change orders; • inability by us or our customers to obtain required permits or approvals, or to meet applicable regulatory standards in our areas of operations; • unanticipated cost increases between order and delivery; 26 • adverse weather conditions and other events of force majeure; • design or engineering changes; and • work stoppages and other labor disputes.
Further, construction and upgrade projects are subject to risks of delay or significant cost overruns inherent in any large construction project from numerous factors, including the following: • shortages of equipment, materials or skilled labor; • unscheduled delays in the delivery of ordered materials and equipment or shipyard construction; • failure of equipment to meet quality and/or performance standards; • financial or operating difficulties of equipment vendors; • unanticipated actual or purported change orders; • inability by us or our customers to obtain required permits or approvals, or to meet applicable regulatory standards in our areas of operations; • unanticipated cost increases between order and delivery; • adverse weather conditions and other events of force majeure; • design or engineering changes; and • work stoppages and other labor disputes.
If the estimates of the quality of our sand reserves, including the volumes of the various specifications of those reserves, prove to be inaccurate, we may incur significantly higher excavation costs without corresponding increases in revenues, we may not be able to meet our contractual obligations, or our facilities may have a shorter than expected reserve life, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If the estimates of the 29 quality of our sand reserves, including the volumes of the various specifications of those reserves, prove to be inaccurate, we may incur significantly higher excavation costs without corresponding increases in revenues, we may not be able to meet our contractual obligations, or our facilities may have a shorter than expected reserve life, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Moreover, construction projects for which our services are contracted may require significant expenditures by us prior to receipt of relevant payments from the customer. Finally, the winding down or completion of work on significant projects that were active in previous periods will reduce our revenue and earnings if such significant projects have not been replaced in the current period.
Moreover, construction projects for which our services are contracted may require significant expenditures by us prior to receipt of relevant payments from the customer. Finally, the winding down or 28 completion of work on significant projects that were active in previous periods will reduce our revenue and earnings if such significant projects have not been replaced in the current period.
The one-year contract, as amended, provided for payments of up to $945 million (the “first contract”). On May 26, 2018, Cobra and PREPA entered into a second one-year, $900 million master services agreement to provide additional repair services and begin the initial phase of reconstruction of the electrical power system in Puerto Rico (the “second contract”).
The one-year contract, as amended, provided for payments of up to $945 million (the “first contract”). On May 26, 2018, Cobra and PREPA entered into a second one-year, 20 $900 million master services agreement to provide additional repair services and begin the initial phase of reconstruction of the electrical power system in Puerto Rico (the “second contract”).
Mineral properties sometimes contain claims or transfer histories that examiners cannot verify. A successful claim that we do not have title to our property or lack appropriate water rights could cause us to lose any rights to explore, develop and extract minerals, without compensation 38 for our prior expenditures relating to such property.
Mineral properties sometimes contain claims or transfer histories that examiners cannot verify. A successful claim that we do not have title to our property or lack appropriate water rights could cause us to lose any rights to explore, develop and extract minerals, without compensation for our prior expenditures relating to such property.
We have not hedged our exposure to changes in foreign currency exchange rates and, as a result, could incur unanticipated translation gains and losses. 32 In the course of our business, we may become subject to lawsuits, indemnity or other claims, which could materially and adversely affect our business, results of operations and cash flows.
We have not hedged our exposure to changes in foreign currency exchange rates and, as a result, could incur unanticipated translation gains and losses. In the course of our business, we may become subject to lawsuits, indemnity or other claims, which could materially and adversely affect our business, results of operations and cash flows.
As part of our business, we handle, transport and dispose of a variety of fluids and substances, including hydraulic fracturing fluids which can contain hydrochloric acid and certain petrochemicals. This activity poses some risks of 37 environmental liability, including leakage of hazardous substances from the wells to surface and subsurface soils, surface water or groundwater.
As part of our business, we handle, transport and dispose of a variety of fluids and substances, including hydraulic fracturing fluids which can contain hydrochloric acid and certain petrochemicals. This activity poses some risks of environmental liability, including leakage of hazardous substances from the wells to surface and subsurface soils, surface water or groundwater.
Given the uncertainty inherent in criminal litigation, however, it is not possible at this time to determine the potential impacts that the sentencing could have on us. PREPA has stated in Court 22 filings that it may contend the alleged criminal activity affects Cobra's entitlement to payment under its contracts with PREPA.
Given the uncertainty inherent in criminal litigation, however, it is not possible at this time to determine the potential impacts that the sentencing could have on us. PREPA has stated in Court filings that it may contend the alleged criminal activity affects Cobra’s entitlement to payment under its contracts with PREPA.
The principal competitive factors in our markets are price, product and service quality and availability, responsiveness, experience, technology, equipment quality and reputation for safety. We compete with large national and multi-national companies that have longer operating histories, greater financial, technical and other resources and greater name recognition than we do.
The principal competitive factors in our markets are price, product and service quality and availability, responsiveness, experience, 36 technology, equipment quality and reputation for safety. We compete with large national and multi-national companies that have longer operating histories, greater financial, technical and other resources and greater name recognition than we do.
We also handle, transport and store these substances. The handling, transportation, storage and disposal of these fluids are regulated by a number of laws, including: the Resource Conservation and Recovery Act; the Comprehensive Environmental Response, Compensation, and Liability Act; the Clean Water Act; the Safe Drinking Water Act; and other federal and state laws and regulations promulgated thereunder.
We also handle, transport and store these substances. The handling, transportation, storage and disposal of these fluids are regulated by a number of laws, including: the Resource Conservation and Recovery Act; the Comprehensive 37 Environmental Response, Compensation, and Liability Act; the Clean Water Act; the Safe Drinking Water Act; and other federal and state laws and regulations promulgated thereunder.
We provide well completion services and drilling services in the Utica, SCOOP, STACK, Permian Basin, Marcellus, Granite Wash, and Cana Woodford resource plays located in the continental U.S. We provide infrastructure services in the northeastern, southwestern, midwestern and western portions of the United States. We provide remote accommodation services 33 in the oil sands in Alberta, Canada.
We provide well completion services and drilling services in the Utica, SCOOP, STACK, Permian Basin, Marcellus, Granite Wash, and Cana Woodford resource plays located in the continental U.S. We provide infrastructure services in the northeastern, southwestern, midwestern and western portions of the United States. We provide remote accommodation services in the oil sands in Alberta, Canada.
Further, any disruptions or continuing volatility in the global financial markets and rising interest rates due to efforts to curb persistent inflation may lead to a contraction in credit availability and an increase in our cost of capital, which will adversely impact our ability to finance our operations.
Further, any disruptions or continuing volatility in the global financial markets and rising interest rates due to efforts to curb persistent inflation may lead to a contraction in credit availability and an 34 increase in our cost of capital, which will adversely impact our ability to finance our operations.
In certain economic and commodity price environments, we may experience increased difficulties, delays or failures in collecting outstanding receivables from our customers, due to, among other reasons, a reduction in their cash flow from operations, their inability to access the credit markets and, in certain cases, their insolvencies.
In certain economic and commodity price environments, we may experience increased difficulties, delays or failures in collecting outstanding receivables from our customers, due to, among other reasons, a reduction in their cash flow from 25 operations, their inability to access the credit markets and, in certain cases, their insolvencies.
We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for income taxes. We do not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon challenge by a tax authority.
We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for income taxes. We do not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon 39 challenge by a tax authority.
These variations, along with other risks inherent in performing fixed price contracts, could cause actual project revenue and profits to differ from original estimates, which could result in lower margins than anticipated, or losses, which could reduce our profitability, cash flows and liquidity.
These variations, along with other risks inherent in performing fixed price contracts, could cause actual project revenue 27 and profits to differ from original estimates, which could result in lower margins than anticipated, or losses, which could reduce our profitability, cash flows and liquidity.
Further, federal and state governments and agencies have adopted various laws and regulations or are evaluating proposed legislation and regulations that are focused on the extraction of 30 shale gas or oil using hydraulic fracturing, a process which utilizes proppants such as those that we produce.
Further, federal and state governments and agencies have adopted various laws and regulations or are evaluating proposed legislation and regulations that are focused on the extraction of shale gas or oil using hydraulic fracturing, a process which utilizes proppants such as those that we produce.
We may not be able to provide services that meet the specific needs of oil and natural gas exploration and production companies or utilities at competitive prices. 36 The markets in which we operate are generally highly competitive and have relatively few barriers to entry.
We may not be able to provide services that meet the specific needs of oil and natural gas exploration and production companies or utilities at competitive prices. The markets in which we operate are generally highly competitive and have relatively few barriers to entry.
We may also be subject to litigation in the normal course of business involving allegations of violations of the Fair Labor Standards Act and state wage and hour laws. Claimants may seek large damage awards and defending claims can involve significant costs.
We may also be subject to litigation in the normal course of business involving allegations of violations of the Fair Labor Standards Act and state wage and hour laws. 32 Claimants may seek large damage awards and defending claims can involve significant costs.
Our business may suffer a material adverse effect in the event we have title deficiencies. In some instances, we have received access rights or easements from third parties, which allow for a more efficient operation than would exist without the access or easement.
Our business may suffer a material adverse effect in the event we have title deficiencies. 38 In some instances, we have received access rights or easements from third parties, which allow for a more efficient operation than would exist without the access or easement.
Additionally, many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties. 39 Our income tax returns are subject to review and examination by the applicable tax authorities.
Additionally, many of these liabilities are subject to periodic audits by the respective taxing authority. Subsequent changes to our tax liabilities as a result of these audits may subject us to interest and penalties. Our income tax returns are subject to review and examination by the applicable tax authorities.
The IRA could accelerate the transition of the economy away from the use of fossil fuels 25 towards lower- or zero-carbon emissions alternatives, which could decrease demand for our services related to the oil and natural gas industry.
The IRA could accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which could decrease demand for our services related to the oil and natural gas industry.
Even if 28 we are awarded contracts, we face additional risks that could affect whether, or when, work will begin. This can present difficulty in matching workforce size and equipment location with contract needs.
Even if we are awarded contracts, we face additional risks that could affect whether, or when, work will begin. This can present difficulty in matching workforce size and equipment location with contract needs.
Repercussions of severe weather conditions may include: • curtailment of services; • weather-related damage to equipment resulting in suspension of operations; • weather-related damage to our facilities; • inability to deliver equipment and materials to jobsites in accordance with contract schedules; and • loss of productivity.
Repercussions of severe weather conditions may include: • curtailment of services; • weather-related damage to equipment resulting in suspension of operations; • weather-related damage to our facilities; 33 • inability to deliver equipment and materials to jobsites in accordance with contract schedules; and • loss of productivity.
The occurrence of any of these events could have a material adverse effect on our business, cash flows, results of operations and financial position. Advancements in oilfield service technologies could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The occurrence of any of these events could have a material adverse effect on our business, cash flows, results of operations and financial position. 26 Advancements in oilfield service technologies could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Shortages, delays in delivery and interruptions in supply of major components, replacement parts or, other equipment, supplies or materials may adversely affect our pressure pumping business and our drilling business.
Shortages, delays in delivery and interruptions in supply of major components, replacement parts or, other equipment, supplies or materials may adversely affect our pressure pumping business.
As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.
As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our 40 protective measures or to investigate and remediate any vulnerability to cyber incidents.
Both the SEC and DOJ investigations relate to the same subjects as those at issue in the criminal matter referenced above. We are cooperating with the DOJ and are not able to predict the outcome of this investigation or if it will have a material impact on our business, financial condition, results of operations or cash flows.
Both the SEC and DOJ investigations relate to the same subjects as those at issue in the criminal matter referenced above. We have cooperated with the DOJ and are not able to predict the outcome of this investigation or if it will have a material impact on our business, financial condition, results of operations or cash flows.
In addition, claims, lawsuits and proceedings may harm our reputation or divert management’s attention from our business or divert resources away from operating our business, and cause us to incur significant expenses, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Please see Note 19.
In addition, claims, lawsuits and proceedings may harm our reputation or divert management’s attention from our business or divert resources away from operating our business, and cause us to incur significant expenses, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Please see Note 20.
For the years ended December 31, 2022 and 2021, we generated approximately 45% and 48%, respectively, of our revenue from our operations in Ohio, Wisconsin, Minnesota, North Dakota, Pennsylvania, West Virginia and Canada where weather conditions may be severe, particularly during winter and spring months.
For the years ended December 31, 2023 and 2022, we generated approximately 48% and 45%, respectively, of our revenue from our operations in Ohio, Wisconsin, Minnesota, North Dakota, Pennsylvania, West Virginia and Canada where weather conditions may be severe, particularly during winter and spring months.
If any of such programs or systems were to fail or create erroneous information in our hardware or software network infrastructure, whether due to cyberattack or otherwise, possible consequences include our loss of communication links and inability to automatically process commercial transactions or engage in similar automated or computerized business activities.
If our programs or systems were to fail or create erroneous information in our hardware or software network infrastructure, whether due to cyberattack or otherwise, possible consequences include our loss of communication links and inability to automatically process commercial transactions or engage in similar automated or computerized business activities.
At times during the business cycle, there is a high demand for hydraulic fracturing, coiled tubing and other oilfield services and extended lead times to obtain equipment needed to provide these services. Further, there are a limited number of suppliers that manufacture the equipment we use.
At times during the business cycle, there is a high demand for hydraulic fracturing and other oilfield services and extended lead times to obtain equipment needed to provide these services. Further, there are a limited number of suppliers that manufacture the equipment we use.
Business — Regulation of Hydraulic Fracturing included elsewhere in this annual report. We face distribution and logistics challenges in our business.
Business — Regulation of Hydraulic Fracturing included elsewhere in this annual report. 30 We face distribution and logistics challenges in our business.
Moreover, if one or more of the analysts who cover our company downgrades our stock or if our operating results do not meet their expectations, our stock price could decline. We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
Moreover, if analysts who cover our company downgrades our stock or if our operating results do not meet their expectations, our stock price could decline. We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
Risks Inherent to Our Common Stock Our largest stockholder controls a significant percentage of our common stock, and its interests may conflict with those of our other stockholders. Wexford, through its affiliate MEH Sub LLC, beneficially owns approximately 47.5% of our outstanding common stock.
Risks Inherent to Our Common Stock Our largest stockholder controls a significant percentage of our common stock, and its interests may conflict with those of our other stockholders. Wexford, through its affiliate MEH Sub LLC, beneficially owns approximately 47.1% of our outstanding common stock.
To the extent one or more of our key customers commences bankruptcy proceedings, as was the case with Gulfport, our contracts with these customers may be subject to rejection under applicable provisions of the United States Bankruptcy Code, or may be renegotiated.
To the extent one or more of our key customers commences bankruptcy proceedings, as was the case with Gulfport Energy Corporation, our contracts with these customers may be subject to rejection under applicable provisions of the United States Bankruptcy Code, or may be renegotiated.
When a major customer discontinues the use our services, our revenue will decline and our operating results and financial condition will be harmed unless such loss is offset by new business. Our top five customers accounted for approximately 36%, 35% and 50%, respectively, of our revenue for the years ended December 31, 2022, 2021 and 2020.
When a major customer discontinues the use our services, our revenue will decline and our operating results and financial condition will be harmed unless such loss is offset by new business. Our top five customers accounted for approximately 35%, 36% and 35%, respectively, of our revenue for the years ended December 31, 2023, 2022 and 2021.
Oilfield services equipment or assets being upgraded, converted or re-activated following a period of inactivity may experience significant start-up costs and complications and may encounter other operational problems that could result in significant delays, uncompensated downtime, reduced dayrates or the cancellation, termination or non-renewal of contracts.
Oilfield services equipment or assets being upgraded, converted or re-activated following a period of inactivity may experience significant start-up costs and complications and may encounter other operational problems that could result in significant delays, uncompensated downtime, reduced day rates or the cancellation, termination or non-renewal of contracts.
If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
If analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.
We cannot predict the extent of this war’s effect on our business and results of operations as well as on the global economy, energy markets and industries in which we operate. The outcomes of investigations and litigation relating to our contracts with PREPA may have a material adverse effect on our business, financial condition, results of operations and cash flows.
We cannot predict the extent of these wars’ effect on our business and results of operations as well as on the global economy, energy markets and industries in which we operate. The outcomes of investigations and litigation relating to our contracts with PREPA may have a material adverse effect on our business, financial condition, results of operations and cash flows.
This could put us at a competitive disadvantage, impair our ability to meet our operating needs or interfere with our growth plans. Further, 34 our actual capital expenditures for 2023 or future years could exceed our capital expenditure budget.
This could put us at a competitive disadvantage, impair our ability to meet our operating needs or interfere with our growth plans. Further, our actual capital expenditures for 2024 or future years could exceed our capital expenditure budget.
Our revolving credit facility limits, and any of our future credit facilities may limit, our ability to take various actions, such as: • incurring additional indebtedness; • paying dividends; • creating certain additional liens on our assets; • entering into sale and leaseback transactions; • making investments; • entering into transactions with affiliates; • making material changes to the type of business we conduct or our business structure; • making guarantees; • entering into hedges; • disposing of assets in excess of certain permitted amounts; • merging or consolidating with other entities; and • selling all or substantially all of our assets.
Our revolving credit facility and term credit facility limit, our ability to take various actions, such as: • incurring additional indebtedness; • paying dividends; • creating certain additional liens on our assets; • entering into sale and leaseback transactions; • making investments; • entering into transactions with affiliates; • making material changes to the type of business we conduct or our business structure; • making guarantees; • entering into hedges; • disposing of assets in excess of certain permitted amounts; • merging or consolidating with other entities; and • selling all or substantially all of our assets.
Our operations require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could limit our ability to grow. Our capital budget for 2023 is estimated to be $64 million, depending upon industry conditions and our financial results.
Our operations require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could limit our ability to grow. Our capital budget for 2024 is estimated to be $15 million, depending upon industry conditions and our financial results.
Subject to the limitations of applicable law, our certificate of incorporation, among other things: 41 • permits us to enter into transactions with entities in which one or more of our officers or directors are financially or otherwise interested; • permits any of our stockholders, officers or directors to conduct business that competes with us and to make investments in any kind of property in which we may make investments; and • provides that if any director or officer of one of our affiliates who is also one of our officers or directors becomes aware of a potential business opportunity, transaction or other matter (other than one expressly offered to that director or officer in writing solely in his or her capacity as our director or officer), that director or officer will have no duty to communicate or offer that opportunity to us, and will be permitted to communicate or offer that opportunity to such affiliates and that director or officer will not be deemed to have (i) acted in a manner inconsistent with his or her fiduciary or other duties to us regarding the opportunity or (ii) acted in bad faith or in a manner inconsistent with our best interests.
The corporate opportunity provisions in our certificate of incorporation could enable Wexford or other affiliates of ours to benefit from corporate opportunities that might otherwise be available to us. 41 Subject to the limitations of applicable law, our certificate of incorporation, among other things: • permits us to enter into transactions with entities in which one or more of our officers or directors are financially or otherwise interested; • permits any of our stockholders, officers or directors to conduct business that competes with us and to make investments in any kind of property in which we may make investments; and • provides that if any director or officer of one of our affiliates who is also one of our officers or directors becomes aware of a potential business opportunity, transaction or other matter (other than one expressly offered to that director or officer in writing solely in his or her capacity as our director or officer), that director or officer will have no duty to communicate or offer that opportunity to us, and will be permitted to communicate or offer that opportunity to such affiliates and that director or officer will not be deemed to have (i) acted in a manner inconsistent with his or her fiduciary or other duties to us regarding the opportunity or (ii) acted in bad faith or in a manner inconsistent with our best interests.
Changes in currency exchange rates could adversely affect our combined results of operations or financial position. We also maintain cash balances denominated in the Canadian dollar. At December 31, 2022, we had $3.4 million of cash in Canadian dollars, in Canadian accounts.
Changes in currency exchange rates could adversely affect our combined results of operations or financial position. We also maintain cash balances denominated in the Canadian dollar. At December 31, 2023, we had $2.4 million of cash in Canadian dollars, in Canadian accounts.
Sales of these shares of common stock or sales of substantial amounts of our common stock by other stockholders, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock. 42 As of December 31, 2022, Wexford beneficially owned 47.5% shares of our common stock.
Sales of these shares of common stock or sales of substantial amounts of our common stock by other 42 stockholders, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock. As of December 31, 2023, Wexford beneficially owned 47.1% shares of our common stock.
Other significant factors that are likely to continue to affect commodity prices in current and future periods include, but are not limited to, the effect of U.S. energy, monetary and trade policies, U.S. and global political developments, the impact and duration of the ongoing COVID-19 pandemic and conditions in the U.S. oil and gas industry, actions of OPEC+ members, the impact of the ongoing war in Ukraine on the global energy and capital markets and global stability and other factors.
Other significant factors that are likely to continue to affect commodity prices in current and future periods include, but are not limited to, the effect of U.S. energy, monetary and trade policies, U.S. and global political developments, conditions in the U.S. oil and gas industry, actions of OPEC+ members, the impact of the ongoing war in Ukraine and the recent Israel-Hamas war on the global energy and capital markets and global stability and other factors.
As a result, we may incur substantial losses which could materially and adversely affect our financial condition and results of operation. Loss of our information and computer systems could adversely affect our business. We are heavily dependent on our information systems and computer based programs, including our well operations information and accounting data.
As a result, we may incur substantial losses which could materially and adversely affect our financial condition and results of operation. Loss of our information and computer systems could adversely affect our business. We are heavily dependent on our information systems and computer-based programs.
Based on its evaluation of these factors, the board of directors may determine not to declare a dividend, or declare dividends at rates that are less than anticipated, either of which could reduce returns to our stockholders. Item 1B. Unresolved Staff Comments None.
Based on its evaluation of these factors, the board of directors may determine not to declare a dividend, or declare dividends at rates that are less than anticipated, either of which could reduce returns to our stockholders.
Our revolving credit facility provides, and any future credit facilities may provide, for fluctuating interest rates, which may increase or decrease our interest expense. Our revolving credit facility provides for fluctuating interest rates, primarily based on rates set by the U.S. Federal Reserve.
Our revolving credit facility and term credit facility provide for fluctuating interest rates, which may increase or decrease our interest expense. Our revolving credit facility and term credit facility provide for fluctuating interest rates, primarily based on rates set by the U.S. Federal Reserve.
Many factors over which we have no control affect the supply of and demand for, and our customers’ willingness to explore, develop and produce oil and natural gas, and therefore, influence prices for our products and services, including: • the domestic and foreign supply of and demand for oil and natural gas; • the level of prices, and expectations about future prices, of oil and natural gas; • the level of global oil and natural gas exploration and production; • the cost of exploring for, developing, producing and delivering oil and natural gas; • the expected decline rates of current production; • the price and quantity of foreign imports; • political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia, including the impact of the ongoing war in Ukraine on the global energy and capital markets and global stability; • the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; • speculative trading in crude oil and natural gas derivative contracts; • the level of consumer product demand; • the discovery rates of new oil and natural gas reserves; • contractions in the credit market; • the strength or weakness of the U.S. dollar; • available pipeline and other transportation capacity; • the levels of oil and natural gas storage; • weather conditions and other natural disasters; • political instability in oil and natural gas producing countries; • domestic and foreign tax policy; • domestic and foreign governmental approvals and regulatory requirements and conditions; • the continued threat of terrorism and the impact of military and other action, including military action in the Middle East; • technical advances affecting energy consumption; • the proximity and capacity of oil and natural gas pipelines and other transportation facilities; • the price and availability of alternative fuels; • the ability of oil and natural gas producers to raise equity capital and debt financing; • global or national health concerns, including the outbreak of pandemic or contagious diseases such as the coronavirus; • merger and divestiture activity among oil and natural gas producers; and • overall domestic and global economic conditions. 24 These factors and the volatility of the energy markets make it extremely difficult to predict future oil and natural gas price movements with any certainty.
Many factors over which we have no control affect the supply of and demand for, and our customers’ willingness to explore, develop and produce oil and natural gas, and therefore, influence prices for our products and services, including: • the domestic and foreign supply of and demand for oil and natural gas; • the level of prices, and expectations about future prices, of oil and natural gas; • the level of global oil and natural gas exploration and production; • the cost of exploring for, developing, producing and delivering oil and natural gas; • the expected decline rates of current production; • the price and quantity of foreign imports; • political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia, including the impact of the ongoing war in Ukraine and the recent Israel-Hamas war on the global energy and capital markets and global stability; 23 • the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; • speculative trading in crude oil and natural gas derivative contracts; • the level of consumer product demand; • the discovery rates of new oil and natural gas reserves; • contractions in the credit market; • the strength or weakness of the U.S. dollar; • available pipeline and other transportation capacity; • the levels of oil and natural gas storage; • weather conditions and other natural disasters; • political instability in oil and natural gas producing countries; • domestic and foreign tax policy; • domestic and foreign governmental approvals and regulatory requirements and conditions; • the continued threat of terrorism and the impact of military and other action, including military action in the Middle East; • technical advances affecting energy consumption; • the proximity and capacity of oil and natural gas pipelines and other transportation facilities; • the price and availability of alternative fuels; • the ability of oil and natural gas producers to raise equity capital and debt financing; • global or national health concerns, including the outbreak of pandemic or contagious diseases; • merger and divestiture activity among oil and natural gas producers; • governmental laws, policies, regulations, subsidies, and other actions, including initiatives to promote the use of renewable energy sources; and • overall domestic and global economic conditions.
A portion of our business depends on the oil and natural gas industry and particularly on the level of exploration and production activity within the United States and Canada, and continued volatility in the oil and natural gas markets have impacted, and are likely to continue to impact, our oilfield services and, as a result, our business, financial condition, results of operations, cash flows and stock price. 23 Demand for our oil and natural gas products and services depends substantially on the level of capital expenditures by companies in the oil and natural gas industry.
A portion of our business depends on the oil and natural gas industry and particularly on the level of exploration and production activity within the United States and Canada, and continued volatility in the oil and natural gas markets have impacted, and are likely to continue to impact, our oilfield services and, as a result, our business, financial condition, results of operations, cash flows and stock price.
Our technologies, systems and networks, and those of our vendors, suppliers and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or other disruption of our business operations.
Our technologies, systems and networks, and those of our vendors, suppliers and other business partners, have been and could continue to be the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or other disruption of our business operations.
It is likely that we will continue to derive a significant portion of our revenue from a relatively small number of 21 customers in the future. See the risk factors below for additional information. In addition, we are subject to credit risk due to the concentration of our customer base.
It is likely that we will continue to derive a significant portion of our revenue from a relatively small number of customers in the future. In addition, we are subject to credit risk due to the concentration of our customer base.
The market price for our common stock has fluctuated significantly, ranging from a high of $8.79 per share to a low of $1.35 per share during 2022. In addition, in the absence of an active public trading market, investors may be unable to liquidate their investment in us.
The market price for our common stock has fluctuated significantly, ranging from a high of $8.74 per share to a low of $3.41 per share during 2023. In addition, in the absence of an active public trading market, investors may be unable to liquidate their investment in us.
Failure to effectively and timely address the energy transition to a lower carbon footprint could adversely affect our oil and gas business Our long-term success depends on our ability to effectively address the energy transition to a lower carbon footprint, which will require adapting our portfolio of oilfield services to potentially changing or more burdensome government requirements and customer preferences.
Our long-term success depends on our ability to effectively address the energy transition to a lower carbon footprint, which will require adapting our portfolio of oilfield services to potentially changing or more burdensome government requirements and customer preferences.
Any nonperformance by our counterparties, including their failure to pay the amounts they owe us on a timely basis or at all, either as a result of changes in financial and economic conditions or otherwise, could have a material adverse impact on our operating results and could adversely affect our liquidity.
Any nonperformance by our counterparties, including their failure to pay the amounts they owe us on a timely basis or at all, either as a result of changes in financial and economic conditions or otherwise, could have a material adverse impact on our operating results and could adversely affect our liquidity. 21 We may experience losses in excess of our recorded reserves for receivables.
Estimates of economically recoverable sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as: • geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience; • assumptions concerning future prices of frac sand, operating costs, mining technology improvements, development costs and reclamation costs; and • assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies. 29 Any inaccuracy in the estimates related to our sand reserves could result in lower than expected sales and higher than expected costs.
Estimates of economically recoverable sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as: • geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience; • assumptions concerning future prices of frac sand, operating costs, mining technology improvements, development costs and reclamation costs; and • assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies.
Any such consequence could have a material adverse effect on our business. We are subject to cyber security risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss. The energy services industry has become increasingly dependent on digital technologies to conduct certain processing activities.
Any such consequence could have a material adverse effect on our business. We are subject to cyber security risks. Cyber incidents or intrusions may result in information theft, data corruption, operational disruption and/or financial loss. Our operations have become increasingly dependent on digital technologies to conduct certain processing activities.
In particular, PREPA owed us approximately $379.0 million (including interest charged on overdue amounts) as of December 31, 2022, as discussed in more detail above.
In particular, PREPA owed us approximately $402.3 million (including interest charged on overdue amounts) as of December 31, 2023, as discussed in more detail above.
We fund our capital expenditures primarily with cash generated by operations, borrowings under our revolving credit facility and sale-leaseback transactions.
We fund our capital expenditures primarily with cash generated by operations and borrowings under our revolving credit facility and term loan facility.
As of December 31, 2022, PREPA owed us approximately $227.0 million for services performed excluding $152.0 million of interest charged on these delinquent balances. PREPA is currently subject to bankruptcy proceedings pending in the U.S. District Court for the District of Puerto Rico.
As of December 31, 2023, PREPA owed us approximately $204.8 million for services performed excluding $197.5 million of interest charged on delinquent balances. PREPA is currently subject to bankruptcy proceedings pending in the U.S. District Court for the District of Puerto Rico.
In addition to master service and other service agreements, we enter into contracts for specific projects or jobs that may require the installation or construction of an 27 entire infrastructure system or specified units within an infrastructure system, which are priced on a per unit basis.
In addition to master service and other service agreements, we enter into contracts for specific projects or jobs that may require the installation or construction of an entire infrastructure system or specified units within an infrastructure system, which are priced on a per unit basis. Profitability will be reduced if actual costs to complete a project exceed our original estimates.
However, the broader consequences of the Russian-Ukrainian conflict, which may include further sanctions, embargoes, regional instability and geopolitical shifts, may have adverse effects on global macroeconomic conditions, increase volatility in the price and demand for oil and natural gas, which would adversely impact the oilfield services industry, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity.
However, the broader consequences of the Russian-Ukrainian conflict, and the Israel-Hamas war may increase volatility in the price and demand for oil and natural gas, which would adversely impact the oilfield services industry, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity.
An unexpected change in customer financial condition or future economic uncertainty could result in additional requirements for specific reserves, which could have a material effect on our business, financial condition, results of operations and cash flows. Our business and operations have been and will likely continue to be adversely affected by the COVID-19 pandemic.
An unexpected change in customer financial condition or future economic uncertainty could result in additional requirements for specific reserves, which could have a material effect on our business, financial condition, results of operations and cash flows.
The water discharge, storm water or any other permits we may be required to have in order to conduct our frac sand processing operations is subject to regulatory discretion, and any inability to obtain or maintain the necessary permits could have an adverse effect on our ability to run such operations. 31 Similar to our natural sand proppant services, certain of our completion and production services, particularly our hydraulic fracturing services, are substantially dependent on the availability of water.
The water discharge, storm water or any other permits we may be required to have in order to conduct our frac sand processing operations is subject to regulatory discretion, and any inability to obtain or maintain the necessary permits could have an adverse effect on our ability to run such operations.
As a smaller reporting company and, as of December 31, 2022, a non-accelerated filer, we are required to document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting under Section 404 of the Sarbanes Act of 2002.
We are required to document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting under Section 404 of the Sarbanes Act of 2002.
Prices for oil and natural gas historically have been extremely volatile and are expected to continue to be volatile in the years to come. During 2022, West Texas Intermediate posted prices ranged from $71.02 to $123.70 per barrel and the New York Mercantile Exchange natural gas futures prices ranged from $3.72 to $9.68 per MMBtu.
Prices for oil and natural gas historically have been extremely volatile and are expected to continue to be volatile in the years to come. During 2023, West Texas Intermediate posted prices ranged from $66.74 to $93.68 per barrel and the New York Mercantile Exchange natural 24 gas futures prices ranged from $1.99 to $4.48 per MMBtu.
In August 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA contains billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
For example, the Infrastructure Investment and Jobs Act and the IRA contain billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
Throughout 2022 and 2023, the Federal Reserve increased its benchmark interest rates eight times for an aggregate increase of 4.5 percentage points and may continue increasing benchmark interest rates in the future.
Throughout 2022 and 2023, the Federal Reserve increased its benchmark interest rates eight times for an aggregate increase of 4.75 percentage points and may continue increasing benchmark interest rates in the future. We have not hedged our interest rate exposure with respect to our floating rate debt.
In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period. Our systems and insurance coverage for 40 protecting against cyber security risks may not be sufficient.
In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period. Our security programs and measures, as well as security programs of our customers, suppliers, or other third parties, may not prevent all intrusions and our systems and insurance coverage for protecting against cyber security risks may not be sufficient.
Debt to our consolidated financial statements included elsewhere in this report, and we could be forced into bankruptcy or liquidation. Our customer base is concentrated and the loss of one or more of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue to decline substantially.
Our customer base is concentrated and the loss of one or more of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue to decline substantially.
Our inability, or customers’ inability, to obtain water to use in our operations from local sources or to effectively utilize flowback water could have an adverse effect on our business, financial condition, results of operations and cash flows.
In October 2023, the Commission announced draft amendments to its water protection rules to, among other things, encourage waste recycling. Our inability, or 31 customers’ inability, to obtain water to use in our operations from local sources or to effectively utilize flowback water could have an adverse effect on our business, financial condition, results of operations and cash flows.
Profitability will be reduced if actual costs to complete a project exceed our original estimates. Our profitability is dependent upon our ability to accurately estimate the costs associated with our services and our ability to execute in accordance with our plans.
Our profitability is dependent upon our ability to accurately estimate the costs associated with our services and our ability to execute in accordance with our plans.
If the prices of oil and natural gas decline from current levels, our operations, financial condition and level of expenditures may be materially and adversely affected.
If the prices of oil and natural gas decline from current levels, our operations, financial condition and level of expenditures may be materially and adversely affected. Failure to effectively and timely address the energy transition to a lower carbon footprint could adversely affect our oil and gas business.
Cobra has 90 days from the February 1, 2023 decision to file a notice of appeal. We believe all amounts charged to PREPA were properly in accordance with the terms of these contracts. Further, we believe these receivables are collectible.
We believe all amounts charged to PREPA were properly in accordance with the terms of these contracts. Further, we believe these receivables are collectible.
Recorded reserves represent our estimate of current expected credit losses on existing receivables and are determined based on historical customer reviews, current financial conditions and reasonable and supportable forecasts.
We evaluate the collectability of our receivables based on consideration of a customer’s ability to make required payments, payment history, economic events and other factors. Recorded reserves represent our estimate of current expected credit losses on existing receivables and are determined based on historical customer reviews, current financial conditions and reasonable and supportable forecasts.
Restrictions on our ability, or our customers’ ability, to obtain water may have an adverse effect on our business, financial condition, results of operations and cash flows. Water is an essential component of deep shale oil and natural gas production during both the drilling and hydraulic fracturing processes.
Similar to our natural sand proppant services, certain of our completion and production services, particularly our hydraulic fracturing services, are substantially dependent on the availability of water. Restrictions on our ability, or our customers’ ability, to obtain water may have an adverse effect on our business, financial condition, results of operations and cash flows.
For example, these estimates assume that our revenue and cost structure will remain relatively constant over the life of our reserves. If these assumptions prove to be inaccurate, some or all of our reserves may not be economically mineable, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If these assumptions prove to be inaccurate, some or all of our reserves may not be economically mineable, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, our current customer contracts require us to deliver frac sand that meets certain specifications.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur Piranha facility includes a 150 ton per hour natural 50 gas fired fluid bed dryer and a 200 ton per hour natural gas fluid bed dryer as well as seven high capacity screeners capable of producing 2.6 million tons of frac sand per year.
Biggest changeOur Piranha facility includes a 150 ton per hour natural 51 gas fired fluid bed dryer and a 200 ton per hour natural gas fluid bed dryer as well as seven high-capacity screeners capable of producing 2.6 million tons of frac sand per year. During the year ended December 31, 2023, our Piranha facility produced 0.7 million tons of sand.
Boyd, there were no material changes in mineral (frac sand) resources/mineral (frac sand) reserves, material assumptions or other technical information from those reported in the February 2022 technical report. As a result, we are relying on the February 2022 technical report, as updated by John T. Boyd for immaterial changes in our reserves/resources as of December 31, 2022.
Boyd, there were no material changes in mineral (frac sand) resources/mineral (frac sand) reserves, material assumptions or other technical information from those reported in the February 2022 technical report. As a result, we are relying on the February 2022 technical report, as updated by John T. Boyd for immaterial changes in our reserves/resources as of December 31, 2023.
All of our frac sand facilities are located in Wisconsin, with our Taylor facilities located in Jackson County, our Piranha facilities located in Barron County and our Muskie facilities located in Pierce County. 45 Our frac sand facilities consist of three dry plants with a total permitted capacity of 5.7 million tons of sand per year, and two wet plants, with a total permitted capacity of 8.7 million tons of sand per year, that supply two of the dry plants with Northern White silica sand, which we believe is some of the highest quality raw frac sand available.
All of our frac sand facilities are located in Wisconsin, with our Taylor facilities located in Jackson County, our Piranha facilities located in Barron County and our Muskie facilities located in Pierce County. 46 Our frac sand facilities consist of three dry plants with a total permitted capacity of 5.7 million tons of sand per year, and two wet plants, with a total permitted capacity of 8.7 million tons of sand per year, that supply two of the dry plants with Northern White silica sand, which we believe is some of the highest quality raw frac sand available.
The information that follows is derived, in part, from the technical report summary prepared by John T. Boyd Company in February 2022, our third party mining and geological consultant and an external qualified person, (“John T. 44 Boyd”), in compliance with Item 601(b)(96) and subpart 1300 of Regulation S-K. As of December 31, 2022, in the opinion of John T.
The information that follows is derived, in part, from the technical report summary prepared by John T. Boyd Company in February 2022, our third-party mining and geological consultant and an external qualified person, (“John T. Boyd”), in compliance with Item 601(b)(96) and subpart 1300 of Regulation S-K. As of December 31, 2023, in the opinion of John T.
Approximately 148 acres of frac sand resources remain on this 48 property. We own in fee numerous land parcels which comprise the processing plant site, mineral resource areas and rail loadout facility. Our rail loadout facility, located in Trempealeau County, Wisconsin, is approximately two miles southwest of the mine and processing facility. Our Taylor operation commenced mining operations in 2012.
Approximately 148 acres of frac sand resources remain on this 49 property. We own in fee numerous land parcels which comprise the processing plant site, mineral resource areas and rail loadout facility. Our rail loadout facility, located in Trempealeau County, Wisconsin, is approximately two miles southwest of the mine and processing facility. Our Taylor operation commenced mining operations in 2012.
A third-party contractor then “bumps” the sand using explosives on the mine face, 46 which causes the sand to fall into the pit, where it is then carried by truck or conveyor to the wet plant operations. At our wet plants, the mined sand goes through a series of processes designed to separate the sand from unusable materials.
A third-party contractor then “bumps” the sand using explosives on the mine face, 47 which causes the sand to fall into the pit, where it is then carried by truck or conveyor to the wet plant operations. At our wet plants, the mined sand goes through a series of processes designed to separate the sand from unusable materials.
During the year ended December 31, 2022, our Taylor facility produced 0.6 million tons of finished sand product. Our finished product is transported via truck to our transloading facility with rail access. We estimate an overall product yield (after mining and processing losses) of approximately 66% for the Taylor mine. John T.
During the year ended December 31, 2023, our Taylor facility produced 0.6 million tons of finished sand product. Our finished product is transported via truck to our transloading facility with rail access. We estimate an overall product yield (after mining and processing losses) of approximately 66% for the Taylor mine. John T.
Our Piranha wet plant, which is adjacent to the mine, can process up to 4.7 million tons of wet sand per year and is located two miles from our Piranha dry plant, to which we have year-round trucking access. As of December 31, 2022, the dry plant facility had a rated production capacity of 2.6 million tons per year.
Our Piranha wet plant, which is adjacent to the mine, can process up to 4.7 million tons of wet sand per year and is located two miles from our Piranha dry plant, to which we have year-round trucking access. As of December 31, 2023, the dry plant facility had a rated production capacity of 2.6 million tons per year.
The decrease from 2021 to 2022 is primarily attributed to depletion by mining 0.6 million tons of sand. Piranha. Our Piranha operation is located approximately five miles northwest of the town of New Auburn, in Baron County, Wisconsin and encompasses a total of approximately 608 acres.
The decrease from 2022 to 2023 is primarily attributed to depletion by mining 0.6 million tons of sand. Piranha. Our Piranha operation is located approximately five miles northwest of the town of New Auburn, in Baron County, Wisconsin and encompasses a total of approximately 608 acres.
Boyd updates our reserve estimates annually, making necessary adjustments for operations at each location during the year and 47 additions or surveying, drill core analysis and other tests to confirm the quantity and quality of the reserves.
Boyd updates our reserve estimates annually, making necessary adjustments for operations at each location during the year and 48 additions or surveying, drill core analysis and other tests to confirm the quantity and quality of the reserves.
The site contains a mine with 23.8 million tons of proven recoverable proppant sand reserves as of December 31, 2022, based on estimates prepared by John T. Boyd. Our Taylor wet plant can currently process up to 2.6 million tons of wet frac sand per year. Our Taylor dry plant is adjacent to our Taylor wet plant and wash facilities.
The site contains a mine with 23.2 million tons of proven recoverable proppant sand reserves as of December 31, 2023, based on estimates prepared by John T. Boyd. Our Taylor wet plant can currently process up to 2.6 million tons of wet frac sand per year. Our Taylor dry plant is adjacent to our Taylor wet plant and wash facilities.
The following table presents a summary of our mineral reserves for the Piranha mine as of December 31, 2022, together with a comparison to the reserves as of the end of the preceding fiscal year and an explanation of any material changes.
The following table presents a summary of our mineral reserves for the Piranha mine as of December 31, 2023, together with a comparison to the reserves as of the end of the preceding fiscal year and an explanation of any material changes.
As of December 31, 2022, the dry plant had a rated production capacity of 2.2 million tons per year. Our current air permit allows us to produce up to 2.2 million tons per year of finished product.
As of December 31, 2023, the dry plant had a rated production capacity of 2.2 million tons per year. Our current air permit allows us to produce up to 2.2 million tons per year of finished product.
Boyd utilized post December 31, 2017 production data we provided, along with the John T. Boyd January 2019 Report amending the resource tons as of December 31, 2017, to reconcile the amended estimate from the December 31, 2017 estimate to December 31, 2022.
Boyd utilized post December 31, 2017 production data we provided, along with the John T. Boyd January 2019 Report amending the resource tons as of December 31, 2017, to reconcile the amended estimate from the December 31, 2017 estimate to December 31, 2023.
Boyd has determined that all reportable mineral resources for the Piranha mine are categorized as proven reserves as the area is well explored and exhibit acceptable drill hole data spacing to be classified as a measured resource. The decrease from 2021 to 2022 is primarily attributed to depletion by mining 0.8 million tons of sand. Muskie.
Boyd has determined that all reportable mineral resources for the Piranha mine are categorized as proven reserves as the area is well explored and exhibit acceptable drill hole data spacing to be classified as a measured resource. The decrease from 2022 to 2023 is primarily attributed to depletion by mining 0.7 million tons of sand. Muskie.
Boyd utilized post March 31, 2017 production data we provided, in conjunction with other data, to reconcile the estimate from the March 31, 2017 volumetric estimate to December 31, 2022.
Boyd utilized post March 31, 2017 production data we provided, in conjunction with other data, to reconcile the estimate from the March 31, 2017 volumetric estimate to December 31, 2023.
Boyd reviewed our financial cost and revenue per ton data at the time of the proven reserve determination. Our 2022 average monthly sales prices ranged from approximately $20 to $31 per ton free on board mine. Based on its review of our cost structure and its extensive experience with similar operations, John T.
Boyd reviewed our financial cost and revenue per ton data at the time of the proven reserve determination. Our 2023 average monthly sales prices ranged from approximately $20 to $32 per ton free on board mine. Based on its review of our cost structure and its extensive experience with similar operations, John T.
The total net book value of the Muskie operation’s real property and fixed assets as of December 31, 2022, was $5.9 million. Headquarters Our corporate headquarters are located at 14201 Caliber Drive, Suite 300, Oklahoma City, Oklahoma 73134.
The total net book value of the Muskie operation’s real property and fixed assets as of December 31, 2023, was $5.2 million. Headquarters Our corporate headquarters are located at 14201 Caliber Drive, Suite 300, Oklahoma City, Oklahoma 73134.
The following table provides information regarding our aggregate sand mined for December 31, 2022, 2021 and 2020: Total Sand Mined (Thousands of Tons) As of December 31, 2022 2021 2020 Plant Location Taylor in Jackson County, Wisconsin 630 567 589 Piranha in Barron County, Wisconsin 766 320 — Total 1,396 887 589 Mineral Resources and Reserves The quantity and nature of our mineral resources and reserves are estimated by John T.
The following table provides information regarding our aggregate sand mined for December 31, 2023, 2022 and 2021: Total Sand Mined (Thousands of Tons) As of December 31, 2023 2022 2021 Plant Location Taylor in Jackson County, Wisconsin 608 630 567 Piranha in Barron County, Wisconsin 696 766 320 Total 1,304 1,396 887 Mineral Resources and Reserves The quantity and nature of our mineral resources and reserves are estimated by John T.
Piranha Mine – Summary of Reserves (1)(2) (Thousands of Tons) Amount as of Reserves Category December 31, 2022 December 31, 2021 Change % Change Proven 37,351 37,814 (463) (1) % 1. Pricing data based on the weighted average projected sales price for sand of $18.59 per ton. 2. John T.
Piranha Mine – Summary of Reserves (1)(2) (Thousands of Tons) Amount as of Reserves Category December 31, 2023 December 31, 2022 Change % Change Proven 36,706 37,351 (645) (2) % 1. Pricing data based on the weighted average projected sales price for sand of $18.59 per ton. 2. John T.
We acquired the Taylor operation in June 2017 when we acquired Sturgeon Acquisitions, LLC. The total net book value of the Taylor operation’s real property and fixed assets as of December 31, 2022, was $26.1 million.
We acquired the Taylor operation in June 2017 when we acquired Sturgeon Acquisitions, LLC. The total net book value of the Taylor operation’s real property and fixed assets as of December 31, 2023, was $24.2 million.
The total net book value of the Piranha operation’s real property and fixed assets as of December 31, 2022 was $14.8 million. The site contains 37.4 million tons of proven recoverable proppant sand reserves as of December 31, 2022, based on estimates prepared by John T. Boyd.
The total net book value of the Piranha operation’s real property and fixed assets as of December 31, 2023 was $13.4 million. The site contains 36.7 million tons of proven recoverable proppant sand reserves as of December 31, 2023, based on estimates prepared by John T. Boyd.
The following table presents a summary of our mineral reserves for the Taylor mine as of December 31, 2022, together with a comparison to the reserves as of the end of the preceding fiscal year and an explanation of any material changes. 49 Taylor Mine – Summary of Reserves (1)(2) (Thousands of Tons) Amount as of Reserves Category December 31, 2022 December 31, 2021 Change % Change Proven 23,822 24,277 (455) (2) % 1.
The following table presents a summary of our mineral reserves for the Taylor mine as of December 31, 2023, together with a comparison to the reserves as of the end of the preceding fiscal year and an explanation of any material changes. 50 Taylor Mine – Summary of Reserves (1)(2) (Thousands of Tons) Amount as of Reserves Category December 31, 2023 December 31, 2022 Change % Change Proven 23,191 23,822 (631) (3) % 1.
During the year ended December 31, 2022, our Piranha facility produced 0.8 million tons of sand. Our finished product is loaded directly into railcars. Our Piranha facility is capable of storing up to 400 railcars. We estimate an overall product yield (after mining and processing losses) of approximately 71% for the Piranha mine. John T.
Our finished product is loaded directly into railcars. Our Piranha facility is capable of storing up to 400 railcars. We estimate an overall product yield (after mining and processing losses) of approximately 71% for the Piranha mine. John T.
The following table presents our estimated frac sand reserves for the Taylor and Piranha mines as of December 31, 2022 (amounts in thousands): Mine Reserves Category Total Reserves (1)(2) Taylor Proven 23,822 Piranha Proven 37,351 Total 61,173 1.
The following table presents our estimated frac sand reserves for the Taylor and Piranha mines as of December 31, 2023 (amounts in thousands): Mine Reserves Category Total Reserves (1)(2) Taylor Proven 23,191 Piranha Proven 36,706 Total 59,897 1.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest change“Risk Factors—Risks Related to Our Business and the Industries We Serve— Cobra, one of our infrastructure services subsidiaries, was party to service contracts with PREPA. PREPA is currently subject to bankruptcy proceedings and, as a result, PREPA’s ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources.
Biggest change“Risk Factors—Risks Related to Our Business and the Industries We Serve— Cobra, one of our infrastructure services subsidiaries, was party to service contracts with PREPA. Due to PREPA’s bankruptcy proceedings, PREPA ’ s ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources.
Item 3. Legal Proceedings We are a party to, or the subject of, certain investigations and legal proceedings discussed elsewhere in this annual report. For a description of such investigations and legal proceedings, see Note 19. Commitments and Contingencies to our consolidated financial statements included elsewhere in this annual report and Item 1A.
Item 3. Legal Proceedings We are a party to, or the subject of, certain investigations and legal proceedings discussed elsewhere in this annual report. For a description of such investigations and legal proceedings, see Note 20. Commitments and Contingencies to our consolidated financial statements included elsewhere in this annual report and Item 1A.
In the event that PREPA fails to pay amounts owed to us for services performed, our financial condition, results of operations and cash flows would be materially and adversely affected .” and “— The outcomes of investigations and litigation relating to our contracts with PREPA may have a material adverse effect on our financial condition, results of operations and cash flows .” In addition, due to the nature of our business, we are, from time to time, also involved in routine litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment related disputes. 51 Except as described in Note 19, Item 1A referenced above and elsewhere in this annual report, in the opinion of our management, none of the pending litigation, disputes or claims against us, if decided adversely, will have a material adverse effect on our business, financial condition, results of operations or cash flows.
In the event that PREPA does not pay amounts owed to us for services performed, our financial condition, results of operations and cash flows would be materially and adversely affected. ” and “— The outcomes of investigations and litigation relating to our contracts with PREPA may have a material adverse effect on our financial condition, results of operations and cash flows .” In addition, due to the nature of our business, we are, from time to time, also involved in routine litigation or subject to disputes or claims related to our business activities, including workers’ compensation claims and employment related disputes. 52 Except as described in Note 20, Item 1A referenced above and elsewhere in this annual report, in the opinion of our management, none of the pending litigation, disputes or claims against us, if decided adversely, will have a material adverse effect on our business, financial condition, results of operations or cash flows.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeInformation concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Report. 52 PART II. OTHER INFORMATION
Biggest changeInformation concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Report. 53 PART II. OTHER INFORMATION

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends On July 16, 2018, we initiated a quarterly dividend policy and declared our first quarterly cash dividend. In July 2019, as a result of oilfield market conditions and other factors, which included the status of collections from PREPA, our board of directors suspended the quarterly cash dividend.
Biggest changeIn July 2019, as a result of oilfield market conditions and other factors, which included the status of collections from PREPA, our board of directors suspended the quarterly cash dividend.
Based on its evaluation of these factors, the board of directors may determine not to declare a dividend, or declare dividends at rates that are less than currently anticipated. Item 6. [Reserved] 53
Based on its evaluation of these factors, the board of directors may determine not to declare a dividend, or declare dividends at rates that are less than currently anticipated. Item 6. [Reserved] 54
The number of holders of record of our common stock is not representative of the number of beneficial holders because many of the shares are held by depositories, brokers or nominees. Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities None.
The number of holders of record of our common stock is not representative of the number of beneficial holders because many of the shares are held by depositories, brokers or nominees. Unregistered Sales of Equity Securities None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders of Record Our common stock is traded on the Nasdaq Global Select Market under the symbol “TUSK.” As of the close of business on February 22, 2023, there were 69 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Holders of Record Our common stock is traded on the Nasdaq Global Select Market under the symbol “TUSK.” As of the close of business on February 28, 2024, there were 83 holders of record of our common stock.
Added
Issuer Purchases of Equity Securities On August 10, 2023, our board of directors approved a stock repurchase program pursuant to which we would be authorized to repurchase up to the lesser of $55 million or 10 million shares of its common stock, subject to the factors discussed below.
Added
Following the completion of the refinancing transactions discussed in this report, any stock repurchases under this program may be made opportunistically from time to time in open market or privately negotiated transactions in compliance with Rule 10b-18 under the Securities Act of 1934, as amended, including any 10b5-1 plan, and will be subject to market conditions, applicable legal and contractual restrictions, liquidity requirements and other factors.
Added
The repurchase program has no time limit, does not require us to repurchase any specific number of shares and may be suspended from time to time, modified or discontinued by our board of directors at any time. Any common stock repurchased as part of such stock repurchase program will be cancelled and retired.
Added
We have not repurchased any shares of our common stock under the stock repurchase program as of December 31, 2023 or to date. See also Item 1.A.
Added
“Risk Factors--Our ability to repurchase stock may be limited and no assurance can be given that we will be able to effectuate our stock repurchase program in the future at indicated levels or at all.” Dividends On July 16, 2018, we initiated a quarterly dividend policy and declared our first quarterly cash dividend.

Item 7. Management's Discussion & Analysis

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

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Biggest changeConsolidated Years Ended December 31, Reconciliation of Adjusted EBITDA to net loss: 2022 2021 2020 Net loss $ (619) $ (101,430) $ (107,607) Depreciation, depletion, amortization and accretion 64,271 78,475 95,317 Gains on disposal of assets, net (3,908) (5,147) (638) Impairment of goodwill — 891 54,973 Impairment of other long-lived assets — 1,212 12,897 Public offering costs — 91 — Stock based compensation 923 1,191 1,952 Interest expense, net 11,506 6,406 5,397 Other income, net (40,912) (5,154) (34,300) Provision (benefit) for income taxes 13,607 (22,863) (12,169) Interest on trade accounts receivable 41,276 34,709 34,130 Adjusted EBITDA $ 86,144 $ (11,619) $ 49,952 Well Completion Services Years Ended December 31, Reconciliation of Adjusted EBITDA to net income (loss): 2022 2021 2020 Net income (loss) $ 10,194 $ (58,051) $ (69,073) Depreciation, depletion, amortization and accretion 22,103 26,377 30,411 Gains on disposal of assets, net (615) (770) (388) Impairment of goodwill — — 53,406 Impairment of other long-lived assets — — 4,203 Public offering costs — 31 — Stock based compensation 380 333 527 Interest expense 1,940 1,107 1,130 Other (income) expense, net (343) 1,843 (1,886) Interest on trade accounts receivable — (1,841) 1,888 Adjusted EBITDA $ 33,659 $ (30,971) $ 20,218 68 Infrastructure Services Years Ended December 31, Reconciliation of Adjusted EBITDA to net income (loss): 2022 2021 2020 Net income (loss) $ 4,933 $ (36,711) $ (928) Depreciation, depletion, amortization and accretion 16,171 21,880 29,373 Gains on disposal of assets, net (795) (286) (443) Impairment of goodwill — 891 — Impairment of other long-lived assets — 665 — Public offering costs — 39 — Stock based compensation 349 500 580 Interest expense 7,390 3,925 2,794 Other income, net (40,470) (6,499) (31,994) Provision for income taxes 13,427 712 7,133 Interest on trade accounts receivable 41,276 36,551 32,214 Adjusted EBITDA $ 42,281 $ 21,667 $ 38,729 Natural Sand Proppant Services Years Ended December 31, Reconciliation of Adjusted EBITDA to net loss: 2022 2021 2020 Net loss $ (1,945) $ (6,328) $ (11,324) Depreciation, depletion, amortization and accretion 8,732 9,005 9,771 Gains on disposal of assets, net (89) (30) 1,829 Public offering costs — 12 — Stock based compensation 119 202 425 Interest expense 753 474 312 Other (income) expense, net (14) (844) 10 Interest on trade accounts receivable — (1) 3 Adjusted EBITDA $ 7,556 $ 2,490 $ 1,026 Drilling Services Years Ended December 31, Reconciliation of Adjusted EBITDA to net loss: 2022 2021 2020 Net loss $ (7,510) $ (11,307) $ (16,865) Depreciation, depletion, amortization and accretion 6,467 7,996 10,039 Gains on disposal of assets, net (172) (202) (353) Impairment of other long-lived assets — — 326 Public offering costs — 2 — Stock based compensation 18 76 203 Interest expense 545 293 454 Other income, net — 25 126 Adjusted EBITDA $ (652) $ (3,117) $ (6,070) 69 Other Services (a) Years Ended December 31, Reconciliation of Adjusted EBITDA to net (loss) income: 2022 2021 2020 Net (loss) income $ (6,291) $ 10,967 $ (9,417) Depreciation, depletion, amortization and accretion 10,798 13,217 15,722 Gains on disposal of assets, net (2,237) (3,859) (1,283) Impairment of goodwill — — 1,567 Impairment of other long-lived assets — 547 8,368 Public offering costs — 7 — Stock based compensation 57 80 217 Interest expense, net 878 607 707 Other income, net (85) 321 (556) Provision (benefit) for income taxes 180 (23,575) (19,302) Interest on trade accounts receivable — — 25 Adjusted EBITDA $ 3,300 $ (1,688) $ (3,952) a.
Biggest changeConsolidated Years Ended December 31, Reconciliation of net loss to Adjusted EBITDA: 2023 2022 2021 Net loss $ (3,163) $ (619) $ (101,430) Depreciation, depletion, amortization and accretion 45,110 64,271 78,475 Gains on disposal of assets, net (6,041) (3,908) (5,147) Impairment of goodwill 1,810 — 891 Impairment of other long-lived assets — — 1,212 Public offering costs — — 91 Stock based compensation 1,345 923 1,191 Interest expense and financing charges, net 16,196 11,506 6,406 Other income, net (42,015) (40,912) (5,154) Provision (benefit) for income taxes 12,297 13,607 (22,863) Interest on trade accounts receivable 45,440 41,276 34,709 Adjusted EBITDA $ 70,979 $ 86,144 $ (11,619) 63 Well Completion Services Years Ended December 31, Reconciliation of net (loss) income to Adjusted EBITDA: 2023 2022 2021 Net (loss) income $ (3,782) $ 10,194 $ (58,051) Depreciation, depletion, amortization and accretion 16,794 22,103 26,377 Gains on disposal of assets, net (2,091) (615) (770) Public offering costs — — 31 Stock based compensation 508 380 333 Interest expense and financing charges, net 4,502 1,940 1,107 Other expense (income), net 2 (343) 1,843 Interest on trade accounts receivable — — (1,841) Adjusted EBITDA $ 15,933 $ 33,659 $ (30,971) Infrastructure Services Years Ended December 31, Reconciliation of net income (loss) to Adjusted EBITDA: 2023 2022 2021 Net income (loss) $ 8,237 $ 4,933 $ (36,711) Depreciation, depletion, amortization and accretion 8,390 16,171 21,880 Gains on disposal of assets, net (510) (795) (286) Impairment of goodwill — — 891 Impairment of other long-lived assets — — 665 Public offering costs — — 39 Stock based compensation 538 349 500 Interest expense and financing charges, net 9,753 7,390 3,925 Other income, net (39,252) (40,470) (6,499) Provision for income taxes 11,214 13,427 712 Interest on trade accounts receivable 45,440 41,276 36,551 Adjusted EBITDA $ 43,810 $ 42,281 $ 21,667 Natural Sand Proppant Services Years Ended December 31, Reconciliation of net income (loss) to Adjusted EBITDA: 2023 2022 2021 Net income (loss) $ 906 $ (1,945) $ (6,328) Depreciation, depletion, amortization and accretion 7,737 8,732 9,005 Gains on disposal of assets, net (13) (89) (30) Public offering costs — — 12 Stock based compensation 187 119 202 Interest expense and financing charges, net 540 753 474 Other income, net (18) (14) (844) Interest on trade accounts receivable — — (1) Adjusted EBITDA $ 9,339 $ 7,556 $ 2,490 64 Drilling Services Years Ended December 31, Reconciliation of net loss to Adjusted EBITDA: 2023 2022 2021 Net loss $ (4,134) $ (6,071) $ (9,183) Depreciation, depletion, amortization and accretion 4,514 5,811 6,784 Gains on disposal of assets, net (1,577) — (205) Public offering costs — — 1 Stock based compensation 23 11 66 Interest expense and financing charges, net 489 435 237 Other (income) expense, net (33) — 25 Adjusted EBITDA $ (718) $ 186 $ (2,275) Other Services (a) Years Ended December 31, Reconciliation of net (loss) income to Adjusted EBITDA: 2023 2022 2021 Net (loss) income $ (4,390) $ (7,730) $ 8,843 Depreciation, depletion, amortization and accretion 7,675 11,454 14,429 Gains on disposal of assets, net (1,850) (2,409) (3,856) Impairment of goodwill 1,810 — — Impairment of other long-lived assets — — 547 Public offering costs — — 8 Stock based compensation 89 64 90 Interest expense and financing charges, net 912 988 663 Other (income) expense, net (2,714) (85) 321 Provision (benefit) for income taxes 1,083 180 (23,575) Interest on trade accounts receivable — — — Adjusted EBITDA $ 2,615 $ 2,462 $ (2,530) a.
Activity rebounded modestly in 2021 and continued to increase throughout 2022 as we saw an increase in the volume of sand sold. Supply constraints from labor shortages have negatively affected West Texas in-basin mine operations and increased demand for Northern White frac sand for the region in 2022.
Activity rebounded modestly in 2021 and continued to increase throughout 2022 as we saw an increase in the volume of sand sold. Supply constraints from labor shortages negatively affected West Texas in-basin mine operations and increased demand for Northern White frac sand for the region in 2022.
We believe that our cash on hand, operating cash flow and available borrowings under our credit facility will be sufficient to meet our short-term and long-term funding requirements, including funding our current operations, planned capital expenditures, debt service obligations and known contingencies.
We believe that our cash on hand, operating cash flow and available borrowings under our credit facility and term loan facility will be sufficient to meet our short-term and long-term funding requirements, including funding our current operations, planned capital expenditures, debt service obligations and known contingencies.
In response to market conditions, we have temporarily shut down our cementing and acidizing operations and flowback operations beginning in July 2019, our contract drilling operations beginning in December 2019, our rig hauling operations beginning in April 2020, our coil tubing, pressure control and full service transportation operations beginning in July 2020 and our crude oil hauling operations beginning in July 2021.
In response to market conditions, we temporarily shut down our cementing and acidizing operations and flowback operations beginning in July 2019, our contract drilling operations beginning in December 2019, our rig hauling operations beginning in April 2020, our coil tubing, pressure control and full service transportation operations beginning in July 2020 and our crude oil hauling operations beginning in July 2021.
Further, as noted above, our 58 contracts with PREPA have concluded and we have not obtained, and there can be no assurance that we will be able to obtain, one or more contracts with other customers to replace the level of services that we provided to PREPA.
Further, as noted above, our contracts with PREPA have concluded and we have not obtained, and there can be no assurance that we will be able to obtain, one or more contracts with other customers to replace the level of services that we provided to PREPA.
We define Adjusted EBITDA as net (loss) income before depreciation, depletion, amortization and accretion, gains on disposal of assets, net, impairment of goodwill, impairment of other long-lived assets, public offering costs, stock based compensation, interest expense, net, other income, net (which is comprised of interest on trade accounts receivable and certain legal expenses) and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable.
We define Adjusted EBITDA as net (loss) income before depreciation, depletion, amortization and accretion, gains on disposal of assets, net, impairment of goodwill, impairment of other long-lived assets, public offering costs, stock based compensation, interest expense and financing charges, net, other income, net (which is comprised of interest on trade accounts receivable and certain legal expenses) and provision (benefit) for income taxes, further adjusted to add back interest on trade accounts receivable.
PREPA is currently subject to bankruptcy proceedings and, as a result, their ability to meet their obligations is largely dependent upon funding from the FEMA or other sources. For a description of our collection efforts and related litigation against PREPA, see Note 2. Summary of Significant Accounting Policies—Accounts Receivable and Note 19.
PREPA is currently subject to bankruptcy proceedings and, as a result, their ability to meet their obligations is largely dependent upon funding from the FEMA or other sources. For a description of our collection efforts and related litigation against PREPA, see Note 2. Summary of Significant Accounting Policies—Accounts Receivable and Note 20.
Natural Sand Proppant Industry In our natural sand proppant services business, we experienced a significant decline in demand of our sand proppant in the second half of 2019 and throughout 2020 as a result of completion activity falling due to lower oil demand and pricing, increased capital discipline by our customers, budget exhaustion and the COVID-19 pandemic.
Natural Sand Proppant Industry We experienced a significant decline in demand of our sand proppant in the second half of 2019 and throughout 2020 as a result of completion activity falling due to lower oil demand and pricing, increased capital discipline by our customers, budget exhaustion and the COVID-19 pandemic.
See Note 13 to our consolidated financial statements for additional detail regarding our change in tax expense. Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies.
See Note 14 to our consolidated financial statements for additional detail regarding our change in tax expense. Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies.
Litigation and Contingencies As discussed in Note 19 of our consolidated financial statements, we are involved in various litigation matters arising in the ordinary course of business. Accruals for litigation and contingencies are based on our assessment, including advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings and/or the expected resolution of contingencies.
Litigation and Contingencies As discussed in Note 20 of our consolidated financial statements, we are involved in various litigation matters arising in the ordinary course of business. Accruals for litigation and contingencies are based on our assessment, including advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings and/or the expected resolution of contingencies.
Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as discrete items, such as changes in the valuation allowance that may not be consistent from year to year.
Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as discrete items, such as changes in the valuation allowance and interest and penalties that may not be consistent from year to year.
See Note 6 to our consolidated financial statements for details regarding the facts and circumstances that led to this impairment and how the fair value of each reporting unit was estimated, including significant assumptions used and other details. Other Long-Lived Assets.
See Note 7 to our consolidated financial statements for details regarding the facts and circumstances that led to this impairment and how the fair value of each reporting unit was estimated, including significant assumptions used and other details. Other Long-Lived Assets.
Capital expenditures primarily for upgrades to our pressure pumping fleet to reduce greenhouse gas emissions and maintenance for the years ended December 31, 2022, 2021 and 2020. b. Capital expenditures primarily for truck, tooling and other equipment purchases for new infrastructure crews for the years ended December 31, 2022, 2021 and 2020. c.
Capital expenditures primarily for upgrades to our pressure pumping fleet to reduce greenhouse gas emissions and maintenance for the years ended December 31, 2023, 2022 and 2021. b. Capital expenditures primarily for truck, tooling and other equipment purchases for new infrastructure crews for the years ended December 31, 2023, 2022 and 2021. c.
It is unclear what PREPA's position will be going forward. See Note 19. Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information regarding these investigations and proceedings.
It is unclear what PREPA’s position will be going forward. See Note 20. Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information regarding these investigations and proceedings.
As additional information becomes available, we reassess potential liabilities related to pending claims and litigation and may revise previous estimates, which could materially affect our results of operations in a given period. 77
As additional information becomes available, we reassess potential liabilities related to pending claims and litigation and may revise previous estimates, which could materially affect our results of operations in a given period. 74
We believe these receivables are collectible and for the reasons previously described as well as other factors, no allowance was deemed necessary at December 31, 2022 or 2021.
We believe these receivables are collectible and for the reasons previously described as well as other factors, no allowance was deemed necessary at December 31, 2023 or 2022.
However, in the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to Cobra or (iii) otherwise does not pay amounts owed to Cobra for services performed, the receivable may not be collectible, which may adversely impact our liquidity.
However, in the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to Cobra or (iii) otherwise does not pay amounts owed to Cobra, the receivable may not be collectible, which may adversely impact our liquidity.
Net working capital (less cash and current portion of long-term debt) is a non-GAAP measure and, as of December 31, 2022, is calculated by subtracting total current liabilities of $237.2 million and cash and cash equivalents of $17.3 million from total current assets of $496.7 million, further adjusted to add current portion of long-term debt of $83.5 million.
As of December 31, 2022, net working capital (less cash) is calculated by subtracting total current liabilities of $237.2 million and cash and cash equivalents of $17.3 million from total current assets of $496.7 million, further adjusted to add current portion of long-term debt of $83.5 million.
If we seek additional capital for any of the above or other reasons, we may do so through borrowings under a revolving credit facility, joint venture partnerships, sale-leaseback transactions, asset sales, offerings of debt or equity securities or other means.
If we seek additional capital for any of the above or other reasons, we may do so through borrowings under a revolving credit facility, joint venture partnerships, sale-leaseback transactions, asset sales, including potential sales of accounts receivable, offerings of debt or equity securities or other means.
As the financial condition of customers changes, circumstances develop, or additional information becomes available, adjustments to the allowance for doubtful accounts may be required. This process involves judgment and estimation. Accordingly, our results of operations can be affected by adjustments to the allowance due to actual write-offs that differ from estimated amounts.
As the financial condition of customers changes, circumstances develop, or additional information becomes available, adjustments to the allowance for expected credit losses may be required. This process involves judgment and estimation. Accordingly, our results of operations can be affected by adjustments to the allowance due to actual write-offs that differ from estimated amounts.
We were in compliance with the applicable financial covenants under our amended revolving credit facility in effect as of December 31, 2022. For additional information regarding our revolving credit facility, see Note 10. Debt to our consolidated financial statements included elsewhere in this report.
We were in compliance with the applicable financial covenants under our amended revolving credit facility in effect as of December 31, 2023. For additional information regarding our revolving credit facility, see Note 11. Debt to our consolidated financial statements included elsewhere in this report.
Allowance for Doubtful Accounts We regularly review receivables and provide for estimated losses through an allowance for doubtful accounts. In evaluating the level of established reserves, we make judgments regarding our customers’ ability to make required payments, economic events and other factors.
Allowance for Expected Credit Losses We regularly review receivables and provide for estimated losses through an allowance for expected credit losses. In evaluating the level of established reserves, we make judgments regarding our customers’ ability to make required payments, economic events and other factors.
Demand for most of our oil and natural gas products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry. The levels of capital expenditures of our customers are predominantly driven by the prices of oil and natural gas.
Demand for most of our oil and natural gas products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry. The levels of capital expenditures of our customers are driven by many factors, including the prices of oil and natural gas.
Intersegment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, totaled $2.2 million and $2.7 million, respectively for 2021 and 2020. The decrease in our other services revenue was primarily due to a decline in utilization for our equipment rental business.
Intersegment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, totaled $2.1 million and $1.7 million, for 2023 and 2022, respectively. The decrease in our other services revenue was primarily due to a decline in utilization for our equipment rental business.
See Note 2 to our consolidated financial statements for additional detail regarding our allowance for doubtful accounts. Valuation of Long-Lived Assets Long-lived assets on our balance sheet include property, plant and equipment, goodwill and intangible assets. We test goodwill for impairment annually, or more frequently if events or changes in circumstances indicate that an impairment may 76 exist.
See Note 2 to our consolidated financial statements for additional detail regarding our allowance for expected credit losses. Valuation of Long-Lived Assets Long-lived assets on our balance sheet include property, plant and equipment, goodwill and intangible assets. We test goodwill for impairment annually, or more frequently if events or changes in circumstances indicate that an impairment may 73 exist.
We did not recognize any impairment of other long-lived assets for the year ended December 31, 2022. See Note 6 to our consolidated financial statements for additional details. The assumptions used in the impairment evaluation for long-lived assets are inherently uncertain and require management’s judgment.
We did not recognize any impairment of other long-lived assets for the years ended December 31, 2023 or 2022. See Note 7 to our consolidated financial statements for additional details. The assumptions used in the impairment evaluation for long-lived assets are inherently uncertain and require management’s judgment.
An average of 3.0 of our six fleets were active throughout 2022 compared to 1.1 fleets for 2021. Infrastructure Services.
An average of 1.8 of our six fleets were active throughout 2023 compared to 3.0 fleets for 2022. Infrastructure Services.
If such evaluations indicate that the future undiscounted cash flow from the assets is not sufficient to recover the carrying value of such assets, the assets are adjusted to their estimated fair values. During the years ended December 31, 2021, and 2020, we recorded impairment charges of other long-lived assets totaling, $1.2 million and $12.9 million, respectively.
If such evaluations indicate that the future undiscounted cash flow from the assets is not sufficient to recover the carrying value of such assets, the assets are adjusted to their estimated fair values. During the year ended December 31, 2021, we recorded impairment charges of other long-lived assets totaling $1.2 million.
Effect of Foreign Exchange Rate on Cash The effect of foreign exchange rate on cash was ($0.2) million for the year ended December 31, 2022 and was a nominal amount for both of the years ended December 31, 2021, and 2020.
Effect of Foreign Exchange Rate on Cash The effect of foreign exchange rate on cash was a nominal amount for the year ended December 31, 2023, ($0.2) million for the year ended December 31, 2022, and was a nominal amount for the year ended December 31, 2021.
Revenue derived from related parties, consisting primarily of directional drilling revenue from El Toro Resources LLC, was $0.8 million for 2022 and $0.6 million for 2021.
Revenue derived from related parties, consisting primarily of directional drilling revenue from El Toro Resources LLC, was $0.5 million for 2023 and $0.8 million for 2022.
During the years ended December 31, 2021, and 2020, we recorded goodwill impairment charges of $0.9 million and $55.0 million, respectively. We did not recognize any impairment of goodwill for the year ended December 31, 2022.
During the years ended December 31, 2023, and 2021, we recorded goodwill impairment charges of $1.8 million and $0.9 million, respectively. We did not recognize any impairment of goodwill for the year ended December 31, 2022.
We identified our most critical accounting estimates to be: – allowance for doubtful accounts; – valuations of long-lived assets, including goodwill and intangible assets; and – litigation and contingencies.
We identified our most critical accounting estimates to be: – allowance for expected credit losses; – valuations of long-lived assets, including goodwill and intangible assets; and – litigation and contingencies.
On average, 172 rooms were utilized per night during 2022, a 91% increase from an average of 90 rooms utilized per night in 2021. Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense) .
On average, 178 rooms were utilized per night during 2023, a 3% increase from an average of 172 rooms utilized per night in 2022. Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense) .
Funding for projects in the infrastructure space remains strong with added opportunities expected from the Infrastructure Investment and Jobs Act, which was signed into law on November 15, 2021. We anticipate the federal spending to begin fueling additional projects in this sector beginning in late 2023.
Funding for projects in the infrastructure space remains strong with added opportunities expected from the Infrastructure Investment and Jobs Act, which was signed into law on November 15, 2021. We anticipate the federal spending to begin fueling additional projects in this sector and expect bidding activity to ramp up in 2024.
The year-over-year effect was driven primarily by an unfavorable shift in the strength of the Canadian dollar relative to the U.S. dollar for the cash held in Canadian accounts. Working Capital Our working capital totaled $259.5 million and $290.5 million, respectively, at December 31, 2022 and 2021.
The year-over-year effect was driven primarily by a favorable (unfavorable) shift in the weakness (strength) of the Canadian dollar relative to the U.S. dollar for the cash held in Canadian accounts. Working Capital Our working capital totaled $314.4 million and $259.5 million, respectively, at December 31, 2023 and 2022.
Years Ended December 31, 2022 2021 2020 (in thousands, except per share amounts) Net loss, as reported $ (619) $ (101,430) $ (107,607) Impairment of goodwill — 891 54,973 Impairment of other long-lived assets — 1,212 12,897 Adjusted net loss $ (619) $ (99,327) $ (39,737) Basic loss per share, as reported $ (0.01) $ (2.18) $ (2.36) Impairment of goodwill — 0.02 1.20 Impairment of other long-lived assets — 0.03 0.28 Adjusted basic loss per share $ (0.01) $ (2.13) $ (0.88) Diluted loss per share, as reported $ (0.01) $ (2.18) $ (2.36) Impairment of goodwill — 0.02 1.20 Impairment of other long-lived assets — 0.03 0.28 Adjusted diluted loss per share $ (0.01) $ (2.13) $ (0.88) 70 Liquidity and Capital Resources We require capital to fund ongoing operations including maintenance expenditures on our existing fleet of equipment, organic growth initiatives, investments and acquisitions, and the litigation settlement obligations described in Note 19 “Commitments and Contingencies” of the Notes to the Consolidated Financial Statements and under “Capital Requirements and Sources of Liquidity” below.
Years Ended December 31, 2023 2022 2021 (in thousands, except per share amounts) Net loss, as reported $ (3,163) $ (619) $ (101,430) Impairment of goodwill 1,810 — 891 Impairment of other long-lived assets — — 1,212 Adjusted net loss $ (1,353) $ (619) $ (99,327) Basic loss per share, as reported $ (0.07) $ (0.01) $ (2.18) Impairment of goodwill 0.04 — 0.02 Impairment of other long-lived assets — — 0.03 Adjusted basic loss per share $ (0.03) $ (0.01) $ (2.13) Diluted loss per share, as reported $ (0.07) $ (0.01) $ (2.18) Impairment of goodwill 0.04 — 0.02 Impairment of other long-lived assets — — 0.03 Adjusted diluted loss per share $ (0.03) $ (0.01) $ (2.13) Liquidity and Capital Resources We require capital to fund ongoing operations including maintenance expenditures on our existing fleet of equipment, organic growth initiatives, investments and acquisitions, and the litigation settlement obligations described in Note 20 “Commitments and Contingencies” of the Notes to the Consolidated Financial Statements and under “Capital Requirements and Sources of Liquidity” below.
As a result, PREPA’s ability to meet its payment obligations under the contracts is largely dependent upon funding from the Federal Emergency Management Agency, or FEMA, or other sources. On September 30, 2019, we filed a motion with the U.S.
As a result, PREPA’s ability to meet its payment obligations under the contracts is largely dependent upon funding from the Federal Emergency Management Agency, or FEMA, or other sources. Since September 30, 2019, we have been pursuing litigation in the U.S.
Our work under each of the contracts with PREPA ended on March 31, 2019. As of December 31, 2022, PREPA owed us approximately $227 million for services we performed, excluding $152.0 million of interest charged on these delinquent balances as of December 31, 2022. See Note 2.
Our work under each of the contracts with PREPA ended on March 31, 2019. As of December 31, 2023, PREPA owed us approximately $204.8 million for services we performed, excluding $197.5 million of interest charged on delinquent balances as of December 31, 2023. See Note 2.
Inspections LLC—January 2015 • Mammoth Equipment Leasing LLC—November 2016 • Bison Sand Logistics LLC—January 2018 • Aquahawk Energy LLC—June 2018 Infrastructure Services Segment • Cobra Acquisitions LLC, or Cobra—January 2017 • Lion Power Services LLC, formerly Cobra Energy LLC—January 2017 • Higher Power Electrical LLC—April 2017 • 5 Star Electric LLC—July 2017 • Python Equipment LLC—December 2018 • Aquawolf LLC—September 2019 • Falcon Fiber Solutions LLC—May 2021 Natural Sand Proppant Services Segment • Muskie Proppant LLC—September 2011 • Barracuda Logistics LLC—October 2014 • Piranha Proppant LLC—May 2017 54 • Sturgeon Acquisitions LLC—June 2017 • Taylor Frac, LLC—June 2017 • Taylor Real Estate Investments, LLC—June 2017 • South River Road, LLC—June 2017 Drilling Services Segment • Bison Drilling and Field Services, LLC—November 2010 • Panther Drilling Systems LLC—December 2012 • Bison Trucking LLC—August 2013 Other • Great White Sand Tiger Lodging Ltd.—October 2007 • Redback Energy Services, LLC—October 2011 • Redback Coil Tubing, LLC—May 2012 • Anaconda Rentals LLC, formerly White Wing Tubular Services LLC—September 2014 • WTL Oil LLC, or WTL, formerly Silverback—June 2016 • Mammoth Energy Services Inc.—June 2016 • Mammoth Energy Partners, LLC—October 2016 • Mako Acquisitions LLC—March 2017 • Stingray Energy Services LLC, or Stingray Energy Services—June 2017 • Stingray Cementing LLC—June 2017 • Tiger Shark Logistics LLC—October 2017 • Cobra Aviation Services LLC—January 2018 • Black Mamba Energy LLC—March 2018 • Stingray Cementing and Acidizing LLC, formerly RTS Energy Services LLC—June 2018 • Ivory Freight Solutions LLC—July 2018 • IFX Transport LLC—December 2018 • Air Rescue Systems LLC—December 2018 • Leopard Aviation LLC—April 2019 • Anaconda Manufacturing LLC—September 2019 Our Response to COVID-19 and Related Market Conditions We have taken, and continue to take, responsible steps to protect the health and safety of our employees during the COVID-19 pandemic.
Inspections LLC—January 2015 • Mammoth Equipment Leasing LLC—November 2016 • Bison Sand Logistics LLC—January 2018 • Aquahawk Energy LLC—June 2018 Infrastructure Services Segment • Cobra Acquisitions LLC, or Cobra—January 2017 • Lion Power Services LLC, formerly Cobra Energy LLC—January 2017 • Higher Power Electrical LLC—April 2017 • 5 Star Electric LLC—July 2017 • Python Equipment LLC—December 2018 • Aquawolf LLC—September 2019 • Falcon Fiber Solutions LLC—May 2021 55 Natural Sand Proppant Services Segment • Muskie Proppant LLC—September 2011 • Barracuda Logistics LLC—October 2014 • Piranha Proppant LLC—May 2017 • Sturgeon Acquisitions LLC—June 2017 • Taylor Frac, LLC—June 2017 • Taylor Real Estate Investments, LLC—June 2017 • South River Road, LLC—June 2017 Drilling Services Segment • Bison Drilling and Field Services, LLC—November 2010 • Panther Drilling Systems LLC—December 2012 Other • Great White Sand Tiger Lodging Ltd.—October 2007 • Redback Energy Services, LLC—October 2011 • Redback Coil Tubing, LLC—May 2012 • Bison Trucking—August 2013 • Anaconda Rentals LLC, formerly White Wing Tubular Services LLC—September 2014 • WTL Oil LLC, or WTL, formerly Silverback—June 2016 • Mammoth Energy Services Inc.—June 2016 • Mammoth Energy Partners, LLC—October 2016 • Mako Acquisitions LLC—March 2017 • Stingray Energy Services LLC, or Stingray Energy Services—June 2017 • Stingray Cementing LLC—June 2017 • Tiger Shark Logistics LLC—October 2017 • Cobra Aviation Services LLC—January 2018 • Black Mamba Energy LLC—March 2018 • Stingray Cementing and Acidizing LLC, formerly RTS Energy Services LLC—June 2018 • Ivory Freight Solutions LLC—July 2018 • IFX Transport LLC—December 2018 • Air Rescue Systems LLC (“ARS”)—December 2018 through July 13, 2023 • Leopard Aviation LLC—April 2019 • Anaconda Manufacturing LLC—September 2019 On July 13, 2023, the Company sold its equity interests in ARS.
Amounts include receivables due from PREPA of $379.0 million and $337.8 million and corresponding liabilities of $47.6 million and $42.3 million at December 31, 2022 and 2021, respectively.
Amounts include receivables due from PREPA of $402.3 million and $379.0 million and corresponding liabilities of $60.6 million and $47.6 million at December 31, 2023 and 2022, respectively.
Our cash balances totaled $17.3 million and $9.9 million, respectively, at December 31, 2022 and 2021. Included in working capital are receivables due from PREPA totaling $379.0 million and $337.8 million and corresponding liabilities of $47.6 million and $42.3 million at December 31, 2022 and 2021, respectively.
Our unrestricted cash balances totaled $16.6 million and $17.3 million, respectively, at December 31, 2023 and 2022. Included in working capital are receivables due from PREPA totaling $402.3 million and $379.0 million and corresponding liabilities of $60.6 million and $47.6 million at December 31, 2023 and 2022, respectively.
Adjusted Net Loss and Adjusted Loss per Share Adjusted net loss and adjusted basic and diluted loss per share are supplemental non-GAAP financial measures that are used by management to evaluate our operating and financial performance.
Our corporate related activities do not generate revenue. 65 Adjusted Net Loss and Adjusted Loss per Share Adjusted net loss and adjusted basic and diluted loss per share are supplemental non-GAAP financial measures that are used by management to evaluate our operating and financial performance.
As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $22.1 million in 2022 and $26.4 million in 2021, was 75% and 77%, for 2022 and 2021, respectively. Infrastructure Services.
As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $16.8 million in 2023 and $22.1 million in 2022, was 83% and 75%, for 2023 and 2022, respectively.
Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was $2.5 million, or 5% of total sand revenue, for 2022 and $4.0 million, or 11% of total sand revenue, for 2021.
Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was a nominal amount for 2023 and $2.5 million, or 5% of total sand revenue, for 2022.
Our revenues, operating (loss) income and identifiable assets are primarily attributable to four reportable segments: well completion services; infrastructure services; natural sand proppant services; and drilling services.
Our revenues, operating (loss) income and identifiable assets are primarily attributable to four reportable segments: well completion services; infrastructure services; natural sand proppant services; and drilling services. Prior to 2023, we included Bison Trucking LLC, or Bison Trucking, in our drilling segment.
Depreciation, depletion, amortization and accretion decreased $14.2 million, or 18%, to $64.3 million for 2022 from $78.5 million in 2021. The decrease is primarily due to a decline in property and equipment depreciation expense as a result of lower capital expenditures and existing assets being fully depreciated or impaired. Gains on Disposal of Assets, Net.
The decrease is primarily due to a decline in property and equipment depreciation expense as a result of lower capital expenditures and existing assets being fully depreciated or impaired. Gains on Disposal of Assets, Net. Gains on the disposal of assets increased $2.1 million, or 54%, to $6.0 million for 2023 from $3.9 million in 2022.
During 2022, our capital expenditures totaled $12.7 million, included $11.4 million in our well completion segment primarily related to upgrades to our pressure pumping fleet and water transfer equipment, $0.9 million in our infrastructure segment primarily related to truck, tooling and equipment purchases for new crews and $0.4 million for our other divisions primarily related to equipment additions for our remote accommodations and equipment rental businesses.
During 2023, our capital expenditures totaled $19.4 million, including $17.9 million in our well completion segment primarily related to upgrades to our pressure pumping fleet, $0.7 million in our infrastructure segment primarily related to truck, tooling and equipment purchases for new crews, $0.2 million in our natural sand proppant services segment for equipment maintenance and $0.6 million for our other divisions primarily related to equipment additions for our remote accommodations and equipment rental businesses.
During 2022, we recorded an income tax expense of $13.6 million on pre-tax income of $13.0 million compared to an income tax benefit of $22.9 million on pre-tax loss of $124.3 million for 2021. Our effective tax rate was 104.8% for 2022 compared to 18.4% for 2021.
During 2023, we recorded income tax expense of $12.3 million on pre-tax income of $9.1 million compared to income tax expense of $13.6 million on pre-tax income of $13.0 million for 2022. Our effective tax rate was 134.6% for 2023 compared to 104.8% for 2022.
We believe that we are well-positioned to compete for new projects due to the experience of our infrastructure management team, combined with our vertically integrated service offerings.
We work for multiple utilities primarily across the northeastern, southwestern, midwestern and western portions of the United States. We believe that we are well-positioned to compete for new projects due to the experience of our infrastructure management team, combined with our vertically integrated service offerings.
Revenue derived from related parties, consisting primarily of aviation revenue from Brim Equipment Leasing, Inc., or Brim, was $0.3 million, or 1% of total other services revenue, for 2022 and $0.4 million, or 2% of total other services revenue, for 2021.
Revenue from other services, including our aviation, equipment rental, remote accommodation and equipment manufacturing businesses decreased $1.1 million, or 4%, to $24.1 million for 2023 from $25.2 million for 2022. Revenue derived from related parties, consisting primarily of aviation revenue from Brim Equipment Leasing, Inc., or Brim, was $0.4 million for 2023 and $0.3 million for 2022.
Capital expenditures primarily for equipment for our remote accommodations and equipment rental businesses for the years ended December 31, 2022, 2021 and 2020. Financing Activities Net cash (used in) provided by financing activities was ($5.6) million, $8.4 million and $4.3 million, respectively, for the years ended December 31, 2022, 2021 and 2020.
Financing Activities Net cash (used in) provided by financing activities was ($15.6) million, ($5.6) million and $8.4 million, respectively, for the years ended December 31, 2023, 2022 and 2021.
Operating lease obligations primarily relate to rail cars, real estate and other equipment. e. Financing lease obligations primarily relate to equipment for our well completions and infrastructure segments. f. Equipment financing obligations relate to equipment for our well completion segment. 75 Critical Accounting Estimates The preparation of financial statements requires the use of judgments and estimates.
Obligations under a sale-leaseback arrangement for a portion of our infrastructure segment assets. f. Operating lease obligations primarily relate to rail cars, real estate and other equipment. g. Financing lease obligations primarily relate to equipment for our infrastructure and natural sand proppant segments. 72 Critical Accounting Estimates The preparation of financial statements requires the use of judgments and estimates.
Intersegment revenue, consisting primarily of revenue derived from our other services and sand segment, totaled $0.8 million and $0.1 million, for 2022 and 2021, respectively. 60 The increase in our well completion services revenue was primarily driven by an increase in both utilization and pricing. The number of stages completed increased 142% to 6,149 for 2022 from 2,544 for 2021.
Intersegment revenue, consisting primarily of revenue derived from our other services and natural sand proppant segment, totaled $0.5 million and $0.8 million, for 2023 and 2022, respectively. 60 The decline in our well completion services revenue was primarily driven by decreased utilization. The number of stages completed declined 31% to 4,220 for 2023 from 6,149 for 2022.
In addition, if we are unable to comply with the financial covenants under our amended revolving credit facility, or obtain a waiver of forecasted or actual non-compliance with any such financial covenants from our lenders, and an event of default occurs and remains uncured, our lenders would not be required to lend any additional amounts to us, could elect to increase our interest rate by 200 basis points, could elect to declare all outstanding borrowings, together with accrued and unpaid interest and fees, to be due and payable, may have the ability to require us to apply all of our available cash to repay our outstanding borrowings and may foreclose on substantially all of our assets.
The lenders, as applicable, (i) would not be required to lend any additional amounts to us under the new revolving credit facility, (ii) could elect to increase the interest rate by (x) 200 basis points in connection with an event of default under the new revolving credit facility or (y) 300 basis points with respect to an event of default under the new term credit facility, (iii) could elect to declare all outstanding borrowings, together with accrued and unpaid interest and fees, to be due and payable, (iv) may have the ability to require us to apply all of our available cash to repay outstanding borrowings, and (v) may foreclose on substantially all of our assets.
Further, we may not be able to extend, repay or refinance our existing revolving credit facility at or prior to maturity on the terms acceptable to us or at all. 71 Liquidity and Cash Flows The following table sets forth our cash flows for the years indicated (in thousands): Years Ended December 31, 2022 2021 2020 Net cash provided by (used in) operating activities $ 15,266 $ (18,865) $ 6,967 Net cash (used in) provided by investing activities (2,124) 5,507 (2,295) Net cash (used in) provided by financing activities (5,601) 8,428 4,266 Effect of foreign exchange rate on cash (158) 7 12 Net change in cash $ 7,383 $ (4,923) $ 8,950 Operating Activities Net cash provided by (used in) operating activities was $15.3 million, ($18.9) million and $7.0 million, respectively, for the years ended December 31, 2022, 2021 and 2020.
Liquidity and Cash Flows The following table sets forth our cash flows for the years indicated (in thousands): Years Ended December 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 31,386 $ 15,266 $ (18,865) Net cash (used in) provided by investing activities (8,786) (2,124) 5,507 Net cash (used in) provided by financing activities (15,586) (5,601) 8,428 Effect of foreign exchange rate on cash 2 (158) 7 Net change in cash $ 7,016 $ 7,383 $ (4,923) Operating Activities Net cash provided by (used in) operating activities was $31.4 million, $15.3 million and ($18.9) million, respectively, for the years ended December 31, 2023, 2022 and 2021.
Cobra has 90 days from the February 1, 2023 decision to file a notice of appeal. We believe all amounts charged to PREPA were in accordance with the terms of the contracts. Further, we believe these receivables are collectible.
We believe all amounts charged to PREPA were in accordance with the terms of the contracts. Further, we believe these receivables are collectible.
We continue to monitor market conditions to determine if and when we will recommence these services and operations and increase our workforce. Any such recommencement and expansion will further increase our liquidity requirements in advance of revenue generation.
We continue to monitor market conditions to determine if and when we will recommence these services and operations and increase our workforce.
Demand from oil and gas companies in Western Canada and the Marcellus Shale has also being strong in 2022. The increase in activity in 2022 resulted in an increase in demand and pricing for our sand and we expect that prices will remain at these levels throughout 2023.
Demand from oil and gas companies in Western Canada and the Marcellus Shale was also strong in 2022. The increase in activity in 2022 resulted in an increase in demand and pricing for our sand, which continued throughout the first quarter of 2023.
Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, increased $9.6 million, or 35%, from $27.2 million for 2021 to $36.8 million for 2022.
Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $10.5 million, or 29%, from $36.8 million for 2022 to $26.3 61 million for 2023.
Since the dates presented below, we have conducted our operations through the following entities: Well Completion Services Segment • Stingray Pressure Pumping LLC—March 2012 • Silverback Energy LLC—November 2012 • Redback Pump Down Services LLC—January 2015 • Mr.
Well Completion Services Segment • Stingray Pressure Pumping LLC—March 2012 • Silverback Energy LLC—November 2012 • Redback Pump Down Services LLC—January 2015 • Mr.
Our Revolving Credit Facility On October 19, 2018, we and certain of our direct and indirect subsidiaries, as borrowers, entered into an amended and restated revolving credit facility, as subsequently amended, with the lenders party thereto and PNC Bank, National Association, as a lender and as administrative agent for the lenders.
New Revolving Credit Facility and New Term Credit Facility On October 16, 2023, we entered into the new revolving credit facility and the new term credit facility (each as defined below), which refinanced in full our indebtedness outstanding under, and terminated, the amended and restated revolving credit facility, dated as of October 19, 2018, as amended (the “previous revolving credit facility”), with us and certain of our direct and indirect subsidiaries, as borrowers, the lenders party thereto from time to time, and PNC Bank, National Association, as a lender and as administrative agent for the lenders.
Infrastructure services division revenue increased $18.1 million, or 19%, to $111.5 million for 2022 from $93.4 million for 2021 primarily due to an increase in average crew count from 82 crews during the year ended December 31, 2021 to an average of 91 crews during the year ended December 31, 2022 as well as improved operational efficiency.
Infrastructure services division revenue decreased $1.0 million, or 1%, to $110.5 million for 2023 from $111.5 million for 2022 primarily due to a decline in average crew count from 91 crews during the year ended December 31, 2022 to an average of 83 crews during the year ended December 31, 2023.
Drilling services division cost of revenue, exclusive of depreciation and amortization expense, increased $3.7 million, or 61%, from $6.1 million for 2021 to $9.8 million for 2022, as a result of increased activity.
Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $0.5 million, or 7%, from $7.6 million for 2022 to $7.1 million for 2023.
The following is a breakout of SG&A expenses for the periods indicated (in thousands): Years Ended December 31, 2022 December 31, 2021 Cash expenses: Compensation and benefits $ 13,729 $ 15,064 Professional services 13,501 11,400 Other (a) 8,012 9,052 Total cash SG&A expense 35,242 35,516 Non-cash expenses: Bad debt provision (b) 3,389 41,662 Stock based compensation 923 1,068 Total non-cash SG&A expense 4,312 42,730 Total SG&A expense $ 39,554 $ 78,246 a.
The following is a breakout of SG&A expenses for the periods indicated (in thousands): Years Ended December 31, 2023 December 31, 2022 Cash expenses: Compensation and benefits $ 15,563 $ 13,729 Professional services 13,448 13,501 Other (a) 7,693 8,012 Total cash SG&A expense 36,704 35,242 Non-cash expenses: Change in provision for expected credit losses (591) 3,389 Stock based compensation 1,345 923 Total non-cash SG&A expense 754 4,312 Total SG&A expense $ 37,458 $ 39,554 a.
We believe that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet debt service requirements. 67 The following tables also provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net income or (loss) for each of our operating segments for the specified periods (in thousands).
The following tables also provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net income or (loss) for each of our operating segments for the specified periods (in thousands).
As of February 22, 2023, we had $79.7 million in borrowings outstanding under our revolving credit facility, leaving an aggregate of $22.3 million of available borrowing capacity under this facility, after giving effect to $6.4 million of outstanding letters of credit and the requirement to maintain a $10.0 million reserve out of the available borrowing capacity.
As of February 28, 2024, we had cash on hand of $10.5 million, no outstanding borrowings under our new revolving credit facility and a borrowing base of $23.3 million, leaving an aggregate of $17.0 million of available borrowing capacity under this facility, after giving effect to $6.3 million of outstanding letters of credit.
Sale-Leaseback Transactions On December 30, 2020, we entered into an agreement with First National Capital, LLC, or FNC, whereby we agreed to sell certain assets from our infrastructure segment to FNC for aggregate proceeds of $5.0 million.
“Risk Factors--Our ability to repurchase stock may be limited and no assurance can be given that we will be able to effectuate our stock repurchase program in the future at indicated levels or at all.” Sale-Leaseback Transactions On December 30, 2020, we entered into an agreement with First National Capital, LLC, or FNC, whereby we agreed to sell certain assets from our infrastructure segment to FNC for aggregate proceeds of $5.0 million.
Capital expenditures primarily for maintenance for the years ended December 31, 2022, 2021 and 2020. d. Capital expenditures primarily for maintenance for the years ended December 31, 2022 and 2021, and for directional drilling equipment for the year ended December 31, 2020. e.
Capital expenditures primarily for maintenance for the years ended December 31, 2023, 2022 and 2021. d. Capital expenditures primarily for equipment for our remote accommodations and equipment rental businesses for the years ended December 31, 2023, 2022 and 2021.
Aviation Note On November 6, 2020, Leopard and Cobra Aviation entered into a 39 month promissory note agreement with Bank7, or the Aviation Note, in an aggregate principal amount of $4.6 million and received net proceeds of $4.5 million. The Aviation Note bore interest at a rate based on the Wall Street Journal Prime Rate plus a margin of 1%.
We imputed an interest rate so that the carrying amount of the financial liabilities will be the expected repurchase price at the end of the initial lease terms. 70 Aviation Note On November 6, 2020, Leopard and Cobra Aviation entered into a 39-month promissory note agreement with Bank7, or the Aviation Note, in an aggregate principal amount of $4.6 million and received net proceeds of $4.5 million.
As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $26.4 million in 2021 and $30.4 million in 2020, was 77% and 54%, respectively, for 2021 and 2020, respectively.
As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $4.5 million in 2023 and $5.8 million in 2022, was 100% and 90%, for 2023 and 2022, respectively.
Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information. Energy Infrastructure Industry Our infrastructure services business provides engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry.
Energy Infrastructure Industry Our infrastructure services business provides engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry.
The Aviation Note was paid off on September 30, 2022. Equipment Financing Note In December 2022, we entered into a 42 month financing arrangement with FNC for the purchase of seven new pressure pumping units for an aggregate value of $9.7 million.
Equipment Financing Note In December 2022, we entered into a 42-month financing arrangement with FNC for the purchase of seven new pressure pumping units for an aggregate value of $9.7 million. Under this arrangement, we agreed to make monthly principal and interest payments totaling $0.3 million over the term of the agreement.
As of December 31, 2021, net working capital (less cash) is calculated by subtracting total current liabilities of $150.2 million and cash and cash equivalents of $9.9 million from total current assets of $440.8 million, further adjusted to add current portion of long-term debt of $1.5 million.
Net working capital (less cash and current portion of long-term debt) is a non-GAAP measure and, as of December 31, 2023, is calculated by subtracting total current liabilities of $182.6 million and cash and cash equivalents of $16.6 million from total current assets of $496.9 million.
We rented an average of 249 pieces of equipment to customers during 2022, an increase of 84% from an average of 135 pieces of equipment rented to customers during 2021. Additionally, utilization for remote accommodations business increased.
We rented an average of 241 pieces of equipment to customers during 2023, a decrease of 3% from an average of 249 pieces of equipment rented to customers during 2022. This was offset by an increase in utilization for remote accommodations business.
During 2023, we currently estimate that our aggregate capital expenditures will be $64 million, depending upon industry conditions and our financial results.
During 2024, we currently estimate that our aggregate capital expenditures will be approximately $15 million, depending upon industry conditions and our financial results. These capital expenditures include $13 million for our well completions segment, $1 million for our infrastructure segment and $1 million for our other businesses.
The following table summarizes our capital expenditures by operating division for the periods indicated (in thousands): Years Ended December 31, 2022 2021 2020 Well completion services (a) $ 11,421 $ 4,327 $ 4,358 Infrastructure services (b) 885 627 258 Natural sand proppant services (c) 88 484 1,073 Drilling services (d) 101 44 432 Other (e) 395 361 716 Eliminations (153) — — Total capital expenditures $ 12,737 $ 5,843 $ 6,837 a.
Cash (used in) provided by investing activities is primarily comprised of purchases of property and equipment and proceeds from the disposal of property and equipment and business divestitures. 67 The following table summarizes our capital expenditures by operating division for the periods indicated (in thousands): Years Ended December 31, 2023 2022 2021 Well completion services (a) $ 17,931 $ 11,421 $ 4,327 Infrastructure services (b) 716 885 627 Natural sand proppant services (c) 223 88 484 Drilling services (c) 110 95 23 Other (d) 312 401 382 Eliminations 103 (153) — Total capital expenditures $ 19,395 $ 12,737 $ 5,843 a.
The following table summarizes our liquidity as of the dates indicated (in thousands): December 31, 2022 2021 Cash and cash equivalents $ 17,282 $ 9,899 Revolving credit facility availability 119,756 118,948 Less current and long-term debt (83,520) (86,708) Less available borrowing capacity reserve (10,000) (10,000) Less letter of credit facilities (environmental remediation) (3,694) (3,694) Less letter of credit facilities (insurance programs) (2,800) (3,890) Less letter of credit facilities (bonding program) — (1,000) Less letter of credit facilities (rail car commitments) — (455) Net working capital (less cash and current portion of long-term debt) (a) 325,719 282,118 Total $ 362,743 $ 305,218 a.
Our primary uses of capital have been for investing in property and equipment used to provide our services and to acquire complementary businesses. 66 The following table summarizes our liquidity as of the dates indicated (in thousands): December 31, 2023 2022 Cash and cash equivalents $ 16,556 $ 17,282 Revolving credit facility borrowing base 27,016 119,756 Less current and long-term debt — (83,520) Less current and long-term debt - related parties (45,000) — Less available borrowing capacity reserve — (10,000) Less letter of credit facilities (environmental remediation) (3,782) (3,694) Less letter of credit facilities (insurance programs) (2,500) (2,800) Net working capital (less cash and current portion of long-term debt) (a) 297,816 325,719 Total $ 290,106 $ 362,743 a.
The ongoing war and related humanitarian crisis in Ukraine, however, could have an adverse impact on the global energy markets and volatility of commodity prices.
The ongoing war in Ukraine and the recent Israel-Hamas war, however, could continue to have an adverse impact on the global energy markets and volatility of commodity prices, which could further adversely impact demand for our well completion services.
Gains on the disposal of assets decreased $1.2 million, or 24%, to $3.9 million for 2022 from $5.1 million in 2021. Gains on the disposal of assets is primarily related to the sale of trucks, land and buildings for the year ended December 31, 2022 and trucking assets for the year ended December 31, 2021. Impairment of Goodwill .
Gains on the disposal of assets is primarily related to the sale of a drilling rig, trucks, and field equipment for the years ended December 31, 2023 and trucks, land and buildings for the year ended December 31, 2022. Impairment of Goodwill .
Investing Activities Net cash (used in) provided by investing activities was ($2.1) million, $5.5 million and ($2.3) million, respectively, for the years ended December 31, 2022, 2021 and 2020.
The change in operating cash flows from 2021 to 2022 was primarily due to an increase in activity and utilization across all of our operating divisions. Investing Activities Net cash (used in) provided by investing activities was ($8.8) million, ($2.1) million and $5.5 million, respectively, for the years ended December 31, 2023, 2022 and 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+4 added−4 removed8 unchanged
Biggest changeWe saw improvements in the oilfield services industry and in both pricing and utilization of our well completion and drilling services throughout 2022 and we expect both pricing and utilization to continue at these levels throughout 2023 as a result of an increase in budgets for publicly traded exploration and production companies and elevated activity levels, driven by strong energy demand and favorable commodity prices.
Biggest changeIn 2021, U.S. oil production stabilized as commodity prices increased and demand for crude oil rebounded. We saw improvements in the oilfield services industry and in both pricing and utilization of our well completion and drilling services during 2022.
We have not hedged our exposure to changes in foreign currency exchange rates and, as a result, could incur unanticipated translation gains and losses. Customer Credit Risk We are also subject to credit risk due to concentration of our receivables from several significant customers. We generally do not require our customers to post collateral.
We have not hedged our exposure to changes in foreign currency exchange rates and, as a result, could incur unanticipated translation gains and losses. 75 Customer Credit Risk We are also subject to credit risk due to concentration of our receivables from several significant customers. We generally do not require our customers to post collateral.
Throughout 2022 and 2023, the Federal Reserve increased its benchmark interest rates by an aggregate of 4.5 percentage points, and may continue increasing benchmark interest rates in the future. If the efforts to control inflation are not successful and inflationary pressures persist, our business, results of operations and financial condition may be adversely affected.
Throughout 2022 and 2023, the Federal Reserve increased its benchmark interest rates by an aggregate of 4.75 percentage points, and may continue increasing benchmark interest rates in the future. If the efforts to control inflation are not successful and inflationary pressures persist, our business, results of operations and financial condition may be adversely affected.
For the years ended December 31, 2022, 2021 and 2020, we generated approximately 45%, 48% and 35%, respectively, of our revenue from our operations in Ohio, Wisconsin, Minnesota, North Dakota, Pennsylvania, West Virginia and Canada where weather conditions may be severe.
For the years ended December 31, 2023, 2022 and 2021, we generated approximately 48%, 45% and 48%, respectively, of our revenue from our operations in Ohio, Wisconsin, Minnesota, North Dakota, Pennsylvania, West Virginia and Canada where weather conditions may be severe.
Federal Reserve (which increased its benchmark interest rate by an aggregate of 4.5 percentage points throughout 2022 and 2023, and may continue to increase interest rates in an effort to counter the persistent inflation), the supply and demand for credit and general economic conditions, plus an applicable margin.
Federal Reserve (which increased its benchmark interest rate by an aggregate of 4.75 percentage points throughout 2022 and 2023, and may continue to increase interest rates), the supply and demand for credit and general economic conditions, plus an applicable margin.
Commitments and Contingencies—Litigation of our consolidated financial statements contained elsewhere in this annual report for additional information. Seasonality We provide infrastructure services in the northeastern, southwestern, midwestern and western portions of the United States.
See Note 2. Summary of Significant Accounting Policies—Accounts Receivable and —Concentrations of Credit Risk and Significant Customers and Note 20. Commitments and Contingencies—Litigation of our consolidated financial statements contained elsewhere in this annual report for additional information. Seasonality We provide infrastructure services in the northeastern, southwestern, midwestern and western portions of the United States.
We are unable to predict the ultimate impact of the COVID-19 pandemic, the volatility in commodity prices, any changes in the near-term or long-term outlook for our industries or overall macroeconomic conditions on our business, financial condition, results of operations, cash flows and stock price.
We are unable to predict the ultimate impact of the volatility in commodity prices, any changes in the near-term or long-term outlook for our industries or overall macroeconomic conditions on our business, financial condition, results of operations, cash flows and stock price. Interest Rate Risk We had a cash and cash equivalents balance of $16.6 million at December 31, 2023.
The inability, delay or failure of our customers to meet their obligations to us due to customer liquidity issues or their insolvency or liquidation may adversely affect our business, financial condition, results of operations and cash flows.
The inability, delay or failure of our customers to meet their obligations to us due to customer liquidity issues or their insolvency or liquidation may adversely affect our business, financial condition, results of operations and cash flows. This risk may be further enhanced by the volatility in commodity prices, the reduction in demand for our services and challenging macroeconomic conditions.
A 10% increase in the strength of the Canadian dollar versus the U.S. dollar would have resulted in an increase in pre- 78 tax income of approximately ($0.1) million as of December 31, 2022. Conversely, a corresponding decrease in the strength of the Canadian dollar would have resulted in a comparable increase in pre-tax income.
We also maintain cash balances denominated in the Canadian dollar. At December 31, 2023, we had $2.4 million of cash in Canadian accounts. A 10% increase in the strength of the Canadian dollar versus the U.S. dollar would have resulted in an increase in pre-tax income of approximately ($0.2) million as of December 31, 2023.
Interest Rate Risk We had a cash and cash equivalents balance of $17.3 million at December 31, 2022. We do not enter into investments for trading or speculative purposes. Interest under our credit facility is payable at a base rate, which can fluctuate based on multiple facts, including rates set by the U.S.
We do not enter into investments for trading or speculative purposes. Interest under the new revolving credit facility equals the Tranche Rate (as defined in the new revolving credit facility) plus an applicable margin, which can fluctuate based on multiple facts, including rates set by the U.S.
These transactions could be materially affected by currency fluctuations. Changes in currency exchange rates could adversely affect our consolidated results of operations or financial position. We also maintain cash balances denominated in the Canadian dollar. At December 31, 2022, we had $3.4 million of cash in Canadian accounts.
Foreign Currency Risk Our remote accommodation business, which is included in our other services division, generates revenue and incurs expenses that are denominated in the Canadian dollar. These transactions could be materially affected by currency fluctuations. Changes in currency exchange rates could adversely affect our consolidated results of operations or financial position.
Strong demand in the pressure pumping industry and continuing supply chain disruptions have resulted, however, in delays of equipment and replacement parts for our and our competitors’ pressure pumping fleets. Further, the ongoing war and related humanitarian crisis in Ukraine could continue to have an adverse effect on the global supply chain and volatility of commodity prices.
The ongoing war in Ukraine and the recent Israel-Hamas war, however, could continue to have an adverse impact on the global energy markets and volatility of commodity prices, which could further adversely impact demand for our well completion services.
A 1% increase or decrease in the interest rate would have increased or decreased our interest expense by approximately $0.8 million per year. We do not currently hedge our interest rate exposure. Foreign Currency Risk Our remote accommodation business, which is included in our other services division, generates revenue and incurs expenses that are denominated in the Canadian dollar.
Based on the outstanding borrowings under our term loan as of December 31, 2023, a 1% increase or decrease in the interest rate would have increased or decreased our interest expense by approximately $0.5 million per year. We do not currently hedge our interest rate exposure.
This risk may be further enhanced by the COVID-19 pandemic, the volatility in commodity prices, the reduction in demand for our services and challenging macroeconomic conditions. Specifically, we had receivables due from PREPA totaling $379.0 million as of December 31, 2022. PREPA is currently subject to bankruptcy proceedings pending in the U.S. District Court for the District of Puerto Rico.
Specifically, we had receivables due from PREPA totaling $402.3 million as of December 31, 2023. PREPA is currently subject to bankruptcy proceedings pending in the U.S. District Court for the District of Puerto Rico. As a result, PREPA’s ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources.
Removed
In 2021, U.S. oil production stabilized as commodity prices increased and demand for crude oil rebounded, many exploration and production companies set their operating budgets based on the prevailing prices for oil and natural gas at the time.
Added
Throughout 2023, pricing for crude oil and natural gas declined from levels seen in 2022, which slowed down completion activities for our customers, in particular, in the Utica and Marcellus Shale natural gas plays, and, as a result, reduced demand for our well completion services. These factors have continued into the first quarter of 2024.
Removed
Despite improvement in the U.S. and global economic activity, easing of the COVID-19 pandemic and related restrictions, rising energy use and improved commodity prices, the budgets for the publicly traded exploration and production companies remained relatively flat throughout 2021, with any excess cash flows used for debt repayment and shareholder returns, rather than to increase production.
Added
Despite this short-term softness, however, we are seeing indications that activity levels will begin to ramp back up in mid-2024, creating the opportunity to reactivate additional fleets, if appropriate.
Removed
The applicable margin is currently set at 4.0%, which can be reduced to 3.5% under certain circumstances specified in our credit facility. At December 31, 2022, we had outstanding borrowings under our revolving credit facility of $83.5 million with a weighted average interest rate of 11.5%.
Added
Interest under our new term credit facility equals the SOFR Interest Rate (as defined in the new term credit facility) plus 7.50%. At December 31, 2023, we had no outstanding borrowings under the new credit facility and $45.0 million outstanding under our term loan with an interest rate of 12.9%.
Removed
As a result, PREPA’s ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources. See Note 2. Summary of Significant Accounting Policies—Accounts Receivable and —Concentrations of Credit Risk and Significant Customers and Note 19.
Added
Conversely, a corresponding decrease in the strength of the Canadian dollar would have resulted in a comparable increase in pre-tax income.

Other TUSK 10-K year-over-year comparisons