What changed in this filing

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Item 1A. Risk Factors

2024-02-29 compared with 2023-03-01 · 136 added, 120 removed, 368 unchanged (41% of the section changed)

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• Risks Related to Our Macroeconomic-Business Environment

◦ Certain of our customers’ spending may be directly, and our business may be indirectly, affected by volatile or low oil, metallurgical (met) coal, natural gas or iron ore prices or unsuccessful exploration results.

◦ The effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, have materially affected, and may materially affect, how we and our customers are operating our and their businesses.

◦ Certain of our customers’ spending may be directly, and our business may be indirectly, affected by (i) volatile or low oil, metallurgical (met) coal, natural gas or iron ore prices;

(ii) increasing production costs;

or (iii) unsuccessful exploration results.

◦ The effects of public health crises, pandemics and epidemics may materially affect how we and our customers are operating our and their businesses.

• Risks Related to Our Customers

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◦ Our business could be negatively impacted by security threats, including cybersecurity threats and other disruptions.

◦ Our business could be disrupted by any failure of our information technology systems.

◦ Loss of key members of our management could adversely affect our business.

• Financial/Accounting Risks

◦ Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions.

◦ Currency exchange rate fluctuations could adversely affect our U.S.

dollar reported results of operations and financial position.

◦ We may not have adequate insurance for potential liabilities and insurance may not cover certain liabilities.

◦ The cyclical nature of our business and a severe prolonged downturn has, and could in the future, negatively affect the value of our long-lived assets and our goodwill.

◦ Our inability to control the inherent risks of identifying, acquiring and integrating businesses that we may acquire could adversely affect our operations.

◦ We may not have adequate insurance for potential liabilities and insurance may not cover certain liabilities.

◦ Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions.

• Legal and Regulatory Risks

◦ We do business in Canada and Australia, whose political and regulatory environments and compliance regimes differ from those in the United States (U.S.)

◦ We do business in Canada and Australia, whose political and regulatory environments and compliance regimes differ from those in the U.S.

◦ We are subject to extensive and costly environmental laws and regulations.

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◦ The market price and trading volume of our common shares may be volatile.

◦ Any repurchases of our common shares are within the discretion of our Board of Directors, and there is no guarantee that we will repurchase common shares in the future.

◦ The payment of dividends and repurchases of our common shares are each within the discretion of our Board of Directors, and there is no guarantee that we will pay any dividends or repurchase common shares in the future or at levels anticipated by our shareholders.

◦ We are governed by the corporate laws in British Columbia, Canada.

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Risks Related to Our Macroeconomic Business Environment

Certain of our customers’ spending may be directly, and our business may be indirectly, affected by volatile or low oil, met coal, natural gas or iron ore prices or unsuccessful exploration results.

Certain of our customers’ spending may be directly, and our business may be indirectly, affected by (i) volatile or low oil, metallurgical (met) coal, natural gas or iron ore prices;

(ii) increasing production costs;

or (iii) unsuccessful exploration results.

Demand for our services is sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, natural resources companies.

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Prices for oil, met coal, LNG, iron ore and other natural resources are subject to large fluctuations in response to changes in global supply of and demand for these commodities.

Global oil prices dropped to historically low levels in April 2020 due to severely reduced global oil demand, high global crude inventory levels, uncertainty around timing and slope of worldwide economic recovery after COVID-19 related economic shut-downs and effectiveness of production cuts by major oil producing countries, such as Saudi Arabia, Russia and the U.S.

While oil prices have recovered from the low levels observed during 2020, commodity prices continue to be volatile.

Other factors beyond our control that affect commodity prices include:

• worldwide economic activity including growth in and demand for oil, coal and other natural resources, particularly from developing countries, such as China and India;

• the level of activity and natural resource developments in Australia and the Canadian oil sands;

• the level of global oil and gas exploration and production and the impact of government regulation or Organization of Petroleum Exporting Companies (OPEC) policies that impact production levels and oil prices;

• the level of activity, spending and natural resource developments in Australia and Canada;

• the level of global oil and gas exploration and production and the impact of government regulation or Organization of the Petroleum Exporting Countries Plus (OPEC+) policies that impact production levels and oil prices;

• the availability of transportation infrastructure and refining capacity for oil, natural gas, LNG and coal;

• global weather conditions, natural disasters, global health concerns, such as the COVID-19 pandemic, or any future disaster or pandemic, and geopolitical events such as the ongoing conflict between Russia and Ukraine;

• global weather conditions, natural disasters and global health concerns;

• geopolitical events such as the ongoing Russia/Ukraine and Israel/Hamas conflicts;

• global reduction in demand for fossil fuels due to international efforts to address climate change;

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As of February 23, 2024, the West Texas Intermediate (WTI) price was $77.54 and the Western Canadian Select (WCS) price was $58.60, resulting in a discount (WCS Differential) at which WCS trades relative to WTI of $18.94.

Should the price of WTI decline or the WCS discount to WTI widen further, our oil sands customers may delay or eliminate additional investments, further reduce their spending in the oil sands region or curtail or shut-down additional existing operations.

The effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, have materially affected, and may materially affect, how we and our customers are operating our and their businesses.

Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, have adversely impacted and may continue to adversely impact, worldwide economic activity, including the operations of natural resources companies in Canada, Australia and the U.S.

Should the price of WTI decline or the WCS discount to WTI widen further, our oil sands customers may delay or eliminate additional investments, reduce their spending in the oil sands region or curtail or shut-down existing operations.

The effects of public health crises, pandemics and epidemics may materially affect how we and our customers are operating our and their businesses.

Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, have adversely impacted and may in the future adversely impact, worldwide economic activity, including the operations of natural resources companies in Canada, Australia and the U.S.

and the worldwide demand for oil and natural gas.

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and employee impacts from illness, travel restrictions, including border closures, and other community response measures.

Such public health crises, pandemics and epidemics are continuously evolving and the extent to which our business operations and financial results continue to be affected depends on various factors beyond our control, such as the duration, severity and sustained geographic resurgence of the COVID-19 virus;

the emergence, severity and spread of new variants of the virus;

The extent to which our business operations and financial results may be affected by such public health crises, pandemics and epidemics depends on various factors beyond our control, such as the duration, severity and sustained geographic impact of the outbreak;

the impact and effectiveness of governmental actions to contain and treat such outbreaks, including government policies and restrictions;

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The price of and demand for natural resources produced by our customers may impact their desire and/or ability to continue producing existing projects or start new projects.

Customers may also experience unexpected problems, higher costs or delays in commencing or developing a project.

Customers may also experience unexpected problems, higher costs or delays in commencing, developing or producing a project.

Additionally, the willingness of natural resources companies to explore, develop and produce may be impacted by pressures to limit increases in capital spending generally and on met coal and hydrocarbons in particular, as well as by cost overruns on past and current projects, which could adversely impact demand for our services.

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Our ability to do so generally depends on a variety of factors, including overall customer expenditure levels and the quality, price and responsiveness of our services, as well as our ability to market these services effectively and differentiate ourselves from our competitors.

We cannot assure that we will be able to obtain new business, renew existing customer contracts at the same or higher levels of pricing, or at all, or that our current customers will not turn to competitors, cease operations, elect to (1) utilize their own, on-site accommodations or (2) terminate contracts with us.

We cannot assure that we will be able to obtain new business, renew existing customer contracts at the same or higher levels of pricing, or at all, or that our current customers will not turn to competitors, cease operations, elect to (i) utilize their own, on-site accommodations or (ii) terminate contracts with us.

Our business is contract intensive and we are party to many contracts with customers.

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Finally, while we periodically review our compliance with contract terms and provisions, if customers were to dispute our contract determinations, the resolution of such disputes in a manner adverse to our interests, including customers withholding payments or modification of payment terms, could negatively affect sales and operating results.

We have agreed to not renew an expiring land lease associated with our McClelland Lake Lodge in Alberta, Canada, which currently expires in June 2023, to support our customer’s intent to mine the land where the lodge is currently located.

In addition, our hospitality services contract at McClelland Lake Lodge expires in June 2023.

Failure to secure a replacement contract for our McClelland Lake Lodge will impact our business and results of operations in the second half of 2023.

Revenues associated with the 2022 room commitments at our McClelland Lake Lodge were approximately C$60 million.

We did not renew the land lease associated with our McClelland Lake Lodge in Alberta, Canada, which expired in June 2023, in order to support our customer’s intent to mine the land where the lodge was located.

In addition, the accompanying hospitality services contract at McClelland Lake Lodge expired in July 2023;

however, we continued to provide hospitality services to the customer at our other owned lodges through January 31, 2024 under a short-term take-or-pay commitment.

We completed the sale of the McClelland Lake Lodge assets in January 2024.

Revenues associated with the 2023 room commitments at the lodge through July 2023 were approximately C$39 million.

Customer contract cancellations, reduced customer utilization, the failure to renew a significant number of our existing contracts or the failure to obtain new business would have a material adverse effect on our business and results of operations.

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Because of the concentration of our business in three relatively small geographic areas:

the oil sands region of Alberta, Canada, the coal producing, Bowen Basin region of Queensland, Australia and the iron ore producing, Pilbarra region of Western Australia, we have increased exposure to political, regulatory, environmental, labor, climate or natural disasters such as forest fires or flooding, events or developments that could disproportionately impact our operations and financial results.

the oil sands region of Alberta, Canada, the coal producing, Bowen Basin region of Queensland, Australia and the iron ore producing, Pilbarra region of Western Australia, we have increased exposure in these areas to political, regulatory, environmental, labor, climate or natural disasters such as forest fires or flooding, events or developments that could disproportionately impact our operations and financial results.

For example, in 2011 and 2017, cyclones and resulting flooding threatened our villages in Australia.

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In addition, a limited number of potential customers operate in the areas in which our business is located, and occupancy at each of our lodges may be constrained by the radius which potential customers are willing to transport their workers.

Our geographic concentration could limit the number of customers seeking our services, and as to any single lodge or village, we may have few potential customers.

Our geographic concentration could limit the number of customers seeking our services, and as to any single lodge or village, we

may have few potential customers.

Therefore, we are subject to volatility in occupancy in any location based on the capital spending plans of a limited number of customers, based on their changing decisions as to whether to outsource or use their own company-owned accommodations and whether other potential customers move into that lodge’s radius.

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business as a result of the economic disruption caused by COVID-19, and experienced a corresponding decrease in our occupancy and profitability.

Although customer production activity and resulting demand for our accommodations approached pre-pandemic levels in 2022, volatility in commodity price levels, the ongoing impact of COVID-19 or other global health crises, inflationary pressures, actions taken by OPEC+ to adjust production levels, geopolitical events such as the ongoing Russia/Ukraine conflict, and regulatory implications on such prices, among other factors, could cause our Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets, which would cause a decrease in customer demand for our accommodations.

Continued volatility in commodity price levels, any future global health crises, inflationary pressures, actions taken by OPEC+ to adjust production levels, geopolitical events such as the ongoing Russia/Ukraine and Israel/Hamas conflicts, and regulatory implications on such prices, among other factors, could cause our Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets, which would cause a decrease in customer demand for our accommodations.

Increased operating costs and limited cost recovery through pricing or contract terms may constrain our ability to make a profit.

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For example, substantial increases in the cost of fuel and utilities have historically resulted in cost increases in our lodges and villages.

From time to time, we have experienced increases in our food costs.

While we believe a portion of these increases were attributable to fuel prices, we believe the increases also resulted from rising global food demand, other general inflationary pressures and rising supply chain issues affecting supply of goods, which are exacerbated by the ongoing Russia/Ukraine conflict.

In addition, food prices can fluctuate as a result of foreign exchange rates and temporary changes in supply, including as a result of incidences of wildfires or severe weather such as droughts, heavy rains and late freezes, or other climate effects.

In the last eighteen months, we have experienced a significant increase in our food costs due to global inflationary pressures.

While inflation has stabilized, and while we have been able to pass some of the increased costs onto our customers, we expect to continue to experience increases in our food costs from time to time due to increasing fuel prices, rising global food demand, other general inflationary pressures and rising supply chain issues affecting supply of goods.

In addition, food

prices can fluctuate as a result of foreign exchange rates and temporary changes in supply, including as a result of incidences of wildfires or severe weather such as droughts, heavy rains and late freezes, or other climate effects.

Climate and natural disaster events, such as forest fires or flooding, have the ability to impact local crop production, limiting supply and therefore having an upward pressure on food prices.

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A shortage of skilled labor could also result in higher wages due to more expensive temporary hire labor resources that would increase our labor costs, which could negatively affect our profitability.

Since the COVID-19 pandemic began, we have been impacted by increased staff costs as a result of hospitality labor shortages in Australia.

This has been exacerbated by low levels of immigration into Australia and, specifically, an acute shortage of skilled labor.

The reduced levels of immigration and shortage of skilled labor has subsequently led to an increased reliance on more expensive temporary labor hire resources and has negatively affected our profitability.

For example, we have recently been impacted by increased staff costs as a result of hospitality labor shortages in Australia due to low levels of immigration into Australia and, specifically, an acute shortage of skilled labor.

The reduced levels of immigration and shortage of skilled labor subsequently led to an increased reliance on more expensive temporary labor hire resources and negatively affected our profitability.

Additionally, an increased proportion of temporary labor hire resources has the effect of driving up costs due to a lack of efficiency.

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If we are unable to hire a sufficient labor force, we could be required to increase wages or use temporary labor at a higher cost and reduced efficiency.

In 2022, we experienced, and expect to continue to experience, a shortage of labor for certain functions, inflationary pressures on wages, and an increasingly competitive labor market.

The extent and duration of the effect of these labor market challenges are subject to numerous factors, including geopolitical events such as the continuing effect of the COVID-19 pandemic or the ongoing Russia/Ukraine conflict, availability of qualified persons in the markets where we and our contracted service providers operate, inflation and unemployment levels within these markets and our reputation within the labor market.

In recent years, we experienced, and expect to continue to experience, a shortage of labor for certain functions, inflationary pressures on wages, and an increasingly competitive labor market.

The extent and duration of the effect of these labor market challenges are subject to numerous factors, including geopolitical events such as the ongoing Russia/Ukraine and Israel/Hamas conflicts, availability of qualified persons in the markets where we and our contracted service providers operate, inflation and unemployment levels within these markets and our reputation within the labor market.

Inefficient operations or further increased labor costs resulting from these labor market challenges could negatively impact our profitability and could damage our reputation with our customers.

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Collective bargaining agreements in our Canadian operations have individual expiration dates, but in no case extend beyond 2026.

Enterprise bargaining agreements in our Australian operations cover certain employees working at our villages in Queensland, New South Wales, Western Australia and South Australia, as well as certain employees working at our integrated services customer owned sites in Western Australia.

Enterprise bargaining agreements in our Australian operations cover certain employees working at our villages in Queensland, New South Wales and Western Australia, as well as certain employees working at our integrated services customer-owned sites in Western Australia and South Australia.

These agreements either have individual expiration dates or continue until either party seeks to have such agreement cancelled, but in no case extend beyond 2024.

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Because food safety issues could be experienced at the source or by food suppliers or distributors, food safety could, in part, be out of our control.

Regardless of the source or cause, any report of food-borne illness or other food safety issues such as food tampering or contamination at one of our locations could adversely impact our reputation, hindering our ability to renew contracts on favorable terms or to obtain new business, and have a negative

impact on our revenue.

Future food product recalls and health concerns associated with food contamination may also increase our raw materials costs and, from time to time, disrupt our business.

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In that event, we would be required to remove our accommodations assets and remediate the site at our own cost, which could be material.

We did not renew an expiring land lease associated with our McClelland Lake Lodge in Alberta, Canada, which expired in June 2023, in order to support our customer’s intent to mine the land where the lodge was located.

As of December 31, 2023, we had an asset retirement obligation (ARO) liability related to the McClelland Lake Lodge on our balance sheet of $0.3 million.

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Also, in certain areas in which we operate, we are required to seek permits from local government agencies in order to build a new lodge or operate an existing lodge on leased land.

A proposed regulation in the Regional Municipality of Wood Buffalo, Alberta, where we have eight facilities, would require us to seek renewal of such permits every four years;

however, this proposal was abandoned in late 2019, and no update has been provided.

We can provide no assurances that we will be able to renew our leases or permits upon expiration on similar terms, or at all.

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Additionally, the areas in which we operate are susceptible to wildfires.

Finally, global climate change may result in certain of these adverse weather conditions occurring more

frequently or with greater intensity.

Finally, global climate change may result in certain of these adverse weather conditions occurring more frequently or with greater intensity.

If any of these conditions occur, our operations could be interrupted and our earnings may be adversely impacted.

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We may be subject to risks associated with the transportation, installation and demobilization of mobile accommodations.

In connection with our Canadian business, we currently have several contracts to transport and install modular, skid-mounted accommodations and central facilities that can be quickly configured to serve a multitude of short to medium-term accommodation needs.

We currently have several contracts to transport and install modular, skid-mounted accommodations and central facilities that can be quickly configured to serve a multitude of short- to medium-term accommodation needs.

In connection with the transportation and installation of these facilities, we may be exposed to various risks, including:

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In addition, such events could result in litigation, regulatory action and potential liability, including liability under laws that protect the privacy of personal information, as well as the costs and operational consequences of implementing further data protection measures.

Cybersecurity attacks in particular are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, ransomware attacks and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of or denial of access to confidential or otherwise protected information and corruption of data.

We have experienced, and expect to continue to confront, efforts by hackers and other third parties to gain unauthorized access or deny access to, or otherwise disrupt, our information technology systems and networks.

While we have not experienced a material incident in the last three years, a material cyber-incident could have a material adverse effect on our business, financial condition, results of operations or liquidity.

Cybersecurity attacks in particular develop and evolve rapidly, including from emerging technologies, such as advanced forms of artificial intelligence.

Such attacks include, but are not limited to, malicious software, attempts to gain unauthorized access to data, ransomware attacks and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of or denial of access to confidential or otherwise protected information and corruption of data.

While we have not experienced a material cybersecurity incident in the last three years, a material cybersecurity incident could have a material adverse effect on our business, financial condition, results of operations or liquidity.

Our business could be disrupted by any failure of our information systems.

We depend on our information systems to actively manage our accommodation services, including with respect to administrative functions, financial and operational data, ordering and point of sale processing, to enhance our ability to optimize facility utilization, occupancy, costs of goods sold and average daily rate.

The failure of our information systems to perform as anticipated could damage our reputation with our customers, disrupt our business or result in, among other things, decreased revenue and increased costs.

Any such failure could harm our business, results of operations and financial condition.

In addition, the delay or failure to implement information system upgrades and new systems effectively could disrupt our business, distract management’s focus and attention from business operations and growth initiatives, and increase our implementation

and operating costs, any of which could materially adversely affect our operations and operating results.

Furthermore, these technologies may require refinements and upgrades, which may require significant investment by us.

As various systems and technologies become outdated or new technology is required, we may not be able to replace or introduce them as quickly as needed or in a cost- effective and timely manner.

As a result, we may not achieve the benefits we may have been anticipating from any new technology or system .

Loss of key members of our management could adversely affect our business.

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Financial/Accounting Risks

Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions.

As of December 31, 2022, we had approximately $29.5 million outstanding under the term loan portion of our Syndicated Facility Agreement (Credit Agreement), $102.5 million outstanding under the revolving portion of the Credit Agreement, $1.4 million of outstanding letters of credit and capacity to borrow an additional $96.1 million under the revolving portion of the Credit Agreement.

If market or other economic conditions remain depressed or further deteriorate, our borrowing capacity may be reduced.

Our Credit Agreement contains, and any future indebtedness we incur may contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to, among other things, borrow funds, dispose of assets, pay dividends and make certain investments.

In addition, these covenants also may limit our ability to obtain future financings, make needed capital expenditures, withstand a continued downturn in our business or a downturn in the economy in general or otherwise conduct necessary corporate activities.

Our ability to comply with these covenants may be affected by events beyond our control.

Declines in commodity prices, or a prolonged period of commodity prices at depressed levels, could eventually result in our failing to meet one or more of the financial covenants under the Credit Agreement, which could require us to refinance or amend such obligations resulting in the payment of consent fees or higher interest rates, or require us to raise additional capital at an inopportune time or on terms not favorable to us.

A failure to comply with these covenants, ratios or tests could also result in an event of default.

A default under the Credit Agreement, if not cured or waived, could result in acceleration of all indebtedness outstanding thereunder.

The accelerated debt would become immediately due and payable.

If that should occur, we may be unable to pay all such debt or to borrow sufficient funds to refinance it.

Even if new financing were then available, it may not be on terms that are acceptable to us.

In addition, in the event of an event of default under the Credit Agreement, the lenders could foreclose on the collateral securing the credit facility and require repayment of all borrowings outstanding.

If the amounts outstanding under the credit facility or any of our other indebtedness were to be accelerated, our assets may not be sufficient to repay in full the money owed to the lenders or to our other debt holders.

Moreover, any new indebtedness we incur may impose financial restrictions and other covenants on us that may be more restrictive than our existing debt agreements.

Our ability to service our debt, including repaying outstanding borrowings under our Credit Agreement at maturity, will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control.

If our business does not generate sufficient cash flows from operations to enable us to meet our obligations under our indebtedness, we will be forced to take actions such as reducing or delaying business activities, acquisitions, investments and/or capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital.

We may not be able to effect any of these remedies on satisfactory terms or at all, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Currency exchange rate fluctuations could adversely affect our U.S.

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Any currency controls implemented by local monetary authorities in countries where we currently operate could also adversely affect our business, financial condition and results of operations.

We may attempt to limit the risks of currency fluctuation where possible by entering into financial instruments to protect against foreign currency exposure, but, to date, we have not entered into any foreign currency financial

Our efforts to limit exchange risks may be unsuccessful, thereby exposing us to foreign currency fluctuations that could cause our results of operations, financial condition and cash flows to deteriorate.

We may not have adequate insurance for potential liabilities and insurance may not cover certain liabilities.

Our operations are subject to many hazards.

In the ordinary course of business, we become the subject of various claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of our products or operations.

Some of these claims relate to the activities of businesses that we have acquired, even though these activities may have occurred prior to our acquisition of such businesses.

We maintain insurance to cover many of our potential losses, including cyber risk insurance, and we are subject to various self-retentions and deductibles under our insurance policies.

It is possible, however, that a judgment could be rendered against us in cases in which we could be uninsured and beyond the amounts that we currently have reserved or anticipate incurring for such matters.

Even a partially uninsured or underinsured claim, if successful and of significant size, could have a material adverse effect on our results of operations or consolidated financial position.

In addition, we are insured under the insurance policies of Oil States International, Inc.

(Oil States) for occurrences prior to the completion of our spin-off from Oil States in May 2014 (the Spin-Off).

The specifications and insured limits under those policies, however, may be insufficient for such claims.

We also face other risks related to our insurance coverage, including (i) we may not be able to continue to obtain insurance on commercially reasonable terms;

(ii) the counterparties to our insurance contracts may pose credit risks;

(iii) we may incur losses from interruption of our business that exceed our insurance coverage;

and (iv) we may not be able to procure insurance for certain risks due to various factors including insurance market constraints.

The cyclical nature of our business and a severe prolonged downturn has, and could in the future, negatively affect the value of our long-lived assets and our goodwill.

We recorded impairments of our long-lived assets of $1.4 million, $5.7 million and $7.9 million in 2023, 2022 and 2021, respectively.

We also recorded goodwill impairments of $93.6 million in 2020.

As of December 31, 2023, goodwill at our Australian reporting unit represented 1% of total assets, or $7.7 million.

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An inability to realize expected strategic advantages as a result of the acquisition would negatively affect the anticipated benefits of the acquisition.

Additionally, an acquisition may bring us into businesses we have not previously conducted and expose us to additional business risks that are different from those we have previously experienced.

Additionally, an acquisition may bring us into businesses we have not previously conducted or geographies in which we have not previously operated and expose us to additional business risks that are different from those we have previously experienced.

Our future success depends, in part, upon our ability to manage this expanded business, which will pose substantial challenges for our management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.

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Our capitalization and results of operations may change significantly following an acquisition, and our shareholders may not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in evaluating future acquisitions.

We may not have adequate insurance for potential liabilities and insurance may not cover certain liabilities.

Our operations are subject to many hazards.

Some of these claims relate to the activities of businesses that we have acquired, even though these activities may have occurred prior to our acquisition of such businesses.

We maintain insurance to cover many of our potential losses, including cyber risk insurance, and we are subject to various self-retentions and deductibles under our insurance policies.

Even a partially uninsured or underinsured claim, if successful and of significant size, could have a material adverse effect on our results of operations or consolidated financial position.

In addition, we are insured under the insurance policies of Oil States International, Inc.

(Oil States) for occurrences prior to the completion of our spin-off from Oil States in May 2014 (the Spin-Off).

The specifications and insured limits under those policies, however, may be insufficient for such claims.

We also face other risks related to our insurance coverage, including (1) we may not be able to continue to obtain insurance on commercially reasonable terms;

(2) the counterparties to our insurance contracts may pose credit risks;

and (3) we may incur losses from interruption of our business that exceed our insurance coverage

Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions.

As of December 31, 2023, we had approximately $65.6 million outstanding under the revolving portion of our Syndicated Facility Agreement (Credit Agreement), $1.4 million of outstanding letters of credit and an additional $133.1 million in remaining capacity to borrow under the revolving portion of the Credit Agreement.