3 unchanged sentences
• The success of our business largely depends on activity levels in the oil and natural gas industry, which can be affected by the amount and volatility of oil and natural gas prices.
−Removed: • The markets in which we operate are highly competitive.
−Removed: • We may hold excess or obsolete inventory.
+Added: • The markets in which we operate are highly competitive, including some companies that hold substantial market share and have substantially greater resources than we do, as well as a number of regional or local competitors for certain of our product lines.
+Added: We may not be able to compete successfully in this environment.
+Added: • Given the uncertainty related to long-term commodity prices and associated customer demand, we may hold excess or obsolete inventory, and as a result, may experience a reduction in gross margins and financial results.
• We may not realize revenue on our current backlog due to customer order reductions, cancellations or acceptance delays, which may negatively impact our financial results.
• The COVID-19 pandemic has and may continue to adversely affect our business and results of operations.
−Removed: • The industry in which we operate is undergoing continuing consolidation that may impact our results of operations.
+Added: • The industry in which we operate is undergoing continuing consolidation and seeking opportunities to participate in the energy transition, which may impact our results of operations.
• A greater focus on budgetary discipline and technological advances have caused a decline in customer spending that may remain at a low level despite an increase in commodity prices.
−Removed: • Our Chief Executive Officer and other executive officers are critical to our business and these individuals may not remain with us in the future.
• We may be unable to employ a sufficient number of skilled and qualified workers.
1 unchanged sentence
• Our business depends upon our ability to obtain key raw materials and specialized equipment from suppliers.
+Added: Increased costs of raw materials and other components, and inflationary pressure, may result in increased operating expenses.
• We may not be able to satisfy technical requirements, testing requirements, code requirements or other specifications under contracts and contract tenders.
−Removed: • A failure or breach of our information technology infrastructure could adversely impact our business and results of operations and expose us to potential liabilities.
+Added: • A failure or breach of our information technology infrastructure, including as a result of cyber attacks or failures of data protection measures, could adversely impact our business and results of operations and expose us to potential liabilities.
• Our success depends on our ability to implement new technologies and services more efficiently and quickly than our competitors.
• Our success will be affected by the use and protection of our proprietary technology.
+Added: Due to the limitations of our intellectual property rights, our ability to exclude others from the use of our proprietary technology may be reduced.
+Added: Furthermore, we may be adversely affected by disputes regarding intellectual property rights.
• We may incur liabilities, fines, penalties or additional costs, or we may be unable to sell to certain customers if we do not maintain safe operations.
+Added: • If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
• Facility consolidations or expansions may subject us to risks of operating inefficiencies, construction delays and cost overruns.
−Removed: • Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated.
+Added: • Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.
• A natural disaster, catastrophe or other event could result in severe property damage, which could curtail our operations.
Legal and Regulatory Risks:
−Removed: • Governmental laws and regulations may affect our and our customers’ costs, prohibit or curtail our customers’ operations in certain areas, limit the demand for our products and services or restrict our operations.
+Added: • Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that affect our and our customers’ costs, prohibit or curtail our customers’ operations in certain areas, limit the demand for our products and services or restrict our operations.
• Potential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products.
−Removed: • Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and development activity in response to significant environmental incidents.
+Added: • Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and development activity in response to significant environmental incidents or climate change actions.
• Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities.
−Removed: • Our business operations worldwide are subject to anti-corruption and trade sanction laws and regulations in the U.S.
−Removed: and other jurisdictions.
+Added: • Tariffs imposed by the U.S.
+Added: government could have a further severe adverse effect on our results of operations.
• We are subject to litigation risks that may not be covered by insurance.
1 unchanged sentence
• Our products are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and, as a result, we are exposed to potential liabilities that could affect our financial condition and reputation.
−Removed: • Climate change legislation or regulations restricting emissions of greenhouse gases could increase our operating costs or reduce demand for our products.
+Added: • Climate change legislation or regulations restricting emissions of greenhouse gases and related divestment and other efforts could increase our operating costs or reduce demand for our products.
Risks Related to our International Operations
−Removed: • We may be adversely affected by developments and economic uncertainty relating to the U.K.’s departure from the European Union.
−Removed: • Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows.
+Added: • Our business operations worldwide are subject to a number of U.S.
+Added: federal laws and regulations, including restrictions imposed by the U.S.
+Added: Foreign Corrupt Practices Act as well as trade sanctions administered by the Office of Foreign Assets Control and the Commerce Department, as well as similar laws in non-U.S.
+Added: jurisdictions that govern our operations by virtue of our presence or activities there.
+Added: • Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows and could have an adverse effect on our results of operations.
Risks Related to our Common Stock, Indebtedness and Financial Condition:
4 unchanged sentences
• Our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions and credit rating.
−Removed: • We have incurred impairment charges in the past and we may incur additional impairment charges in the future.
−Removed: Simmons & Associates (“LESA”), through SCF, may significantly influence the outcome of stockholder voting and may exercise this voting power in a manner adverse to our other stockholders.
−Removed: • Certain of our directors may have conflicts of interest because they are also directors or officers of SCF.
−Removed: The resolution of these conflicts of interest may not be in the best interests of our Company or our other stockholders.
−Removed: • We have renounced any interest in specified business opportunities, and SCF and its director nominees on our board of directors generally have no obligation to offer us those opportunities.
+Added: • We have incurred impairment charges and we may incur additional impairment charges in the future.
+Added: • Provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.
+Added: Simmons & Associates (“LESA”), through SCF Partners (“SCF”), may significantly influence the outcome of stockholder voting and may exercise this voting power in a manner adverse to our other stockholders.
+Added: • We have renounced any interest in specified business opportunities.
Risks Related to our Business and Operations:
12 unchanged sentences
• ability of our customers to access new markets or areas of production or to continue to access current markets, including as a result of trade restrictions;
−Removed: • weather conditions, including hurricanes, that can affect oil and natural gas operations over a wide area;
+Added: • weather conditions, including hurricanes and tornadoes, that can affect oil and natural gas operations;
• natural disasters, catastrophes or other events resulting in severe property damage;
4 unchanged sentences
• political instability in oil and natural gas producing countries;
−Removed: • shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil and natural gas;
+Added: • increased pressures to invest in sustainable energy sources, shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil and natural gas;
• conservation measures and technological advances affecting energy consumption;
1 unchanged sentence
• uncertainty in capital and commodities markets, and the ability of oil and natural gas companies to raise equity capital and debt financing;
−Removed: • interest rates and the cost of capital;
+Added: • interest rates, the cost of capital and inflationary pressures;
• merger and divestiture activity among oil and natural gas producers, drilling contractors and oilfield service companies.
1 unchanged sentence
As a result, there are periodic reductions in the demand for our products and services, downward pressure on the prices that we charge and ultimately an adverse impact on our business.
−Removed: The COVID-19 pandemic has negatively impacted demand for oil and natural gas, which has contributed to further price volatility.
−Removed: It is uncertain whether commodity prices will maintain current levels, decline or increase in 2021.
−Removed: Furthermore, there can be no assurance that the demand or pricing for oil and natural gas will follow historic patterns or recover meaningfully in the near term.
−Removed: Declines in oil and natural gas prices, decreased levels of exploration, development, and production activity, and the willingness of customers to invest in their equipment relative to historical norms may negatively affect:
+Added: During the year ended December 31, 2021, the COVID-19 pandemic negatively impacted demand for oil and natural gas, which has contributed to further price volatility.
+Added: Although, as of early 2022, oil and gas prices and demand have recovered from the historic lows seen in the first half of 2020, it is uncertain whether prices will maintain current levels, decline or increase.
+Added: Furthermore, there can be no assurance that the demand or pricing for oil and natural gas will follow historic patterns, including as a result of increased availability of alternative energy sources.
+Added: Declines in oil and natural gas prices, decreased levels of exploration,
+Added: development, and production activity, use of alternative sources of energy, and the willingness of customers to invest in their equipment relative to historical norms may negatively affect:
• revenues, cash flows, and profitability;
3 unchanged sentences
• the ability to attract and retain skilled personnel to maintain our business or that will be needed in the event of an upturn in the demand for our products.
−Removed: The markets in which we operate are highly competitive, including some competitors that hold substantial market share and have substantially greater resources than we do, as well as a number of regional or local competitors for certain of our product lines.
+Added: The markets in which we operate are highly competitive, including some companies that hold substantial market share and have substantially greater resources than we do, as well as a number of regional or local competitors for certain of our product lines.
We may not be able to compete successfully in this environment.
The markets in which we operate are highly competitive and our products and services are subject to competition from significantly larger businesses.
−Removed: We have several competitors that are large national and multinational companies that have longer operating histories, greater financial, technical and other resources and greater name recognition than we do.
+Added: We have several competitors that are large national and multinational companies that have longer operating histories, and greater financial, technical and other resources than we do.
In addition, we compete with many small companies on a regional or local basis.
14 unchanged sentences
For more information about our competitors, please read “Business—Competition.”
−Removed: Given the uncertainty related to long-term commodity prices and associated customer demand, we hold excess or obsolete inventory and have experienced a reduction in gross margins and financial results.
+Added: Given the uncertainty related to long-term commodity prices and associated customer demand, we may hold excess or obsolete inventory, and as a result, may experience a reduction in gross margins and financial results.
We cannot accurately predict what or how many products our customers will need in the future.
Orders are placed with our suppliers based on forecasts of customer demand and, in some instances, we may establish buffer inventories to accommodate anticipated demand.
−Removed: At certain times, we have built capital equipment before receiving customer orders, and we have kept our standardized downhole protection systems and certain of our flow iron products in stock and readily available for delivery on short notice from customers.
+Added: At certain times, we have built capital equipment before receiving customer orders.
Our forecasts of customer demand are based on multiple assumptions, which have introduced errors into the estimates.
−Removed: These forecasts were particularly challenging recently due to the COVID-19 pandemic, including as a result of uncertain demand levels and inability by our customers to receive finished goods.
+Added: These forecasts were particularly challenging during the height of the COVID-19 pandemic, including as a result of uncertain demand levels and inability by our customers to receive finished goods.
In addition, many of our suppliers, such as those for certain of our standardized valves, require a longer lead time to provide products than our customers demand for delivery of our finished products.
11 unchanged sentences
The COVID-19 pandemic and related responses by governmental authorities and changes to consumer behavior have significantly impacted global economic activity.
−Removed: In addition to impacts on oil and natural gas markets (as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Conditions”), the COVID-19 pandemic has resulted in further declines in the global rig count and North America completions activities that have and may continue to impact our business and operations.
−Removed: These events have directly affected our business and have compounded the impact from many of the risks described in this Risk Factors section, including those relating to our customers’ capital spending and trends in oil and natural gas prices.
−Removed: Demand for our products and services has declined and is expected to remain depressed as our customers have reduced their capital budgets in response to lower commodity prices.
−Removed: In addition, we are facing, and expect to continue to face, logistical challenges including border closures, travel restrictions and an inability to commute to certain facilities and job sites, as we provide services and products to our customers.
−Removed: We are also experiencing inefficiencies surrounding stay-at-home orders and remote work arrangements.
−Removed: Given the nature and significance of the events described above, we are not able to enumerate all potential risks to our business;
−Removed: however, we believe that in addition to the impacts described above, other current or potential impacts of these recent events include, but are not limited to:
−Removed: • supply chain disruptions for essential raw materials, including product import and export restrictions;
−Removed: • claims that non-performance is permitted due to force majeure or other reasons;
−Removed: • customers may delay or default on payment obligations, and/or seek bankruptcy protection that could delay or prevent collections of certain accounts receivable;
−Removed: • liquidity challenges
−Removed: • a credit rating downgrade and higher borrowing costs in the future;
−Removed: • cybersecurity issues, as digital technologies may become more vulnerable and experience a higher rate of and increased sophistication in cyberattacks in the current environment of remote connectivity, which could disrupt our operations or result in the loss or exposure of confidential or sensitive customer, employee or company information and adversely affect our business, financial condition and results of operations;
−Removed: • litigation risk and possible loss contingencies related to COVID-19 and its impact, including with respect to commercial contracts, employee matters and insurance arrangements;
−Removed: • reduction of our global workforce to adjust to market conditions, including severance payments, retention issues, and an inability to hire employees when market conditions improve;
−Removed: • costs associated with rationalization of our portfolio of real estate facilities, including possible exit of leases and facility closures to align with expected activity and workforce capacity;
−Removed: • additional asset impairments, including an impairment of the carrying value of our intangible assets, property and equipment, along with other accounting charges related to reduced demand for our products and services;
−Removed: • infections and quarantining of our employees and the personnel of our customers, suppliers and other third parties in areas in which we operate;
−Removed: • changes in the regulation of the production of hydrocarbons, such as the imposition of limitations on the production of oil and natural gas by states or other jurisdictions, that may result in additional limits on demand for our products and services;
−Removed: • actions undertaken by national, regional and local governments and health officials to contain the virus or treat its effects;
−Removed: • a structural shift in the global economy and its demand for oil and natural gas as a result of changes in the way people work, travel and interact, or in connection with a global recession or depression.
+Added: In addition to impacts on oil and natural gas markets (as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Conditions”), the COVID-19 pandemic caused further declines in the global rig count and North America completions activities that impacted our business and operations.
+Added: These events have compounded the impact from many of the risks described in this Risk Factors section, including those relating to our customers’ capital spending and trends in oil and natural gas prices.
+Added: Although demand for our products and services has partially recovered from 2020 lows, demand may remain depressed as a result of our customers’ reduction in capital budgets in response to commodity price volatility, ongoing macroeconomic instability, supply chain disruption and other factors related to the COVID-19 pandemic.
+Added: In addition, we are facing, and expect to continue to face, logistical challenges resulting from the COVID-19 pandemic, including operational and supply chain disruptions, material and labor shortages, travel restrictions and an inability to commute to certain facilities and job sites, as we provide services and products to our customers.
Given the dynamic nature of these events, we cannot reasonably estimate the period of time that the COVID-19 pandemic and related market conditions will persist, the full extent of the impact they will have on our business, financial condition, results of operations or cash flows or the pace or extent of any subsequent recovery.
−Removed: The ultimate extent of the impact of the pandemic will depend largely on future developments, including the duration and spread of the outbreak, the success of vaccination programs and the related impact on overall economic activity, all of which are uncertain and cannot be predicted with certainty at this time.
−Removed: We expect our activity levels will continue to be substantially below previous year levels, coupled with downward pressure on the price of our products and services, and corresponding reductions in revenue and operating margins.
−Removed: The confluence of events described above have had, and are expected to continue to have, a significant impact on our business, and depending on the duration of the pandemic and its effect on the oil and natural gas industry, could have, a material adverse effect on our business, liquidity, consolidated results of operations and consolidated financial condition.
+Added: The ultimate extent of the impact of the pandemic will depend largely on future developments, including the duration and spread of the outbreak, the success of vaccination and booster programs and the related impact on overall economic activity, all of which are uncertain and cannot be predicted with certainty at this time.
For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Conditions.”
−Removed: The industry in which we operate is undergoing continuing consolidation that may impact our results of operations.
−Removed: Some of our largest customers have consolidated and are using their size and purchasing power to achieve economies of scale and pricing concessions.
−Removed: This consolidation could result in reduced capital spending by such customers or decreased demand for our products and services.
−Removed: If we cannot maintain sales levels for customers that have consolidated or replace such revenues with increased business activities from other customers, this consolidation activity could have a significant negative impact on our results of operations or financial condition.
−Removed: We are unable to predict what effect consolidations in the industry may have on prices, capital spending by customers, selling strategies, competitive position, customer retention or our ability to negotiate favorable agreements with customers.
+Added: The industry in which we operate is undergoing continuing consolidation and seeking opportunities to participate in the energy transition, which may impact our results of operations.
+Added: Some of our customers have consolidated and are seeking to achieve economies of scale and pricing concessions.
+Added: In addition, they are making investments in non-traditional oil and gas markets as part of the energy transition.
+Added: As a result, we may be unable to supply our traditional oil and gas products to these customers if we do not develop new technology that meets their changing needs.
+Added: In addition, the consolidation of customers and focus on non-traditional energy investments could result in reduced spending by such companies or decreased demand for our existing products and services.
+Added: Therefore, to counteract these pressures, any reduced spending or decreased demand for traditional energy products will need to be offset at the same or greater pace by sales to other customers or increased sales of renewable energy technologies that we develop.
+Added: If we are not successful in offsetting such sales, there could be a significant negative impact on our results of operations or financial condition.
+Added: We are unable to predict what effect consolidations and the energy transition in the industry may have on prices, spending by customers, selling strategies, competitive position, customer retention or our ability to negotiate favorable agreements with customers.
A greater focus on budgetary discipline and technological advances have caused a decline in customer spending that may remain at a low level despite an increase in commodity prices.
3 unchanged sentences
The number of days required for a drilling rig to be on a site to drill a well has in many areas been reduced by at least half over the last several years.
−Removed: This has exacerbated the oversupply of drilling rigs.
Given these factors, we cannot provide any assurance that our capital equipment sales will increase if there is an increase in commodity prices.
−Removed: Our common stock price has been volatile, and we expect it to continue to remain volatile in the future.
−Removed: The market price of common stock of companies engaged in the oil and natural gas equipment manufacturing and services industry has been volatile.
−Removed: Likewise, the market price of our common stock has varied significantly in the past.
−Removed: For example, in 2020, the market price of our common stock reached a high of $40.20 per share on January 7, 2020 and a low of $3.00 per share on March 23, 2020 and April 1, 2020.
−Removed: Additionally, the Reverse Stock Split reduced the number of shares in our public float, which may limit trading and liquidity and increase volatility until more shares become available, if ever.
−Removed: We expect our stock price to continue to remain volatile given the cyclical nature of our industry and our limited public float.
−Removed: We may be adversely affected by developments and economic uncertainty relating to the U.K.’s departure from the European Union.
−Removed: held a referendum on June 23, 2016 in which a majority voted for the U.K.’s withdrawal from the European Union (“EU”), commonly referred to as “Brexit,” and the U.K.
−Removed: withdrew from the EU on January 31, 2020.
−Removed: On December 31, 2020, the transition period during which the trading relationship between the EU and the U.K.
−Removed: remained substantially the same as prior to the U.K.’s withdrawal from the EU ended.
−Removed: To ensure as smooth a transition as practicably possible, in December 2020, the U.K.
−Removed: and the EU reached an accord on a trade and cooperation agreement (“TCA”), which is provisionally applicable from January 1, 2021.
−Removed: The TCA was ratified by the U.K.
−Removed: Parliament on December 30, 2020 and awaits formal approval of the European Parliament and adoption by the European Council, both of which are expected to be completed by the end of February 2021.
−Removed: Brexit and the terms of the TCA bring an end to the U.K.’s automatic access to the EU single market, with U.K.
−Removed: goods no longer benefiting from the free movement of goods and the free market of people between the EU and the U.K.
−Removed: also being curtailed.
−Removed: The withdrawal of the U.K.
−Removed: from the EU may adversely affect business activity and economic and market conditions in the U.K., the Eurozone, and globally and could contribute to instability in global financial and foreign exchange markets, including volatility in the value of the pound sterling and the euro.
−Removed: In addition, Brexit could lead to additional political, legal, regulatory and economic instability in the EU and the U.K.
−Removed: Depending on the application of the terms of the TCA, our business could face new regulatory costs and challenges, and any adjustments we are required to undertake as a result of Brexit could lead to a significant time and cost commitment from our business.
−Removed: Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K.
−Removed: determines which EU laws to replace and which to maintain.
−Removed: Any of these effects of Brexit, and others we cannot anticipate, could adversely affect the value of our assets in the U.K., as well as our business, financial condition, results of operations and cash flows.
−Removed: We have a significant amount of indebtedness.
−Removed: Our leverage and debt service obligations restrict our operations and make us more vulnerable to adverse economic conditions.
−Removed: We currently have a substantial amount of indebtedness, including $316.9 million of 9.00% convertible secured notes due August 2025 (“2025 Notes”).
−Removed: Our level of indebtedness and restrictions in our debt agreements have significant consequences for our future prospects, including limiting our liquidity and flexibility in obtaining additional financing.
−Removed: In addition, we may have difficulty making debt service payments on our indebtedness as such payments become due.
−Removed: Furthermore, our $250.0 million senior secured revolving credit facility (“Credit Facility”), which had an outstanding balance of $13.1 million as of December 31, 2020, will mature prior to the maturity date of our 2025 Notes.
−Removed: Our level of indebtedness and the terms of our debt agreements affect our operations in several ways, including the following:
−Removed: • requiring us to dedicate a substantial portion of our cash flow from operations to servicing existing debt obligations;
−Removed: • increasing our vulnerability to general adverse economic and industry conditions;
−Removed: • limiting our ability to borrow funds, dispose of assets, pay dividends and make certain investments;
−Removed: • reducing our flexibility to plan for, and react to, changes in the economy and in our industry;
−Removed: • impairing our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes.
−Removed: Our ability to pay our expenses, and fund our working capital needs and debt obligations, will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors that are outside of our control.
−Removed: As a result of these factors, our business may not generate sufficient cash flow from operations to enable us to meet our debt obligations.
−Removed: In addition, under the terms of our Credit Facility, any failure to comply with the financial or other covenants of our indebtedness would result in an event of default, which would cause some or all of our indebtedness to become immediately due and payable and have a material adverse effect on our business, financial condition and results of operations.
−Removed: The indenture governing our 2025 Notes and our Credit Facility contain operating and financial restrictions that restrict our business and financing activities.
−Removed: Our indenture and Credit Facility contain, and any future indebtedness we incur may contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things:
−Removed: • pay dividends on, purchase or redeem our common stock;
−Removed: • make certain investments;
−Removed: • incur or guarantee additional indebtedness or issue certain types of equity securities;
−Removed: • create certain liens;
−Removed: • sell assets, including equity interests in our restricted subsidiaries;
−Removed: • redeem or prepay subordinated debt or debt that is unsecured or secured on a basis junior to our notes;
−Removed: • restrict dividends or other payments of our restricted subsidiaries;
−Removed: • consolidate, merge or transfer all or substantially all of our assets;
−Removed: • engage in transactions with affiliates;
−Removed: • create unrestricted subsidiaries;
−Removed: • execute our acquisition strategy.
−Removed: Our Credit Facility also contains covenants, which, among other things, require us in certain circumstances, on a consolidated basis, to maintain specified financial ratios or conditions.
−Removed: As a result of these covenants, we will be limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.
−Removed: Our ability to borrow under the Credit Facility and comply with some of the covenants, ratios or tests contained in our indenture and Credit Facility may be affected by events beyond our control.
−Removed: If market or other economic conditions deteriorate, and there is a decrease in our accounts receivable and inventory, our ability to borrow under our Credit Facility will be reduced and our ability to comply with these covenants, ratios or tests may be impaired.
−Removed: A failure to comply with the covenants, ratios or tests would result in an event of default, which, if not cured or waived, would cause some or all of our indebtedness to become immediately due and payable and have a material adverse effect on our business, financial condition and results of operations.
−Removed: Tariffs imposed by the United States government could continue to adversely affect our results of operations.
−Removed: government has imposed global tariffs on certain imported steel and aluminum products pursuant to Section 232 of the Trade Expansion Act of 1962, as well as tariffs on Chinese imports pursuant to Section 301 of the Trade Act of 1974.
−Removed: In response, China and other countries have imposed retaliatory tariffs on a wide range of U.S.
−Removed: products, including those containing steel and aluminum.
−Removed: Our efforts to mitigate the impact of these tariffs on raw materials through the diversification of our supply chain and exemption requests may not be sufficiently successful.
−Removed: Furthermore, a prolonged imposition of tariffs on our goods could have a significant adverse effect on our results of operations.
−Removed: Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows and could have an adverse effect on our results of operations.
−Removed: Fluctuations in currency exchange rates could be material to us depending upon, among other things, our manufacturing locations and the sourcing for our raw materials and components.
−Removed: In particular, we are sensitive to fluctuations in currency exchange rates between the U.S.
−Removed: dollar and each of the Canadian dollar, the British pound sterling, the Euro, and, to a lesser degree, the Mexican peso, the Chinese yuan, the Singapore dollar, and the Saudi riyal.
−Removed: There may be instances in which costs and revenue will not be matched with respect to currency denomination.
−Removed: As a result, to the extent that we continue our expansion on a global basis, management expects that increasing portions of revenue, costs, assets and liabilities will be subject to fluctuations in foreign currency valuations.
−Removed: We may experience economic loss and a negative impact on earnings or net assets solely as a result of foreign currency exchange rate fluctuations.
−Removed: Further, the markets in which we operate could restrict the removal or conversion of the local currency, resulting in our inability to hedge against these risks.
−Removed: Our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions and credit rating.
−Removed: Our ability to access the capital and credit markets is limited by, among other things, oil and natural gas prices, our existing capital structure, our credit ratings, the state of the economy, the health of the drilling and overall oil and natural gas industry, trends among investors to avoid companies associated with the production of hydrocarbon products, and the liquidity of the capital markets.
−Removed: Many of the factors that affect our ability to access capital markets are outside of our control and may be negatively impacted by market events.
−Removed: Recent trends and conditions in the capital and credit markets with respect to the energy sector limit our ability to access these markets or may significantly increase our cost of capital.
−Removed: Low levels of exploration and drilling activity have caused and may
−Removed: continue to cause lenders to increase the interest rates under our credit facilities, enact tighter lending standards, refuse to refinance existing debt on acceptable terms or at all and may reduce or cease to provide funding.
−Removed: If we are unable to access the capital or credit markets on terms acceptable to us, it could have a material adverse effect on our business, financial condition, results of operations, cash flows and liquidity, particularly in respect of our ability to repay or refinance our debt .
−Removed: We have incurred impairment charges and we may incur additional impairment charges in the future.
−Removed: For the year ended December 31, 2019, we recognized goodwill impairments totaling $471.0 million which is included in “Impairments of goodwill, intangible assets, property and equipment” in the consolidated statements of comprehensive loss.
−Removed: Following these impairment charges, there is no remaining goodwill balance for any of our reporting units.
−Removed: We evaluate our long-lived assets, including property and equipment and intangible assets with definite lives, for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable.
−Removed: In performing our review for impairment, future cash flows expected to result from the use of the asset and its eventual value upon disposal are estimated.
−Removed: If the undiscounted future cash flows are less than the carrying amount of the assets, there is an indication that the asset may be impaired.
−Removed: The amount of the impairment is measured as the difference between the carrying value and the estimated fair value of the asset.
−Removed: The fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization.
−Removed: For the year ended December 31, 2020 and 2019 , we recognized property and equipment impairment charges totaling $15.1 million and $7.9 million, respectively.
−Removed: For the years ended December 31, 2020 and 2019, we recognized intangible asset impairment charges totaling $5.3 million and $53.5 million, respectively.
−Removed: These charges are included in “Impairments of goodwill, intangible assets, property and equipment” in the consolidated statements of comprehensive loss.
−Removed: See Note 8 Impairments of Goodwill and Long Lived Assets for further information related to these charges.
−Removed: If we determine that the carrying value of our long-lived assets is less than their fair value, we would be required to record additional charges in the future, which could adversely affect our financial condition and results of operations.
−Removed: Our Chief Executive Officer and other executive officers are critical to our business and these individuals may not remain with us in the future.
−Removed: Our future success depends in substantial part on our ability to hire and retain executive officers with expertise and strategic vision.
−Removed: In addition, we presently depend upon the significant years of experience, abilities and services of our President, Chief Executive Officer and Chairman of the Board, C.
−Removed: Christopher Gaut.
−Removed: The diminution or loss of Mr.
−Removed: Gaut’s services or the services of our other executive officers could have a material adverse effect on our business.
−Removed: Furthermore, the knowledge and skills possessed by our Chief Executive Officer and other executive officers are transferable to positions outside of the oil and gas industry.
−Removed: As a result, the prolonged industry downturn makes us particularly susceptible to the loss of services of members of our executive team.
We may be unable to employ a sufficient number of skilled and qualified workers.
5 unchanged sentences
In addition, during those periods, the demand for skilled workers is high, the supply is limited and the cost to attract and retain qualified personnel increases, especially for skilled workers.
−Removed: For example, we have in the past experienced shortages of engineers, mechanical assemblers, machinists and welders, which in some instances slowed the productivity of certain of our operations.
+Added: For example, we have recently experienced shortages of engineers, mechanical assemblers, machinists and welders, which in some instances slowed the productivity of certain of our operations.
Furthermore, a significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both.
+Added: We are also exposed to the impact of labor cost increases resulting from other factors such as high employment levels, increased wages offered by employers in other industries, and government regulations.
If any of these events were to occur, our ability to respond quickly to customer demands may be inhibited and our growth potential could be impaired.
1 unchanged sentence
Certain of our product lines depend on a limited number of third party suppliers.
−Removed: In some cases, the suppliers own the intellectual property rights to the products we sell, or possess the technology or specialized tooling required to
−Removed: manufacture them.
+Added: In some cases, the suppliers own the intellectual property rights to the products we sell, or possess the technology or specialized tooling required to manufacture them.
As a result of this concentration in part of our supply chain, our business and operations may be negatively affected if our key suppliers were to experience significant disruptions affecting the price, quality, availability or timely delivery of their products, such as from the COVID-19 pandemic, or if they were to decide to terminate their relationships with us.
2 unchanged sentences
Recently, some of our suppliers have imposed more stringent payment terms and conditions on us based on our perceived risk as a counterparty.
−Removed: The partial or complete loss of any one of our key suppliers, or a significant adverse change in the relationship with any of these suppliers, through consolidation or otherwise, would limit our ability to manufacture and sell certain of our products.
+Added: The partial or complete loss of any one of our key suppliers, a significant adverse change in the relationship with any of these suppliers, through consolidation or otherwise, would limit our ability to manufacture and sell certain of our products.
Our business depends upon our ability to obtain key raw materials and specialized equipment from suppliers.
−Removed: Increased costs of raw materials and other components may result in increased operating expenses.
+Added: Increased costs of raw materials and other components, and inflationary pressure, may result in increased operating expenses.
Should our suppliers be unable to provide the necessary raw materials or finished products or otherwise fail to deliver such materials and products timely and in the quantities required, resulting delays in the provision of products or services to customers could have a material adverse effect on our business.
1 unchanged sentence
Our results of operations may be adversely affected by our inability to manage the rising costs and availability of raw materials and components used in our products.
+Added: For example, our Coiled Tubing product line was unable to source a sufficient amount of steel during the third and fourth quarters of 2021 to satisfy customer orders on a timely basis.
+Added: In addition to the impact of the COVID-19 pandemic and related supply chain and operational disruptions, the availability and cost of necessary raw materials and finished products may be impacted by macroeconomic demand, various national, regional, local, economic and political factors, and inflationary pressures.
Some of our customer contracts require us to compensate customers if we do not meet specified delivery obligations.
2 unchanged sentences
Furthermore, the ability of third party suppliers to deliver materials to our specifications may be affected by events beyond our control.
−Removed: As a result, there is a risk that we could experience diminished supplier performance resulting in longer than expected lead times and/or product quality issues.
+Added: As a result, there is a risk that we could experience diminished supplier performance
+Added: resulting in longer than expected lead times and/or product quality issues.
For example, in the past, we have experienced issues with the quality of certain forgings used to produce materials utilized in our products.
10 unchanged sentences
The efficient operation of our business is dependent on our information technology (“IT”) systems.
−Removed: Accordingly, we rely upon the capacity, reliability and security of our IT hardware and software infrastructure and our ability to expand and update this infrastructure in response to our changing needs.
+Added: Accordingly, we rely upon the capacity, reliability and security of our IT hardware and software infrastructure and our ability to expand and update this infrastructure in response to our changing needs, including remote connectivity.
Despite our implementation of security measures, our IT systems are vulnerable to computer viruses, natural disasters, incursions by intruders or hackers, failures in hardware or software, power fluctuations, cyber terrorists and other similar disruptions.
In certain instances, our IT systems have failed to perform as anticipated, resulting in disruptions in operations and other adverse consequences.
−Removed: Should our IT systems materially fail in the future, it may result in numerous other adverse consequences, including reduced effectiveness and efficiency of our operations, inappropriate disclosure of
−Removed: confidential information, increased overhead costs, and loss of intellectual property, which could lead to liability to third parties or otherwise and have a material adverse effect on our business and results of operations.
+Added: Should our IT systems materially fail in the future, it may result in numerous other adverse consequences, including reduced effectiveness and efficiency of our operations, inappropriate disclosure or loss of confidential or sensitive information, increased overhead costs, and loss of intellectual property, which could lead to liability to third parties or otherwise and have a material adverse effect on our business and results of operations.
Our insurance may not protect us against such occurrences or our insurers may refuse to make payment.
6 unchanged sentences
Our success depends on our ability to develop and implement new product designs and improvements that meet our customer’s needs in a manner equal to or more effective than those offered by our competitors.
−Removed: If we are not able to continue to provide new and innovative services and technologies in a manner that allows us to meet evolving industry requirements at prices acceptable to our customers, our financial results would be negatively affected.
+Added: If we are not able to continue to provide new and innovative services and technologies in a manner that allows us to meet evolving industry requirements, including the focus on renewable energy opportunities, at prices acceptable to our customers, our financial results would be negatively affected.
In addition, some of our competitors are large national and multinational companies that we believe are able to devote greater financial, technical, manufacturing and marketing resources to research and develop more or better systems, services and technologies than we are able to do.
27 unchanged sentences
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.
−Removed: Effective internal control over financial processes and reporting are necessary for us to provide reliable financial reports that effectively prevent fraud and operate successfully.
+Added: Effective internal controls over financial processes and reporting are necessary for us to provide reliable financial reports that effectively prevent fraud and operate successfully.
Our efforts to maintain internal control systems have not been successful in the past.
6 unchanged sentences
These facility consolidations may be delayed and cause us to incur increased costs, product or service delivery delays, decreased responsiveness to customer needs, liabilities under terms and conditions of sale or other operational inefficiencies, or may not provide the benefits we anticipate.
−Removed: We may lose key personnel and operational knowledge that might lead to quality issues or delays in production.
+Added: We may lose key personnel and operational knowledge that might lead to quality issues, delays in production or other competitive disadvantages.
In the future, we may grow our businesses through the construction of new facilities and expansions of our existing facilities.
6 unchanged sentences
• difficulties in obtaining necessary permits or in meeting permit conditions.
+Added: Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.
+Added: We continually seek opportunities to maximize efficiency and value through various transactions, including purchases or sales of assets, businesses, investments, or joint venture interests.
+Added: These transactions are intended to (but may not) result in the realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or the reduction of risk.
+Added: Acquisition transactions may use cash on hand or be financed by additional borrowings or by the issuance of our common stock.
+Added: These transactions may also affect our business, consolidated results of operations and consolidated financial condition.
+Added: These transactions also involve risks, and we cannot ensure that:
+Added: • any acquisitions we attempt will be completed on the terms announced, or at all;
+Added: • any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits;
+Added: • any acquisitions would be successfully integrated into our operations and internal controls;
+Added: • the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure, including under the U.S.
+Added: Foreign Corrupt Practices Act (“FCPA”), or that we will appropriately quantify the exposure from known risks;
+Added: • any disposition would not result in decreased earnings, revenue, or cash flow;
+Added: • use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses;
+Added: • any dispositions, investments, or acquisitions, including integration efforts, would not divert management resources.
+Added: A natural disaster, catastrophe or other event could result in severe property damage, which could curtail our operations.
+Added: Adverse weather conditions, such as hurricanes, tornadoes, ice or snow may damage or destroy our facilities, interrupt or curtail our operations, or our customers’ operations, cause supply disruptions and result in a loss of revenue, which may or may not be insured.
+Added: For example, certain of our facilities located in Oklahoma and Pennsylvania have experienced suspensions in operations due to tornado activity or extreme cold weather conditions.
+Added: Some of our operations involve risks of, among other things, property damage, which could curtail our operations.
+Added: Disruptions in operations or damage to a manufacturing plant could reduce our ability to produce products and satisfy customer demand.
+Added: In particular, we have offices and manufacturing facilities in Houston, Texas, and in
+Added: various places throughout the U.S.
+Added: Gulf Coast region.
+Added: These offices and facilities are particularly susceptible to severe tropical storms and hurricanes, which may disrupt our operations.
+Added: Damage to one or more of our manufacturing facilities by severe weather or any other disaster, accident, catastrophe or event, could significantly interrupt our operations.
+Added: Similar interruptions could result from damage to production or other facilities that provide supplies or other raw materials to our plants or other stoppages arising from factors beyond our control.
+Added: These interruptions might involve significant damage to property, among other things, and repairs might take a significant amount of time.
+Added: For example, in the third quarter 2017, we were impacted by idled facilities and operations directly related to Hurricane Harvey’s widespread damage in Texas and Louisiana.
+Added: As a result, our financial results were negatively impacted by foregone revenue and under-absorption of manufacturing costs, and, indirectly, due to supplier and logistical delays.
+Added: Legal and Regulatory Risks:
Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that affect our and our customers’ costs, prohibit or curtail our customers’ operations in certain areas, limit the demand for our products and services or restrict our operations.
35 unchanged sentences
If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where our oil and natural gas exploration and production customers operate, they could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development, and production activities, and perhaps even be precluded from drilling wells, some or all of which could adversely affect demand for our products and services from those customers.
−Removed: Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and development activity in response to significant environmental incidents.
−Removed: Department of the Interior implemented additional safety and certification requirements applicable to drilling activities in the U.S.
−Removed: Gulf of Mexico, imposed additional requirements with respect to exploration,
−Removed: development and production activities in U.S.
−Removed: waters and imposed a moratorium that delayed the approval of drilling plans and well permits in both deepwater and shallow-water areas due to the Macondo well incident.
−Removed: Although neither we nor our products were involved in the incident, the delays caused by the new regulations and requirements had an overall negative effect on drilling activity in U.S.
−Removed: waters, and to a certain extent, our financial results.
−Removed: Another similar environmental incident could result in similar drilling moratoria, and could result in increased federal, state, and international regulation of our and our customers’ operations that could negatively impact our earnings, prospects and the availability and cost of insurance coverage.
+Added: Our financial results could be adversely impacted by changes in regulation of oil and natural gas exploration and development activity in response to significant environmental incidents or climate change actions.
+Added: Environmental incidents such as the Macondo well incident could result in drilling moratoria, and could result in increased federal, state, and international regulation of our and our customers’ operations that could negatively impact our earnings, prospects and the availability and cost of insurance coverage.
Any additional regulation of the exploration and production industry as a whole could result in fewer companies being financially qualified to operate offshore or onshore in the U.S.
1 unchanged sentence
jurisdictions, resulting in higher operating costs for our customers and reduced demand for our products and services.
+Added: In January 2021, President Biden signed an executive order that, among other things, instructed the Secretary of the Interior to pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of federal oil and natural gas permitting and leasing practices.
+Added: Following that executive order, the acting Secretary of the Interior issued an order imposing a 60 day pause on the issuance of new leases, permits and right-of-way grants for oil and gas drilling on federal lands, unless approved by senior officials at the Department of the Interior.
+Added: In March 2021, prior to the expiration of the Secretary of the Interior’s order, President Biden announced that career staff at the Department of the Interior would resume processing oil and gas drilling permits.
+Added: In June 2021, a federal judge for the U.S.
+Added: District Court of the Western District of Louisiana issued a nationwide preliminary injunction against the pause of oil and natural gas leasing on public lands or in offshore waters while litigation challenging that aspect of the executive order is ongoing.
+Added: The full impact of these federal actions remains unclear, and if other restrictions or prohibitions become effective in the future, they could have an adverse impact on our business, financial condition, results of operations and cash flows.
Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities.
9 unchanged sentences
Failure to comply with these laws and regulations or to obtain or comply with permits may result in the inability to conduct certain operational activities, assessment of administrative, civil and criminal penalties, imposition of remedial or corrective action requirements and the imposition of injunctions to prohibit certain activities or force future compliance.
−Removed: Certain environmental laws may impose joint and several liability, without regard to fault or legality of conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment.
+Added: Certain environmental laws may impose joint and several liability, without regard to fault or legality of conduct, on classes of persons who are
+Added: considered to be responsible for the release of a hazardous substance into the environment.
In addition, these risks may be greater for us because the companies we acquire or have acquired may not have allocated sufficient resources and management focus to environmental compliance, potentially requiring rehabilitative efforts during the integration process or exposing us to liability before such rehabilitation occurs.
1 unchanged sentence
The implementation of new laws and regulations could result in materially increased costs, stricter standards and enforcement, larger fines and liability and increased capital expenditures and operating costs, particularly for our customers.
−Removed: Our business operations worldwide are subject to a number of U.S.
−Removed: federal laws and regulations, including restrictions imposed by the U.S.
−Removed: Foreign Corrupt Practices Act (“FCPA”) as well as trade sanctions administered by the Office of Foreign Assets Control and the Commerce Department, as well as similar laws in non-U.S.
−Removed: jurisdictions that govern our operations by virtue of our presence or activities there.
−Removed: We rely on a large number of agents in non-U.S.
−Removed: countries that have been identified as posing a high risk of corrupt activities and whose local laws and customs differ significantly from those in the U.S.
−Removed: In many countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by the regulations applicable to us.
−Removed: Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions, including the UK Bribery Act 2010, (“anti-corruption laws”) prohibit corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity.
−Removed: We may be held responsible for violations by our employees, contractors and agents for violations of anti-corruption laws.
−Removed: We may also be held responsible for violations by an acquired company that occur prior to an acquisition, or subsequent to an acquisition but before we are able to institute our compliance procedures.
−Removed: In addition, our non-U.S.
−Removed: competitors that are not subject to the FCPA or similar anti-corruption laws may be able to secure business or other preferential treatment in such countries by means that such laws prohibit with respect to us.
−Removed: The UK Bribery Act 2010 is broader in scope than the FCPA, applies to public and private sector corruption, and contains no facilitating payments exception.
−Removed: A violation of any of these laws, even if prohibited by our policies, could have a material adverse effect on our business.
−Removed: Actual or alleged violations could damage our reputation, be expensive to defend, impair our ability to do business, and cause us to incur civil and criminal fines, penalties and sanctions.
−Removed: Compliance with regulations relating to export controls, trade sanctions and embargoes administered by the countries in which we operate, including the U.S.
−Removed: Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and similar regulations in non-U.S.
−Removed: jurisdictions also pose a risk to us.
−Removed: We cannot provide products or
−Removed: services to certain countries, companies or individuals subject to trade sanctions of the U.S.
−Removed: and other countries.
−Removed: Furthermore, the laws and regulations concerning import activity, export record keeping and reporting, export controls and economic sanctions are complex and constantly changing.
−Removed: Any failure to comply with applicable legal and regulatory trading obligations could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from governmental contracts, seizure of shipments and loss of import and export privileges.
+Added: Tariffs imposed by the U.S.
+Added: government could have a further severe adverse effect on our results of operations.
+Added: government imposed global tariffs on certain imported steel and aluminum products pursuant to Section 232 of the Trade Expansion Act of 1962, as well as tariffs on imports of various Chinese product (including steel) pursuant to Section 301 of the Trade Act of 1974.
+Added: In response, China and other countries have imposed retaliatory tariffs on a wide range of U.S.
+Added: products, including those containing steel and aluminum.
+Added: In addition, the U.S.
+Added: government recently issued a preliminary determination pursuant to an anti-dumping duty order on certain hot-rolled steel products from Japan, in which it found imports of the subject merchandise were sold in the United States at prices below normal value during the August 2019 to July 2020 time period.
+Added: As a result, the U.S.
+Added: government has preliminarily calculated a dumping margin of 26.81% for imports from Japan of the subject steel products.
+Added: At this time, we cannot predict whether this level of dumping margins will become final or the duty amount that may be imposed.
+Added: Our efforts to mitigate the impact of tariffs on raw materials through the diversification of our supply chain, exemption requests and other measures may not be sufficiently successful.
+Added: Furthermore, a prolonged imposition of tariffs on our goods could have a significant adverse effect on our results of operations.
We are subject to litigation risks that may not be covered by insurance.
15 unchanged sentences
Our excess insurers may also dispute the claims of exhaustion, or may rely on certain policy requirements to delay or deny claims.
−Removed: Furthermore, the various per occurrence and aggregate limits in different insurance policies may result in extended negotiations or the denial of reimbursement for particular claims.
+Added: Furthermore, the various per occurrence and aggregate limits in different insurance policies may result in extended negotiations or the denial of reimbursement
+Added: for particular claims.
For more information on the cost sharing agreements related to this risk, refer to Note 13 Commitments and Contingencies .
14 unchanged sentences
Our insurance policies may not be adequate to cover all liabilities.
−Removed: Further, insurance may not be
−Removed: generally available in the future or, if available, insurance premiums may make such insurance commercially unjustifiable.
+Added: Further, insurance may not be generally available in the future or, if available, insurance premiums may make such insurance commercially unjustifiable.
Moreover, even if we are successful in defending a claim, it could be time-consuming and costly to defend.
3 unchanged sentences
We may incur liabilities for losses associated with these newly acquired companies before we are able to rehabilitate such companies’ quality, safety and environmental programs.
−Removed: Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated, which may have a material adverse effect on our business, consolidated results of operations and consolidated financial condition.
−Removed: We continually seek opportunities to maximize efficiency and value through various transactions, including purchases or sales of assets, businesses, investments, or joint venture interests.
−Removed: These transactions are intended to (but may not) result in the realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or the reduction of risk.
−Removed: Acquisition transactions may use cash on hand or be financed by additional borrowings or by the issuance of our common stock.
−Removed: These transactions may also affect our business, consolidated results of operations and consolidated financial condition.
−Removed: These transactions also involve risks, and we cannot ensure that:
−Removed: • any acquisitions we attempt will be completed on the terms announced, or at all;
−Removed: • any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits;
−Removed: • any acquisitions would be successfully integrated into our operations and internal controls;
−Removed: • the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure, including under the FCPA, or that we will appropriately quantify the exposure from known risks;
−Removed: • any disposition would not result in decreased earnings, revenue, or cash flow;
−Removed: • use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses;
−Removed: • any dispositions, investments, or acquisitions, including integration efforts, would not divert management resources.
Climate change legislation or regulations restricting emissions of greenhouse gases and related divestment and other efforts could increase our operating costs or reduce demand for our products.
3 unchanged sentences
Congress has considered adopting comprehensive legislation to reduce emissions of GHGs, and almost half of the states have already taken legal measures to reduce emissions of GHGs, primarily through measures to promote the use of renewable energy and/or regional GHG cap-and-trade programs.
−Removed: The Environmental Protection Agency (the “EPA”) has already begun to regulate greenhouse gas emissions under the federal Clean Air Act.
+Added: The Environmental Protection Agency (the “EPA”) has attempted to regulate greenhouse gas emissions under the federal Clean Air Act.
In December 2009, the EPA determined that emissions of carbon dioxide, methane and certain other GHGs endanger public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the Earth’s atmosphere and other climatic changes.
−Removed: Accordingly, the EPA has begun adopting rules under the Clean Air Act that, among other things, cover reductions in GHG emissions from motor vehicles, permits for certain large stationary sources of GHGs, and monitoring and annual reporting of GHG emissions from specified GHG emission sources, including oil and natural gas exploration and production operations.
−Removed: Additionally, in May 2016, the EPA issued final new source performance standards governing methane emissions that impose more stringent controls on methane and volatile organic compounds emissions at new and modified oil and natural gas production, processing, storage and transmission facilities.
−Removed: However, in August 2020 the EPA rescinded methane and volatile organic compound emissions standards for new and modified oil and gas transmission and storage infrastructure, as well as methane limits for new and modified oil and gas production and processing equipment.
+Added: In October 2015, the EPA finalized the Clean Power Plan (CPP), which tried to impose additional obligations on the power generation sector to reduce GHG emissions.
+Added: In August 2019, the EPA finalized the repeal of the 2015 regulations and replaced them with the Affordable Clean Energy rule (ACE), which designates heat rate improvement, or efficiency improvement, as the best system of emissions reduction for carbon dioxide from existing coal-fired electric utility generating units.
+Added: In 2021, the U.S.
+Added: Court of Appeals for the District of Columbia struck down the ACE rule but did not reinstate the former CPP regulation.
+Added: The power of the EPA to reissue the CPP under Section 111(d) of the CAA will be decided by the Supreme Court in 2022.
+Added: In August 2020, the EPA rescinded methane and volatile organic compound emissions standards for new and modified oil and gas transmission and storage infrastructure previously promulgated in 2016, as well as methane limits for new and modified oil and gas production and processing equipment.
The EPA also relaxed requirements for oil and gas operators to monitor emissions leaks.
+Added: However, in November 2021, the EPA proposed new NSPS updates and emission guidelines to reduce methane and other pollutants from the oil and gas industry.
The EPA has also adopted rules requiring the reporting of greenhouse gas emissions from specified large greenhouse gas emission sources in the U.S., including oil and natural gas systems.
Efforts have also been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues.
−Removed: In 2015, the U.S.
−Removed: participated in the United Nations Conference on Climate Change, which led to the creation of the Paris Agreement, which requires member countries to review and “represent a progression” in their nationally determined contributions, which set GHG emission reduction goals every five years.
Although the U.S.
1 unchanged sentence
into the agreement in February 2021.
+Added: Under the Paris Agreement, the Biden Administration has committed the United States to reducing its greenhouse gas emissions by 50 - 52% from 2005 levels by 2030.
+Added: In November 2021, the United States and other countries entered into the Glasgow Climate Pact, which includes a range of measures designed to address climate change, including but not limited to the phase-out of fossil fuel subsidies, reducing methane emissions 30% by 2030, and cooperating toward the advancement of the development of clean energy.
The adoption of additional legislation or regulatory programs to reduce emissions of greenhouse gases could require us to incur increased operating costs to comply with new emissions-reduction or reporting requirements.
2 unchanged sentences
In addition to the regulatory efforts described above, there have also been efforts in recent years aimed at the investment community, including investment advisers, sovereign wealth funds, public pension funds, universities and other groups, promoting the divestment of fossil fuel equities as well as to pressure lenders and other financial services companies to limit or curtail activities with companies engaged in the extraction of fossil fuel reserves.
+Added: In connection with such developments, numerous market participants, including certain New York State pension and public employee retirement funds, have announced plans to completely or partially divest from fossil fuel and related stocks or otherwise pursue net-zero portfolio strategies.
If these efforts are successful, our ability to access capital markets may be limited and our stock price may be negatively impacted.
Members of the investment community have recently increased their focus on sustainability practices, including practices related to GHGs and climate change, in the oil and natural gas industry.
−Removed: As a result, we and our customers have come under increasing pressure to improve our sustainability practices.
−Removed: Some of our customers have begun to screen their service providers, including us, for compliance with sustainability metrics.
+Added: As a result, we and our customers have come under increasing pressure to improve our sustainability and other Environmental, Social and Governance (ESG) performance and to increase our public reporting and disclosure on our ESG practices.
+Added: Some of our customers have begun to screen their service providers, including us, for compliance with sustainability metrics and we may incur additional costs to comply with ESG reporting expectations and ESG-linked contracting policies for our customers and suppliers.
Additionally, members of the investment community have begun to screen companies such as ours for sustainability performance before investing in our stock.
4 unchanged sentences
Should we be targeted by any such litigation or investigations, we may incur liability, which, to the extent that societal pressures or political or other factors are involved, could be imposed without regard to the causation of or contribution to the asserted damage, or to other mitigating factors.
−Removed: A natural disaster, catastrophe or other event could result in severe property damage, which could curtail our operations.
−Removed: Adverse weather conditions, such as hurricanes, tornadoes, ice or snow may damage or destroy our facilities, interrupt or curtail our operations, or our customers’ operations, cause supply disruptions and result in a loss of revenue, which may or may not be insured.
−Removed: For example, certain of our facilities located in Oklahoma and Pennsylvania have experienced suspensions in operations due to tornado activity or extreme cold weather conditions.
−Removed: Some of our operations involve risks of, among other things, property damage, which could curtail our operations.
−Removed: Disruptions in operations or damage to a manufacturing plant could reduce our ability to produce products and satisfy customer demand.
−Removed: In particular, we have offices and manufacturing facilities in Houston, Texas, and in various places throughout the U.S.
−Removed: Gulf Coast region.
−Removed: These offices and facilities are particularly susceptible to severe tropical storms and hurricanes, which may disrupt our operations.
−Removed: Damage to one or more of our manufacturing facilities by severe weather or any other disaster, accident, catastrophe or event, could significantly interrupt our operations.
−Removed: Similar interruptions could result from damage to production or other facilities that provide supplies or other raw materials to our plants or other stoppages arising from factors beyond our control.
−Removed: These interruptions might involve significant damage to property, among other things, and repairs might take a significant amount of time.
−Removed: For example, in the third quarter 2017, we were impacted by idled facilities and operations directly related to Hurricane Harvey’s widespread damage in Texas and Louisiana.
−Removed: As a result, our financial results were negatively impacted by foregone revenue and under-absorption of manufacturing costs, and, indirectly, due to supplier and logistical delays.
−Removed: Provisions in our organizational documents and under Delaware law and our rights plan could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.
−Removed: The existence of some provisions in our organizational documents and under Delaware law and our rights plan could delay or prevent a change in control of our company that a stockholder may consider favorable, which could adversely affect the price of our common stock.
+Added: Risks Related to our International Operations:
+Added: Our business operations worldwide are subject to a number of U.S.
+Added: federal laws and regulations, including restrictions imposed by the FCPA as well as trade sanctions administered by the Office of Foreign Assets Control and the Commerce Department, as well as similar laws in non-U.S.
+Added: jurisdictions that govern our operations by virtue of our presence or activities there.
+Added: We rely on a large number of agents in non-U.S.
+Added: countries that have been identified as posing a high risk of corrupt activities and whose local laws and customs differ significantly from those in the U.S.
+Added: In many countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by the regulations applicable to us.
+Added: Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions, including the UK Bribery Act 2010, (“anti-corruption laws”) prohibit corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity.
+Added: may be held responsible for violations by our employees, contractors and agents for violations of anti-corruption laws.
+Added: We may also be held responsible for violations by an acquired company that occur prior to an acquisition, or subsequent to an acquisition but before we are able to institute our compliance procedures.
+Added: In addition, our non-U.S.
+Added: competitors that are not subject to the FCPA or similar anti-corruption laws may be able to secure business or other preferential treatment in such countries by means that such laws prohibit with respect to us.
+Added: The UK Bribery Act 2010 is broader in scope than the FCPA, applies to public and private sector corruption, and contains no facilitating payments exception.
+Added: A violation of any of these laws, even if prohibited by our policies, could have a material adverse effect on our business.
+Added: Actual or alleged violations could damage our reputation, be expensive to defend, impair our ability to do business, and cause us to incur civil and criminal fines, penalties and sanctions.
+Added: Compliance with regulations relating to export controls, trade sanctions and embargoes administered by the countries in which we operate, including the U.S.
+Added: Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and similar regulations in non-U.S.
+Added: jurisdictions also pose a risk to us.
+Added: We cannot provide products or services to certain countries, companies or individuals subject to U.S.
+Added: and other countries’ trade sanctions.
+Added: Furthermore, the laws and regulations concerning import activity, export record keeping and reporting, export controls and economic sanctions are complex and constantly changing.
+Added: Any failure to comply with applicable legal and regulatory trading obligations could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from governmental contracts, seizure of shipments and loss of import and export privileges.
+Added: Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows and could have an adverse effect on our results of operations.
+Added: Fluctuations in currency exchange rates could be material to us depending upon, among other things, our manufacturing locations and the sourcing for our raw materials and components.
+Added: In particular, we are sensitive to fluctuations in currency exchange rates between the U.S.
+Added: dollar and each of the Canadian dollar, the British pound sterling, the Euro, and, to a lesser degree, the Mexican peso, the Chinese yuan, the Singapore dollar, and the Saudi riyal.
+Added: There may be instances in which costs and revenue will not be matched with respect to currency denomination.
+Added: As a result, to the extent that we expand on a global basis, higher portions of revenue, costs, assets and liabilities will be subject to fluctuations in foreign currency valuations.
+Added: We may experience economic loss and a negative impact on earnings or net assets solely as a result of foreign currency exchange rate fluctuations.
+Added: Further, the markets in which we operate could restrict the removal or conversion of the local currency, resulting in our inability to hedge against these risks.
+Added: Risks Related to our Common Stock, Indebtedness and Financial Condition:
+Added: Our common stock price has been volatile, and we expect it to continue to remain volatile in the future.
+Added: The market price of common stock of companies engaged in the oil and natural gas equipment manufacturing and services industry has been volatile.
+Added: Likewise, the market price of our common stock has varied significantly in the past.
+Added: For example, in 2021, the market price of our common stock reached a high of $28.50 per share on June 2, 2021 and a low of $12.09 per share on January 4, 2021.
+Added: Additionally, the Reverse Stock Split reduced the number of shares in our public float, which may limit trading and liquidity and increase volatility until more shares become available, if ever.
+Added: We expect our stock price to continue to remain volatile given the cyclical nature of our industry and our limited public float.
+Added: We have a significant amount of indebtedness.
+Added: Our leverage and debt service obligations restrict our operations and make us more vulnerable to adverse economic conditions.
+Added: We currently have a substantial amount of indebtedness, including approximately $257.0 million of 9.00% convertible secured notes due August 2025 (“2025 Notes”).
+Added: Our level of indebtedness and restrictions in our debt agreements have significant consequences for our future prospects, including limiting our liquidity and flexibility in obtaining additional financing.
+Added: In addition, we may have difficulty making debt service payments on our indebtedness as such payments become due.
+Added: Furthermore, our $179.0 million senior secured revolving credit facility (“Credit Facility”), which had no borrowings outstanding as of December 31, 2021, is scheduled to mature the earlier of September 8, 2026 or 91 days prior to the maturity of the 2025 Notes.
+Added: Our level of indebtedness and the terms of our debt agreements affect our operations in several ways, including the following:
+Added: • requiring us to dedicate a substantial portion of our cash flow from operations to servicing existing debt obligations;
+Added: • increasing our vulnerability to general adverse economic and industry conditions;
+Added: • limiting our ability to borrow funds, dispose of assets, pay dividends and make certain investments;
+Added: • reducing our flexibility to plan for, and react to, changes in the economy and in our industry;
+Added: • impairing our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes.
+Added: Our ability to pay our expenses, and fund our working capital needs and debt obligations, will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors that are outside of our control.
+Added: As a result of these factors, our business may not generate sufficient cash flow from operations to enable us to meet our debt obligations.
+Added: In addition, under the terms of our Credit Facility, any failure to comply with the financial or other covenants of our indebtedness would result in an event of default, which would cause some or all of our indebtedness to become immediately due and payable and have a material adverse effect on our business, financial condition and results of operations.
+Added: The indenture governing our 2025 Notes and our Credit Facility contains operating and financial restrictions that restrict our business and financing activities.
+Added: Our indenture and Credit Facility contain, and any future indebtedness we incur may contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things:
+Added: • pay dividends on, purchase or redeem our common stock;
+Added: • make certain investments;
+Added: • incur or guarantee additional indebtedness or issue certain types of equity securities;
+Added: • create certain liens;
+Added: • sell assets, including equity interests in our restricted subsidiaries;
+Added: • redeem or prepay subordinated debt or debt that is unsecured or secured on a basis junior to our notes;
+Added: • restrict dividends or other payments of our restricted subsidiaries;
+Added: • consolidate, merge or transfer all or substantially all of our assets;
+Added: • engage in transactions with affiliates;
+Added: • create unrestricted subsidiaries;
+Added: • execute our acquisition strategy.
+Added: Our Credit Facility also contains covenants, which, among other things, require us in certain circumstances, on a consolidated basis, to maintain specified financial ratios or conditions.
+Added: As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.
+Added: Our ability to borrow under the Credit Facility and comply with some of the covenants, ratios or tests contained in our indenture and Credit Facility may be affected by events beyond our control.
+Added: If market or other economic conditions deteriorate, and there is a decrease in our accounts receivable and inventory, our ability to borrow under our Credit Facility will be reduced and our ability to comply with these covenants, ratios or tests may be impaired.
+Added: A failure to comply with the covenants, ratios or tests would result in an event of default, which, if not cured or waived, would cause some or all of our indebtedness to become immediately due and payable and have a material adverse effect on our business, financial condition and results of operations.
+Added: Our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level, industry conditions and credit rating.
+Added: Our ability to access the capital and credit markets is limited by, among other things, oil and natural gas prices, our existing capital structure, our credit ratings, the state of the economy, the health of the drilling and overall oil and natural gas industry, trends among investors to avoid companies associated with the production of hydrocarbon products, and the liquidity of the capital markets.
+Added: Many of the factors that affect our ability to access capital markets are outside of our control and may be negatively impacted by market events.
+Added: Recent trends and conditions in the capital and credit markets with respect to the energy sector, including environmental and climate change related divestment campaigns, limit our ability to access these markets or may significantly increase our cost of capital.
+Added: Low levels of exploration and drilling activity have caused and may continue to cause lenders to increase the interest rates under our credit facilities, enact tighter lending standards, refuse to refinance existing debt on acceptable terms or at all and may reduce or cease to provide funding.
+Added: If we are unable to access the capital or credit markets on terms acceptable to us, it could have a material adverse effect on our business, financial condition, results of operations, cash flows and liquidity, particularly in respect of our ability to repay or refinance our debt .
+Added: We have incurred impairment charges and we may incur additional impairment charges in the future.
+Added: We evaluate our long-lived assets, including property and equipment, intangible assets with definite lives and operating lease right of use assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable.
+Added: In performing our review for impairment, future cash flows expected to result from the use of the asset and its eventual value upon disposal are estimated.
+Added: If the undiscounted future cash flows are less than the carrying amount of the assets, there is an indication that the asset may be impaired.
+Added: The amount of the impairment is measured as the difference between the carrying value and the estimated fair value of the asset.
+Added: The fair value is determined either through the use of an external valuation, or by means of an analysis of discounted future cash flows based on expected utilization.
+Added: For the year ended December 31, 2021, we did not recognize any impairment charges.
+Added: For the year ended December 31, 2020, we recognized impairment charges for property and equipment, intangible assets and operating lease right of use assets totaling $15.1 million, $5.3 million and $15.4 million, respectively.
+Added: See Note 8 Impairments of Long-Lived Assets for further information related to these charges.
+Added: If we determine that the carrying value of our long-lived assets is less than their fair value, we would be required to record additional charges in the future, which could adversely affect our financial condition and results of operations.
+Added: Provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.
+Added: The existence of some provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company that a stockholder may consider favorable, which could adversely affect the price of our common stock.
Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for a third party to acquire control of our company, even if the change of control would be beneficial to our stockholders.
6 unchanged sentences
In addition, our amended and restated bylaws establish advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders.
−Removed: Furthermore, if SCF’s ownership is reduced to less than 15%, certain restrictions under Delaware law on business combinations with greater than 15% stockholders will begin to apply to us.
−Removed: Further, in April 2020, our board of directors adopted a shareholder rights plan, implementing what is commonly known as a “poison pill.” This poison pill significantly increases the costs that would be incurred by an unwanted third party acquirer if such party owns or commences a tender offer for 10% (or 20% in the case of a holder who or which is entitled to file and files a statement on Schedule 13G) or more of our outstanding common stock.
−Removed: The existence of this poison pill could delay, deter or prevent a takeover of us.
−Removed: The shareholder rights plan is scheduled to expire in April 2021.
−Removed: LESA, through SCF Partners (“SCF”), may significantly influence the outcome of stockholder voting and may exercise this voting power in a manner adverse to our other stockholders.
+Added: LESA, through SCF, may significantly influence the outcome of stockholder voting and may exercise this voting power in a manner adverse to our other stockholders.
As of February 25, 2022, SCF held approximately 748 thousand shares of our common stock, equal to approximately 13% of the outstanding common stock at that date.
−Removed: LESA is the ultimate general partner of SCF and will exert significant influence over us, including over the outcome of most matters requiring a stockholder vote,
−Removed: such as the election of directors, adoption of amendments to our charter and bylaws and approval of transactions involving a change of control.
+Added: LESA is the ultimate general partner of SCF and will exert significant influence over us, including over the outcome of most matters requiring a stockholder vote, such as the election of directors, adoption of amendments to our charter and bylaws and approval of transactions involving a change of control.
LESA’s interests may differ from our other stockholders, and SCF may vote its common stock in a manner that may adversely affect those stockholders.
SCF is a party to a registration rights agreement with us, which requires us to effect the registration of its shares in certain circumstances.
−Removed: SCF exercised such rights in the past.
+Added: SCF has exercised such rights in the past.
Sales of substantial amounts of our common stock by SCF, or the perception that such sales could occur, may adversely affect prevailing market prices of our common stock.
−Removed: Certain of our directors may have conflicts of interest because they are also directors or officers of SCF.
−Removed: The resolution of these conflicts of interest may not be in the best interests of our Company or our other stockholders.
−Removed: Certain of our directors, namely David C.
−Removed: Baldwin and Andrew L.
−Removed: Waite, are currently officers of LESA.
−Removed: In addition, our CEO, directly and through a trust for his children who are primary beneficiaries, holds an ownership interest in various SCF funds.
−Removed: These positions may create conflicts of interest because of the ownership interest these directors and Mr.
−Removed: Gaut maintain.
−Removed: Duties as directors or officers of LESA may conflict with such individuals’ duties as one of our directors or officers regarding business dealings and other matters between SCF and us.
−Removed: The resolution of these conflicts may not always be in the best interest of our Company or our other stockholders.
−Removed: Please read “We have renounced any interest in specified business opportunities, and SCF and its director nominees on our board of directors generally have no obligation to offer us those opportunities.”
−Removed: We have renounced any interest in specified business opportunities, and SCF and its director nominees on our board of directors generally have no obligation to offer us those opportunities.
+Added: We have renounced any interest in specified business opportunities.
Our certificate of incorporation provides that, so long as we have a director or officer who is affiliated with SCF (an “SCF Nominee”) and for a continuous period of one year thereafter, we renounce any interest or expectancy in any business opportunity in which any member of the SCF group participates or desires or seeks to participate in and that involves any aspect of the energy equipment or services business or industry, other than (i) any business opportunity that is brought to the attention of an SCF Nominee solely in such person’s capacity as a director or officer of our Company and with respect to which no other member of the SCF group independently receives notice or otherwise identifies such opportunity and (ii) any business opportunity that is identified by the SCF group solely through the disclosure of information by or on behalf of our Company.
1 unchanged sentence
We are not prohibited from pursuing any business opportunity with respect to which we have renounced any interest.
+Added: No SCF nominee currently serves on our board of directors and, therefore, this provision in our certificate of incorporation is scheduled to expire in December 2022.
SCF has investments in other oilfield service companies that may compete with us, and SCF and its affiliates, other than our Company, may invest in other such companies in the future.
6 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.