What changed in this filing

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Item 1A. Risk Factors

2023-02-10 compared with 2022-02-22 · 140 added, 89 removed, 361 unchanged (39% of the section changed)

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Please refer to the explanation of the qualifications and limitation on forward-looking statements set forth on page ii hereof.

Risks Related to the COVID-19 Pandemic

The COVID-19 pandemic significantly reduced demand for our services, and had, and may in the future have, a material adverse effect on our operations, business and financial results.

We face risks related to public health crises, including the ongoing COVID-19 pandemic.

Many of the COVID-19 precautions taken by governments and businesses, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews and shelter-in-place orders that were enacted in 2020 have been lifted or reduced.

However, during 2020 these actions resulted in a significant and swift reduction in international and U.S.

economic activity.

The collapse in the demand for oil during 2020 caused by this unprecedented global health and economic crisis, coupled with an oil oversupply, had a material adverse impact on the demand for our services and on our financial condition, results of operations and cash flows.

Additionally, the COVID-19 pandemic could worsen despite the increased availability of vaccines in certain jurisdictions, including as a result of the emergence of more infectious strains of the virus, vaccine hesitancy or increased business and social activities, which may cause governmental authorities to reconsider restrictions on business and social activities.

We are closely monitoring the continuing effects of the pandemic on our customers, operations, and employees.

During 2021, oil demand and the demand for our services recovered from the lows experienced during the onset of the pandemic.

The extent to which our operating and financial results will be affected by COVID-19 in the future will depend on various factors and consequences, such as the ultimate duration and scope of the pandemic, any additional actions by businesses and governments in response to the pandemic, and the speed and effectiveness of responses to combat the virus.

COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate the other risk factors that we identify herein.

COVID-19 may also materially adversely affect our operating and financial results in a manner that is not currently known to us or that we do not currently consider presenting significant risks to us.

We cannot predict the ultimate duration or scope of the COVID-19 pandemic.

Accordingly, if the pandemic worsens or if actions taken by governments and businesses in response to the pandemic in 2020 are re-enacted, the demand for our services may fall again, which would have a material adverse impact on our financial condition, results of operations and cash flows.

Potential future vaccine mandates for employers could have a material adverse impact on our business and results of operations.

On September 9, 2021, President Biden announced plans for the federal Occupational Safety and Health Administration (“OSHA”) to issue an Emergency Temporary Standard (“ETS”) mandating that all employers with more than 100 employees ensure their workers are either fully vaccinated against COVID-19 or produce, on a weekly basis, a negative COVID-19 test (the “Vaccine Mandate”).

OSHA issued the ETS on November 4, 2021, requiring covered employers to comply with the Vaccine Mandate beginning with January 4, 2022 or face substantial penalties for non-compliance.

Supreme Court issued a stay on the Vaccine Mandate on January 13, 2022, and OSHA thereafter withdrew the ETS.

It is possible that future vaccine mandates may be announced by the federal, state or local jurisdictions in which we operate.

Although it is not possible to predict with certainty the impact of these measures on our business and workforce, these requirements may result in attrition, including attrition of skilled labor, and difficulty securing future labor needs, which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to the OneStim Acquisition

The Company's results may suffer if it does not effectively manage its expanded operations following the OneStim Acquisition.

Since the OneStim Acquisition, the size of the Company’s business has increased significantly.

In addition, we now own and operate two sand mines.

While we have retained qualified personnel to operate the mines, we have not undertaken mining operations in the past.

The Company’s future success will depend, in part, on the Company’s ability to manage this expanded business, which poses numerous risks and uncertainties.

The Schlumberger Parties have significant influence over us.

As of February 18, 2022, Schlumberger owned approximately 30.5% of the outstanding shares of Common Stock.

As long as Schlumberger owns or controls a significant percentage of the Company’s outstanding voting power, they will have the ability to significantly influence corporate actions requiring stockholder approval, including the election and removal of directors, any amendment to the Company’s certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of the Company’s assets.

Schlumberger’s influence over our management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of the shares of Class A Common Stock to decline or prevent stockholders from realizing a premium over the market price for the shares of Class A Common Stock.

Pursuant to the Amended and Restated Stockholders Agreement, dated as of December 13, 2020, Schlumberger has designated two directors to the Company’s board of directors.

Schlumberger’s right to designate directors to our Board is subject to the Schlumberger’s ownership percentage of the total outstanding shares of Common Stock.

If Schlumberger and its affiliates collectively beneficially own:

(a) 20% or greater of the outstanding shares of Common Stock, they will have the right to appoint two directors or (b) at least 10% but less than 20% of the outstanding shares of Common Stock, they will have the right to appoint one director.

Schlumberger’s interests may not align with the Company’s interests or the interests of the Company’s other stockholders.

Following the OneStim Acquisition, we expanded our operations to Canada and may be subject to increased business and economic risks.

The Company has historically owned and operated its assets exclusively within the United States.

In connection with the OneStim Acquisition, we acquired certain Canadian assets and liabilities, which marked our entry into a new geographical territory where we had limited experience in owning and operating assets and providing our services.

As a result, we are subject to a variety of risks inherent in doing business internationally, including:

risks related to the legal and regulatory environment in foreign jurisdictions;

fluctuations in currency exchange rates;

complying with multiple tax jurisdictions;

difficulties in staffing and managing international operations and the increased travel, infrastructure and compliance costs associated with international locations and employees;

regulations that might add difficulties in repatriating cash earned outside the United States and otherwise preventing us from freely moving cash;

complying with statutory equity requirements;

and complying with the U.S.

Foreign Corrupt Practices Act and the Corruption of Foreign Public Officials Act (Canada) and other similar laws in Canada.

If we fail to manage our operations in Canada successfully, our business may suffer.

Risks Related to the Oil and Natural Gas Industry

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In January 2021, President Biden issued an executive order that called for issuance of proposed rules by no later than September 2021 that would restore rules for methane standards applicable to new, modified, and reconstructed sources and establish new methane and volatile organic compound standards applicable to existing oil and gas operations, including the production, transmission, processing and storage segments.

On November 2021, the EPA proposed such a rule.

Such a rule could make it significantly more difficult and/or costly to drill and operate oil and gas wells.

On November 2021, the EPA proposed such a rule and in November 2022, EPA issued a proposal that updates and expands on the November 2021 proposal.

If adopted, such a rule could make it significantly more difficult and/or costly to drill and operate oil and gas wells.

As a result, such rule, if adopted, could result in a decline in the completion of new oil and gas wells or the recompletion of existing wells, which could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the demand for our services.

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Such events could have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.

Additionally, in January 2021, the U.S.

Department of the Interior issued an order that effectively suspends new oil and gas leases and drilling permits on non-Indian federal lands and waters for a period of 60 days, but the suspension does not limit existing operations under valid leases.

President Biden followed with an executive order that ordered the Secretary of the Interior to pause the issuance of new oil and gas leases on federal public lands and offshore waters pending completion of a comprehensive review of federal oil and gas permitting and leasing practices that take into consideration potential climate and other impacts associated with oil and gas activities.

This order further directs agencies to identify fossil fuel subsidies provided by such agencies and take measures to ensure that federal funding is not directly subsidizing fossil fuels, with an objective of eliminating fossil fuel subsidies from federal budget requests beginning in 2022.

This order is currently being challenged in court by industry groups.

Additional legislation, executive actions, regulations or other regulatory initiatives to limit, delay or prohibit hydraulic fracturing or other aspects of oil and gas development may be pursued.

In the event that these or other new federal restrictions, delays or prohibitions relating to the hydraulic fracturing process are adopted in areas where we or our customers conduct business, we or our customers may incur additional costs or permitting requirements to comply with such federal requirements that may be significant and, in the case of our customers, also could result in added restrictions or delays in the pursuit of exploration, development, or production activities, which would in turn reduce the demand for our services and have a material adverse effect on our results of operations.

Federal legislation and regulatory initiatives relating to drilling on federal lands could harm our business and negatively impact the oil and natural gas industry.

Businesses and operations of our customers may be carried out on federal lands.

The Biden administration has announced that it is considering more stringent regulations for operations on such lands, and in January 2021, the U.S.

Department of the Interior issued an order that effectively suspends new oil and gas leases and drilling permits on non-Indian federal lands and waters for a period of 60 days.

However, the suspension does not limit existing operations under valid leases.

President Biden followed with an executive order directing the Secretary of the Interior to pause the issuance of new oil and gas leases on federal public lands and offshore waters pending completion of a comprehensive review of federal oil and gas permitting and leasing practices that take into consideration potential climate and other impacts associated with oil and gas activities.

The leasing suspension has been the subject of several lawsuits, resulting in conflicting decisions on the legality of the lease suspension.

For example, in August 2022, the U.S.

District Court for the Western District of Louisiana blocked the Biden administration’s ability to unilaterally pause oil and gas leasing in 13 states, holding that the U.S.

Department of the Interior violated federal law when it canceled onshore and offshore leasing on federal lands.

While the various lawsuits were pending, in August 2022, Congress passed the 2022 IRA which, among other things, makes changes to the federal oil and gas leasing program (including increasing royalty rates and implementing policies to discourage venting and flaring) and requires the Biden administration to hold several oil and gas lease auctions, including many that had been suspended or cancelled.

Additionally, in November 2021, the U.S.

Department of the Interior released a report on the federal oil and gas leasing program, which found that the current program fails to serve the public interest.

The report makes several recommendations, including increasing royalty rates and adding new restrictions on what lands are made available for oil and gas development to minimize leasing of lands with low potential for development.

Department of the Interior is expected to propose rules based on these recommendations.

In April 2022, the U.S.

Department of the Interior also announced that the U.S.

Bureau of Land Management would post notices for significantly reformed onshore lease sales that would promote the public interest in public lands while addressing deficiencies in the current federal oil and gas leasing program.

The new lease sales will incorporate many of the recommendations in the U.S.

Department of the Interior report on the federal leasing program.

Such scheduled sales began in June 2022.

Furthermore, a group of oil and gas related interests has also sued alleging that lease sales are not occurring as required under the Mineral Leasing Act.

In addition, where lease sales have occurred, environmental groups have sued to block the sales.

On June 1, 2022, the U.S.

District Court for the District of Columbia granted a motion to voluntarily dismiss three cases after the U.S.

Bureau of Land Management and other defendants agreed to conduct more robust environmental reviews of certain oil and gas leases and reconsider the cumulative climate effects of these leases.

The settlement agreements apply to nearly four

million acres of land in Colorado, Wyoming, Utah, Montana, and New Mexico.

Bureau of Land Management fails to complete its obligations under the settlement agreements, the plaintiffs can reinstate the litigation.

To the extent our customers operate on leased federal land, these and other regulatory actions could have a material adverse effect on the Company and our industry.

Our business depends on domestic capital spending by the oil and natural gas industry, and reductions in capital spending could have a material adverse effect on our liquidity, results of operations and financial condition.

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During the year 2022, the posted WTI price traded at an average of $94.90 per barrel (“Bbl”), as compared to the 2021 average of $68.13 per Bbl and the 2020 average of $39.16 per Bbl.

The combined impact of the COVID-19 pandemic and the breakdown of OPEC+ production cut negotiations in Spring 2020 caused oil prices to drop to historical lows in April 2020.

During the fourth quarter of 2022, WTI oil prices averaged $82.79 compared to $93.06 in the third quarter of 2022 and $77.33 in the fourth quarter of 2021.

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Therefore, our customers’ operations in certain areas may be interrupted or suspended for varying lengths of time, causing a loss of revenue to us and adversely affecting our results of operations in support of those customers.

In January 2021, the U.S.

As described above, in January 2021, the U.S.

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This order is currently being challenged by industry groups.

For additional information, see the risk factor titled “Federal legislation and regulatory initiatives relating to drilling on federal lands could harm our business and negatively impact the oil and natural gas industry.”

Oil and natural gas companies’ operations using hydraulic fracturing are substantially dependent on the availability of water.

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Applicable laws impose restrictions and strict controls regarding the discharge of pollutants into waters of the United States and require that permits or other approvals be obtained to discharge pollutants to such waters.

Additionally, in 2016 EPA engaged a pretreatment standard that prohibits the discharge of wastewater pollutants from onshore unconventional oil and gas extraction facilities to publicly owned treatment works.

Additionally, in 2016 EPA adopted a pretreatment standard that prohibits the discharge of wastewater pollutants from onshore unconventional oil and gas extraction facilities to publicly owned treatment works.

Further, regulations implemented under both federal and state laws prohibit the discharge of produced water and sand, drilling fluids, drill cuttings and certain other substances related to the natural gas and oil industry into coastal waters.

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economy to net-zero carbon by 2050.

At the 27th Conference of the Parties in 2022, President Biden reinforced these commitments and emphasized efforts to reduce methane emissions from the oil and gas sector.

Programs addressing climate change may limit the ability to produce crude oil and natural gas, require stricter limits on the release of methane or other GHGs, increase reporting and/or other compliance obligations associated with GHG emissions, limit the ability to explore in new areas, limit the construction of pipelines and related equipment or may make it more expensive to produce, any of which may decrease the demand for our services and our revenues.

Related, President Biden has called on OPEC+ to produce more oil, which if heeded could result in lower oil and gas prices and lower domestic production.

As of February 2, 2022, OPEC+ authorized a 400,000-barrel-per-day increase for March 2022.

Incentives to conserve energy or use alternative energy sources, which can be part of climate change programs, may increase the competitiveness of alternative energy sources (such as wind, solar, geothermal, tidal and biofuels) or increase the focus on reducing the use of combustion engines in transportation (such as governmental mandates that ban the sale of new gasoline-powered automobiles).

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An increased societal and governmental focus on ESG and climate change issues may adversely impact our business, impact our access to investors and financing, and decrease demand for our services.

An increased expectation that companies address environmental (including climate change), social and governance (“ESG”) matters may have a myriad of impacts on our business.

An increased expectation that companies address ESG matters (including climate change) may have a myriad of impacts on our business.

Some investors and lenders are factoring these issues into investment and financing decisions.

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Additionally, some potential sources of investment or financing have announced an intention to avoid or limit investment in companies that engage in hydraulic fracturing.

For example, in 2020, Deutsche Bank announced that it would no longer finance oil and gas projects that use hydraulic fracturing in countries with scarce water supplies, and BlackRock affirmed its commitment to divest from investments in fossil fuels due to concerns over climate change.

In 2021, BlackRock announced a continuing commitment to the goal of net zero GHG emissions by 2050 or sooner, and noted that key actions for 2021 included asking companies to disclose a business plan aligned with the goal of achieving net zero global GHG emissions by 2050 and using “investment stewardship” to ensure companies its clients invest in are mitigating climate risk and considering opportunities presented by the net zero transition.

While a substantial number of major banks and financing sources remain active in investments related to hydraulic fracturing, it is possible that the investment avoidance or limitation theme could expand in the future and restrict access to capital for companies like us.

Moreover, while we have and may continue to create and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.

Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to

misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.

Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.

Additionally, to the extent that we report GHG emissions data, the methodologies that we use to calculate our emissions may change over time based upon changing industry standards.

We note that standards and expectations regarding the processes for measuring and counting GHG emissions and GHG emission reductions are evolving, and it is possible that our approach to measuring our emissions maybe considered inconsistent with common or best practices with respect to measuring and accounting for such matters.

If our approaches to such matters fall out of step with common or best practice, we may be subject to additional scrutiny, criticism, regulatory and investor engagement or litigation, any of which may adversely impact our business, financial condition or results of operation.

Furthermore, the SEC has announced proposed rules that, among other matters, will establish a framework for reporting climate related risks.

To the extent that any proposed rules impose additional reporting obligations, we could face increased

Separately, the SEC has also announced that it is scrutinizing existing climate change related disclosure in public filings, increasing the potential for enforcement if the SEC were to allege our existing climate disclosures are misleading or deficient.

Furthermore, in November 2022, the U.S.

Department of Labor adopted final rules that allow plan fiduciaries to consider climate change and other ESG factors when they select retirement investments and exercise shareholder rights, such as proxy voting.

Should plan investors decide to not invest in us based on ESG factors, our business and access to capital may be negatively impacted.

In addition, ESG and climate change issues may cause consumer preference to shift toward other alternative sources of energy, lowering demand for oil and natural gas and consequently lowering demand for our services.

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Obtaining employees with CDLs can be challenging during times when the trucking industry has driver shortages, as competition for qualified employees is often more intense.

If we are unable to obtain trucking services on a timely basis or the services of a sufficient number of field employees with CDLs, it could have a material adverse impact on our financial condition, results of operations and cash flows.

If we are unable

to obtain trucking services on a timely basis or the services of a sufficient number of field employees with CDLs, it could have a material adverse impact on our financial condition, results of operations and cash flows.

In addition, potential liability and unfavorable publicity associated with accidents in the trucking industry can be severe and occurrences are unpredictable.

The number and severity of litigation claims may be worsened by distracted driving by both

truck drivers and other motorists.

The number and severity of litigation claims may be worsened by distracted driving by both truck drivers and other motorists.

Our transportation operations often involve traveling on unpaved roads located in rural areas, increasing the risk of accidents.

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Some environmental laws and regulations may impose strict liability, which means that in some situations we could be exposed to liability as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties.

Remedial and abatement costs and other damages arising as a result of environmental and occupational health and safety laws and costs associated with changes in these laws and regulations could be significant and have a material adverse effect on our liquidity, consolidated results of operations and financial condition.

Remedial and abatement costs and other damages arising as a result of environmental and occupational health and safety laws and costs

associated with changes in these laws and regulations could be significant and have a material adverse effect on our liquidity, consolidated results of operations and financial condition.

Laws and regulations protecting the environment generally have become more stringent in recent years and are expected to continue to do so, which could lead to material increases in costs for future environmental compliance and remediation.

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In July 2020, the FWS published a 90-day finding that a 2018 petition seeking that the dunes sagebrush lizard be listed as endangered or threatened presented substantial evidence indicating that listing may be warranted.

In November 2021, an environmental group filed a notice of intent to sue the U.S.

Department of the Interior and the FWS for unlawfully delaying protection of the dunes sagebrush lizard and five other species.

According to the petition, if a determination is not made by January 2022, the environmental group will file suit to enforce the ESA.

In May 2022, an environmental group filed suit against the U.S.

Department of the Interior and the FWS alleging that they have unlawfully delayed protection of the dunes sagebrush.

If the dunes sagebrush lizard is listed as an endangered or threatened species, our operations and the operations of our customers in any area that is designated as the dunes sagebrush lizard’s habitat may be limited, delayed or, in some circumstances, prohibited, and we and our customers could be required to comply with expensive mitigation measures intended to protect the dunes sagebrush lizard and its habitat.

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Limits on our ability to effectively use or implement new technologies may have a material adverse effect on our business, financial condition and results of operations.

The ability or willingness of OPEC and other oil exporting nations to set and maintain production levels and/or the impact of sanctions on Russia related to the war in Ukraine may have a significant impact on natural gas commodity prices.

The Organization of Petroleum Exporting Countries and their allies (collectively, OPEC+), is an intergovernmental organization that seeks to manage the price and supply of oil on the global energy market.

Actions taken by OPEC+ members, including those taken alongside other oil exporting nations, have a significant impact on global oil supply and pricing.

For example, OPEC+ and certain other oil exporting nations have previously agreed to take measures, including production cuts, to support crude oil prices.

In March 2020, members of OPEC+ considered extending and potentially increasing these oil production cuts, however these negotiations were unsuccessful.

As a result, Saudi Arabia announced an immediate reduction in export prices and Russia announced that all previously agreed oil production cuts expired on April 1, 2020.

These actions led to an immediate and steep decrease in oil prices.

Conversely, sanctions imposed on Russia in the last few months have increased prices.

In October 2022, OPEC+ again determined to reduce production of oil, by approximately 2 million barrels per day.

At its meeting on December 4, 2022, OPEC+ agreed to keep its current policy unchanged as the oil markets struggle to assess the impact of a slowing Chinese economy on demand, and the Group of Seven Nations agreed on a price cap on Russian oil supply.

There can be no assurance that OPEC+ members and other oil exporting nations will agree to future production cuts or other actions to support and stabilize oil prices, nor can there be any assurance that sanctions or other global conflicts will not further impact oil prices.

Uncertainty regarding future sanctions or actions to be taken by OPEC+ members or other oil

exporting countries could lead to increased volatility in the price of oil and natural gas, which could adversely affect our business, future financial condition and results of operations.

Risks Related to the TRAs

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The TRAs generally provide for the payment by the Company to each TRA Holder of 85% of the net cash savings, if any, in U.S.

federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) as a result of certain increases in tax basis, net operating losses available to the Company as a result of the corporate reorganization performed in connection with the IPO (the “Corporate Reorganization”), and certain benefits attributable to imputed interest.

federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually recognizes (or is deemed to recognize in certain circumstances) as a result of certain increases in tax basis, net operating losses available to the Company as a result of the corporate reorganization performed in connection with the IPO (the “Corporate Reorganization”), and certain benefits attributable to imputed interest.

The Company will retain the benefit of the remaining 15% of these cash savings.

The Company is a holding company and has no material assets other than its equity interest in Liberty LLC.

Because the Company has no independent means of generating revenue, its ability to make payments under the TRAs is dependent on the ability of Liberty LLC to make distributions to the Company in an amount sufficient to cover its obligations under the TRAs.

The Company is a holding company and has no material assets other than its direct and indirect equity interests in its subsidiaries.

Because the Company has no independent means of generating revenue, its ability to make payments under the TRAs is dependent on the ability of its subsidiaries to make distributions to the Company in an amount sufficient to cover its obligations under the TRAs.

To the extent that the Company is unable to make payments under the TRAs for any reason, such payments will be deferred and will accrue interest until paid.

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In addition, payments the Company makes under the TRAs will be increased by any interest earned from the due date (without extensions) of the corresponding tax return.

Payments under the TRAs commenced in 2020 and so long as the tax savings are realized and the TRAs are not terminated, payments are anticipated to continue for 15 years after the date of the last redemption of the Liberty LLC Units.

Payments under the TRAs commenced in 2020 and so long as the tax savings are recognized and the TRAs are not terminated, payments are anticipated to continue for 15 years after the date of the last redemption of the Liberty LLC Units, which occurred on January 31, 2023.

Accordingly, if the applicable U.S.

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As a result, the Company’s obligations under the TRAs could have a substantial negative impact on its liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms of business combinations or changes of control.

There can be no assurance that we will be able to finance our obligations under the TRAs.

There can be no assurance we will be able to finance our obligations under the TRAs.

Furthermore, as a result of this payment obligation, holders of our Class A Common Stock could receive substantially less consideration in connection with a change in control transaction than they would receive in the absence of such obligation.

Since our payment obligations under the TRAs will not be conditioned upon the TRA Holders’ having continued interest in the Company or liberty LLC, the TRA Holders’ interests may conflict with those of the holders of our Class A Common Stock.

Because our payment obligations under the TRAs will not be conditioned upon the TRA Holders’ having continued interest in the Company or Liberty LLC, the TRA Holders’ interests may conflict with those of the holders of our Class A Common Stock.

Payments under the TRAs are based on the tax reporting positions that we will determine.

The TRA Holders will not reimburse us for any payments previously made under the TRAs if any tax benefits that have given rise to payments under the TRAs are subsequently disallowed, except that excess payments made to any TRA Holder will be netted against payments that would otherwise be made to such TRA Holder, if any, after our determination of such excess.

The TRA Holders will not reimburse us for any payments previously made under the TRAs if any tax benefits that have given rise to payments under the TRAs are subsequently disallowed in an audit, except that excess payments made to any TRA Holder will be netted against payments that would otherwise be made to such TRA Holder, if any, after our determination of such excess.

As a result, in such circumstances the Company could make payments that are greater than its actual cash tax savings, if any, and may not be able to recoup those payments, which could adversely affect the Company’s liquidity.

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General Risks Related to our Business

COVID-19 has had in the past, and may in the future have, a material adverse effect on the demand for our services, our operations, business and financial results.

The COVID-19 pandemic created significant uncertainty and economic disruption, as well as heightened volatility in the prices of oil and natural gas.

Although government response measures to COVID-19 have generally relaxed, the ultimate impact of this pandemic is uncertain and subject to change.

We are closely monitoring the continuing effects of the pandemic on our customers, operations, and employees.

Oil demand and the demand for our services have since recovered from the lows experienced during the onset of the pandemic.

COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate the other risk factors that we identify herein.

We cannot predict the ultimate duration or scope of the COVID-19 pandemic or the response of the overall economy and the financial markets to the COVID-19 pandemic and response measures.

We may be adversely affected by uncertainty in the global financial markets and the deterioration of the financial condition of our customers.

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Further, if a customer was to enter into bankruptcy, it could also result in the cancellation of all or a portion of our service contracts with such customer at significant expense or loss of expected revenues to us.

Our business, financial condition and results of operations may be adversely impacted by the effects of inflation.

Inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices we charge our customers.

Other inflationary pressures could affect wages, the cost and availability of components, materials and other inputs and our ability to meet customer demand.

Inflation may further exacerbate other risk factors, including supply chain disruptions, risks related to international operations and the recruitment and retention of qualified employees.

Reliance upon a few large customers may adversely affect our revenue and operating results.

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If a major customer fails to pay us, revenue would be impacted and our operating results and financial condition could be materially harmed.

Additionally, if we were to lose any material customer or our customers were to consolidate or merge with other operators, we may not be able to redeploy our equipment at similar

utilization or pricing levels or within a short period of time and such loss could have a material adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels.

Additionally, if we were to lose any material customer or our customers were to consolidate or merge with other operators, we may not be able to redeploy our equipment at similar utilization or pricing levels or within a short period of time and such loss could have a material adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels.

We are subject to cyber security risks.

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Our current and future indebtedness could adversely affect our financial condition.

As of February 18, 2022, we had $106.5 million outstanding under our Term Loan Facility and $133.0 million outstanding under our ABL Facility (defined herein), as well as a letter of credit in the amount of $1.5 million, with a borrowing base of $273.1 million.

Effective January 23, 2023, using proceeds from borrowings on our ABL Facility, we repaid all amounts outstanding under the Term Loan Facility.

As of February 6, 2023, we had $284.0 million outstanding under our ABL Facility (defined herein), as well as a letter of credit in the amount of $2.6 million, with a borrowing base of $430.4 million.

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements.”

Moreover, subject to the limits contained in our ABL Facility and Term Loan Facility (collectively, the “Credit Facilities”), we may incur substantial additional debt from time to time.

Moreover, subject to the limits contained in our ABL Facility, we may incur substantial additional debt from time to time.

Any borrowings we may incur in the future would have several important consequences for our future operations, including that:

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Some of these areas, including the DJ Basin, Powder River Basin, Williston Basin and our Canadian operations, are adversely affected by seasonal weather conditions, primarily in the winter and spring.

However, as evidenced by the severe winter weather experienced in the southern United States and Canada during February 2021, weather-related hazards can exist in almost all the areas where we operate.

During periods of heavy snow, ice or rain, we may be unable to move our equipment between locations or obtain adequate

supplies of raw material or fuel, thereby reducing our ability to provide services and generate revenues.

However, as evidenced by the severe winter weather experienced in the southern United States and Canada during December 2022, weather-related hazards can exist in almost all the areas where we operate.

During periods of heavy snow, ice or rain, we may be unable to move our equipment between locations or obtain adequate supplies of raw material or fuel, thereby reducing our ability to provide services and generate revenues.

The exploration activities of our customers may also be affected during such periods of adverse weather conditions.

Additionally, extended drought conditions in our operating regions could impact our ability or our customers’ ability to source sufficient water or increase the cost for such water.

Additionally, extended drought conditions in our operating regions could impact our ability or our customers’ ability to source sufficient water or

increase the cost for such water.

As a result, a natural disaster or inclement weather conditions could severely disrupt the normal operation of our business and adversely impact our financial condition and results of operations.

Furthermore, if the area in which we operate or the market demand for oil and natural gas is affected by a public health crises, such as the coronavirus, or other similar catastrophic event outside of our control, our business and results of operations could suffer.

Furthermore, if the area in which we operate or the market demand for oil and natural gas is affected by a public health crisis, such as the coronavirus, or other similar catastrophic event outside of our control, our business and results of operations could suffer.

The sand mining operations are subject to a number of risks relating to the proppant industry.

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Any explosive incident could expose us to adverse publicity or liability for damages or cause production restrictions, delays or cancellations, any of which developments could have a material adverse effect on our ability to compete, business, financial condition and results of operations.

The ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations.

In February of 2022, Russian military forces invaded Ukraine, resulting in conflict and disruption in the region.

The length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable.

This conflict has led and may continue to lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, higher inflation, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.

As a result of the invasion and ongoing military conflict, governments in the European Union, the United States, the United Kingdom, Switzerland and other countries have implemented and may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories.

Such sanctions, and other measures, as well as the existing and potential further responses from Russia or other countries to such sanctions, supply chain disruptions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our business, financial condition and results of operations, and could also aggravate the other risk factors that we identify herein.

The choice of forum provisions in our charter and bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Our Amended and Restated Certificate of Incorporation (as amended, the “Charter”) provides that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company or any director or officer or other employee of the Company arising pursuant to any provision of the General Corporation Law of the State of Delaware, the Charter or the Company’s bylaws, or (iv) any action asserting a claim against the Company or any director or officer or other employee of the Company governed by the internal affairs doctrine, in each such case subject to Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

Our Second Amended and Restated Bylaws (the “Bylaws”) further provide that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933 (the “Securities Act”).

Under the Securities Act, federal and state courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

Accordingly, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.

Any person or entity purchasing or otherwise acquiring any interest in shares of common stock of the Company will be deemed to have notice of and have consented to the provisions of our Charter and Bylaws related to choice of forum.

The choice of forum provisions in our Charter and Bylaws may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Additionally, the enforceability of choice of forum provisions in other companies’ governing documents has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Charter and Bylaws to be inapplicable or unenforceable in such action.

If so, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

There can be no assurance we will repurchase shares of our Class A Common Stock in any particular amounts.

The stock markets in general have experienced substantial price and trading fluctuations, which have resulted in volatility in the market prices of securities that often are unrelated or disproportionate to changes in operating performance.

These broad market fluctuations may adversely affect the trading price of our Class A Common Stock.

Price volatility over a given period may also cause the average price at which we repurchase our own Class A Common Stock to exceed the stock’s price at a given point in time.

In addition, significant changes in the trading price of our Class A Common Stock and our ability to access capital on terms favorable to us could impact our ability to repurchase shares of our Class A Common Stock.

The timing and amount of any repurchases will be determined by the Company’s management based on its evaluation of market conditions, capital allocation alternatives and other factors beyond our control.

Our share repurchase program may be modified, suspended, extended or terminated by the Company at any time and without notice.

Risks Related to the OneStim Acquisition

The Company's results may suffer if it does not effectively manage its expanded operations following the OneStim Acquisition.

Since the OneStim Acquisition, the size of the Company’s business has increased significantly.

In addition, we now own and operate two sand mines.

While we have retained qualified personnel to operate the mines, we have not undertaken mining operations in the past.

The Company’s future success will depend, in part, on the Company’s ability to manage this expanded business, which poses numerous risks and uncertainties.

Following the OneStim Acquisition, we expanded our operations to Canada and may be subject to increased business and economic risks.

The Company has historically owned and operated its assets exclusively within the United States.

As a result, we are subject to a variety of risks inherent in doing business internationally, including:

risks related to the legal and regulatory environment in foreign jurisdictions;

fluctuations in currency exchange rates;

complying with multiple tax jurisdictions;

difficulties in staffing and managing international operations and the increased travel, infrastructure and compliance costs associated with international locations and employees;

regulations that might add difficulties in repatriating cash earned outside the United States and otherwise preventing us from freely moving cash;

complying with statutory equity requirements;

and complying with the U.S.

Foreign Corrupt Practices Act and the Corruption of Foreign Public Officials Act (Canada) and other similar laws in Canada.

If we fail to manage our operations in Canada successfully, our business may suffer.

Unresolved Staff Comments

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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.

What changed 10-K

Item 1A. Risk Factors