What changed in this filing

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Item 1. Business

2021-02-22 compared with 2020-02-21 · 233 added, 149 removed, 195 unchanged (66% of the section changed)

Oil States International, Inc., through its subsidiaries, is a global oilfield products and services company serving the drilling, completion, subsea, production and infrastructure sectors of the oil and natural gas industry.

Oil States International, Inc., through its subsidiaries, is a global provider of manufactured products and services used in the drilling, completion, subsea, production and infrastructure sectors of the oil and natural gas industry, as well as in the industrial and military sectors.

Our manufactured products include highly engineered capital equipment as well as products consumed in the drilling, well construction and production of oil and natural gas.

Through our acquisition of GEODynamics, Inc.

("GEODynamics") in 2018, we are a leading researcher, developer and manufacturer of engineered solutions to connect the wellbore with the formation in oil and natural gas well completions.

Oil States is headquartered in Houston, Texas with manufacturing and service facilities strategically located across the globe.

Our customers include many national oil and natural gas companies, major and independent oil and natural gas companies, onshore and offshore drilling companies and other oilfield service companies.

Our customers include many national oil and natural gas companies, major and independent oil and natural gas companies, onshore and offshore drilling companies and other oilfield service and industrial companies.

We operate through three business segments – Well Site Services, Downhole Technologies and Offshore/Manufactured Products – and maintain a leadership position with certain of our product and service offerings in each segment.

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Available Information

The Company's website can be found at www.oilstatesintl.com .

The Company makes available, free of charge through its website, its Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, its proxy statement, Forms 3, 4 and 5 filed on behalf of directors and executive officers, and amendments to these reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes such material to, the Securities and Exchange Commission (the "SEC").

The Company is not including the information contained on the Company's website or any other website as a part of, or incorporating it by reference into, this Annual Report on Form 10‑K or any other filing the Company makes with the SEC.

Our website can be found at www.oilstatesintl.com .

We make available, free of charge through our website, our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, our proxy statement, Forms 3, 4 and 5 filed on behalf of directors and executive officers, and amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (the "SEC").

We are not including the information contained on our website or any other website as a part of, or incorporating it by reference into, this Annual Report on Form 10‑K or any other filing we make with the SEC.

The filings are also available through the SEC's website at www.sec.gov .

The Board of Directors of the Company (the "Board") has documented its governance practices by adopting several corporate governance policies.

These governance policies, including the Company's Corporate Governance Guidelines, Corporate Code of Business Conduct and Ethics and Financial Code of Ethics for Senior Officers, as well as the charters for the committees of the Board (Audit Committee, Compensation Committee and Nominating & Corporate Governance Committee) may also be viewed at the Company's website.

Our Board of Directors (the "Board") has documented its governance practices by adopting several corporate governance policies.

These governance policies, including our Corporate Governance Guidelines, Corporate Code of Business Conduct and Ethics and Financial Code of Ethics for Senior Officers, as well as the charters for the committees of the Board (Audit Committee, Compensation Committee and Nominating & Corporate Governance Committee) may also be viewed on our website.

The financial code of ethics applies to our principal executive officer, principal financial officer, principal accounting officer and other senior officers.

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We have historically grown our product and service offerings organically, through capital spending and strategic acquisitions.

Our investments are focused in growth areas and on areas where we expect to be able to expand market share through our technology offerings and where we believe we can achieve an attractive return on our investment.

As part of our long-term strategy, we continue to review complementary acquisitions, invest in research and development and make organic capital expenditures to enhance our cash flows, leverage our cost structure and increase our stockholders' returns.

Our investments are focused in areas where we expect to be able to expand market share through our technology offerings and where we believe we can achieve an attractive return on our investment.

As part of our long-term strategy, we continue to review business expansion, complementary acquisitions, invest in research and development and make organic capital expenditures to enhance our cash flows, leverage our cost structure and increase our stockholders' returns.

For additional discussion of our business strategy, please read "Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations."

Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report on Form 10-K.

Recent Developments

In addition to capital spending, we have invested in acquisitions of businesses complementary to our growth strategy.

Our acquisition strategy has allowed us to leverage our existing and acquired products and services into new geographic locations and has expanded the breadth of our technology and product offerings while allowing us to leverage our cost structure.

We have made strategic and complementary acquisitions in each of our business segments in recent years.

On December 12, 2017 we entered into an agreement to acquire GEODynamics, which provides oil and gas perforation systems and downhole tools in support of completion, intervention, wireline and well abandonment operations.

On January 12, 2018, we closed the acquisition of GEODynamics for total consideration of approximately $615 million (the "GEODynamics Acquisition"), consisting of (i) $295 million in cash (net of cash acquired), (ii) approximately 8.66 million shares of our common stock (valued at $34.05 per share on the date of closing) and (iii) an unsecured $25 million promissory note.

In connection with the GEODynamics Acquisition, we completed several financing transactions in 2018 to extend the maturity of our debt and to provide flexibility in repaying outstanding borrowings under our revolving credit facility (the "Revolving Credit Facility") with anticipated future cash flows from operations.

On January 30, 2018, we sold $200 million aggregate principal amount of our 1.50% convertible senior notes due February 2023 (the "Notes") through a private placement to qualified institutional buyers.

We received net proceeds from the offering of the Notes of approximately $194 million, after deducting issuance costs.

We used the net proceeds to repay a portion of the borrowings outstanding under our Revolving Credit Facility, substantially all of which were drawn to fund the cash portion of the purchase price paid for GEODynamics.

Concurrently with the Notes offering, we amended our Revolving Credit Facility to extend the maturity date to January 2022, permit the issuance of the Notes and provide for up to $350 million in borrowing capacity, subject to certain limitations.

On February 28, 2018, we acquired Falcon Flowback Services, LLC ("Falcon"), a full-service provider of flowback and well testing services for the separation and recovery of fluids, solid debris and proppant used during hydraulic fracturing operations.

Falcon provides additional scale and diversity to our Completion Services operations in key shale plays in the United States.

The acquisition price was $84.2 million in cash, funded with borrowings under our Revolving Credit Facility.

During the third quarter of 2019, we made the strategic decision to reduce the scope of our Drilling Services business (adjusting from 34 rigs to 9 rigs) due to the ongoing weakness in customer demand for vertical drilling rigs in the U.S.

As a result of this decision, our Drilling Services business recorded a non-cash impairment charge of $33.7 million to decrease the carrying value of the business' fixed assets to their estimated fair value.

Substantially all of the decommissioned rigs were sold in the fourth quarter of 2019.

During the fourth quarter of 2019, our Downhole Technologies segment recorded a non-cash goodwill impairment charge of $165.0 million due to, among other factors, a reduction in our near-term outlook for demand related to our short-cycle products and services in the U.S.

In March of 2020, the spot price of West Texas Intermediate ("WTI") crude oil declined over 50% in response to actual and forecasted reductions in global demand for crude oil due to the COVID-19 pandemic coupled with announcements by Saudi Arabia and Russia of plans to increase crude oil production in an effort to protect market share.

OPEC, its members and other state-controlled oil companies ultimately agreed to reduce production following the crude oil price collapse and many operators

shut-in production in the United States in an effort to address rapidly collapsing demand.

While crude oil prices have recovered some of their losses since reaching record low levels in April of 2020, the spot price of Brent and WTI crude oil averaged $42 and $39 per barrel during 2020 – down 35% and 31%, respectively, from their comparable 2019 averages.

The ultimate magnitude and duration of the COVID-19 pandemic, the timing and extent of governmental restrictions placing limitations on the mobility and ability to work of the worldwide population, and the related impact on crude oil prices, the global economy and capital markets remains uncertain.

While it is difficult to assess or predict with precision the broad future effect of this pandemic on the global economy, the energy industry or us, we expect that the COVID-19 pandemic will continue to adversely affect demand for our products and services in 2021.

Demand for most of our products and services depends substantially on the level of capital expenditures invested in the oil and natural gas industry, which reached 15-year lows in 2020.

The decline in crude oil prices, coupled with higher crude oil inventory levels in 2020, caused rapid reductions in most of our customers' drilling, completion and production activities and their related spending on products and services, particularly those supporting activities in the U.S.

shale play regions.

See Note 4 , "Details of Selected Balance Sheet Accounts," Note 5 , "Business Acquisitions" and Note 7 , "Long-term Debt" to the Consolidated Financial Statements included in this Annual Report on Form 10‑K for further discussion of these recent developments.

We principally operate in the oilfield services industry and provide a broad range of products and services to our customers through each of our business segments.

These conditions have and may continue to result in a material adverse impact on certain customers' liquidity and financial position, leading to further spending reductions, delays in the collection of amounts owed and, in certain instances, non-payments of amounts owed.

Additionally, future actions among OPEC members and other oil producing nations as to production levels and prices could result in further declines in crude oil prices, which would prove detrimental, particularly given the weak demand environment for crude oil and associated products caused by the ongoing COVID-19 pandemic.

Following the unprecedented events commencing in March 2020, we immediately began aggressive implementation of cost reduction initiatives in an effort to reduce our expenditures to protect the financial health of our company, including the following:

• reduced headcount by 32% between December 31, 2019 and December 31, 2020;

• reduced capital expenditures in 2020 by 77% compared to 2019;

• reduced annual short-term and long-term incentive awards;

• consolidated and closed certain facilities.

Given the COVID-19 induced economic destruction, we assessed the carrying value of goodwill and other assets based on the industry outlook regarding overall demand for and pricing of our products and services.

As a result of these events, actions and assessments, we recorded the following charges during 2020:

• non-cash goodwill impairment charges of $406.1 million to reduce the carrying value of our reporting units to their estimated fair value;

• non-cash impairment charges of $31.2 million to reduce the carrying value of inventory to its estimated realizable value;

• non-cash impairment charges of $12.4 million to decrease the carrying value of our fixed assets and leases to their estimated realizable value;

• employee severance and restructuring charges of $9.1 million.

As discussed in more detail under "– Liquidity, Capital Resources and Other Matters – Financing Activities – Revolving Credit Facility," we amended our existing Revolving Credit Facility (as defined herein) during the second quarter of 2020.

In connection with this amendment, the Revolving Credit Facility size was reduced from $350 million to $200 million, with advances subject to a monthly borrowing base calculation, in exchange for suspension of the existing financial covenants from July 1, 2020 through March 30, 2021.

On February 10, 2021, as discussed in more detail under "– Liquidity, Capital Resources and Other Matters – Financing Activities – Asset-based Revolving Credit Facility," we entered into a new senior secured credit facility in order to extend maturity, which provides for a $125.0 million asset-based revolving credit facility (the "Asset-based Revolving Credit Facility") under which credit availability is subject to a monthly borrowing base calculation.

The Asset-based Revolving Credit Facility matures in February 2025.

Concurrent with entering into the Asset-based Revolving Credit Facility, the existing Amended Credit Agreement (as defined herein) was terminated.

In addition, as discussed in more detail under "– Liquidity, Capital Resources and Other Matters – Financing Activities – 1.50% Convertible Senior Notes due February 2023," we opportunistically purchased a total of $34.9 million principal amount of our 1.50% convertible senior notes (the "Notes") for $20.1 million in cash and recognized non-cash gains totaling $10.7 million during 2020.

See Note 3, "Asset Impairments and Other Charges," Note 4, "Details of Selected Balance Sheet Accounts," Note 6, "Goodwill and Other Intangible Assets," Note 7, "Long-term Debt," and Note 8, "Operating Leases," to the Consolidated Financial Statements included in this Annual Report on Form 10‑K for further discussion.

We provide a broad range of products and services to our customers through each of our business segments.

See Note 15, "Segments and Related Information," to the Consolidated Financial Statements included in this Annual Report on Form 10‑K for financial information by segment along with a geographical breakout of revenues and long-lived assets for each of the three years in the period ended December 31, 2020.

Demand for our products and services is cyclical and substantially dependent upon activity levels in the oil and natural gas industry, particularly our customers' willingness to invest capital in the exploration for and development of crude oil and natural gas reserves.

Demand for our products and services is cyclical and substantially dependent upon activity levels in the oil and natural gas industry, particularly upon the willingness of our customers to invest capital in the exploration for and development of crude oil and natural gas reserves.

Our customers' capital spending programs are generally based on their outlook for near-term and long-term commodity prices, economic growth, commodity demand and estimates of resource production.

As a result, demand for our products and services is largely sensitive to expectations with respect to future crude oil and natural gas prices.

Our consolidated results of operations include contributions from the GEODynamics and Falcon acquisitions completed in the first quarter of 2018.

Our reported results of operations reflect the impact of current industry trends and customer spending activities with investments weighted toward U.S.

shale play regions.

However, in 2019, we began to see a general improvement in the level of planned investments in deepwater markets globally.

As a result, demand for our products and services is largely sensitive to expectations regarding future crude oil and natural gas prices.

Our reported 2020 results of operations reflect the negative impact of the unprecedented decline in crude oil prices starting in March and April of 2020 stemming from the global response to the COVID-19 pandemic and continued uncertainties related to future crude oil demand.

The spot price of WTI crude oil averaged $39 per barrel in 2020, down 31% from the comparable prior-year average.

The decline in crude oil prices, coupled with high crude oil inventory levels, has had a negative impact on customer drilling, completion and production activity.

Additionally, our operations were negatively impacted by the government-imposed business closures and mandates outside of the United States enacted in an effort to control the COVID-19 pandemic, which limited wellsite operations and required us and a number of our suppliers to temporarily cease certain operations.

Our historical financial results reflect the cyclical nature of the oilfield services industry – witnessed by periods of increasing and decreasing activity in each of our operating segments.

Lower oil and natural gas prices since 2014 have caused a reduction in most of our customers' drilling, completion and other production activities and related spending on our products and services.

Lower oil and natural gas prices in 2019 and 2020 have caused a reduction in most of our customers' drilling, completion and other production activities and related spending on our products and services.

The reduction in demand from our customers has resulted in an oversupply of many of the services and products we provide.

Such oversupply has substantially reduced the prices we can charge our customers for many of our products and services.

Although oil prices have improved since the trough in 2016, these price improvements have not resulted in significant, sustained global improvements in the demand for our products and services or the prices we are able to charge.

Following material price declines in the fourth quarter of 2018, Brent and West Texas Intermediate ("WTI") crude oil prices averaged $64 and $57 per barrel, respectively, in 2019 - down 10% and 13%, respectively, compared to 2018 average prices.

While the commodity price environment improved in 2019 relative to December of 2018, the crude oil price outlook and associated volatility continues to have a moderating impact on our customers' operating results and capital spending plans, particularly those operating in the U.S.

shale play regions.

rig count at December 31, 2019 totaled 805 rigs, which was down 26% since the most recent peak of 1,083 rigs in December of 2018.

We expect further customer-driven activity declines in early 2020 given crude oil price declines since the end of 2019 as our customers strive for financial discipline and spending levels that are within their capital budgets and generated cash flow ranges.

This may cause additional declines in the demand for, and prices of, our products and services, which would adversely affect our future results of operations, cash flows and financial position.

While oil prices improved from record low levels in April of 2020, these price improvements have not resulted in significant, sustained global improvements in the demand or the prices we are able to charge for our products and services.

rig count declined 454 rigs, or 56%, since December 31, 2019 to a total of 351 active rigs working as of December 31, 2020.

While activity is improving off of 2020's low levels, we expect activity to be tempered in 2021 as our customers strive for spending levels that are within their capital budgets and cash flow targets.

This may cause continued weak demand for, and prices of, our products and services, which would adversely affect our future results of operations, cash flows and financial position.

For additional information about activities in each of our segments, see "Part II, Item 7.

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drilling and completion activity and, in turn, our Well Site Services segment results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the call-out nature of our operations in the segment.

Similarly, demand for our Downhole Technologies segment products is predominantly tied to land-based oil and natural gas exploration and production activity levels in the United States.

Similarly, demand for our Downhole Technologies segment products is predominantly tied to land-based oil and natural gas exploration and production activity levels in the United States and, to a lesser extent, internationally.

The primary driver for this activity is the price of crude oil and, to a lesser extent, natural gas.

Activity levels have been, and we expect will continue to be, highly correlated with hydrocarbon commodity prices.

Over recent years, our industry experienced increased customer spending in crude oil and liquids-rich exploration and development in the U.S.

In past years, operator spending in our industry has been particularly focused on crude oil and liquids-rich exploration and development in the U.S.

shale plays utilizing enhanced horizontal drilling and completion techniques.

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Over recent years, lower crude oil prices, coupled with a relatively uncertain outlook around shorter-term and possibly longer-term commodity price improvements, caused exploration and production companies to reevaluate their future capital expenditures in regards to deepwater projects since they are expensive to drill and complete, have long lead times to first production and may be considered uneconomical relative to the risk involved.

This resulted in reduced bidding and quoting activity, as well as reduced orders from customers, for our Offshore/Manufactured Products segment in 2017 and 2018 relative to the peak in 2014.

Bidding and quoting activity, along with orders from customers, for deepwater projects improved in 2019 from 2018 levels and the potential for future awards appears to be improving.

See "Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations – Macroeconomic Environment" for further discussion on our industry.

Bidding and quoting activity, along with orders from customers, for deepwater projects improved in 2019 from 2018 levels.

However, with reduced market visibility given the significant decline in crude oil prices which began in March of 2020 and associated reductions in customer spending, the segment's 2020 bookings were lower than the levels achieved in 2019.

Well Site Services

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In this segment, our operations primarily include completion-focused equipment and services and, to a much lesser extent, land drilling services in the United States.

We use our fleet of completion tools and drilling rigs to serve our customers at well sites and project development locations.

Our equipment and services are used in both onshore and offshore applications throughout the drilling, completion and production phases of a well's life cycle.

Our completion equipment and services are used in both onshore and offshore applications throughout the drilling, completion and production phases of a well's life cycle.

Well Site Services Market

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Activity levels have been, and we expect will continue to be, highly correlated with hydrocarbon commodity prices.

Completion Services

Our Completion Services business, which is primarily marketed through the brand names Oil States Energy Services, Falcon and Tempress, provides a wide range of services used in the onshore and offshore oil and gas industry, including:

Our Well Site Services business, which is primarily marketed through the brand names Oil States Energy Services, Falcon, Tempress and Capstar Drilling, provides a wide range of services used in the onshore and offshore oil and gas industry, including:

• wellhead isolation services;

flowback and frac valve services;

• frac valve services;

• wireline and coiled tubing support services;

well testing, including separators and line heaters;

• flowback and well testing, including separators and line heaters;

• downhole extended-reach technology;

pipe recovery systems;

• thru-tubing milling and fishing services;

hydraulic chokes and manifolds;

blowout preventers;

• pipe recovery systems;

• gravel pack and sand control operations on wellbores;

Employees in our Completion Services business typically rig up and operate our equipment on the well site for our customers.

Our Completion Services equipment is primarily used during the completion and production stages of a well.

As of December 31, 2019 , we provided completion services through approximately 35 distribution locations serving our customers in the United States, including the Gulf of Mexico, and international markets.

• hydraulic chokes and manifolds;

• blowout preventer ("BOP") services;

• drilling services.

As of December 31, 2020, we provided completion and drilling services through approximately 30 locations serving our customers in the United States, including the Gulf of Mexico, and international markets.

Employees in our Well Site Services segment typically rig up and operate our equipment on the well site for our customers.

Our equipment is primarily used during the completion and production stages of a well.

We typically provide our services and equipment based on daily rates which vary depending on the type of equipment and the length of the job.

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We own patents or have patents pending covering some of our technology, particularly in our wellhead isolation equipment and downhole extended-reach technology product lines.

Our customers in the Completion Services business include major, independent and private oil and gas companies and other large oilfield service companies.

No customer in Completion Services represented more than 10% of our total consolidated revenue in any period presented.

Competition in the Completion Services business is widespread and includes many smaller companies, although we also compete with the larger oilfield service companies for certain equipment and services.

Drilling Services

Our Drilling Services business, which is marketed to oil and gas companies under the brand name Capstar Drilling, provides vertical land drilling services in the United States for shallow to medium depth wells generally of less than 15,000 feet.

We historically served two primary markets with our Drilling Services business:

the Permian Basin in West Texas and the U.S.

Rocky Mountain area.

Since September 2019, the operations are primarily focused on serving operators in the U.S.

Rocky Mountain region.

See Note 4 , "Details of Selected Balance Sheet Accounts," to the Consolidated Financial Statements included in this Annual Report on Form 10‑K for additional discussion.

Our customers in this segment include major, independent and private oil and gas companies and other large oilfield service companies.

No customer in Well Site Services represented more than 10% of our total consolidated revenue in any period presented.

Competition in the Well Site Services segment is widespread and includes many smaller companies, although we also compete with the larger oilfield service companies for certain equipment and services.

Downhole Technologies

Our Downhole Technologies segment is comprised of the GEODynamics business we acquired in January 2018.

GEODynamics was founded in 2004 as a researcher, developer and manufacturer of consumable engineered products used in completion applications.

For the years ended December 31, 2020, 2019 and 2018, our Downhole Technologies segment contributed approximately 15%, 18% and 20%, respectively, of our consolidated revenue.

This segment provides oil and gas perforation systems, downhole tools and services in support of completion, intervention, wireline and well abandonment operations.

This segment is comprised of the GEODynamics, Inc.

("GEODynamics") business we acquired in January 2018 (the "GEODynamics Acquisition") and provides oil and gas perforation systems, downhole tools and services in support of completion, intervention, wireline and well abandonment operations.

This segment designs, manufactures and markets its consumable engineered products to oilfield service as well as exploration and production companies.

Downhole Technologies Market

Similar to our Well Site Services segment, demand for our Downhole Technologies segment products is predominantly tied to the level of oil and natural gas exploration and production activity on land in the United States.

The primary driver for this activity is the price of crude oil and, to a lesser extent, natural gas.

Similar to our Well Site Services segment, demand for our Downhole Technologies segment products is predominantly tied to land-based oil and natural gas exploration and production activity levels in the United States.

The primary drivers for this activity are the price of crude oil and, to a lesser extent, natural gas.

Activity levels have been, and we expect will continue to be, highly correlated with hydrocarbon commodity prices.

Demand for this segment's products is also influenced by continued trends toward longer lateral lengths, increased frac stages and more perforation clusters to target increased unconventional well productivity, which requires ongoing technological and product developments.

Product and service offerings for this segment include advanced perforation technology achieved through patented and proprietary systems combined with advanced modeling and analysis tools.

This expertise has led to the optimization of perforation hole size, depth, and quality of tunnels, which are key factors for maximizing the effectiveness of hydraulic fracturing.

Product and service offerings for this segment utilize innovations in perforation technology through patented and proprietary systems combined with advanced modeling and analysis tools.

Our expertise has led to the optimization of perforation hole size, depth, and quality of tunnels, which are key factors for maximizing the effectiveness of hydraulic fracturing.

Additional offerings include proprietary toe valve and frac plug products, which are focused on zonal isolation for hydraulic fracturing of horizontal wells, and a broad range of consumable products, such as setting tools and bridge plugs, that are used in completion, intervention and decommissioning applications.

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Through this segment, we provide technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities, as well as certain products and services to the offshore and land-based drilling and completion markets.

Our products and services used primarily in deepwater producing regions include our FlexJoint ® technology, advanced connector systems, high-pressure riser systems, compact valves, deepwater mooring systems, cranes, subsea pipeline products, specialty welding, fabrication, cladding and machining services, offshore installation services and inspection and repair services.

Products and services used primarily in deepwater producing regions include our FlexJoint ® technology, advanced connector systems, high-pressure riser systems, compact valves, deepwater mooring systems, cranes, subsea pipeline products, specialty welding, fabrication, cladding and machining services, offshore installation services and inspection and repair services.

In addition, we design, manufacture and market numerous other products and services used in both land and offshore drilling and completion activities and by non-oil and gas customers, including consumable downhole elastomer products used in onshore completion activities, valves and sound and vibration dampening products used in military applications.

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the United Kingdom;

the United Arab Emirates;

and the United Arab Emirates.

Offshore/Manufactured Products Market

The market for products and services offered by our Offshore/Manufactured Products segment centers primarily on the development of infrastructure for offshore production facilities and their subsequent operations, exploration and drilling activities, and to a lesser extent, new rig and vessel construction, refurbishments or upgrades.

The market for products and services offered by our Offshore/Manufactured Products segment centers primarily on the development of infrastructure for offshore production facilities and their subsequent operations, exploration and drilling activities, and to a lesser extent, on-vessel construction, refurbishments or upgrades.

Demand for oil and natural gas, and the related drilling and production in offshore areas throughout the world, particularly in deeper water, drive spending for these activities.

Sales of our shorter-cycle products to land-based drilling and completion markets are driven by the level and complexity of drilling, completion and workover activity, particularly in North America.

Sales of our shorter-cycle products to land-based drilling and completion markets are driven by the level and complexity of drilling, completion and workover activity, particularly in the United States.

Products and Services

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Our Offshore/Manufactured Products segment is dependent in part on the industry's continuing innovation and creative applications of existing technologies.

To that end, we are in the early stages of bidding on projects that facilitate the development of alternative energy sources, including offshore wind opportunities.

We own various patents covering some of our technology, particularly in our connector and valve product lines.

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We design, manufacture, inspect, assemble, repair, test and market equipment for mooring, pipeline, production and drilling risers, and subsea applications along with equipment for offshore vessel and rig construction.

Our products are components of equipment used for the drilling and production of oil and natural gas wells on offshore fixed platforms and mobile production units, including floating platforms, such as tension leg platforms, floating production, storage and offloading ("FPSO") vessels, Spars, and other marine vessels and offshore rigs.

Our products and services include:

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• production, workover, completion and drilling riser systems and their related repair services;

blowout preventer ("BOP") stack assembly, integration, testing and repair services;

• BOP stack assembly, integration, testing and repair services;

• consumable downhole products;

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A FlexJoint ® is a flexible bearing that allows for rotational movement of a riser or tension leg platform tether while under high tension and/or pressure.

When positioned at the top, bottom, or, in some cases, middle of a deepwater riser, it reduces the stress and loads on the riser while compensating for the pitch and rotational forces on the riser as the production facility or drilling rig moves with ocean forces.

When positioned at the top, bottom, or, in some cases, middle of a deepwater riser, it reduces the stress and loads on the riser while compensating for pitch and rotational forces on the riser as the production facility or drilling rig moves with ocean forces.

FlexJoint ® connectors are used on drilling, production and export risers and are used increasingly as offshore production moves to deeper water.

Drilling riser systems provide the vertical conduit between the floating drilling vessel and the subsea wellhead.

Drilling riser systems provide a vertical conduit between the floating drilling vessel and the subsea wellhead.

Through the drilling riser, the drill string is guided into the well and drilling fluids are returned to the surface.

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Our FlexJoint ® connectors are a critical element in the construction and operation of production and export risers on floating production systems in deepwater.

Floating production systems, including tension leg platforms, FPSO facilities and Spars (defined below), are a significant means of producing oil and natural gas, particularly in deepwater environments.

Floating production systems, including tension leg platforms, FPSO facilities and Spars, are a significant means of producing oil and natural gas, particularly in deepwater environments.

We provide many important products for the construction of these facilities.

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Our Piper Valve division designs and manufactures compact high-pressure valves and manifold system components for all environments of the oil and gas industry including onshore, offshore, drilling and subsea applications.

Our valve and manifold bores are designed to closely match the inside diameter of the required pipe schedule for the system working pressure.

The result is elimination of piping transition areas that minimize erosion and system friction pressure loss, resulting in a more efficient flow path.

Our floating ball valve design with its large ball/seat interface has over 30 years of field service experience in upstream unprocessed produced liquids and gasses, assuring reliable service.

Oil States Piper Valve Optimum Flow Technology is our way of helping end users maximize space, minimize weight and increase production.

Our valve and manifold bores are designed to closely match the inside diameter of the required pipe schedule to eliminate piping transition areas, minimize erosion and system friction pressure loss, and to result in a more efficient flow path.

Our floating ball valve design with its large ball/seat interface has over 30 years of proven field application in upstream unprocessed produced liquids and gasses, providing reliable service.

Oil States Piper Valve Optimum Flow Technology allows end users to maximize space, minimize weight and increase production.

Marine Winches, Mooring Systems, Cranes and other Heavy-Lift Rig Equipment.

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Our Nautilus ® marine cranes are used on production platforms throughout the world.

We also design and fabricate rig equipment such as automatic pipe racking, blowout preventer handling equipment, as well as handling equipment used in the installation of offshore wind turbine platforms.

We also design and fabricate rig equipment such as automatic pipe racking systems, BOP handling equipment, and handling equipment used in the installation of offshore wind turbine platforms.

Our engineering teams, manufacturing capability and service technicians, who install and service our products, provide our customers with a broad range of equipment and services to support their operations.

Aftermarket service and support of our installed base of equipment to our customers is also an important source of revenue to us.

Production, Workover, Completion and Drilling Riser Systems and their related repair services.

Utilizing the expertise of our welding technology group, we have extended the boundaries of our Merlin ™ connector technology with the design and manufacture of multiple riser systems.

The unique Merlin ™ connection has proven to be a robust solution for even the most demanding high-pressure (up to 20,000 psi) riser systems used in high-fatigue, deepwater applications.

Aftermarket service and support for our installed base of equipment to our customers is also an important source of revenue to us.

Production, Workover, Completion, Drilling and Mining Riser Systems and their related repair services.

Utilizing our welding technology group's expertise, we continue to extend the boundaries of our Merlin ™ connector technology with the design and manufacture of multiple riser systems.

The unique Merlin ™ connection is a proven, robust solution for even the most demanding high-pressure (up to 20,000 psi) riser systems used in high-fatigue, deepwater applications.

Our riser systems are designed to meet a range of static and fatigue stresses on par with those of our Tension Leg Element connectors.

The connector can be welded or machined directly onto upset riser pipe and provide sufficient material to perform "re-cuts" after extended service.

The connector can be welded or machined directly onto upset riser pipe and provide sufficient material to perform repair or "re-cuts" after extended service.

We believe that our marine riser offers superior tension capabilities together with one of the fastest run times in the industry.

Auxiliary riser system components and running tools can be provided along with full-service inspection and repair of these riser systems.

Auxiliary riser system components and running tools, along with full-service inspection and repair of these riser systems are available.

In 2020, we were awarded a contract to design and supply a new deepwater riser system (including automated tooling, a control system and marine riser) to collect polymetallic nodules from the sea floor.

This mining riser system applies our 30-plus years of experience in providing marine riser systems for the oil and gas industry to a new market, not tied to energy prices.

BOP Stack Assembly, Integration, Testing and Repair Services.

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We also design and manufacture a variety of custom subsea equipment, such as riser flotation tank systems, guide bases, running tools and manifolds.

In addition, we also offer blowout preventer and drilling riser testing and repair services.

In addition, we also offer BOP and drilling riser testing and repair services.

Consumable Downhole Products .

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For example, we have had success in developing and producing composite drillable zonal isolation tools (i.e., bridge/frac plugs) utilizing design and production techniques that reduce cost while still delivering high-quality performance.

Time to drill out has been reduced significantly in comparison to other filament wound products in the market.

Our products also include:

Time to drill out is significantly reduced in comparison to other filament wound products in the market.

Our products include:

• Swab Cups - used primarily in well servicing work;

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Offshore/Manufactured Products' backlog consists of firm customer purchase orders for which contractual commitments exist and delivery is scheduled.

Backlog in our Offshore/Manufactured Products segment was $280 million at December 31, 2019 , compared to $179 million at December 31, 2018 and $168 million at December 31, 2017 .

We expect approximately 75% of our backlog at December 31, 2019 to be recognized as revenue during 2020 .

In some instances, these purchase orders are cancelable by the customer, subject to the payment of termination fees and/or the reimbursement of our costs incurred.

Backlog in our Offshore/Manufactured Products segment was $219 million as of December 31, 2020, compared to $280 million as of December 31, 2019 and $179 million as of December 31, 2018.

We expect approximately 75% of our backlog as of December 31, 2020 to be recognized as revenue during 2021.

In some instances, these purchase orders are cancellable by the customer, subject to the payment of termination fees and/or the reimbursement of our costs incurred.

While backlog cancellations have historically been insignificant, we incurred cancellations totaling $2.2 million during 2020 and $5.0 million during 2019, which we believe is attributable to lower commodity prices, the resultant decrease in capital spending by our customers and, in some cases, the financial condition of our customers.

Additional cancellations may occur in the future, which would reduce our backlog.

Our backlog is an important indicator of future Offshore/Manufactured Products' shipments and major project revenues;

Backlog is an important indicator of future Offshore/Manufactured Products' shipments and major project revenues;

however, backlog as of any particular date may not be indicative of our actual operating results for any future period.

We believe that the offshore construction and development business is characterized by lengthy projects and a "long lead-time" order cycle.

The offshore construction and development business is characterized by lengthy projects and a "long lead-time" order cycle.

The change in backlog levels from one period to the next does not necessarily evidence a long-term trend.

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We market our products and services to a broad customer base, including direct end-users, engineering and design companies, prime contractors, and at times, our competitors through outsourcing arrangements.

While no customer accounted for more than 10% of our consolidated revenues in 2019, Halliburton Company individually accounted for 10% and 16% of our total consolidated revenues in the years ended December 31, 2018 and 2017 , respectively.

Our main competitors in this segment include Cameron (a division of Schlumberger Limited), Dril-Quip, Inc., National Oilwell Varco, Inc., Baker Hughes Company, Hutchinson Group (a subsidiary of Total S.A.), Sparrows Offshore Group LTD, Oceaneering International, Inc.

and Raina Engineers.

While no customer accounted for more than 10% of our consolidated revenues in 2020 or 2019, Halliburton Company individually accounted for 10% of our total consolidated revenues in 2018.

Our main competitors in this segment include OneSubsea (a division of Schlumberger Limited), National Oilwell Varco, Inc., Baker Hughes Company, Hutchinson Group (a subsidiary of Total S.A.), Sparrows Offshore Group LTD, Oceaneering International, Inc., Raina Engineers and AFG Holdings, Inc.

Seasonality of Operations

Our operations are directly affected by seasonal weather differences in certain areas in which we operate, most notably in the Rocky Mountain region, and the Gulf of Mexico.

Severe winter weather conditions in the Rocky Mountain region can restrict access to work areas for our Well Site Services and Downhole Technologies segment operations.

Our operations in the Gulf of Mexico are also affected by weather patterns.

Seasonal weather trends in the Gulf Coast region generally result in higher drilling activity in the spring, summer and fall months with the lowest levels of activity in the winter months.

Summer and fall drilling activity can be interrupted by hurricanes and other storms prevalent in the Gulf of Mexico and along the Gulf Coast.

As a result of these seasonal differences, full-year results are not likely to be a direct multiple of any particular quarter or combination of quarters.

As of December 31, 2019 , the Company employed 3,428 full-time employees on a consolidated basis, 42% of whom are in our Well Site Services segment, 14% of whom are in our Downhole Technologies segment, 41% of whom are in our Offshore/Manufactured Products segment, and 2% of whom are in our corporate headquarters.

During 2019 , company-wide headcount was reduced 13% from a total of 3,926 full-time employees as of December 31, 2018 .

We were party to collective bargaining agreements covering fewer than 100 employees located in the United Kingdom and Argentina as of December 31, 2019 .

Our operations are directly impacted by customer budgets and seasonal weather conditions in certain areas in which we operate, most notably in the Rocky Mountain and Northeast regions of the United States, where severe winter weather conditions can restrict access to work areas.

In addition, summer and fall completion and drilling activity can be restricted due to hurricanes and other storms prevalent in the Gulf of Mexico and along the Gulf Coast.

As a result, full-year results are not likely to be a direct multiple of any particular quarter or combination of quarters.

Human Capital

As of December 31, 2020, we had a total of 2,338 full-time employees, 33% of whom are in our Well Site Services segment, 10% of whom are in our Downhole Technologies segment, 54% of whom are in our Offshore/Manufactured Products segment, and 3% of whom are in our corporate headquarters.

During 2020, our company-wide workforce was reduced 32% following the unprecedented decline in crude oil prices following the demand destruction caused by the global response to the COVID-19 pandemic.

See "– Recent Developments" for further discussion of personnel reductions and other cost control measures implemented during 2020 aimed at reducing costs and protecting the financial health of our company.

We were party to collective bargaining agreements covering fewer than 100 employees located outside the United States as of December 31, 2020.

We believe we have good labor relations with our employees.

The health and safety of our employees, contractors, business partners, visitors and the communities where we work is a cornerstone of our culture, "Safety Focus from the Top." We are transparent in our communications about our health, safety and environment ("HSE") commitment to employees, contractors, vendors, suppliers and customers.

We solicit input to improve our programs and employee participation is a vital element in our success.

We establish global targets in an effort to promote HSE improvement and monitor our performance through real-time reporting.

Executive management and operations personnel review incidents and loss trends on a weekly basis and we update our board of directors no less than monthly.

For divisional and operational teams, a portion of their annual incentive compensation is linked to established safety metrics.

We seek to encourage our employees to actively participate in HSE initiatives through safety committees, behavior-based observations, and employees stopping work if at-risk conditions are observed, among other aspects of our safety management system.

We monitor global compliance with our internal policies and procedures, internationally recognized/certified management systems and all applicable national, state, local and international laws and regulations.

COVID-19 Response

Our dedicated employees across the globe provided essential services to the energy industry during 2020 and continue to do so in 2021.

The COVID-19 outbreak expanded into a global pandemic in early 2020 – requiring swift and effective responses by us in order to protect the health and safety of our employees and others, as well as the communities in which we operate.

We implemented measures to enable our employees to work safely, including:

adjustments to facility workflows and operating schedules;

enhanced cleaning procedures;

health monitoring procedures;

and strict travel protocols.

Additionally, when possible, we requested that employees work from home to limit social contact in support of government instructions.

We recognize that our employees are critical to our long-term success.

Our operations are global and demand a diverse workforce, which we believe provides us with a competitive advantage and allows us to better understand and communicate with a diverse population of constituents.

Our strong focus on innovation necessitates an equally strong focus on technical skills and training programs, which we believe creates high performing teams that can arrive at better solutions to problems.

We strive to cultivate a culture and work environment that enables us to attract, train, promote, and retain a diverse group of skilled individuals who collectively enable us to safely provide quality, innovative solutions to our customers while remaining considerate of the environment and of our communities.

We strive to align our national and cultural diversity with our global operations.

For example, 74% of our full-time employee base was in the United States where we generated 73% of our revenues in 2020.

We have and continue to remain focused on improving gender balance across our field and manufacturing operations, technical, business and management roles.

As of December 31, 2020, women made up approximately 18% of our global workforce.

Additionally, approximately 20% of our executive and senior management roles in 2020 were held by women, including our Chief Executive Officer and President who has served in this role and as a member of our Board since 2007.

Hiring, Training and Development of our Workforce

Our employee hiring, training, career development and retention practices are key to our success.

We recruit and train our employees while providing competitive wages and benefits.

Our industry is cyclical leading to varying headcount needs during industry cycles.

We prioritize recalling our experienced employees for manufacturing and field positions to the extent possible as conditions improve following an industry downturn such as the one experienced in 2020.

We invest in continual training and development of our employees through technical and non-technical courses and programs.

Employee training and development includes course work as well as on the job mentoring – emphasizing, among others matters, safety, ethical behavior, compliance with our internal policies and laws and regulations, protection of the environment, and skills and competencies necessary for a specific position.

In addition to internal training and development, we also value the benefits of continuing formal education and maintain an educational assistance program that reimburses eligible expenses from accredited institutions.

Environmental and Occupational Health and Safety Matters

Our business operations are subject to numerous environmental and occupational health and safety laws and regulations that may be imposed domestically at the federal, regional, state, tribal and local levels or by foreign governments.

These laws and regulations impose stringent environmental and/or worker safety regulation.

Our business operations are subject to stringent environmental and occupational health and safety laws and regulations that may be imposed domestically at the federal, regional, state, tribal and local levels or by foreign governments.

Numerous governmental entities, including domestically the U.S.

Environmental Protection Agency ("EPA"), the federal Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF"), the U.S.

Environmental Protection Agency ("EPA"), the federal Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF"), a law enforcement agency under the U.S.

Department of Justice, the U.S.

Occupational Safety and Health Administration ("OSHA") and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them, often requiring difficult and costly actions.

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• the Clean Air Act ("CAA"), which restricts the emission of air pollutants from many sources and imposes various pre-construction, operational, monitoring and reporting requirements, and that the EPA has relied upon as authority for adopting climate change regulatory initiatives relating to greenhouse gas ("GHG") emissions;

the Federal Water Pollution Control Act, also known as the Clean Water Act, which regulates discharges of pollutants from facilities to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States;

• the Federal Water Pollution Control Act, also known as the Clean Water Act ("CWA"), which regulates discharges of pollutants from facilities to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States;

• the Oil Pollution Act of 1990, which subjects owners and operators of vessels, onshore facilities, and pipelines, as well as lessees or permittees of areas in which offshore facilities are located, to liability for removal costs and damages arising from an oil spill in waters of the United States;

Department of the Interior regulations, which govern oil and natural gas operations on federal lands and waters and impose obligations for establishing financial assurances for decommissioning activities, liabilities for pollution cleanup costs resulting from operations, and potential liabilities for pollution damages;

the Comprehensive Environmental Response, Compensation and Liability Act of 1980, which imposes liability on generators, transporters, and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur;

Department of the Interior ("DOI") regulations, which govern oil and natural gas operations on federal lands and waters and impose obligations for establishing financial assurances for decommissioning activities, liabilities for pollution cleanup costs resulting from operations, and liabilities for pollution damages;

• the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), which imposes liability on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur;

• the Resource Conservation and Recovery Act ("RCRA"), which governs the generation, treatment, storage, transport, and disposal of solid wastes, including oil and natural gas exploration and production wastes and hazardous wastes;

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• the Emergency Planning and Community Right-to-Know Act, which requires facilities to implement a safety hazard communication program and disseminate information to employees, local emergency planning committees, and response departments on toxic chemical uses and inventories;

the Occupational Safety and Health Act, which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures;

the Endangered Species Act, which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating restrictions or a temporary, seasonal, or permanent ban in affected areas;

the National Environmental Policy Act, which requires federal agencies, including the Department of the Interior, to evaluate major agency actions having the potential to impact the environment and that may require the preparation of environmental assessments and more detailed environmental impact statements that may be made available for public review and comment;

the Department of Transportation regulations, which relate to advancing the safe transportation of energy and hazardous materials, including explosives, and emergency response preparedness;

regulations adopted by the ATF, a law enforcement agency under the U.S.

Department of Justice, that impose stringent licensing conditions with respect to the acquisition, storage and use of explosives for well site support services in the oil and natural gas sector.

These federal environmental and occupational health and safety laws and regulations generally restrict the level of substances generated as a result of our operations that may be emitted to ambient air, discharged to surface water, and disposed or otherwise released to surface and below-ground soils and groundwater.

Additionally, there exist regional, state, tribal and local jurisdictions in the United States where we operate that also have, are developing or considering developing, similar environmental and occupational health and safety laws and regulations governing many of these same types of activities.

• OSHA, which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures;

• the Endangered Species Act ("ESA"), which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating restrictions or a temporary, seasonal, or permanent ban in affected areas;

• the National Environmental Policy Act, which requires federal agencies, including the DOI, to evaluate major agency actions having the potential to impact the environment and that may require the preparation of environmental assessments and more detailed environmental impact statements that may be made available for public review and comment;

Department of Transportation regulations, which relate to advancing the safe transportation of energy and hazardous materials, including explosives, and emergency response preparedness;

• regulations adopted by the ATF, that impose stringent licensing conditions with respect to the acquisition, storage and use of explosives for well site support services in the oil and natural gas sector.

Additionally, there exist regional, state, tribal and local jurisdictions in the United States where we operate that also have, or are developing or considering developing, similar environmental and occupational health and safety laws and regulations governing many of these same types of activities.

Outside of the United States, there are countries and provincial, regional, tribal or local jurisdictions therein where we are conducting business that also have, or may be developing, regulatory initiatives or analogous controls that regulate our environmental-related activities.

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the occurrence of restrictions, delays or cancellations in the permitting, development or expansion of projects;

and the issuance of injunctions restricting or prohibiting some or all of our activities in a particular area.

Certain environmental laws also provide for citizen suits, which allow environmental organizations to act in place of the government and sue operators for alleged violations of environmental laws.

and issuance of injunctions restricting or prohibiting some or all of our activities in a particular area.

We have incurred and will continue to incur operating and capital expenditures, some of which may be material, to comply with environmental and occupational health and safety laws and regulations.

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However, there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material adverse effect on our business and operational results.

We own, lease or operate numerous properties that have been used for crude oil and natural gas wellsite support services for many years.

We own, lease or operate numerous properties that have been used for wellsite support services for many years.

We also have acquired certain properties supportive of oil and natural gas activities from third parties whose actions with respect to the management and disposal or release of hydrocarbons, hazardous substances or wastes at or from such properties were not under our control prior to acquiring them.

Under environmental laws and regulations, we could incur strict joint and several liability for remediating hydrocarbons, hazardous substances or wastes disposed of or released by prior owners or operators.

Under environmental laws and regulations such as CERCLA and RCRA, we could incur

strict joint and several liability due to damages to natural resources or for remediating hydrocarbons, hazardous substances or wastes disposed of or released by prior owners or operators.

Moreover, an accidental release of materials into the environment during the course of our operations may cause us to incur significant costs and liabilities.

We also could incur costs related to the clean-up of third-party sites to which we sent regulated substances for disposal or to which we sent equipment for cleaning, and for damages to natural resources or other claims related to releases of regulated substances at or from such third-party sites.

Over time, both in the United States and in foreign countries, the trend in environmental and occupational health and safety laws and regulations is to typically place more restrictions and limitations on activities that may adversely affect the environment or expose workers to injury.

Consequently, any new or amended legal requirement that may arise in the future to address potential environmental, health or safety-related concerns including, for example, as a result of oil and natural gas development in close proximity to occupied structures or environmentally-sensitive lands or recreational areas, could have a material adverse effect on our business, results of operations and financial position.

If existing regulatory requirements or enforcement policies change or new regulatory or enforcement initiatives are developed and implemented in the future, we or our customers may be required to make significant, unanticipated capital and operating expenditures.

Examples of recent regulations or other regulatory initiatives in the United States include the following:

• Hydraulic fracturing .

Hydraulic fracturing is typically regulated by state oil and gas commissions, but the practice continues to attract considerable public, scientific and governmental attention in certain parts of the country, resulting in increased scrutiny and regulation, including by federal agencies.

At the federal level, the EPA asserted federal regulatory authority under the SDWA over certain hydraulic fracturing activities involving the use of diesel fuels and published permitting guidance for such activities.

Additionally, the EPA issued a final regulation under the CWA prohibiting discharges to publicly owned treatment works of wastewater from onshore unconventional oil and gas extraction facilities.

In late 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources, concluding that "water cycle" activities associated with hydraulic fracturing may impact drinking water resources under certain circumstances.

Also in 2016, the federal Bureau of Land Management ("BLM") under the Obama Administration published a final rule imposing more stringent standards on hydraulic fracturing on federal lands;

however, in late 2018, the BLM under the Trump Administration published a final rule rescinding the 2016 final rule.

Since that time, litigation challenging the BLM's 2016 final rule and the 2018 final rule has resulted in rescission in federal courts of both the 2016 rule and the 2018 final rule but appeals of one or both of those decisions are expected.

Notwithstanding these regulatory developments, the Biden Administration could seek to pursue legislative, regulatory or executive initiatives that restrict hydraulic fracturing activities on federal lands.

For example, the Biden Administration issued an order temporarily suspending the issuance of new leases and authorizations on federal lands and waters for a period of 60 days beginning on January 20, 2021, and subsequently issued a second order in January 2021 suspending the issuance of new leases on federal lands and waters pending completion of a study of current oil and gas practices.

Although these suspensions do not limit existing operations under valid leases and are not applicable to tribal lands that the federal governmental holds in trust, further constraints may be adopted by the Biden Administration in the future.

At the state level, many states have adopted legal requirements that have imposed new or more stringent permitting, public disclosure or well construction requirements on hydraulic fracturing activities, including states where our oil and gas exploration and production customers operate.

States could also elect to place prohibitions on hydraulic fracturing and local governments may seek to adopt ordinances within their jurisdictions regulating the time, place or manner of drilling activities in general or hydraulic fracturing activities in particular.

• Induced seismicity .

In recent years, wells in the United States used for the disposal by injection of flowback water or certain other oilfield fluids below ground into non-producing formations have been associated with an increased number of seismic events, with research suggesting that the link between seismic events and wastewater disposal may vary by region and local geology.

geological survey has in the recent past identified six states with the most significant hazards from induced seismicity:

Oklahoma, Kansas, Texas, Colorado, New Mexico, and Arkansas.

In response to these concerns, regulators in some of the states in which our oil and gas exploration and production customers operate have adopted additional requirements related to seismicity and its potential association with hydraulic fracturing.

For example, Oklahoma and Texas have issued rules for wastewater disposal wells that imposed certain permitting and operating restrictions and reporting requirements on disposal wells in proximity to faults.

States such as Oklahoma have also issued orders, from time to time, for certain wells where seismic incidents have occurred to restrict or suspend disposal well operations.

Another consequence of seismic events may be lawsuits alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal.

In countries outside of the United States where we or our customers conduct operations, there may exist similar governmental restrictions or controls over well disposal activities in an effort to limit the occurrence of induced seismicity.

• Offshore marine safety .

In the United States, President Biden has placed a moratorium on new oil and natural gas leases on federal lands and waters, including the federal Outer Continental Shelf ("OCS"), and he may pursue regulatory initiatives, executive actions and legislation in support of his regulatory agenda.

Additionally, regulatory agencies under the Biden Administration may issue new or amended rulemakings regarding deepwater leasing,

permitting or drilling that could result in more stringent or costly restrictions, delays or cancellations to our oil and gas exploration and production customers with respect to their offshore operations.

For example, as discussed under "Hydraulic Fracturing" above, the Biden Administration has suspended the issuance of authorizations for oil and gas activities on federal lands and waters, although the suspension does not limit existing operations under valid leases.

The Bureau of Ocean Energy Management ("BOEM") and the Bureau of Safety and Environmental Enforcement ("BSEE") have over the past decade, primarily under the Obama Administration, imposed more stringent permitting procedures and regulatory safety and performance requirements with respect to new wells to be drilled in federal waters.

However, in recent years under the Trump Administration, there have been actions by BSEE or BOEM seeking to mitigate or delay certain of those more rigorous standards.

For example, in 2016, the BOEM under the Trump Administration imposed a delay in, and ultimately rescinded in 2020, the implementation of a Notice to Lessees and Operators ("NTL") issued by BSEE under the Obama Administration that would have bolstered supplemental bonding procedures for the decommissioning of offshore wells, platforms, pipelines, and other facilities by oil and natural gas exploration and production operators on the OCS.

BSEE and BOEM under the Biden Administration may reconsider rules and regulatory initiatives implemented under the Trump Administration and pursue legislation, regulations, executive actions or other regulatory initiatives that impose more stringent standards.

Additionally, the Biden Administration may seek to pursue executive actions and legislation that would restrict, delay or cancel prospective leasing or drilling activities on the OCS or significantly increase financial assurances of operators for decommissioning of offshore facilities on the OCS.

Our customers compliance with such new, more stringent legal requirements may result in increased costs for us or our customers and could adversely affect, delay or curtail new or ongoing drilling and development efforts by our customers.

Outside of the United States, there are countries and provincial, regional, tribal or local jurisdictions therein where our customers are conducting business that also have, or may be developing, regulatory initiatives or analogous controls that regulate the permitting and regulatory safety and performance aspects of those customers’ development and production activities, which could significantly restrict, delay or cancel the leasing, permitting, development or expansion of an offshore energy project or substantially increase the cost of doing business offshore.

• Ground-level ozone standards .

In 2015, the EPA under the Obama Administration issued a final rule under the CAA, making the National Ambient Air Quality Standard ("NAAQS") for ground-level ozone more stringent.

Since that time, the EPA has issued area designations with respect to ground-level ozone and final requirements that apply to state, local, and tribal air agencies for implementing the 2015 NAAQS for ground-level ozone and, more recently, in December 2020, the EPA, under the Trump Administration, published a final action that, upon conducting a periodic review of the ozone standard in accord with CAA requirements, elected to retain the 2015 ozone NAAQS without revision on a going-forward basis.

However, several groups have filed litigation over this December decision, and the NAAQS may be subject to further revision under the Biden Administration.

State implementation of the revised NAAQS could, among other things, require installation of new emission controls on some of our or our customers' equipment, result in longer permitting timelines, and significantly increase our or our customers' capital expenditures and operating costs.

• Waters of the United States .

In 2015, the EPA and U.S.

Army Corps of Engineers ("Corps") under the Obama Administration released a final rule outlining federal jurisdictional reach under the CWA over waters of the United States, including wetlands;

however, the 2015 rule was repealed by the EPA and the Corps under the Trump Administration in a final rule that became effective in December 2019 and they also published a final rule in April 2020 re-defining the term "waters of the United States" as applied under the CWA and narrowing the scope of waters subject to federal regulation.

The April 2020 final rule is subject to various pending legal challenges and there is an expectation that this final rule will be reconsidered by the Biden Administration.

To the extent that the EPA and the Corps under the Biden Administration revises the June 2020 final rule in a manner similar to or more stringent than the original 2015 final rule, or if any challenge to the June 2020 final rule is successful and the 2015 final rule or a revised rule again expands the scope of the CWA's jurisdiction in areas where we or our customers conduct operations, such developments could delay, restrict or halt permitting or development of projects, result in longer permitting timelines, or increased compliance expenditures or mitigation costs for our and our customers’ operations, which may reduce the rate of production from operators.

• Climate change .

In the United States, no comprehensive climate change legislation has been implemented at the federal level, but President Biden may pursue new climate change legislation, executive actions or other regulatory initiatives to limit GHG emissions.

Moreover, with the U.S.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted rules that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources, and impose new standards reducing methane emissions from oil and gas operations through limitations on venting and flaring and the implementation of enhanced emission leak detection and repair requirements.

In recent years, there has been considerable uncertainty

surrounding regulation of methane emissions, as the EPA under the Obama Administration published final regulations under the CAA establishing new source performance standards ("NSPS") for methane in 2016, but since that time the EPA has undertaken several measures for stationary sources of air emissions, including publishing the September 2020 final rule policy and technical amendments to the NSPS.

The policy amendments, effective September 14, 2020, notably removed the transmission and storage sector from the regulated source category and rescinded methane and volatile organic compounds requirements for the remaining sources that were established by former President Obama's Administration, and the technical amendments, effective November 16, 2020, included changes to fugitive emissions monitoring and repair schedules for gathering and boosting compressor stations and low-production wells, recordkeeping and reporting requirements, and more.

Various states and industry and environmental groups are separately challenging both the original 2016 standards and the EPA's September 2020 final rules and on January 20, 2021, President Biden issued an executive order that, among other things, directed the EPA to reconsider the technical amendments and issue a proposed rule suspending, revising or rescinding those amendments by no later than September 2021.

A reconsideration of the September 2020 policy amendments is expected to follow.

The January 20, 2021 executive order also directed the establishment of new methane and volatile organic compound standards applicable to existing oil and gas operations, including the production, transmission, processing and storage segments.

Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as greenhouse gas cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

At the international level, there exists the United Nations-sponsored "Paris Agreement," which is a non-binding agreement for nations to limit their greenhouse gas emissions through individually-determined reduction goals every five years after 2020.

While the United States had withdrawn from the Paris Agreement, President Biden has signed executive orders to recommit the United States to the Paris Agreement and to direct the federal government to formulate the United States' emissions reduction goal under the agreement.

With the United States recommitting to the Paris Agreement, executive orders may be issued or federal legislation or regulatory initiatives may be adopted to achieve the agreement's goals.

Separately, on January 27, 2021, President Biden issued an executive order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and an increased emphasis on climate-related risks across government agencies and economic sectors.

Litigation risks are also increasing, as a number of states, municipalities and other plaintiffs have sought to bring suit against the largest oil and natural gas exploration and production companies in state or federal court, alleging, among other things, that such energy companies created public nuisances by producing fuels that contributed to global warming effects, such as rising sea levels, and therefore, are responsible for roadway and infrastructure damages as a result, or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts.

There are also increasing financial risks for fossil fuel producers and other companies supportive of the oil and natural gas industry as shareholders and bondholders currently invested in fossil-fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.

Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending and investment practices and some of them may elect not to provide funding for fossil fuel energy companies.

Additionally, there is the possibility that financial institutions will be required to adopt policies that limit funding for fossil fuel energy companies.

Recently, President Biden signed an executive order calling for the development of a climate finance plan and, separately, the Federal Reserve announced that it has joined the Network for Greening the Financial System, a consortium of financial regulators focused on addressing climate-related risks in the financial sector.

Finally, increasing concentrations of GHG in the Earth's atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, rising sea levels and other climatic events.

While we maintain insurance coverage for certain environmental and occupational health and safety risks that we believe is consistent with insurance coverage held by other similarly situated industry participants, our insurance does not cover any penalties or fines that may be issued by a government authority.

In addition, it is possible that other developments, such as stricter and more comprehensive environmental and occupational health and safety laws and regulations, claims for damages to property or persons or disruption of our customers' operations resulting from our actions or omissions, and imposition of penalties due to our operations, could have a material adverse effect on us and our results of operations.

See Risk Factors under Part I, Item 1A of this Form 10‑K for further discussion on environmental laws and regulations, including with respect to hydraulic fracturing;

ozone standards, induced seismicity regulatory developments;

climate change, including methane or other GHG emissions;

storage and use of explosives;

offshore drilling and related regulatory developments, including with respect to decommissioning obligations;

and other risks or regulations relating to environmental protection.

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 1. Business