What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-07-29 compared with 2021-04-29 · 212 added, 142 removed, 517 unchanged (41% of the section changed)

4 unchanged sentences

(In Thousands, Except Per Share Amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Products $ 78,038 $ 82,643 $ 139,483 $ 185,623

8 unchanged sentences

Impairments of goodwill — — — 406,056

Impairments of fixed assets 650 5,198

Other operating (income) expense, net ( 354 ) 107

Impairments of fixed and lease assets 2,794 2,992 3,444 8,190

Other operating income, net ( 85 ) ( 134 ) ( 439 ) ( 27 )

163,342 179,579 308,693 841,075

16 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net loss $ ( 15,271 ) $ ( 24,626 ) $ ( 31,081 ) $ ( 429,667 )

Other comprehensive loss:

Other comprehensive income (loss):

Currency translation adjustments 3,160 ( 1,230 ) 1,631 ( 16,021 )

46 unchanged sentences

(In Thousands)

Three Months Ended March 31, 2021 Common

Three Months Ended June 30, 2021 Common

Stock Additional

4 unchanged sentences

Stockholders'

Balance, March 31, 2021 $ 738 $ 1,100,077 $ 329,750 $ ( 72,914 ) $ ( 625,489 ) $ 732,162

Net loss — — ( 15,271 ) — — ( 15,271 )

Currency translation adjustments (excluding intercompany advances) — — — 556 — 556

Currency translation adjustments on intercompany advances — — — 2,604 — 2,604

Stock-based compensation expense:

Restricted stock 1 1,882 — — — 1,883

Surrender of stock to settle taxes on restricted stock awards — — — — — —

Adoption of ASU 2020-06 — — — — — —

Balance, June 30, 2021 $ 739 $ 1,101,959 $ 314,479 $ ( 69,754 ) $ ( 625,489 ) $ 721,934

Six Months Ended June 30, 2021 Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stockholders'

Balance, December 31, 2020 $ 733 $ 1,122,945 $ 329,327 $ ( 71,385 ) $ ( 623,989 ) $ 757,631

6 unchanged sentences

Adoption of ASU 2020-06 — ( 25,683 ) 16,233 — — ( 9,450 )

Balance, June 30, 2021 $ 739 $ 1,101,959 $ 314,479 $ ( 69,754 ) $ ( 625,489 ) $ 721,934

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In Thousands)

Three Months Ended June 30, 2020 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Balance, March 31, 2020 $ 732 $ 1,115,677 $ 392,669 $ ( 82,537 ) $ ( 623,909 ) $ 802,632

Three Months Ended March 31, 2020 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Net loss — — ( 24,626 ) — — ( 24,626 )

Currency translation adjustments (excluding intercompany advances) — — — ( 442 ) — ( 442 )

Currency translation adjustments on intercompany advances — — — ( 788 ) — ( 788 )

Stock-based compensation expense:

Restricted stock 1 2,094 — — — 2,095

Surrender of stock to settle taxes on restricted stock awards — — — — ( 2 ) ( 2 )

Balance, June 30, 2020 $ 733 $ 1,117,771 $ 368,043 $ ( 83,767 ) $ ( 623,911 ) $ 778,869

Six Months Ended June 30, 2020 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity

Balance, December 31, 2019 $ 726 $ 1,114,521 $ 797,710 $ ( 67,746 ) $ ( 621,244 ) $ 1,223,967

5 unchanged sentences

Surrender of stock to settle taxes on restricted stock awards — — — — ( 2,667 ) ( 2,667 )

Balance, March 31, 2020 $ 732 $ 1,115,677 $ 392,669 $ ( 82,537 ) $ ( 623,909 ) $ 802,632

Balance, June 30, 2020 $ 733 $ 1,117,771 $ 368,043 $ ( 83,767 ) $ ( 623,911 ) $ 778,869

The accompanying notes are an integral part of these financial statements.

3 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net loss $ ( 31,081 ) $ ( 429,667 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization expense 42,429 51,055

1 unchanged sentence

Impairments of inventories — 25,230

Impairments of fixed assets 650 5,198

Impairments of fixed and lease assets 3,444 8,190

Stock-based compensation expense 4,703 3,257

2 unchanged sentences

Gains on extinguishment of 1.50 % convertible senior notes

( 4,022 ) ( 4,779 )

Gains on disposals of assets ( 1,632 ) ( 1,489 )

4 unchanged sentences

Accounts payable and accrued liabilities 11,896 ( 34,227 )

Income taxes payable — ( 1,100 )

Deferred revenue 1,780 5,991

Other operating assets and liabilities, net 2,929 4,266

Net cash flows provided by (used in) operating activities ( 8,417 ) 5,449

Net cash flows provided by operating activities 13,933 44,131

Cash flows from investing activities:

Capital expenditures ( 7,311 ) ( 8,915 )

Proceeds from disposition of property, plant and equipment 1,851 4,092

Proceeds from disposition of property and equipment 3,422 5,418

Other, net ( 326 ) ( 301 )

34 unchanged sentences

It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company.

During 2020 and the first quarter of 2021, the Company recorded asset impairments, severance and facility closure charges in response to these developments as further discussed in Note 3, "Asset Impairments and Other Restructuring Items." As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

During 2020 and the first half of 2021, the Company recorded asset impairments, severance and restructuring charges in response to these developments as further discussed in Note 3, "Asset Impairments and Other Restructuring Items." As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

16 unchanged sentences

Asset Impairments and Other Restructuring Items

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.

Following this unprecedented collapse in crude oil prices, the spot price of Brent and WTI crude oil closed at $ 15 and $ 21 per barrel, respectively, on March 31, 2020.

Consistent with oilfield service industry peers, the Company's stock price declined dramatically during the first quarter of 2020, with its market capitalization falling substantially below the carrying value of stockholders' equity.

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

Demand for most of the Company's products and services depends substantially on the level of capital expenditures by the oil and natural gas industry, and these conditions caused rapid reductions to most of the Company's 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.

While crude oil prices have recovered significantly since reaching record low levels in April 2020, with crude oil inventory levels moderating, there remains some uncertainty around the timing of demand recovery to pre-COVID-19 levels.

While the prices of and demand for crude oil have increased significantly since reaching record low levels in April 2020, with crude oil inventory levels moderating, uncertainty remains regarding the timing of demand recovery to pre-COVID-19 levels.

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

3 unchanged sentences

Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

First quarter 2020

Impairments of:

3 unchanged sentences

16,249 — 8,981 — 25,230 4,736 20,494

Severance and restructuring charges 112 — 548 — 660 139 521

During the first quarter of 2021, the Company further reduced its workforce, closed additional facilities in the United States and continued to assess the carrying value of its assets based on the industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):

Severance and restructuring costs 112 — 548 — 660 139 521

The Company further reduced its workforce and closed additional facilities in the United States during the second quarter of 2020, and recorded the following charges (in thousands):

Offshore/ Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

Second quarter 2020

Impairments of fixed assets $ — $ — $ 2,992 $ — $ 2,992 $ 628 $ 2,364

Severance and restructuring charges 282 275 1,306 1,555 3,418 717 2,701

Additionally, during the first quarter of 2021, the Company recognized an aggregate $ 4.8 million reduction of payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") employee retention credit program.

The Company continues to evaluate additional benefits potentially available to it under the CARES Act.

Severance and restructuring costs 322 1,315 3,544 216 5,397 1,133 4,264

During the first and second quarters of 2021, the Company continued its restructuring efforts, closed additional facilities in the United States and continued to assess the carrying value of its assets based on the industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):

Offshore/ Manufactured Products Downhole Technologies Well Site Services Corporate Pre-tax Total Tax After-tax Total

First quarter 2021

Impairments of fixed assets $ — $ — $ 650 $ — $ 650 $ 137 $ 513

Severance and restructuring costs 282 275 1,306 1,555 3,418 717 2,701

Second quarter 2021

Impairment of operating lease assets $ — $ — $ 2,794 $ — $ 2,794 $ 587 $ 2,207

Restructuring costs (1)

— 203 2,351 — 2,554 536 2,018

____________________

(1) Includes recognition of $ 1.9 million in additional lease-related liabilities associated with the exit of a long-term lease supporting the Well Site Services segment.

OIL STATES INTERNATIONAL, INC.

2 unchanged sentences

FINANCIAL STATEMENTS

Additionally, during the three and six months ended June 30, 2021, the Company recognized $ 2.8 million and $ 7.6 million, respectively, in aggregate reductions to payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") employee retention credit program.

The Company continues to evaluate any and all benefits potentially available to it under the CARES Act.

Goodwill is allocated to each reporting unit based on acquisitions made by the Company and is assessed for impairment annually and when an event occurs or circumstances change that indicate the carrying amounts may not be recoverable.

9 unchanged sentences

The Company performed its annual quantitative assessment of goodwill as of December 1, 2020, which indicated that the fair value of the Offshore/Manufactured Products segment was greater than its carrying amount and no additional provision for impairment was required.

The Company's remaining goodwill within the segment totaled approximately $ 76.5 million as of March 31, 2021 and December 31, 2020.

The Company's remaining goodwill within the segment totaled approximately $ 76.5 million as of June 30, 2021 and December 31, 2020.

Long-lived Assets

1 unchanged sentence

As a result of the March 2020 assessment, the Company concluded that certain drilling-related property and equipment held by the Well Site Services segment was impaired and recognized a non-cash fixed asset impairment charge of $ 5.2 million in the first quarter of 2020.

During the first quarter of 2021, the Well Site Services segment recognized non-cash fixed asset impairment charges of $ 0.7 million associated with the closure of additional facilities and other management actions.

During the first and second quarters of 2021, the Well Site Services segment recognized non-cash fixed and operating lease asset impairment charges of $ 0.7 million and $ 2.8 million, respectively, associated with the closure of additional facilities coupled with other management actions.

During the second quarter of 2021, the segment also recorded an additional $ 1.9 million charge associated with the exit of a leased facility.

Should, among other events and circumstances, global economic and industry conditions deteriorate, the COVID-19 pandemic business and market disruptions worsen, the outlook for future operating results and cash flow for any of the Company's reporting units decline, income tax rates increase or regulations change, costs of equity or debt capital increase, valuations for comparable public companies or comparable acquisition valuations decrease, or management implement strategic decisions based on industry conditions, the Company may need to recognize additional impairment losses in future periods.

4 unchanged sentences

Details of Selected Balance Sheet Accounts

Additional information regarding selected balance sheet accounts as of March 31, 2021 and December 31, 2020 is presented below (in thousands):

Additional information regarding selected balance sheet accounts as of June 30, 2021 and December 31, 2020 is presented below (in thousands):

2021 December 31,

10 unchanged sentences

Deferred revenue (contract liabilities) $ 45,210 $ 43,384

For the three months ended March 31, 2021, the $ 5.9 million net decrease in contract assets was primarily attributable to $ 16.8 million transferred to accounts receivable, which was partially offset by $ 10.9 million in revenue recognized during the period.

Deferred revenue (contract liabilities) decreased by $ 0.2 million in the first quarter of 2021, primarily reflecting the recognition of $ 3.0 million of revenue that was deferred at the beginning of the period, substantially offset by $ 2.8 million in new customer billings which were not recognized as revenue during the period.

As of March 31, 2021, accounts receivable, net in the United States and the United Kingdom represented 70 % and 18 %, respectively, of the total.

No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of March 31, 2021.

The following provides a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

As of June 30, 2021, accounts receivable, net in the United States and the United Kingdom represented 64 % and 20 %, respectively, of the total.

No other country or single customer accounted for more than 10% of the Company's total accounts receivable as of June 30, 2021.

For the six months ended June 30, 2021, the $ 17.8 million net decrease in contract assets was primarily attributable to $ 33.3 million transferred to accounts receivable, which was partially offset by $ 15.4 million in revenue recognized during the period.

Deferred revenue (contract liabilities) increased by $ 1.8 million in the first half of 2021, primarily reflecting $ 7.2 million in new customer billings which were not recognized as revenue during the period, partially offset by the recognition of $ 5.4 million of revenue that was deferred at the beginning of the period.

The following provides a summary of activity in the allowance for doubtful accounts for the six months ended June 30, 2021 and 2020 (in thousands):

Six Months Ended June 30,

Allowance for doubtful accounts – January 1 $ 8,304 $ 8,745

2 unchanged sentences

Other 148 1,152

Allowance for doubtful accounts – March 31 $ 8,545 $ 8,686

Allowance for doubtful accounts – June 30 $ 7,698 $ 10,262

2021 December 31,

23 unchanged sentences

$ 355,405 $ 383,562

For the three months ended March 31, 2021 and 2020, depreciation expense was $ 16.4 million and $ 20.1 million, respectively.

March 31, 2021 December 31, 2020

For the three months ended June 30, 2021 and 2020, depreciation expense was $ 15.6 million and $ 18.5 million, respectively.

Depreciation expense was $ 32.0 million and $ 38.6 million for the six months ended June 30, 2021 and 2020, respectively.

June 30, 2021 December 31, 2020

Amount Accumulated

8 unchanged sentences

$ 300,526 $ 104,914 $ 195,612 $ 313,960 $ 108,211 $ 205,749

For the three months ended March 31, 2021 and 2020, amortization expense was $ 5.2 million and $ 6.3 million, respectively.

For the three months ended June 30, 2021 and 2020, amortization expense was $ 5.3 million and $ 6.1 million, respectively.

Amortization expense was $ 10.5 million and $ 12.5 million for the six months ended June 30, 2021 and 2020, respectively.

2021 December 31,

1 unchanged sentence

Deferred compensation plan $ 24,026 $ 22,801

Deferred financing costs 3,097 —

Deferred income taxes 1,466 1,280

4 unchanged sentences

Accrued compensation $ 16,840 $ 18,463

Insurance liabilities 6,579 7,694

Accrued taxes, other than income taxes 11,029 7,307

Insurance liabilities 6,677 7,694

Accrued interest 3,605 2,202

7 unchanged sentences

Net Loss Per Share

The table below provides a reconciliation of the numerators and denominators of basic and diluted net loss per share for the three months ended March 31, 2021 and 2020 (in thousands, except per share amounts):

The table below provides a reconciliation of the numerators and denominators of basic and diluted net loss per share for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share amounts):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net loss $ ( 15,271 ) $ ( 24,626 ) $ ( 31,081 ) $ ( 429,667 )

11 unchanged sentences

Diluted ( 0.25 ) ( 0.41 ) ( 0.52 ) ( 7.19 )

The calculation of diluted net loss per share for the three months ended March 31, 2021 and 2020 excluded 500 thousand shares and 629 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

The calculation of diluted net loss per share for the three and six months ended June 30, 2021 excluded 437 thousand shares and 468 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

The calculation of diluted net loss per share for the three and six months ended June 30, 2020 excluded 596 thousand shares and 613 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect.

Additionally, shares issuable upon conversion of both the 2023 Notes and the 2026 Notes were excluded due to, among other factors, their antidilutive effect.

Long-term Debt

As of March 31, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):

As of June 30, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):

2021 December 31,

Revolving credit facilities (1)

$ 3,807 $ 18,408

2026 Notes (2)

32,022 143,242

2023 Notes (3)

25,728 143,242

Promissory note 17,534 17,095

4 unchanged sentences

____________________

(1) Presented net of $ 3.2 million and $ 0.6 million of unamortized debt issuance costs as of March 31, 2021 and December 31, 2020, respectively.

(2) The outstanding principal amount of the 2023 Notes was $ 32.4 million and $ 157.4 million as of March 31, 2021 and December 31, 2020, respectively.

(3) The outstanding principal amount of the 2026 Notes was $ 135.0 million as of March 31, 2021.

(1) Presented net of $ 0.6 million of unamortized debt issuance costs as of December 31, 2020.

Unamortized debt issuance costs of $ 3.1 million as of June 30, 2021 are presented in Other noncurrent assets.

(2) The outstanding principal amount of the 2026 Notes was $ 135.0 million as of June 30, 2021.

(3) The outstanding principal amount of the 2023 Notes was $ 26.0 million and $ 157.4 million as of June 30, 2021 and December 31, 2020, respectively.

OIL STATES INTERNATIONAL, INC.

4 unchanged sentences

On February 10, 2021, the Company entered into a senior secured credit facility with certain lenders, which provides for a $ 125.0 million asset-based revolving credit facility (the "ABL Facility") under which credit availability is subject to a borrowing base calculation.

Concurrent with entering into this facility, the Former Facility (discussed below) was terminated.

Concurrent with entering into this facility, the Company's former senior secured revolving credit facility (discussed below) was terminated.

On March 16, 2021, the Company entered into an amendment to the ABL Facility that permitted the Company to incur the indebtedness represented by the 2026 Notes.

9 unchanged sentences

The ABL Agreement also requires the Company to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 for specified periods of time in the event that availability under the ABL Agreement is less than the greater of 15 % of the borrowing base and $ 14.1 million or if an event of default has occurred and is continuing.

As of March 31, 2021, the Company had $ 7.0 million of borrowings outstanding under the ABL Agreement and $ 19.0 million of outstanding letters of credit.

The total amount available to be drawn as of March 31, 2021 was $ 40.6 million, calculated based on the current borrowing base less outstanding borrowings and letters of credit.

As of March 31, 2021, the Company was in compliance with its debt covenants under the ABL Agreement.

As of June 30, 2021, the Company had $ 17.3 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of June 30, 2021 was $ 50.3 million, calculated based on the current borrowing base less outstanding borrowings, if any, and letters of credit.

As of June 30, 2021, the Company was in compliance with its debt covenants under the ABL Agreement.

Former Facility

1 unchanged sentence

On June 17, 2020, the Company entered into an omnibus amendment to the credit agreement, under which lender commitments were reduced in exchange for the suspension of certain financial covenants through March 30, 2021.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The following provides a summary of the more significant provisions of the Company's former revolving credit facility.

12 unchanged sentences

(2) Based on unused commitments under the credit agreement.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

On March 19, 2021, the Company issued $ 135 million aggregate principal amount of the 2026 Notes pursuant to an indenture, dated as of March 19, 2021 (the "2026 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

Net proceeds from the 2026 Notes offering, after deducting issuance costs, totaled $ 130.6 million.

The Company used $ 120.0 million of the cash proceeds to purchase $ 125.0 million principal amount of the outstanding 2023 Notes, with the balance added to cash on-hand.

The Company used $ 120.0 million of the cash proceeds to purchase $ 125.0 million principal amount of the outstanding 2023 Notes at a discount, with the balance added to cash on-hand.

The 2026 Notes bear interest at a rate of 4.75 % per year until maturity.

Interest is payable semi-annually in arrears on April 1 and October 1 of each year.

In addition, additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture.

Additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture.

The 2026 Notes will mature on April 1, 2026, unless earlier repurchased, redeemed or converted.

11 unchanged sentences

If specified change in control events involving the Company as defined in the 2026 Indenture occur, then noteholders may require the Company to repurchase their 2026 Notes at a cash repurchase price equal to the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest.

Additionally, the 2026 Indenture contains certain events of default,

Additionally, the 2026 Indenture contains certain events of default, including certain defaults by the Company with respect to other indebtedness of at least $ 40.0 million.

As of June 30, 2021, none of the conditions allowing holders of the 2026 Notes to convert, or requiring the Company to repurchase the 2026 Notes, had been met.

OIL STATES INTERNATIONAL, INC.

2 unchanged sentences

FINANCIAL STATEMENTS

including certain defaults by the Company with respect to other indebtedness of at least $ 40.0 million.

As of March 31, 2021, none of the conditions allowing holders of the 2026 Notes to convert, or requiring the Company to repurchase the 2026 Notes, had been met.

On January 30, 2018, the Company issued $ 200 million aggregate principal amount of the 2023 Notes, pursuant to an indenture, dated as of January 30, 2018 (the "2023 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

During the three months ended March 31, 2021, the Company purchased $ 125.0 million principal amount ($ 123.6 million net carrying amount) of the outstanding 2023 Notes for $ 120.0 million in cash.

In connection with extinguishment of a portion of the 2023 Notes, the Company recognized non-cash gains totaling $ 3.6 million during the first quarter of 2021, which is included as other income, net.

During the three months ended March 31, 2020, the Company purchased $ 5.7 million principal amount of the outstanding 2023 Notes for $ 4.7 million in cash, which approximated the net carrying amount of the related liability.

Since December 31, 2018, the Company has purchased a cumulative $ 167.6 million principal amount of the outstanding 2023 Notes for $ 146.8 million.

The 2023 Notes bear interest at a rate of 1.50 % per year and will mature on February 15, 2023, unless earlier repurchased, redeemed or converted.

The initial conversion rate is 22.2748 shares of the Company's common stock per $1,000 principal amount of 2023 Notes (equivalent to an initial conversion price of approximately $ 44.89 per share of common stock).

The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2023 Indenture.

The Company's intent is to repay the principal amount of the Notes in cash and settle the conversion feature in shares of the Company's common stock.

The initial carrying amount of the 2023 Notes recorded in the consolidated balance sheet was less than their $ 200 million principal amount, in accordance with then-applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that did not have a conversion feature.

The Company recorded the value of the conversion feature as a debt discount, which was amortized as interest expense over the term of the 2023 Notes, with a similar amount allocated to additional paid-in capital.

As a result of this amortization, prior to the Company's adoption of ASU 2020-06 effective January 1, 2021, the interest expense recognized on the 2023 Notes for accounting purposes was based on an effective interest rate of approximately 6 %, which was greater than the cash interest the Company is obligated to pay.

The following table presents the carrying amount of the 2023 Notes in the consolidated balance sheets as of March 31, 2021 and December 31, 2020 (in thousands):

As a result of this amortization, prior to the Company's adoption of the ASU 2020-06 revision to accounting guidance for convertible instruments effective January 1, 2021, the interest expense recognized on the 2023 Notes for accounting purposes was based on an effective interest rate of approximately 6 %, which was greater than the cash interest the Company is obligated to pay.

See Note 2, "Recent Accounting Pronouncement," for discussion of ASU 2020-06, which changed the Company's method of accounting for the 2023 Notes upon adoption.

The following table provides details with respect to the carrying amount of the 2023 Notes in the consolidated balance sheets as of June 30, 2021 and December 31, 2020 (in thousands):

2021 December 31,

4 unchanged sentences

Net carrying amount of the equity component n.a.

See Note 2, "Recent Accounting Pronouncement," for discussion of the recent revision to accounting guidance for convertible instruments, which changed the Company's method of accounting for the 2023 Notes upon its adoption of the standard effective January 1, 2021.

The 2023 Notes bear interest at a rate of 1.50 % per year until maturity.

Interest is payable semi-annually in arrears on February 15 and August 15 of each year.

In addition, additional interest and special interest may accrue on the 2023 Notes under certain circumstances as described in the 2023 Indenture.

The 2023 Notes will mature on February 15, 2023, unless earlier repurchased, redeemed or converted.

The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2023 Indenture.

The Company's intent is to repay the principal amount of the 2023 Notes in cash and settle the conversion feature in shares of the Company's common stock.

Noteholders may convert their 2023 Notes, at their option, only in the following circumstances:

(1) if the last reported sale price per share of the Company's common stock exceeds 130 % of the conversion price for each of at least 20 trading days

The following table presents the Company's purchases of outstanding 2023 Notes during the three- and six-month periods ended June 30, 2021 and 2020, with non-cash gains included within other income, net (in thousands):

Principal Amount Carrying Value of Liability Cash Paid Non-cash Gain Recognized

Three months ended June 30,

2021 $ 6,400 $ 6,337 $ 5,952 $ 385

2020 11,981 10,637 5,858 4,779

Six months ended June 30,

2021 $ 131,400 $ 129,974 $ 125,952 $ 4,022

2020 17,681 15,374 10,595 4,779

Since December 31, 2018, the Company has purchased a cumulative $ 174.0 million principal amount of the outstanding 2023 Notes for $ 152.8 million in cash.

OIL STATES INTERNATIONAL, INC.

2 unchanged sentences

FINANCIAL STATEMENTS

during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the "measurement period") in which the trading price per $1,000 principal amount of the 2023 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of the Company's common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on the Company's common stock, as described in the 2023 Indenture;

or (4) if the Company calls the 2023 Notes for redemption, or at any time from, and including, November 15, 2022 until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares of common stock, at the Company's election, based on the applicable conversion rate(s).

If the Company elects to deliver cash or a combination of cash and shares of common stock, then the consideration due upon conversion will be based on a defined observation period.

The 2023 Notes are redeemable, in whole or in part, at the Company's option at a cash redemption price equal to the principal amount of the 2023 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of common stock exceeds 130 % of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice.

If specified change in control events involving the Company as defined in the 2023 Indenture occur, then noteholders may require the Company to repurchase their 2023 Notes at a cash repurchase price equal to the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest.

Additionally, the 2023 Indenture contains certain events of default, including certain defaults by the Company with respect to other indebtedness of at least $ 40.0 million.

As of March 31, 2021, none of the conditions allowing holders of the 2023 Notes to convert, or requiring the Company to repurchase the 2023 Notes, had been met.

Promissory Note

In connection with the 2018 acquisition of GEODynamics (the "GEODynamics Acquisition"), the Company issued a $ 25.0 million promissory note that bears interest at 2.50 % per annum and was scheduled to mature on July 12, 2019.

The Company believes that payments due under the promissory note are subject to set-off, in full or in part, against certain indemnification claims related to matters occurring prior to the GEODynamics Acquisition.

Payments due under the promissory note are subject to set-off, in full or in part, against certain indemnification claims related to matters occurring prior to the GEODynamics Acquisition.

The Company has provided notice to and asserted indemnification claims against the seller of GEODynamics (the "Seller"), and the Seller has filed a breach of contract suit against the Company and one of its wholly-owned subsidiaries alleging that payments due under the promissory note are required to be, but have not been, repaid in accordance with the terms of such note.

The Company has incurred settlement costs and expenses of $ 7.9 million related to such indemnification claims, and believes that the maturity date of such note is extended until the resolution of these claims and expects that the amount ultimately paid in respect of such note will be reduced as a result of the indemnification claims.

Accordingly, the Company has reduced the carrying amount of such note in the consolidated balance sheet to $ 17.1 million as of March 31, 2021 and December 31, 2020, which is its current best estimate of what is owed after set-off for such indemnification matters.

The Company has incurred settlement costs and expenses of $ 7.5 million related to such indemnification claims, and believes that the maturity date of such note is extended until the resolution of such indemnity claims and that it is permitted to set-off the principal amount owed by the amount of such costs and expenses.

Accordingly, the Company has reduced the carrying amount of such note in the consolidated balance sheet to $ 17.5 million as of June 30, 2021, which is its current best estimate of what is owed after set-off for such indemnification matters.

See Note 13, "Commitments and Contingencies."

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The Company believes that the carrying values of these instruments, other than the 2023 Notes and 2026 Notes, on the accompanying consolidated balance sheets approximate their fair values.

The estimated fair value of the 2023 Notes as of March 31, 2021 was $ 27.3 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 32.4 million.

The estimated fair value of the 2026 Notes as of March 31, 2021 was $ 128.4 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 135.0 million.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The estimated fair value of the 2023 Notes as of June 30, 2021 was $ 24.4 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 26.0 million.

The estimated fair value of the 2026 Notes as of June 30, 2021 was $ 146.0 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $ 135.0 million.

Stockholders' Equity

The following table provides details with respect to the changes to the number of shares of common stock, $ 0.01 par value, outstanding during the first three months of 2021 (in thousands):

The following table provides details with respect to the changes to the number of shares of common stock, $ 0.01 par value, outstanding during the first six months of 2021 (in thousands):

Shares of common stock outstanding – December 31, 2020 61,005

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Shares withheld for taxes on vesting of stock awards and transferred to treasury ( 225 )

Shares of common stock outstanding – March 31, 2021 61,281

As of March 31, 2021 and December 31, 2020, the Company had 25,000,000 shares of preferred stock, $ 0.01 par value, authorized, with no shares issued or outstanding.

Shares of common stock outstanding – June 30, 2021 61,399

As of June 30, 2021 and December 31, 2020, the Company had 25,000,000 shares of preferred stock, $ 0.01 par value, authorized, with no shares issued or outstanding.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, reported as a component of stockholders' equity, increased from $ 71.4 million at December 31, 2020 to $ 72.9 million at March 31, 2021, due to changes in currency exchange rates.

Accumulated other comprehensive loss, reported as a component of stockholders' equity, decreased from $ 71.4 million at December 31, 2020 to $ 69.8 million at June 30, 2021, due to changes in currency exchange rates.

Accumulated other comprehensive loss is primarily related to fluctuations in the currency exchange rates compared to the U.S.

dollar which are used to translate certain of the international operations of the Company's operating segments.

For the three months ended March 31, 2021 and 2020, currency translation adjustments recognized as a component of other comprehensive loss were primarily attributable to the United Kingdom and Brazil.

As of March 31, 2021, the exchange rate for the British pound compared to the U.S.

dollar strengthened by 1 % while the exchange rate for the Brazilian real compared to the U.S.

dollar weakened by 8 % compared to the exchange rates at December 31, 2020, contributing to other comprehensive loss of $ 1.5 million reported for the three months ended March 31, 2021.

For the six months ended June 30, 2021 and 2020, currency translation adjustments recognized as a component of other comprehensive loss were primarily attributable to the United Kingdom and Brazil.

As of June 30, 2021, the exchange rate for the British pound and the Brazilian real compared to the U.S.

dollar strengthened by 1 % and 4 %, respectively, compared to the exchange rates at December 31, 2020, contributing to other comprehensive income of $ 1.6 million reported for the six months ended June 30, 2021.

During the first six months of 2020, the exchange rate for the British pound and the Brazilian real compared to the U.S.

dollar weakened by 6 % and 27 %, respectively, compared to the exchange rate at December 31, 2019, contributing to other comprehensive loss of $ 16.0 million reported for the six months ended June 30, 2020.

OIL STATES INTERNATIONAL, INC.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Long-Term Incentive Compensation

The following table presents a summary of activity for stock options, service-based restricted stock awards and performance-based stock unit awards for the three months ended March 31, 2021 (in thousands):

The following table presents a summary of activity for stock options, service-based restricted stock awards and performance-based stock unit awards for the six months ended June 30, 2021 (in thousands):

Stock Options Service-based Restricted Stock Performance-based Stock Units

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Forfeited ( 134 ) ( 46 ) ( 42 )

Outstanding – March 31, 2021 450 1,012 420

Outstanding – June 30, 2021 396 1,040 420

Weighted average grant date fair value (2021 awards) $ — $ 6.78 $ 6.84

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The performance measure for these Cash Awards is relative total stockholder return compared to a peer group of companies measured over a three-year period.

The ultimate dollar amount to be awarded for the 2021 and 2020 Cash

The ultimate dollar amount to be awarded for the 2021 and 2020 Cash Awards is limited to their targeted award value ($ 1.5 million) if the Company's total stockholder return is negative over the performance period.

The obligations, if any, related to the Cash Awards are classified as liabilities and recognized over the vesting period.

Stock-based compensation expense recognized during the three and six months ended June 30, 2021 totaled $ 1.9 million and $ 4.7 million, respectively.

Stock-based compensation expense recognized during the three and six months ended June 30, 2020 totaled $ 2.1 million and $ 3.3 million, respectively.

As of June 30, 2021, there was $ 9.6 million of pre-tax compensation costs related to service-based and performance-based stock awards, which will be recognized in future periods as vesting conditions are satisfied.

On May 11, 2021, the Company’s stockholders approved the Amended and Restated Equity Participation Plan of Oil States International, Inc., which provided for a 4.5 million increase in the number of shares authorized for issuance under the plan.

For the three months ended June 30, 2021, the Company's income tax benefit was $ 3.2 million on a pre-tax loss of $ 18.5 million, which included certain non-deductible expenses.

This compares to an income tax benefit of $ 6.9 million on a pre-tax loss of $ 31.5 million, which included certain non-deductible expenses, for the three months ended June 30, 2020.

For the six months ended June 30, 2021, the Company's income tax benefit was $ 5.5 million on a pre-tax loss of $ 36.6 million, which included certain non-deductible expenses.

This compares to an income tax benefit of $ 46.4 million on a pre-tax loss of $ 476.1 million, which included non-cash goodwill charges (approximately $ 313.1 million) and other expenses that are not deductible for income tax purposes, for the six months ended June 30, 2020.

The impact of these non-deductible expenses in 2020 was partially offset by a $ 14.8 million discrete tax benefit related to the carryback of U.S.

net operating losses under the CARES Act.

OIL STATES INTERNATIONAL, INC.

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FINANCIAL STATEMENTS

Awards is limited to their targeted award value ($ 1.5 million) if the Company's total stockholder return is negative over the performance period.

The obligations, if any, related to the Cash Awards are classified as liabilities and recognized over the vesting period.

Stock-based compensation expense recognized during the three months ended March 31, 2021 and 2020 totaled $ 2.8 million and $ 1.2 million, respectively.

As of March 31, 2021, there was $ 10.4 million of pre-tax compensation costs related to service-based and performance-based stock awards, which will be recognized in future periods as vesting conditions are satisfied.

For the three months ended March 31, 2021, the Company's income tax benefit was $ 2.3 million on a pre-tax loss of $ 18.1 million, which included certain non-deductible expenses and discrete tax items.

This compares to an income tax benefit of $ 39.5 million on a pre-tax loss of $ 444.5 million, which included non-cash goodwill charges (approximately $ 313.1 million) and other expenses that are not deductible for income tax purposes, for the three months ended March 31, 2020.

The impact of these non-deductible expenses was partially offset by a $ 14.8 million discrete tax benefit related to the carryback of U.S.

net operating losses under the CARES Act.

Segments and Related Information

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Offshore/Manufactured Products, Downhole Technologies and Well Site Services.

Financial information by operating segment for the three months ended March 31, 2021 and 2020 is summarized in the following tables (in thousands).

Financial information by operating segment for the three and six months ended June 30, 2021 and 2020 is summarized in the following tables (in thousands).

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Offshore/Manufactured Products $ 76,908 $ 5,557 $ 4,810 $ 792 $ 526,842

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Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Offshore/Manufactured Products $ 94,936 $ 5,476 $ 9,419 $ 457 $ 548,226

Downhole Technologies 14,965 5,619 ( 11,110 ) 1,165 308,942

Well Site Services (2)

36,344 13,368 ( 22,920 ) 1,923 270,803

Corporate — 183 ( 8,723 ) ( 511 ) 118,912

Total $ 146,245 $ 24,646 $ ( 33,334 ) $ 3,034 $ 1,246,883

________________

(1) Operating loss included non-cash operating lease asset impairment charges of $ 2.8 million.

(2) Operating loss included a non-cash fixed asset impairment charge of $ 3.0 million.

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets

Six Months Ended June 30, 2021

Offshore/Manufactured Products $ 137,517 $ 11,026 $ 5,881 $ 1,255 $ 526,842

Downhole Technologies 52,190 8,910 ( 3,910 ) 280 279,324

Well Site Services (1)

81,606 22,110 ( 21,443 ) 5,207 216,498

Corporate — 383 ( 17,908 ) 569 93,060

Total $ 271,313 $ 42,429 $ ( 37,380 ) $ 7,311 $ 1,115,724

Revenues Depreciation and amortization Operating income (loss) Capital expenditures Total assets

Six Months Ended June 30, 2020

Offshore/Manufactured Products (2)

$ 186,108 $ 11,104 $ ( 86,077 ) $ 1,522 $ 548,226

Downhole Technologies (3)

56,030 11,203 ( 203,801 ) 2,814 308,942

Well Site Services (4)

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________________

(1) Operating loss included a non-cash fixed asset impairment charge of $ 0.7 million.

(1) Operating loss included non-cash fixed and lease asset impairment charges of $ 3.4 million.

(2) Operating loss included non-cash goodwill and inventory impairment charges of $ 86.5 million and $ 16.2 million, respectively.

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(4) Operating loss included non-cash goodwill, inventory and fixed asset impairment charges of $ 127.1 million, $ 9.0 million and $ 8.2 million, respectively.

See Note 3, "Asset Impairments and Other Restructuring Items," and Note 4, "Details of Selected Balance Sheet Accounts," for further discussion of these and other charges and benefits recognized in first three months of 2021 and 2020.

OIL STATES INTERNATIONAL, INC.

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FINANCIAL STATEMENTS

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended March 31, 2021 and 2020 (in thousands):

The following tables provide supplemental disaggregated revenue from contracts with customers by operating segment for the three and six months ended June 30, 2021 and 2020 (in thousands):

Offshore/Manufactured Products Downhole Technologies Well Site Services Total

2021 2020 2021 2020 2021 2020 2021 2020

Three months ended March 31

Three months ended June 30

Major revenue categories -

6 unchanged sentences

$ 76,908 $ 94,936 $ 26,760 $ 14,965 $ 42,056 $ 36,344 $ 145,724 $ 146,245

Revenues from products and services transferred to customers over time accounted for approximately 62 % and 66 % of consolidated revenues for each of the three months ended March 31, 2021 and 2020, respectively.

Offshore/Manufactured Products Downhole Technologies Well Site Services Total

2021 2020 2021 2020 2021 2020 2021 2020

Six months ended June 30

Major revenue categories -

Project-driven products $ 53,200 $ 88,153 $ — $ — $ — $ — $ 53,200 $ 88,153

Completion products and services 18,561 18,416 52,190 56,030 77,882 119,101 148,633 193,547

Drilling services — — — — 3,724 4,700 3,724 4,700

Other products 9,719 15,054 — — — — 9,719 15,054

Total short-cycle 28,280 33,470 52,190 56,030 81,606 123,801 162,076 213,301

Other products and services 56,037 64,485 — — — — 56,037 64,485

$ 137,517 $ 186,108 $ 52,190 $ 56,030 $ 81,606 $ 123,801 $ 271,313 $ 365,939

Revenues from products and services transferred to customers over time accounted for approximately 61 % and 63 % of consolidated revenues for each of the six months ended June 30, 2021 and 2020, respectively.

The balance of revenues for the respective periods relates to products and services transferred to customers at a point in time.

As of March 31, 2021, the Company had $ 166 million of remaining backlog related to contracts with an original expected duration of greater than one year .

Approximately 40 % of this remaining backlog is expected to be recognized as revenue over the remaining nine months of 2021, with an additional 31 % in 2022 and the balance thereafter.

As of June 30, 2021, the Company had $ 158 million of remaining backlog related to contracts with an original expected duration of greater than one year .

Approximately 33 % of this remaining backlog is expected to be recognized as revenue over the remaining six months of 2021, with an additional 33 % in 2022 and the balance thereafter.

Commitments and Contingencies

The impact of the COVID-19 pandemic and related economic, business and market disruptions continue to evolve and their future effects remain uncertain.

The most direct and immediate impact that the Company has experienced and expects to continue to experience from the COVID-19 pandemic is decreased demand for its products and services due to lower activity levels by its customers resulting from the precipitous decline in crude oil prices.

The overall impact of the pandemic and oil price collapse on the Company and its customers will depend on numerous factors, many of which are beyond management's control and knowledge.

In response to public health concerns related to COVID-19, many federal, state, local and other authorities around the world imposed mandatory regulations directing individuals to stay at home and limited their ability to travel domestically or internationally.

In certain cases, when travel was permitted, a multi-week quarantine period was required before an individual could work in the area.

Additionally, rules and regulations regarding employer responsibilities continue to be promulgated.

Facility closures, quarantines, travel restrictions, and possible future workforce shortages may, among numerous other impacts, result in delays by the Company in fulfilling its existing contractual obligations to its customers, which could result in adverse financial consequences.

Additionally, the Company procures a variety of raw materials and component products, including steel, in the manufacture of its products from companies which may be impacted by similar challenges.

During the first half of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded.

However, the effect of the COVID-19 pandemic and related economic, business and market disruptions remains uncertain.

The most direct and immediate impact that the Company has experienced and expects to continue to experience from the COVID-19 pandemic is decreased demand for and pricing of its products and services due to lower activity levels by its customers resulting from the reduction in the demand for crude oil.

While the prices of and demand for crude oil have recovered from the lows seen in the initial stages of the pandemic, further outbreaks or the emergence of new strains of the COVID-19 virus could result in the reimposition of domestic and international regulations directing individuals to stay at home, limiting travel, requiring facility closures and imposing quarantines.

Widespread reimposition of these or similar restrictions could result in reductions in the price of and demand for crude oil and thus, the demand for the Company's products and services, as well as delays in or inability of the Company to fulfill its contractual obligations to customers, logistic constraints, increases in the Company's costs, workforce shortages and unavailability of raw materials.

The Company continues to monitor the effect of COVID-19 on its employees, customers, critical suppliers and other stakeholders.

The ultimate magnitude and duration of the COVID-19 pandemic, resulting governmental restrictions placing limitations on the mobility and ability to work of the worldwide population, and the related impact on crude oil prices and the U.S.

The ultimate duration of the COVID-19 pandemic, the resulting governmental restrictions and the related impact on the prices of and the demand for crude oil and the U.S.

and global economy and capital markets remains uncertain.

The Company is a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of the Company's products or operations.

Some of these claims relate to matters occurring prior to the acquisition of businesses, and some relate to businesses the Company has sold.

In certain cases, the Company is entitled to indemnification from the sellers of businesses and, in other cases, the Company has indemnified the buyers of businesses.

Although the Company can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on the Company, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by indemnity or insurance, will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.

OIL STATES INTERNATIONAL, INC.

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FINANCIAL STATEMENTS

Following the GEODynamics Acquisition in January 2018, the Company determined that certain steel products historically imported by GEODynamics from China for use in its manufacturing process were potentially be subject to anti-dumping and countervailing duties.

Some of these claims relate to matters occurring prior to the acquisition of businesses, and some relate to businesses the Company has sold.

In certain cases, the Company is entitled to indemnification from the sellers of businesses and, in other cases, the Company has indemnified the buyers of businesses.

Following an internal review, the Company voluntarily disclosed this matter to U.S.

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Additionally, the Company believes that its agreements with the Seller allow it to set-off such amounts against payments due under the $ 25.0 million promissory note and that, because the Company has asserted indemnification claims, the maturity date of such note is extended until the resolution of such claims.

Accordingly, the Company has reduced the carrying amount of such note in its consolidated balance sheets to $ 17.1 million as of December 31, 2020 and March 31, 2021, which is the Company's current best estimate of what is owed after set-off for indemnification matters.

Accordingly, the Company reduced the carrying amount of such note in its consolidated balance sheets to $ 17.5 million as of June 30, 2021, which is the Company's current best estimate of what is owed after set-off for such indemnification matters.

In August 2020, the Seller filed a breach of contract suit against the Company and one of its wholly-owned subsidiaries in federal court alleging that payments due under the promissory note are required to be, but have not been, repaid in accordance with the terms of the note.

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The following are important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, our Company:

• public health crises, such as the Coronavirus Disease 2019 ("COVID-19") pandemic, which has negatively impacted the global economy, and correspondingly, the price of oil;

• public health crises, such as the Coronavirus Disease 2019 ("COVID-19") pandemic, which has negatively impacted the global economy, and correspondingly, demand for crude oil;

• the ability and willingness of the Organization of Petroleum Exporting Countries ("OPEC") and other producing nations to set and maintain oil production levels and pricing;

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• the financial health of our customers;

• the impact of environmental matters, including executive actions and regulatory or legislative efforts under the Biden Administration to adopt environmental or climate change regulations that may result in increased operating costs or reduced oil and natural gas production or demand globally;

• the impact of environmental matters, including executive actions and regulatory or legislative efforts to adopt environmental or climate change regulations that may result in increased operating costs or reduced oil and natural gas production or demand globally;

• political, economic and litigation efforts to restrict or eliminate certain oil and natural gas exploration, development and production activities due to concerns over the threat of climate change;

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• our ability to develop new competitive technologies and products;

• our ability to increase prices to our customers as our costs increase;

• fluctuations in currency exchange rates;

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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-Q

Item 1. Financial Statements