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Item 2. Management’s Discussion and Analysis

2021-11-01 compared with 2021-07-29 · 197 added, 170 removed, 300 unchanged (55% of the section changed)

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

The following discussion and analysis should be read together with our condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and notes to those statements included in our 2020 Annual Report on Form 10-K in order to understand factors, such as business combinations, charges and credits and financing transactions, which may impact comparability from period to period.

We provide a broad range of products and services to the oil and gas industry through our Offshore/Manufactured Products, Downhole Technologies and Well Site Services segments.

The following discussion and analysis should be read together with our condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and notes to those statements included in our 2020 Annual Report on Form 10-K in order to understand factors, such as charges and credits, financing transactions and changes in tax regulations, which may impact comparability from period to period.

We provide a broad range of manufactured products and services to customers in the energy, industrial and military sectors through our Offshore/Manufactured Products, Downhole Technologies and Well Site Services segments.

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

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shale play regions.

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.

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

land-based drilling, completion and production activities given regulatory pressures around environmental, social and governance ("ESG") considerations.

Following the unprecedented events 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, stabilize our cash flows and protect liquidity.

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

The 2026 Notes will mature on April 1, 2026 and bear interest at an annual rate of 4.75%, which is payable semi-annually on April 1 and October 1.

We used $120.0 million of the cash proceeds to purchase $125.0 million principal amount of our outstanding 1.50% convertible senior notes due 2023 (the "2023 Notes") at a discount, with the balance added to cash on-hand.

Additionally, as discussed in more detail under "– 2023 Notes," during the second quarter of 2021, we purchased $6.4 million principal amount of our 2023 Notes for $6.0 million in cash.

Hurricane Ida formed and rapidly intensified in the Gulf of Mexico before making landfall in southeast Louisiana on August 30, 2021.

While our facilities in the direct path of Hurricane Ida did not sustain major damage, power was not fully restored until late-September.

Results of operations within our Offshore/Manufactured Products and Well Site Services segments were negatively impacted due to cessation of work in the Gulf of Mexico, temporary facility closures, local workforce challenges and resulting delays in the production and shipment of goods to our customers.

On a consolidated basis, we estimate that Hurricane Ida resulted in reductions to third-quarter 2021 revenues and operating income of $5.9 million and $3.0 million, respectively.

Brent and WTI crude oil and natural gas pricing trends were as follows:

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Energy Information Administration (spot prices).

On July 23, 2021, Brent crude oil, WTI crude oil and natural gas spot prices closed at $72.24 per barrel, $74.86 per barrel and $4.11 per MMBtu, respectively.

On October 22, 2021, Brent crude oil, WTI crude oil and natural gas spot prices closed at $85.43 per barrel, $84.53 per barrel and $5.10 per MMBtu, respectively.

Additionally, as presented in more detail below, the U.S.

drilling rig count reported on July 23, 2021 was 491 rigs, 9% above the second quarter 2021 average.

drilling rig count reported on October 22, 2021 was 542 rigs, 9% above the third quarter 2021 average.

Our Offshore/Manufactured Products segment provides 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.

The segment also produces a variety of products for use in industrial, military and other applications outside the traditional energy industry.

This segment is particularly influenced by global spending on deepwater drilling and production, which is primarily driven by our customers' longer-term commodity demand forecasts and outlook for crude oil and natural gas prices.

Approximately 39% of Offshore/Manufactured Products segment sales in the first six months of 2021 were driven by our customers' capital spending for products used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as "project-driven products").

Approximately 38% of Offshore/Manufactured Products segment sales in the first nine months of 2021 were driven by our customers' capital spending for products used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as "project-driven products").

Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans.

Such projects are generally undertaken by larger exploration, field development and production companies (primarily international oil companies ("IOCs") and state-run national oil companies ("NOCs")) using relatively conservative crude oil and natural gas pricing assumptions.

Such projects are generally undertaken by larger exploration, field development and production companies (primarily international oil companies and state-run national oil companies) using relatively conservative crude oil and natural gas pricing assumptions.

Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to short-term fluctuations in the price of crude oil and natural gas.

Backlog reported by our Offshore/Manufactured Products segment totaled $214 million as of June 30, 2021, with quarterly bookings totaling $65 million, yielding a quarterly book-to-bill ratio of 0.9x and a year-to-date ratio of 1.0x.

Backlog reported by our Offshore/Manufactured Products segment totaled $249 million as of September 30, 2021, with quarterly bookings totaling $106 million, yielding a quarterly book-to-bill ratio of 1.5x and a year-to-date ratio of 1.2x.

The following table sets forth backlog as of the dates indicated (in millions).

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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.

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.

Additional offerings include proprietary frac plug and toe valve 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.

Demand drivers for the Downhole Technologies segment include 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.

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Average for the

As of July 23, 2021

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

As of October 22, 2021

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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shale plays utilizing horizontal drilling and completion techniques.

As of June 30, 2021, oil-directed drilling accounted for 79% of the total U.S.

As of September 30, 2021, oil-directed drilling accounted for 81% of the total U.S.

rig count – with the balance largely natural gas related.

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Since August 14, 2020, the U.S.

rig count has increased 93% to 470 rigs as of June 30, 2021.

rig count has increased 114% to 521 rigs as of September 30, 2021.

As can be derived from the table above, the average U.S.

rig count for the three months ended June 30, 2021 increased by 58 rigs, or 15%, compared to the average for the three months ended June 30, 2020.

rig count for the three months ended September 30, 2021 increased by 242 rigs, or 95%, compared to the average for the three months ended September 30, 2020.

Reduced demand for our products and services, coupled with a reduction in the prices we charge our customers for our products and services, has adversely affected our results of operations, cash flows and financial position.

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In response to the U.S.

tariffs on steel and aluminum, the European Union and several other countries, including Canada and China, have threatened and/or imposed retaliatory tariffs.

tariffs on steel and aluminum, the European Union and several other countries, including

Canada and China, have threatened and/or imposed retaliatory tariffs.

The effect of these tariffs and the application and interpretation of existing trade agreements and customs, anti-dumping and countervailing duty regulations continue to evolve, and we continue to monitor these matters.

If we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase and we are unable to pass corresponding cost increases on to our customers, our financial position and results of operations could be adversely affected.

If we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase and we are unable to pass corresponding cost increases on to our customers, our financial position, cash flows and results of operations could be adversely affected.

Furthermore, uncertainty with respect to potential costs in the drilling and completion of oil and gas wells could cause our customers to delay or cancel planned projects which, if this occurred, would adversely affect our financial position, cash flows and results of operations.

See Note 13, "Commitments and Contingencies."

Other factors that can affect our business and financial results include but are not limited to the general global economic environment, competitive pricing pressures, public health crises, climate-related and other regulatory changes, and changes in tax laws in the United States and international markets.

Other factors that can affect our business and financial results include but are not limited to the general global economic environment, competitive pricing pressures, public health crises, natural disasters, labor market constraints, supply chain disruptions, inflation, climate-related and other regulatory changes, and changes in tax laws in the United States and international markets.

We continue to monitor the global economy, the prices of and demand for crude oil and natural gas, and the resultant impact on the capital spending plans and operations of our customers in order to plan and manage our business.

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Unaudited Consolidated Results of Operations Data

The following summarizes our unaudited consolidated results of operations 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 June 30,

The following summarizes our unaudited consolidated results of operations for the three and nine months ended September 30, 2021 and 2020 (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 Variance 2021 2020 Variance

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________________

(1) Cost of revenues (exclusive of depreciation and amortization expense) included non-cash inventory impairment charges of $25.2 million ($12.0 million in product costs and $13.2 million in service costs) recognized in the first quarter of 2020.

(1) Cost of revenues (exclusive of depreciation and amortization expense) included a non-cash inventory impairment charge of $2.1 million (in product costs) recognized in the third quarter of 2021.

Cost of revenues (exclusive of depreciation and amortization expense) included non-cash inventory impairment charges of $5.9 million (in product costs) and $25.2 million ($12.0 million in product costs and $13.2 million in service costs) recognized in the third and first quarters of 2020, respectively.

(2) During the first quarter of 2020, we recognized non-cash goodwill impairment charges totaling $406.1 million to reduce the carrying value of our reporting units to their estimated fair value.

(3) During the first quarter of 2021 and 2020, our Well Site Services segment recognized non-cash impairment charges of $0.7 million and $5.2 million, respectively, to reduce the carrying value of the segment's fixed assets to their estimated realizable value.

During the second quarter of 2021, our Well Site Services segment recognized non-cash impairment charges of $2.8 million to reduce the carrying value of certain of the segment's operating lease assets to their estimated realizable value.

During the second quarter of 2020, our Well Site Services segment recognized a non-cash impairment charge of $3.0 million to reduce the carrying value of the segment's fixed assets to their estimated realizable value.

(4) During the first quarter of 2021, we recognized non-cash gains of $3.6 million in connection with our purchases of $125.0 million principal amount of our 2023 Notes.

During the second quarter of 2021, we recognized non-cash gains of $0.4 million in connection with our purchases of $6.4 million principal amount of our 2023 Notes.

During the second quarter of 2020, we recognized non-cash gains of $4.8 million in connection with our purchases of $12.0 million principal amount of our 2023 Notes.

(5) During the first quarter of 2020, we recognized a discrete tax benefit of $14.8 million related to U.S.

(3) During the first nine months of 2021 and 2020, we recognized non-cash impairment charges of $3.4 million and $8.2 million, respectively, to reduce the carrying value of the segment's fixed and operating lease assets to their estimated realizable value.

(4) During the nine months ended September 30, 2021, we recognized non-cash gains of $4.0 million in connection with our purchases of $131.4 million principal amount of our 2023 Notes.

During the third quarter of 2020, we recognized non-cash gains of $5.9 million in connection with our purchases of $17.2 million principal amount of our 2023 Notes.

During the nine months ended September 30, 2020, we recognized non-cash gains of $10.7 million in connection with our purchases of $34.9 million principal amount of our 2023 Notes.

(5) During the first nine months of 2020, we recognized a discrete tax benefit of $16.4 million related to U.S.

net operating loss carrybacks under provisions of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

See Note 3, "Asset Impairments and Other Restructuring Items," Note 4, "Details of Selected Balance Sheet Accounts," Note 6, "Long-term Debt," and Note 11, "Income Taxes," to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion of these and other charges and benefits recognized in the first six months of 2021 and 2020.

See Note 3, "Asset Impairments and Other Restructuring Items," Note 4, "Details of Selected Balance Sheet Accounts," Note 5, "Long-term Debt," and Note 9, "Income Taxes," to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion of these and other charges and benefits recognized in the first nine months of 2021 and 2020.

Unaudited Operating Segment Financial Data

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

Supplemental unaudited financial information by operating segment for the three and six months ended June 30, 2021 and 2020 is summarized below (dollars in thousands):

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

Supplemental unaudited financial information by operating segment for the three and nine months ended September 30, 2021 and 2020 is summarized below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 Variance 2021 2020 Variance

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(1) Operating loss in the first quarter of 2020 included non-cash goodwill and inventory impairment charges of $86.5 million and $16.2 million, respectively.

(2) Operating loss in the first quarter of 2020 included a non-cash goodwill impairment charge of $192.5 million.

(2) Operating loss in the third quarter of 2021 included a non-cash inventory impairment charge of $2.1 million.

Operating loss in the first quarter of 2020 included a non-cash goodwill charge of $192.5 million.

Operating loss in the third quarter of 2020 included a non-cash inventory impairment charge of $5.9 million.

(3) Operating loss in the first quarter of 2021 included non-cash fixed asset impairment charges of $0.7 million.

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Operating loss in the second quarter of 2020 included a non-cash fixed asset impairment charge of $3.0 million.

See Note 3, "Asset Impairments and Other Restructuring Items," and Note 4, "Details of Selected Balance Sheet Accounts," to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion of these and other charges and benefits recognized in the first six months of 2021 and 2020.

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Consolidated Operating Results

We reported a net loss for the three months ended June 30, 2021 of $15.3 million, or $0.25 per share.

The second quarter 2021 loss included non-cash operating lease asset impairment charges of $2.8 million ($2.2 million after-tax, or $0.04 per share), restructuring charges of $2.6 million ($2.0 million after-tax, or $0.03 per share) and non-cash gains on extinguishment of 2023 Notes of $0.4 million ($0.3 million after-tax, or $0.01 per share).

These results compare to a net loss for the three months ended June 30, 2020 of $24.6 million, or $0.41 per share.

The reported second quarter 2020 loss included:

$5.4 million ($4.3 million after-tax, or $0.07 per share) of severance and restructuring costs;

non-cash fixed asset impairment charges of $3.0 million ($2.4 million after-tax, or $0.04 per share);

$2.2 million ($1.7 million after-tax, or $0.03 per share) in bad debt provisions related to customer bankruptcies;

and non-cash gains of $4.8 million ($3.8 million after-tax, or $0.06 per share) associated with debt extinguishment.

Our reported results of operations reflect the negative impact of the global response to the COVID-19 pandemic and ongoing uncertainties related to future crude oil demand and supply.

Customer-driven activity has improved off of 2020's low levels but could remain tempered over the balance of 2021 given uncertainty around the timing of demand recovery to pre-COVID-19 levels due to the ongoing nature of the COVID-19 pandemic.

We reported a net loss for the three months ended September 30, 2021 of $13.0 million, or $0.22 per share.

Reported third quarter results reflect the impact of Hurricane Ida, which negatively affected operations in southeast Louisiana and the Gulf of Mexico.

The third quarter 2021 loss also included a non-cash inventory impairment charge of $2.1 million ($1.7 million after-tax, or $0.03 per share) and severance and restructuring costs of $0.7 million ($0.6 million after-tax, or $0.01 per share).

These results compare to a net loss for the three months ended September 30, 2020 of $20.0 million, or $0.33 per share.

The reported third quarter 2020 loss included:

a non-cash inventory impairment charge of $5.9 million ($4.7 million after-tax, or $0.08 per share);

non-cash gains of $5.9 million ($4.7 million after-tax, or $0.08 per share) associated with debt extinguishment;

and $0.3 million ($0.2 million after-tax) of severance and restructuring costs.

Hurricane Ida formed and rapidly intensified in the Gulf of Mexico before making landfall in southeast Louisiana on August 30, 2021.

While our facilities in the direct path of Hurricane Ida did not sustain major damage, power was not fully restored until late-September.

On a consolidated basis, we estimate that Hurricane Ida resulted in reductions to third-quarter 2021 revenues and operating income of $5.9 million and $3.0 million, respectively.

Our reported results of operations also reflect the negative impact of the global response to the COVID-19 pandemic, ongoing uncertainties related to future crude oil demand and supply and, to a lesser extent, supply chain disruptions.

Customer-driven activity has improved off of 2020's low levels but uncertainty remains regarding the timing of demand recovery to pre-COVID-19 levels and the willingness of operators to invest in U.S.

land-based drilling, completion and production activities given regulatory pressures around ESG considerations.

If the pricing environment for crude oil declines from current levels, our customers may be required to moderate or reduce their planned capital expenditures, leading to declines in the demand for and prices of our products and services.

During the second quarter of 2021, we recognized an aggregate $2.8 million reduction of payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the CARES Act employee retention credit program.

During the third quarter of 2021, we recognized an aggregate $1.2 million reduction of payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the CARES Act employee retention credit program.

We continue to evaluate additional benefits potentially available to us under the CARES Act.

Consolidated total revenues in the second quarter of 2021 were relatively consistent with the level reported in the second quarter of 2020, but were up 16% sequentially.

Consolidated product revenues in the second quarter of 2021 decreased $4.6 million, or 6%, from the second quarter of 2020, driven by reduced project-driven customer demand for connector products, partially offset by an increase in U.S.

land-based customer activity.

Consolidated service revenues in the second quarter of 2021 increased $4.1 million, or 6%, from the second quarter of 2020 due primarily to higher customer spending in the U.S.

shale play regions as activity recovers from the 2020 COVID-19 induced lows.

As can be derived from the following table, 58% of our consolidated revenues in the second quarter of 2021 were derived from sales of our short-cycle product and service offerings, which compares to 43% in the same period last year.

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

Consolidated total revenues in the third quarter of 2021 increased $5.8 million, or 4%, from the third quarter of 2020.

Consolidated product revenues in the third quarter of 2021 decreased $2.2 million, or 3%, from the third quarter of 2020, driven by reduced project-driven customer demand for connector products and the impact of Hurricane Ida, partially offset by an increase in U.S.

land-based customer activity and production equipment revenue.

Consolidated service revenues in the third quarter of 2021 increased $8.0 million, or 13%, from the third quarter of 2020 due primarily to higher customer spending in the U.S.

shale play regions as activity continues to recover from the 2020 COVID-19 induced lows, partially offset by the effects of Hurricane Ida which caused a temporary cessation of work in the Gulf of Mexico.

As can be derived from the following table, 64% of our consolidated revenues in the third quarter of 2021 were derived from sales of our short-cycle product and service offerings, which compares to 47% in the same period last year.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended September 30, 2021 and 2020 (in thousands):

Offshore/ Manufactured Products Downhole Technologies Well Site Services Total

Three months ended June 30 2021 2020 2021 2020 2021 2020 2021 2020

Three Months Ended September 30 2021 2020 2021 2020 2021 2020 2021 2020

Major revenue categories -

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Cost of Revenues (exclusive of Depreciation and Amortization Expense).

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $10.5 million, or 8%, in the second quarter of 2021 compared to the second quarter of 2020.

Consolidated product costs in the second quarter of 2021, decreased $4.2 million, or 6%, from the second quarter of 2020.

Consolidated service costs in the second quarter of 2021, decreased $6.3 million, or 10%, from the second quarter of 2020 due to implemented cost saving measures.

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $3.4 million, or 3%, in the third quarter of 2021 compared to the third quarter of 2020.

Cost of revenues in the third quarter of 2021 and 2020 included charges totaling $2.1 million and $5.9 million, respectively, for non-cash inventory impairments.

Excluding these charges, consolidated cost of revenues increased $0.4 million from the prior-year period.

Consolidated product costs were $60.3 million in the third quarter of 2021, which included a $2.1 million non-cash inventory impairment charge.

This compares to consolidated product costs of $66.8 million in the third quarter of 2020, which included a $5.9 million non-cash inventory impairment charge.

Excluding these charges, consolidated product costs decreased $2.7 million or, 4%, due to the decline in product revenue.

Consolidated service costs in the third quarter of 2021, increased $3.1 million, or 6%, from the third quarter of 2020 due to the year-over-year revenue growth discussed previously.

Selling, General and Administrative Expense.

Selling, general and administrative expense decreased $1.9 million, or 8%, in the second quarter of 2021 from the second quarter of 2020 due primarily to reductions in personnel, compensation levels and bad debt expense along with other implemented cost reduction measures, partially offset by $2.1 million in restructuring charges recognized during the current quarter.

Selling, general and administrative expense decreased $1.3 million, or 6%, in the third quarter of 2021 from the third quarter of 2020.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $3.7 million, or 15%, in the second quarter of 2021 compared to the prior-year quarter, driven primarily by reduced capital investments made in our Well Site Services segment in recent years.

Depreciation and amortization expense decreased $4.6 million, or 19%, in the third quarter of 2021 compared to the prior-year quarter, driven primarily by reduced capital investments made in our Well Site Services segment in recent years.

Note 12, "Segments and Related Information," presents depreciation and amortization expense by segment.

Impairments of Fixed and Lease Assets.

During the second quarters of 2021 and 2020, our Well Site Services segment recorded non-cash impairment charges of $2.8 million and $3.0 million, respectively, to reduce the carrying value of certain of the segment's fixed and lease assets to their estimated realizable value.

Operating Income (Loss).

Our consolidated operating loss was $17.6 million in the second quarter of 2021, which included $2.8 million of non-cash operating lease asset impairment charges and $2.6 million of restructuring charges.

This compares to a consolidated operating loss of $33.3 million recognized in the second quarter of 2020, which included $5.4 million of severance and restructuring charges and $3.0 million of non-cash fixed asset impairment charges.

Our consolidated operating loss was $16.1 million in the third quarter of 2021, which included a $2.1 million non-cash inventory impairment charge and $0.7 million of severance and restructuring charges.

This compares to a consolidated operating loss of $30.8 million recognized in the third quarter of 2020, which included a $5.9 million non-cash inventory impairment charge and $0.3 million of severance and restructuring charges.

Interest Expense, Net.

Net interest expense was $2.7 million in the second quarter of 2021, which compares to $4.2 million in the same period of 2020.

Interest expense, which included amortization of deferred financing costs in 2021 and amortization of debt discount and deferred financing costs in 2020, as a percentage of total debt outstanding was approximately 6% in the second quarter of 2021 and 2020.

Net interest expense was $2.6 million in the third quarter of 2021, which compares to $3.5 million in the same period of 2020.

Other Income, Net.

Net other income for second quarter of 2021 included non-cash gains of $0.4 million recognized in connection with our purchases of $6.4 million principal amount of our 2023 Notes for $6.0 million in cash.

Net other income for second quarter of 2020 included non-cash gains of $4.8 million recognized in connection with our purchases of $12.0 million principal amount of our 2023 Notes for $5.9 million in cash.

For the three months ended June 30, 2021, our income tax benefit was $3.2 million, or 17% of the pre-tax loss of $18.5 million, which included certain non-deductible expenses.

This compares to an income tax benefit of $6.9 million, or 22% of the pre-tax loss of $31.5 million for the three months ended June 30, 2020, which also included certain expenses that are not deductible for income tax purposes.

Net other income for third quarter of 2020 included non-cash gains of $5.9 million recognized in connection with our purchases of $17.2 million principal amount of our 2023 Notes for $9.5 million in cash.

For the three months ended September 30, 2021, our income tax benefit was $3.5 million, or 21% of the pre-tax loss of $16.6 million.

This compares to an income tax benefit of $7.7 million, or 28% of the pre-tax loss of $27.6 million for the three months ended September 30, 2020, which included certain expenses that are not deductible for income tax purposes.

Other Comprehensive Income (Loss).

Reported comprehensive loss is the sum of reported net loss and other comprehensive income (loss).

Other comprehensive income was $3.2 million in the second quarter of 2021 compared to loss of $1.2 million in the second quarter of 2020 due to fluctuations in foreign currency exchange rates compared to the U.S.

dollar for certain of the international operations of our operating segments.

For the three months ended June 30, 2021 and 2020, currency translation adjustments recognized as a component of other comprehensive income (loss) were primarily attributable to Brazil.

During the second quarter of 2021, the exchange rate for the Brazilian real strengthened compared to the U.S.

This compares to the second quarter of 2020, when the exchange rate for the Brazilian real weakened compared to the U.S.

Other comprehensive loss was $5.8 million in the third quarter of 2021 compared to income of $3.4 million in the third quarter of 2020 due to fluctuations in currency exchange rates compared to the U.S.

dollar which are used to translate certain of the international operations of our operating segments.

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

During the third quarter of 2021, the exchange rate for both the British pound and the Brazilian real weakened compared to the U.S.

This compares to the third quarter of 2020, when the exchange rate for the British pound strengthened compared to the U.S.

dollar and the Brazilian real weakened compared to the U.S.

Segment Operating Results

Offshore/Manufactured Products

Our Offshore/Manufactured Products segment revenues decreased $18.0 million, or 19%, in the second quarter of 2021 compared to the second quarter of 2020 due primarily to a reduction in sales of its connector products.

Our Offshore/Manufactured Products segment revenues decreased $9.7 million, or 12%, in the third quarter of 2021 compared to the third quarter of 2020 due primarily to reduced customer demand for connector products and Hurricane Ida, which caused the temporary closure of a manufacturing and service facility in southeast Louisiana in September.

Reported results for the third quarter of 2021 included the adverse impact of Hurricane Ida, which reduced revenues and operating income by an estimated $4.8 million and $2.1 million, respectively.

Operating Income.

Our Offshore/Manufactured Products segment reported operating income of $4.8 million in the second quarter of 2021, compared to operating income of $9.4 million in the second quarter of 2020, with the impact of the year-over-year decrease in revenues partially offset by implemented cost reduction measures.

Backlog in our Offshore/Manufactured Products segment totaled $214 million as of June 30, 2021, with second quarter 2021 bookings of $65 million and a quarterly book-to-bill ratio of 0.9x.

Our Offshore/Manufactured Products segment reported operating income of $1.8 million in the third quarter of 2021, compared to operating income of $3.9 million in the third quarter of 2020 due primarily to the decrease in revenue.

Backlog in our Offshore/Manufactured Products segment totaled $249 million as of September 30, 2021, with third quarter 2021 bookings of $106 million and a quarterly book-to-bill ratio of 1.5x.

Downhole Technologies

Our Downhole Technologies segment revenues increased $11.8 million, or 79%, in the second quarter of 2021 from the prior-year period due primarily to an increase in U.S.

Our Downhole Technologies segment revenues increased $6.8 million, or 36%, in the third quarter of 2021 from the prior-year period due primarily to an increase in U.S.

land-based customer completion activity.

Operating Loss.

Our Downhole Technologies segment reported an operating loss of $2.3 million in the second quarter of 2021 compared to an operating loss of $11.1 million in the prior-year period, driven by the significant increase in revenues and implemented cost reduction measures.

The second quarter 2020 results included a $1.5 million bad debt provision on a receivable from a customer claiming bankruptcy protection and $1.3 million in severance and restructuring costs.

Our Downhole Technologies segment reported an operating loss of $5.0 million in the third quarter of 2021, which included a $2.1 million non-cash inventory impairment charge.

This compares to an operating loss of $12.6 million in the prior-year period, which included a $5.9 million non-cash inventory impairment charge.

Excluding these charges, our Downhole Technologies operating loss decreased $3.8 million from the prior-year period, driven by the significant increase in revenues and implemented cost reduction measures.

Well Site Services

Our Well Site Services segment revenues increased $5.7 million, or 16%, in the second quarter of 2021 compared to the prior-year quarter, driven by higher customer drilling, completion and production activity.

Our Well Site Services segment revenues increased $8.6 million, or 23%, in the third quarter of 2021 compared to the prior-year quarter, driven by higher customer drilling, completion and production activity.

The impact of higher land-based activity was partially offset by lower activity in the Gulf of Mexico in September of 2021 due to Hurricane Ida.

Reported results for the third quarter of 2021 included the adverse impact of Hurricane Ida, which reduced revenues and operating income by an estimated $1.1 million and $0.9 million, respectively.

Operating Loss.

Our Well Site Services segment reported an operating loss of $11.6 million in the second quarter of 2021, which included $2.4 million in restructuring charges and $2.8 million of non-cash operating lease asset impairment charges.

The segment reported an operating loss of $22.9 million in the second quarter of 2020, which included $3.5 million in severance and restructuring costs and $3.0 million of non-cash fixed asset impairment charges.

Excluding these charges, our Well Site Services operating loss decreased $10.0 million from the prior-year period due to the increase in revenues and implemented cost reduction measures.

Corporate expenses decreased $0.2 million, or 2%, in the second quarter of 2021 from the prior-year period.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Our Well Site Services segment reported an operating loss of $5.3 million in the third quarter of 2021, which included $0.4 million in severance and restructuring charges.

The segment reported an operating loss of $13.9 million in the third quarter of 2020, which included $1.2 million in expenses associated with prior-year insurance claims and a bad debt provision on a receivable from a customer claiming bankruptcy protection.

Excluding these charges, our Well Site Services operating loss decreased $7.8 million from the prior-year period due to the increase in revenues, decrease in depreciation and amortization expense and implemented cost reduction measures.

Corporate expenses decreased $0.6 million, or 8%, in the third quarter of 2021 from the prior-year period.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Consolidated Operating Results

We reported a net loss for the six months ended June 30, 2021 of $31.1 million, or $0.52 per share.

The reported first half of 2021 loss included non-cash impairment charges of $3.4 million ($2.7 million after-tax, or $0.05 per share) associated with write-downs of fixed and lease assets, $6.0 million ($4.7 million after-tax, or $0.08 per share) of severance and restructuring costs and non-cash gains of $4.0 million ($3.2 million after-tax, or $0.05 per share) associated with debt extinguishment.

These results compare to a net loss for the six months ended June 30, 2020 of $429.7 million, or $7.19 per share, which included:

non-cash impairment charges totaling $439.5 million ($413.4 million after-tax, or $6.92 per share) related to write-downs of goodwill, inventories and fixed assets;

We reported a net loss for the nine months ended September 30, 2021 of $44.1 million, or $0.73 per share.

The reported first nine months of 2021 loss included:

non-cash impairment charges of $5.6 million ($4.4 million after-tax, or $0.08 per share) associated with write-downs of inventories and fixed and lease assets;

$6.7 million ($5.3 million after-tax, or $0.09 per share) of severance and restructuring costs;

and non-cash gains of $4.0 million ($3.2 million after-tax, or $0.05 per share) associated with debt extinguishment.

These results compare to a net loss for the nine months ended September 30, 2020 of $449.6 million, or $7.52 per share.

The reported first nine months of 2020 loss included:

non-cash impairment charges totaling $445.4 million ($418.1 million after-tax, or $6.99 per share) related to write-downs of goodwill, inventories and fixed assets;

$6.3 million ($5.0 million after-tax, or $0.08 per share) of severance and downsizing costs;

$2.2 million ($1.7 million after-tax, or $0.03 per share) in bad debt provisions related to customer bankruptcies;

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and a discrete tax benefit of $16.4 million, or $0.27 per share, associated with the carryback of tax losses allowed under the CARES Act.

Our reported 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 ongoing uncertainties related to future crude oil demand and supply.

Customer-driven activity has improved off of 2020's low levels but could remain tempered over the balance of 2021 given uncertainty around the timing of demand recovery to pre-COVID-19 levels.

Our reported results of operations reflect the negative impact of the global response to the COVID-19 pandemic, ongoing uncertainties related to future crude oil demand and supply and, to a lesser extent, supply chain disruptions.

Customer-driven activity has improved off of 2020's low levels but uncertainty remains around the timing of demand recovery to pre-COVID-19 levels and the willingness of operators to invest in U.S.

land-based drilling, completion and production activities given regulatory pressures around ESG considerations.

During the first half of 2021, we recognized an aggregate $7.6 million reduction of payroll tax expense (recognized within cost of revenues and selling, general and administrative expense) as part of the CARES Act employee retention credit program.

During the first half of 2020, we also recognized a discrete income tax benefit of $14.8 million related to U.S.

During the first nine months of 2021, we recognized an aggregate $8.8 million reduction of payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the CARES Act employee retention credit program.

During the first nine months of 2020, we also recognized a discrete income tax benefit of $16.4 million related to U.S.

net operating loss carrybacks under provisions of the CARES Act.

We continue to evaluate additional benefits potentially available to us under the CARES Act.

Consolidated total revenues in the first six months of 2021 decreased $94.6 million, or 26%, from the first six months of 2020.

Consolidated product revenues in the first six months of 2021 decreased $46.1 million, or 25%, from the first six months of 2020, driven by the significant decline in U.S.

Consolidated total revenues in the first nine months of 2021 decreased $88.9 million, or 18%, from the first nine months of 2020.

Consolidated product revenues in the first nine months of 2021 decreased $48.3 million, or 19%, from the first nine months of 2020, driven by the significant decline in U.S.

land-based customer activity beginning in March 2020 and reduced project-driven customer demand for connector products.

Consolidated service revenues in the first six months of 2021 decreased $48.5 million, or 27%, from the first six months of 2020 due primarily to higher customer spending in the U.S.

Consolidated service revenues in the first nine months of 2021 decreased $40.5 million, or 17%, from the first nine months of 2020 due primarily to higher customer spending in the U.S.

shale play regions in the first quarter of 2020, prior to the significant impact of the COVID-19 pandemic on our operating results.

As can be derived from the following table, 60% of our consolidated revenues in the first six months of 2021 were derived from sales of our short-cycle product and service offerings, which compares to 58% in the same period last year.

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

As can be derived from the following table, 61% of our consolidated revenues in the first nine months of 2021 were derived from sales of our short-cycle product and service offerings, which compares to 55% in the same period last year.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the nine months ended September 30, 2021 and 2020 (in thousands):

Offshore/ Manufactured Products Downhole Technologies Well Site Services Total

Six months ended June 30 2021 2020 2021 2020 2021 2020 2021 2020

Nine Months Ended September 30 2021 2020 2021 2020 2021 2020 2021 2020

Major revenue categories -

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Cost of Revenues (exclusive of Depreciation and Amortization Expense).

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $105.7 million, or 32%, in the first six months of 2021 compared to the first six months of 2020.

Cost of revenues in the first six months of 2020 included provisions totaling $25.2 million for excess and obsolete inventory – driven by the unprecedented market downturn beginning in March of 2020.

Excluding these provisions, consolidated cost of revenues decreased $80.5 million, or 27%, from the prior-year period.

Consolidated product costs in the first six months of 2021, decreased $44.4 million, or 28%, from the first six months of 2020, which included a provision of $12.0 million for excess and obsolete inventory.

Excluding this charge, consolidated product costs decreased $32.5 million, or 22%, from the prior-year period.

Consolidated service costs in the first six months of 2021, decreased $61.3 million, or 37%, from the first six months of 2020, which included provisions for excess and obsolete inventory of $13.2 million.

Excluding these charges, consolidated service costs decreased $48.0 million, or 31%, from the prior-year period.

Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased $109.1 million, or 24%, in the first nine months of 2021 compared to the first nine months of 2020.

Cost of revenues in the first nine months of 2021 and 2020 included $2.1 million and $31.2 million, respectively, of non-cash inventory impairment charges.

Excluding these charges, consolidated cost of revenues decreased $80.1 million, or 19%, from the prior-year period.

Consolidated product costs were $173.7 million in the first nine months of 2021, which included a $2.1 million non-cash inventory impairment charge.

This compares to consolidated product costs of $224.6 million in the first nine months of 2020, which included $17.9 million of non-cash inventory impairment charges.

Excluding these charges, consolidated product costs decreased $35.1 million, or 17%, from the prior-year period due to reduced sales volumes.

Consolidated service costs in the first nine months of 2021, decreased $58.2 million, or 26%, from the first nine months of 2020, which included non-cash inventory impairment charges of $13.3 million.

Excluding these charges, consolidated service costs decreased $45.0 million, or 22%, from the prior-year period due to the decrease in revenues and implemented cost reduction measures.

Selling, General and Administrative Expense.

Selling, general and administrative expense decreased $6.8 million, or 14%, in the first six months of 2021 from the first six months of 2020 due primarily to reductions in personnel, compensation levels, travel and bad debt expenses along with other implemented cost reduction measures, partially offset by $3.7 million in severance and restructuring costs recognized in the first half of 2021.

Selling, general and administrative expense decreased $8.1 million, or 11%, in the first nine months of 2021 from the first nine months of 2020 due primarily to reductions in personnel, compensation levels, travel and bad debt expenses along with other implemented cost reduction measures, partially offset by $3.7 million in severance and restructuring costs recognized in the first nine months of 2021.

Depreciation and Amortization Expense.

Depreciation and amortization expense decreased $8.6 million, or 17%, in the first six months of 2021 compared to the prior-year period, driven primarily by reduced capital investments made in our Well Site Services segment in recent years.

Depreciation and amortization expense decreased $13.2 million, or 18%, in the first nine months of 2021 compared to the prior-year period, driven primarily by reduced capital investments made in our Well Site Services segment in recent years.

Note 12, "Segments and Related Information," presents depreciation and amortization expense by segment.

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Impairments of Fixed and Lease Assets.

During the first six months of 2021 and 2020, our Well Site Services segment recorded non-cash impairment charges of $3.4 million and $8.2 million, respectively, to reduce the carrying value of certain of the segment's fixed and lease assets to their estimated realizable value.

During the first nine months of 2021 and 2020, our Well Site Services segment recorded non-cash impairment charges of $3.4 million and $8.2 million, respectively, to reduce the carrying value of certain of the segment's fixed and lease assets to their estimated realizable value.

Operating Income (Loss).

Our consolidated operating loss was $37.4 million in the first six months of 2021, which included $3.4 million of non-cash asset impairment charges and $6.0 million of severance and restructuring costs.

This compares to a consolidated operating loss of $475.1 million recognized in the first six months of 2020, which included the impact of $439.5 million non-cash asset impairment charges and $6.1 million in severance and restructuring costs.

Our consolidated operating loss was $53.5 million in the first nine months of 2021, which included $5.6 million of non-cash asset impairment charges and $6.7 million of severance and restructuring costs.

This compares to a consolidated operating loss of $506.0 million recognized in the first nine months of 2020, which included the impact of $445.4 million non-cash asset impairment charges and $6.3 million in severance and restructuring costs.

Interest Expense, Net.

Net interest expense was $5.0 million in the first six months of 2021, which compares to $7.7 million in the same period of 2020.

Net interest expense was $7.6 million in the first nine months of 2021, which compares to $11.2 million in the same period of 2020.

Other Income, Net.

Net other income for the first six months of 2021 included non-cash gains of $4.0 million recognized in connection with our purchases of $131.4 million principal amount of our 2023 Notes for $126.0 million in cash.

In the first six months of 2020, we recognized non-cash gains of $4.8 million recognized in connection with our purchases of $17.7 million principal amount of our 2023 Notes for $10.6 million in cash.

For the six months ended June 30, 2021, our income tax benefit was $5.5 million, or 15% of the pre-tax loss of $36.6 million, which included certain non-deductible expenses and discrete tax items.

This compares to an income tax benefit of $46.4 million, or 10% of the pre-tax loss of $476.1 million for the six months ended June 30, 2020, which included non-cash goodwill charges (approximately $313.1 million) and other expenses that are not deductible for income tax purposes.

In the first six months of 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 other income for the first nine months of 2021 included non-cash gains of $4.0 million recognized in connection with our purchases of $131.4 million principal amount of our 2023 Notes for $126.0 million in cash.

In the first nine months of 2020, we recognized non-cash gains of $10.7 million recognized in connection with our purchases of $34.9 million principal amount of our 2023 Notes for $20.1 million in cash.

For the nine months ended September 30, 2021, our income tax benefit was $9.1 million, or 17% of the pre-tax loss of $53.2 million, which included certain non-deductible expenses and discrete tax items.

This compares to an income tax benefit of $54.1 million, or 11% of the pre-tax loss of $503.7 million for the nine months ended September 30, 2020, which included non-cash goodwill charges (approximately $313.1 million) and other expenses that are not deductible for income tax purposes.

In the first nine months of 2020, the impact of these non-deductible expenses was partially offset by a $16.4 million discrete tax benefit related to the carryback of U.S.

net operating losses under the CARES Act.

Other Comprehensive Income (Loss).

Reported comprehensive loss is the sum of reported net loss and other comprehensive income (loss).

Other comprehensive income was $1.6 million in the first six months of 2021 compared to loss of $16.0 million in the first six months of 2020 due to fluctuations in foreign currency exchange rates compared to the U.S.

Other Comprehensive Loss.

Reported comprehensive loss is the sum of reported net loss and other comprehensive loss.

Other comprehensive loss was $4.2 million in the first nine months of 2021 compared to loss of $12.7 million in the first nine months of 2020 due to fluctuations in foreign currency exchange rates compared to the U.S.

dollar for certain of the international operations of our operating segments.

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

During the first six months of 2021, the exchange rate for the British pound and the Brazilian real strengthened compared to the U.S.

This compares to the first six months of 2020, when the exchange rate for both the British pound and Brazilian real weakened compared to the U.S.

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

During the first nine months of 2021 and 2020, the exchange rate for the British pound and the Brazilian real both weakened compared to the U.S.

Segment Operating Results

Offshore/Manufactured Products

Our Offshore/Manufactured Products segment revenues declined $48.6 million, or 26%, in the first six months of 2021 compared to the first six months of 2020 due primarily to a reduction in sales of its connector and short-cycle products and service activities.

Our Offshore/Manufactured Products segment revenues declined $58.3 million, or 22%, in the first nine months of 2021 compared to the first nine months of 2020 due primarily to a reduction in sales of connector and short-cycle products and service activities.

Operating Income (Loss).

Our Offshore/Manufactured Products segment reported operating income of $5.9 million in the first six months of 2021, which included $0.3 million of severance and restructuring charges.

The segment reported an operating loss of $86.1 million in the first six months of 2020, which included severance and restructuring costs of $0.4 million and non-cash impairment charges of $86.5 million related to goodwill and $16.2 million related to inventory.

Excluding these charges, our Offshore/Manufactured Products segment operating income decreased $10.8 million in the first six months of 2021 compared to the first six months of 2020, with the impact of the year-over-year decrease in revenues partially offset by implemented cost reduction measures.

Backlog in our Offshore/Manufactured Products segment totaled $214 million as of June 30, 2021, a decrease of 2% from December 31, 2020.

Bookings during first six months 2021 totaled $135 million, yielding a year-to-date book-to-bill ratio of 1.0x.

Our Offshore/Manufactured Products segment reported operating income of $7.6 million in the first nine months of 2021, which included $0.5 million of severance and restructuring charges.

The segment reported an operating loss of $82.2 million in the first nine months of 2020, which included severance and restructuring costs of $0.7 million and non-cash impairment charges of $86.5 million related to goodwill and $16.2 million related to inventory.

Excluding these charges, our Offshore/Manufactured Products segment operating income decreased $13.1 million in the first nine months of 2021 compared to the first nine months of 2020, with the impact of the year-over-year decrease in revenues partially offset by implemented cost reduction measures.

Backlog in our Offshore/Manufactured Products segment totaled $249 million as of September 30, 2021, a increase of 14% from December 31, 2020.

Bookings during first nine months 2021 totaled $240 million, yielding a year-to-date book-to-bill ratio of 1.2x.

Downhole Technologies

Our Downhole Technologies segment revenues decreased $3.8 million, or 7%, in the first six months of 2021 from the prior-year period due primarily to higher U.S.

land-based customer completion activity during the first quarter of 2020, prior to the significant impact of the COVID-19 pandemic on our operating results.

Our Downhole Technologies segment revenues increased $3.0 million, or 4%, in the first nine months of 2021 from the prior-year period due primarily to higher U.S.

land-based customer completion activity.

Operating Loss.

Our Downhole Technologies segment reported an operating loss of $3.9 million in the first six months of 2021, which included $0.5 million of severance and restructuring charges.

The segment reported an operating loss of $203.8 million in the prior-year period, which included severance and restructuring costs of $1.3 million and a non-cash goodwill impairment charge of $192.5 million.

Excluding these charges, operating loss declined $6.6 million in the first six months of 2021 from the prior-year period due to implemented cost reduction measures.

Our Downhole Technologies segment reported an operating loss of $8.9 million in the first nine months of 2021, which included a non-cash inventory impairment charge of $2.1 million and $0.6 million of severance and restructuring charges.

The segment reported an operating loss of $216.4 million in the prior-year period, which included severance and restructuring costs of $1.3 million and non-cash impairment charges of $192.5 million related to goodwill and $5.9 million related to inventory.

Excluding these charges, operating loss decreased $10.4 million in the first nine months of 2021 from the prior-year period due primarily to implemented cost reduction measures.

Well Site Services

Our Well Site Services segment revenues decreased $42.2 million, or 34%, in the first six months of 2021 compared to the prior-year period, driven by higher customer completion and production activity during the first quarter of 2020, prior to the significant impact of the COVID-19 pandemic on our operating results.

Our Well Site Services segment revenues decreased $33.6 million, or 21%, in the first nine months of 2021 compared to the prior-year period, driven by higher customer completion and production activity during the first quarter of 2020, prior to the significant impact of the COVID-19 pandemic on our operating results.

Operating Loss.

Our Well Site Services segment reported an operating loss of $21.4 million in the first six months of 2021, which included $3.7 million in severance and restructuring costs and non-cash fixed and lease asset impairment charges of $3.4 million.

The segment reported an operating loss of $167.9 million in the first six months of 2020, which included severance and restructuring costs of $4.1 million and non-cash impairment charges of $127.1 million related to goodwill, $9.0 million related to inventory and $8.2 million related to fixed assets.

Excluding these charges, our Well Site Services operating loss decreased $5.2 million from the prior-year period due to implemented cost reduction measures.

Corporate expenses increased $0.5 million, or 3%, in the first six months of 2021 from the prior-year period, with $1.6 million of severance costs incurred in the first six months of 2021 substantially offset by implemented cost reduction measures.

Our Well Site Services segment reported an operating loss of $26.7 million in the first nine months of 2021, which included $4.0 million in severance and restructuring costs and non-cash fixed and lease asset impairment charges of $3.4 million.

The segment reported an operating loss of $181.7 million in the first nine months of 2020, which included severance and restructuring costs of $4.1 million and non-cash impairment charges of $127.1 million related to goodwill, $9.0 million related to inventory and $8.2 million related to fixed assets.

Excluding these charges, our Well Site Services operating loss decreased $14.2 million from the prior-year period with the impact of a $9.7 million decrease in depreciation and amortization expense and implemented cost reduction measures partially offset by the impact of the decrease in revenues.

Corporate expenses in the first nine months of 2021 were comparable to the prior-year period, with $1.6 million of severance costs incurred in the first quarter of 2021 substantially offset by implemented cost reduction measures.

Liquidity, Capital Resources and Other Matters

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Operating Activities

Cash flows from operations totaling $13.9 million were generated during the first half of 2021, compared to $44.1 million generated by operations during the same period of 2020.

During the first half of 2021, $5.2 million was provided by net working capital decreases, primarily due to an increase in accounts payable, partially offset by increases in accounts receivable and inventories.

During the first half of 2020, $27.8 million was provided by net working capital decreases, primarily due to a reduction in accounts receivable, partially offset by decreases in accounts payable and accrued liabilities.

Cash flows from operations totaling $20.6 million were generated during the first nine months of 2021, compared to $131.1 million generated by operations during the same period of 2020.

During the first nine months of 2021, $6.6 million was provided by net working capital decreases, primarily due to an increase in accounts payable and accrued liabilities, partially offset by an increase in inventories.

During the first nine months of 2020, we received cash of $41.3 million related to carryback claims regarding U.S.

net operating losses generated in 2018 and 2019 that were filed in accordance with the rules and procedures of the CARES Act.

Additionally, during the first nine months of 2020, $74.8 million was provided by net working capital decreases, primarily due to collections of accounts receivable and an increase in deferred revenue, partially offset by decreases in accounts payable and accrued liabilities.

Investing Activities

Cash used in investing activities during the first half of 2021 totaled $4.2 million, compared to $3.8 million used in investing activities during the first half of 2020.

Capital expenditures totaled $7.3 million and $8.9 million during the first half of 2021 and 2020, respectively.

These investments were partially offset by proceeds from the sale of property and equipment of $3.4 million and $5.4 million during the six months ended June 30, 2021 and 2020, respectively.

Cash used in investing activities during the first nine months of 2021 totaled $5.3 million, compared to $2.7 million used in investing activities during the first nine months of 2020.

Capital expenditures totaled $11.0 million and $11.3 million during the first nine months of 2021 and 2020, respectively.

These investments were partially offset by proceeds from the sale of property and equipment of $6.2 million and $9.0 million during the nine months ended September 30, 2021 and 2020, respectively.

We expect to spend approximately $15 million in capital expenditures during 2021.

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Financing Activities

During the six months ended June 30, 2021, net cash of $19.1 million was used in financing activities including our purchases of $131.4 million principal amount of our 2023 Notes for cash totaling $126.0 million and $19.0 million of net repayments under our ABL Facility.

During the nine months ended September 30, 2021, net cash of $19.4 million was used in financing activities including our purchases of $131.4 million principal amount of our 2023 Notes for cash totaling $126.0 million and $19.0 million of net repayments under our ABL Facility.

Partially offsetting these uses was our issuance of $135.0 million principal amount of our 2026 Notes yielding net cash proceeds of $130.6 million.

This compares to $5.0 million of cash provided by financing activities during the six months ended June 30, 2020, primarily as a result of $19.1 million in net borrowings under our former revolving credit facility, partially offset by our purchases of $17.7 million principal amount of our 2023 Notes for $10.6 million.

As of June 30, 2021, we had cash and cash equivalents totaling $62.7 million, which compared to $72.0 million as of December 31, 2020.

As of June 30, 2021, we had no borrowings outstanding under our ABL Facility (discussed below), $135.0 million principal amount of our 2026 Notes outstanding, $26.0 million principal amount of our 2023 Notes outstanding and other debt of $22.0 million.

Our reported interest expense, which appropriately included amortization of deferred financing costs of $1.4 million during the first six months of 2021, was above our contractual cash interest expense.

For the first six months of 2021, our contractual cash interest expense was $3.7 million, or approximately 4% of the average principal balance of debt outstanding.

This compares to $57.0 million of cash provided by financing activities during the nine months ended September 30, 2020, primarily as a result of $32.9 million in net borrowings under our former revolving credit facility, partially offset by our purchases of $34.9 million principal amount of our 2023 Notes for $20.1 million.

As of September 30, 2021, we had cash and cash equivalents totaling $67.6 million, which compared to $72.0 million as of December 31, 2020.

As of September 30, 2021, we had no borrowings outstanding under our ABL Facility (discussed below), $135.0 million principal amount of our 2026 Notes outstanding, $26.0 million principal amount of our 2023 Notes outstanding and other debt of $21.8 million.

Our reported interest expense, which appropriately included amortization of deferred financing costs of $1.8 million during the first nine months of 2021, was above our contractual cash interest expense.

For the first nine months of 2021, our contractual cash interest expense was $5.8 million, or approximately 4% of the average principal balance of debt outstanding.

We believe that cash on-hand, cash flow from operations and borrowing capacity available under our ABL Facility will be sufficient to meet our liquidity needs in the coming twelve months.

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In this regard, the effect of the COVID-19 pandemic has resulted in significant disruption of global financial markets.

For companies like ours that support the energy industry, this disruption has been exacerbated by the global crude oil supply and demand imbalance and resulting decline in crude oil prices during 2020, which has negatively impacted the value of our common stock;

For companies like ours that support the energy industry, this disruption has been exacerbated by the

global crude oil supply and demand imbalance and resulting decline in crude oil prices during 2020, which has negatively impacted the value of our common stock;

has and may continue to reduce our ability to access capital in the bank and capital markets;

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

The ABL Facility is governed by a credit agreement with Wells Fargo Bank, National Association, as administrative agent and the lenders and other financial institutions from time to time party thereto (the "ABL Agreement").

The ABL Facility is governed by a credit agreement, as amended, with Wells Fargo Bank, National Association, as administrative agent and the lenders and other financial institutions from time to time party thereto (the "ABL Agreement").

The ABL Agreement matures on February 10, 2025 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $17.5 million (excluding the unsecured promissory note to the seller of GEODynamics).

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The ABL Agreement contains customary default provisions, which, if triggered, could result in acceleration of all amounts then outstanding.

The ABL Agreement also requires us 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 June 30, 2021, we had no borrowings outstanding under the ABL Facility and $17.3 million of outstanding letters of credit.

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 letters of credit.

Former Revolving Credit Facility.

See Note 6, "Long-term Debt," for further information regarding our former revolving credit facility.

The ABL Agreement also requires us 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;

to complete certain specified transactions;

or if an event of default has occurred and is continuing.

As of September 30, 2021, we had $16.5 million of outstanding letters of credit, but no borrowings outstanding under the ABL Agreement.

The total amount available to be drawn as of September 30, 2021 was $61.4 million, calculated based on the current borrowing base less outstanding letters of credit.

On March 16, 2021, we issued $135.0 million aggregate principal amount of the 2026 Notes pursuant to an indenture, dated as of March 16, 2021 (the "2026 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

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See Note 5, "Long-term Debt," for further information regarding the 2026 Notes.

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

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

On January 30, 2018, we issued $200.0 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.

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.

During the first six months of 2021, we purchased $131.4 million principal amount of the outstanding 2023 Notes for $126.0 million in cash.

During the first nine months of 2021, we purchased $131.4 million principal amount of the outstanding 2023 Notes for $126.0 million in cash.

Since September 2019, we have purchased a cumulative $174.0 million principal amount of the 2023 Notes for $152.8 million in cash.

See Note 5, "Long-term Debt," for further information regarding the 2023 Notes.

As of June 30, 2021, none of the conditions allowing holders of the 2023 Notes to convert, or requiring us to repurchase the 2023 Notes, had been met.

As of September 30, 2021, none of the conditions allowing holders of the 2023 Notes to convert, or requiring us to repurchase the 2023 Notes, had been met.

Promissory Note.

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We have incurred settlement costs and expenses of $7.5 million related to such indemnification claims and believe that the maturity date of such note is extended until the resolution of such indemnity claims and that we are permitted to set-off the principal amount owed by the amount of such costs and expenses.

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

See Note 13, "Commitments and Contingencies," to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Our total debt represented 20% of our combined total debt and stockholders' equity as of June 30, 2021 and December 31, 2020.

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

See Note 13, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Our total debt represented 20% of our combined total debt and stockholders' equity as of September 30, 2021 and December 31, 2020.

Contingencies and Other Obligations.

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On February 15, 2021, the Seller dismissed the federal lawsuit without prejudice and refiled its lawsuit in state court.

On September 20, 2021, a motion by the Seller for partial summary judgement was dismissed.

Although we can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on us, we believe 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 our consolidated financial position, results of operations or liquidity.

See Note 13, "Commitments and Contingencies," to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

See Note 13, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Off-Balance Sheet Arrangements

As of June 30, 2021, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

As of September 30, 2021, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Availability and Cost of Products

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If we encounter difficulty in procuring these raw materials and component products as a result of tariffs, supply chain disruptions or other events, or if the prices we have to pay for these products increase and we are unable to pass corresponding cost increases on to our customers, our financial position, cash flows and results of operations could be adversely affected.

See Note 13, "Commitments and Contingencies," to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

See Note 13, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Critical Accounting Policies

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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 2. Management’s Discussion and Analysis