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Item 1. Business

2023-02-17 compared with 2022-02-22 · 121 added, 207 removed, 227 unchanged (59% of the section changed)

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

Oil States International, Inc., through its subsidiaries, is a global provider of manufactured products and services to the energy, industrial and military sectors.

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

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

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

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

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

In this Annual Report on Form 10‑K, references to the "Company" or "Oil States," or to "we," "us," "our," and similar terms are to Oil States International, Inc.

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

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

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

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

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

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

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

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

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

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

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

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

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

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Recent Developments

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.

As demand for most of our products and services depends substantially on the level of capital expenditures by the oil and natural gas industry, these conditions caused rapid reductions to most of our customers' drilling, completion and production activities and their related spending on our products and services, particularly those supporting activities in the U.S.

shale play regions, until the supply/demand imbalances eased.

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 commencing in March 2020, we immediately began aggressive implementation of cost reduction initiatives in an effort to reduce our expenditures to protect the financial health of our company, stabilize our cash flows and protect liquidity.

In addition, as discussed in more detail below and under "– ABL Facility," "– 2023 Notes," and "– 2026 Notes," we completed two significant financing transactions during the first quarter of 2021, which served to extend the maturity profile of our debt and provide greater access to liquidity.

On February 10, 2021, we entered into a new $125.0 million asset-based revolving credit facility (the "ABL Facility") under which credit availability is subject to a borrowing base calculation that includes eligible U.S.

customer accounts receivable and inventory.

The ABL Facility matures in February 2025.

Concurrent with entering into the ABL Facility, our former senior secured revolving credit facility was terminated.

On March 16, 2021, we secured an amendment with our bank group that permitted us to incur the indebtedness represented by the 2026 Notes discussed below.

On March 19, 2021, we issued $135.0 million aggregate principal amount of our 4.75% convertible senior notes due 2026 (the "2026 Notes").

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

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.

During 2021, we made strategic decisions within our Well Site Services segment to exit various underperforming service lines and regions both domestically and internationally.

During the year ended December 31, 2021, these equipment/service offerings and regions generated revenues of approximately $20 million, but with net losses incurred.

These service line and region exits will temper our revenues going forward but should improve our segment margins.

See Note 3, "Asset Impairments and Other Restructuring Items," Note 4, "Details of Selected Balance Sheet Accounts," Note 5, "Goodwill and Other Intangible Assets," Note 6, "Long-term Debt," and Note 7, "Operating Leases," to the Consolidated Financial Statements included in this Annual Report on Form 10‑K for further discussion.

Demand for most of our products and services has increased from the lows experienced in 2020 due to the waning impact of the global response to the COVID-19 pandemic, which had adversely affected energy demand and prices.

Increased capital investments by our customers, together with internal cost reduction and strict capital discipline measures and other corporate actions, have resulted in improvements in our consolidated operating results as shown below (in thousands).

Year ended December 31, Year-over-Year Change

2022 2021 2020 2022 vs 2021 2021 vs 2020

Revenues $ 737,706 $ 573,161 $ 638,075 $ 164,545 $ (64,914)

Operating income (loss) 2,905 (64,792) (534,340) 67,697 469,548

This reported growth has been tempered by the willingness of operators to invest in U.S.

land-based drilling, completion and production activities given regulatory and market pressures around environmental, social and governance ("ESG") considerations as well as labor and supply chain constraints.

In January 2022, our Well Site Services segment exited various underperforming domestic service lines, which had generated revenues of approximately $20 million in 2021.

The exit of these service lines improved our segment margins for 2022 despite tempering our reported revenue growth.

In March 2022, we recorded bad debt expense of $0.8 million related to receivables from Russia-based customers of the Offshore/Manufactured Products segment following the onset of military actions between Russia and Ukraine.

As of March 31 and December 31, 2022, we had no remaining material balance sheet exposure related to Russia.

In April 2022, our Offshore/Manufactured Products segment acquired E-Flow Control Holdings Limited ("E-Flow"), a global provider of fully integrated handling, control, monitoring and instrumentation solutions.

E-Flow, founded in 1988, provides a broad range of engineering, design, manufacturing, installation and commissioning services to its customers in the energy industry.

The purchase price of $8.1 million (net of cash acquired) was funded with cash on-hand.

In July 2022, we paid the seller ("GEO Seller") of GEODynamics, Inc.

("GEODynamics") $10.0 million in cash and issued approximately 1.9 million shares of our common stock (having a market value of $10.3 million) to fully settle our disputes, including $19.7 million in principal and accrued interest due under a promissory note to the GEO Seller (the "GEO Note").

In August 2022, our Offshore/Manufactured Products segment settled outstanding litigation against certain service providers in exchange for the receipt of cash totaling $6.9 million.

We recognized a gain of $6.1 million in connection with this settlement.

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

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

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

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

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

In recent years, the global response to the COVID-19 pandemic adversely affected the economies and financial markets of many countries, resulting in an economic downturn that led to a reduction in the level of capital spending by oil and gas companies for exploration and production activities.

As a result, capital investment by our customers recently reached a 15-year low, which affected demand for and pricing of our products and services.

We saw elements of growth and recovery during 2021 and we expect activity to improve further in 2022 as our customers generate higher free cash flow from increased commodity prices which will allow them to replenish their capital budgets.

In recent years, the global response to the COVID-19 pandemic adversely affected the economies and financial markets of many countries, resulting in an economic downturn that led to a material reduction in the level of capital spending by oil and gas companies for exploration and production activities.

As a result, capital investment by our customers declined, which affected demand for and pricing of our products and services.

As discussed previously, we saw significant growth and recovery during 2021 and 2022.

We expect activity to improve further in 2023 as our customers benefit from higher free cash flows, which should allow them to grow their capital budgets.

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

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Demand for the products and services supplied by our Offshore/Manufactured Products segment is generally driven by both the longer-term outlook for commodity prices and changes in land-based drilling and completion activity.

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

Bidding and quoting activity, along with orders from customers, for deepwater projects improved in 2021 from 2020 levels, which were lower than the levels achieved in 2019 due to reduced market visibility given the significant decline in crude oil prices which began in March of 2020 and associated reductions in customer spending.

With current commodity prices recovering, we are beginning to grow our backlog and related revenues.

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

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

Bidding and quoting activity, along with customer orders, for deepwater projects improved in 2022 from 2021 levels, following a substantial increase in crude oil prices and associated increases in customer spending commitments.

With these market improvements, we grew our backlog and related revenues in 2022.

Demand for our Well Site Services segment is primarily affected by drilling and completion activity in the United States, including the Gulf of Mexico, and, to a lesser extent, the rest of the world.

drilling and completion activity and, in turn, our Well Site Services segment results, are sensitive to near-term fluctuations in commodity prices, particularly West Texas Intermediate ("WTI") crude oil prices, given the shorter lead times for investment and the call-out nature of our operations in the segment.

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

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

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shale plays utilizing enhanced horizontal drilling and completion techniques.

Similarly, demand for our Well Site Services segment is primarily affected by drilling and completion activity in the United States, including the Gulf of Mexico, and, to a lesser extent, the rest of the world.

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

Offshore/Manufactured Products

For the years ended December 31, 2021, 2020 and 2019, our Offshore/Manufactured Products segment generated approximately 52%, 54% and 40%, respectively, of our consolidated revenue.

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

For the years ended December 31, 2022, 2021 and 2020, our Offshore/Manufactured Products segment generated approximately 52% to 54% of our consolidated revenue.

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

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

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and the United Arab Emirates.

Offshore/Manufactured Products Market

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

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Products and Services

In operation for nearly 80 years, our Offshore/Manufactured Products segment provides a broad range of products and services for use in offshore development and drilling activities.

In operation for 80 years, our Offshore/Manufactured Products segment provides a broad range of products and services for use in offshore development and drilling activities.

This segment also provides products for onshore oil and natural gas, defense and other industries.

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

Offshore Development and Drilling Activities.

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

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

Our products and services include:

• flexible bearings and advanced connection systems;

• casing and conductor connections and joints;

• subsea pipeline products;

• compact ball valves, manifold system components and diverter valves;

• marine winches, mooring systems, cranes and other heavy-lift rig equipment;

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

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

• consumable downhole products;

• other products and services, including welding, cladding and other metallurgical technologies.

Flexible Bearings and Advanced Connection Systems.

We are the key supplier of flexible bearings, or FlexJoint ® connectors, to the offshore oil and natural gas industry as well as weld-on connectors and fittings that join lengths of large diameter conductors or casing used in offshore drilling and production operations.

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

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

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

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

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

Production riser systems provide the vertical conduit for the hydrocarbons from the subsea wellhead to the floating production facility.

Oil and natural gas flows to the surface for processing through the production riser.

Export risers provide the vertical conduit from the floating production facility to the subsea export pipelines.

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

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

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

A tension leg platform ("TLP") is a floating platform that is moored by vertical pipes, or tethers, attached to both the platform and the sea floor.

Our FlexJoint ® tether bearings are used at the top and bottom connections of each of the tethers, and our Merlin ® connectors are used to efficiently assemble the tether joints during offshore installation.

An FPSO is a floating vessel, typically ship shaped, used to produce and process oil and natural gas from subsea wells.

A "Spar" is a floating vertical cylindrical structure which is approximately six to seven times longer than its diameter and is anchored in place.

Our FlexJoint ® connectors are used to attach the various production, injection, import or export risers to all of these floating production systems.

Casing and Conductor Connections and Joints .

Our advanced connection systems provide connectors used in various drilling and production applications offshore.

These connectors are welded onto pipe to provide more efficient joint to joint connections with enhanced tensile and burst capabilities that exceed those of connections machined onto plain-end-pipe.

Our connectors are reusable and pliable and, depending on the application, are equipped with metal-to-metal seals.

We offer a suite of connectors offering differing specifications depending on the application.

Our Merlin ® connectors are our premier connectors combining superior static strength and fatigue life with fast, non-rotational make-up and a slim profile.

Merlin ® connectors have been used in sizes up to 60 inches (outside diameter) for applications including open-hole and tie-back casing, offshore conductor casing, pipeline risers and TLP tendons which moor the TLP to the sea floor.

Subsea Pipeline Products.

We design and manufacture a variety of equipment used in the construction, maintenance, expansion and repair of offshore oil and natural gas pipelines.

New construction equipment includes:

• pipeline end manifolds and pipeline end terminals;

• deep and shallow water pipeline connectors;

• midline tie-in sleds;

• forged steel Y-shaped connectors for joining two pipelines into one;

• pressure-balanced safety joints for protecting pipelines and related equipment from anchor snags or a shifting sea-bottom;

• electrical isolation joints;

• hot-tap clamps that allow new pipelines to be joined into existing lines without interrupting the flow of petroleum products.

We provide diverless connection systems for subsea flowlines and pipelines.

Our HydroTech ® collet connectors provide a high-integrity, proprietary metal-to-metal sealing system for the final hook-up of deep offshore pipelines and production systems.

They also are used in diverless pipeline repair systems and future pipeline tie-in systems.

Our lateral tie-in sled, which is installed with the original pipeline, allows a subsea tie-in to be made quickly and efficiently using proven HydroTech ® connectors without costly offshore equipment mobilization and without shutting off product flow.

We provide pipeline repair hardware, including deepwater applications beyond the depth of diver intervention.

Our products include:

• repair clamps used to seal leaks and restore the structural integrity of a pipeline;

• mechanical connectors used in repairing subsea pipelines without having to weld;

• misalignment and swivel ring flanges;

• pipe recovery tools for recovering dropped or damaged pipelines.

Compact Ball Valves, Manifold System Components and Diverter Valves.

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

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

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

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

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

We design, engineer and manufacture marine winches, mooring systems, cranes and certain rig equipment.

Our Skagit ® winches are engineered for mooring floating and semi-submersible drilling rigs as well as positioning pipelay and derrick barges, anchor handling boats and jack-ups.

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

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

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

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

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

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

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

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

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

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

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

In 2020 and 2021, we were awarded contracts to design and supply a new deepwater riser system (including automated tooling, a control system and marine riser) to collect polymetallic nodules from the sea floor.

This mineral gathering riser system applies our 30-plus years of experience in providing marine riser systems for the oil and gas industry to a new market, driven by the energy transition.

BOP Stack Assembly, Integration, Testing and Repair Services.

While not typically a manufacturer of BOP components, we design and fabricate lifting and protection frames for BOP stacks and offer the complete system integration of BOP stacks and subsea production trees.

We can provide complete turnkey and design fabrication services.

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

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

Consumable Downhole Products .

North American shale play development has expanded the need for more advanced completion tools.

In order to reduce well completion costs, minimizing the time to drill out tools is very important.

Our Offshore/Manufactured Products segment has leveraged its knowledge of molded thermoset composites and elastomers to help meet this demand.

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

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

Our products include:

• Swab Cups - used primarily in well servicing work;

• Rod Guides/Centralizers - used in both drilling and production for pipe protection;

• Gate Valve and Butterfly Valve Seats – we service many markets in the valve industry including well completion, refining, and distribution;

• Casing and Cementing Products – we are a custom manufacturer of cementing plugs, wellbore wipers, valve assemblies, combination plugs, specialty seals and gaskets;

• Service Tools – our products include frac balls, packer elements, zonal isolation tools, as well as many custom molded products used in the well servicing industry.

Other Products & Services.

Our Offshore/Manufactured Products segment also produces a variety of products for use in industrial, military and other applications outside the oil and gas industry.

For example, we provide:

• sound and vibration isolation equipment for marine vessels;

• metal-elastomeric FlexJoint ® bearings used in a variety of naval and marine applications;

• products used in the construction and maintenance of offshore wind projects;

• drum-clutches and brakes for heavy-duty power transmission in the mining, paper, logging and marine industries.

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

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Backlog cancellations have historically been insignificant, totaling $3.5 million in 2022 and $1.8 million in 2021.

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

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

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

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

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

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Our Offshore/Manufactured Products segment provides products and services to customers in the major offshore crude oil and natural gas producing regions of the world, including the U.S.

Gulf of Mexico, Brazil, West Africa, the North Sea, Azerbaijan, Russia, India, Southeast Asia, China, the United Arab Emirates and Australia.

Gulf of Mexico, Brazil, West Africa, the North Sea, Azerbaijan, India, Southeast Asia, China, the United Arab Emirates and Australia.

In addition, we provide shorter-cycle products to customers in the land-based drilling and completion markets in the United States and, to a lesser extent, outside the United States.

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

No customer accounted for more than 10% of our consolidated revenues in 2021, 2020 or 2019.

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

Downhole Technologies

For the years ended December 31, 2021, 2020 and 2019, our Downhole Technologies segment contributed approximately 18%, 15% and 18%, respectively, of our consolidated revenue.

This segment is comprised of the GEODynamics, Inc.

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

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

Downhole Technologies Market

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

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

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

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

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

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

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

Customers and Competitors

Our customers in the Downhole Technologies segment include other oilfield services companies as well as major, independent and private oil and gas companies.

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

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

Our main competitors in this segment include AFG Holdings, Inc., Baker Hughes Company, Hutchinson Group (a subsidiary of Total S.A.), NOV Inc., Oceaneering International, Inc., Sparrows Offshore Group Limited, TenarisHydril (a division of Tenaris S.A.) and W-Industries LLC.

Well Site Services

For the years ended December 31, 2021, 2020 and 2019, our Well Site Services segment generated approximately 30%, 31% and 42%, respectively, of our consolidated revenue.

For the years ended December 31, 2022, 2021 and 2020, our Well Site Services segment generated approximately 30% to 31% of our consolidated revenue.

Our Well Site Services segment includes a broad range of equipment and services that are used to drill for, establish and maintain the flow of oil and natural gas from a well throughout its life cycle.

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

Well Site Services Market, Services, Customers and Competitors

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

Market, Services, Customers and Competitors

Demand for our completion and drilling services is predominantly tied to the level of oil and natural gas exploration and production activity on land in the United States.

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

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

Billings to our customers separate charges for our equipment from charges for our field technicians.

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

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

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

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

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

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

Downhole Technologies

For the years ended December 31, 2022, 2021 and 2020, our Downhole Technologies segment contributed approximately 15% to 18% of our consolidated revenue.

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

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

Downhole Technologies Market

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

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

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

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

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

Customers and Competitors

Our customers in the Downhole Technologies segment include other oilfield services companies as well as major, independent and private oil and gas companies.

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

Seasonality of Operations

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Human Capital

As of December 31, 2021, we had a total of 2,373 full-time employees – with 55% in our Offshore/Manufactured Products segment, 11% in our Downhole Technologies segment, 31% in our Well Site Services segment and 3% in our corporate headquarters.

As of December 31, 2022, we had a total of 2,738 full-time employees – with 57% in our Offshore/Manufactured Products segment, 30% in our Well Site Services segment, 10% in our Downhole Technologies segment and 3% in our corporate headquarters.

We were party to collective bargaining agreements covering fewer than 100 employees located outside the United States as of December 31, 2022.

We believe we have good labor relations with our employees.

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

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

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

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

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

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

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

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

These laws and regulations may, among other things, (i) require the acquisition of permits to conduct drilling and other regulated activities;

(ii) restrict the types, quantities and concentration of various substances that can be released into the environment or injected into subsurface formations in connection with oil and natural gas drilling and production activities and wellsite support services;

These laws and regulations may, among other things:

(i) require the acquisition of permits to conduct drilling and other regulated activities;

(iii) limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other protected areas;

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

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

• the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), which imposes liability, without regard to fault or the legality of the original conduct, on generators, transporters, disposers and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur;

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

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laws and regulations, in some cases, the actual implementation of these requirements may impose additional, or more stringent, conditions or controls that can significantly restrict, delay or cancel the permitting, development or expansion of a project or significantly increase the cost of doing business.

Any failure by us to comply with these laws, regulations and regulatory initiatives or controls may result in the assessment of sanctions, including administrative, civil, and criminal penalties;

Any failure by us to comply with these laws, regulations and regulatory initiatives or controls may result in:

the assessment of sanctions, including administrative, civil, and criminal penalties;

the imposition of investigatory, remedial, and corrective action obligations or the incurrence of capital expenditures;

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

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

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

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

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

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

In late 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on

drinking water resources, concluding that "water cycle" activities associated with hydraulic fracturing may impact drinking water resources under certain circumstances.

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

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In January 2021, President Biden issued an executive order suspending the issuance of new leases for exploration and production activities on federal non-Indian lands and waters, but not existing operations under valid leases, pending completion of a study of current oil and gas practices.

The suspension of these federal leasing activities prompted legal action by several states against the Biden Administration, resulting in issuance of a nationwide preliminary injunction by a federal district judge in Louisiana in June 2021, effectively halting implementation of the leasing suspension.

federal government and a coalition of environmental groups are appealing the district court decision.

The suspension of these federal leasing activities prompted legal action by several states against the Biden Administration, resulting in issuance of a nationwide preliminary injunction by a federal district judge in Louisiana in June 2021 and a permanent injunction in August 2022, effectively halting implementation of the leasing suspension with respect to those leases canceled or postponed prior to March 24, 2021.

In April 2022, the DOI reopened onshore leasing for approximately 144,000 acres of federal, non-Indian land, although this sale is presently subject to ongoing litigation.

The DOI has also announced its intention to scope additional land for onshore leasing.

Future actions taken by the federal government to limit the availability of new oil and gas leases would adversely impact the oil and gas industry and impact demand for our products and services.

Separately, the DOI released a report on the federal oil and gas leasing program in November 2021, following a review of the onshore and offshore federal oil and gas program.

The report states an intent to modernize the federal oil and gas leasing program, and recommends reforms including, among other items, raising royalty rates and current minimum levels for bids, rentals, royalties, and bonds;

The report states an intent to modernize the federal oil and gas leasing program, and recommends reforms including, among other items:

raising royalty rates and current minimum levels for bids, rentals, royalties, and bonds;

revising bidding practices to avoid leasing of low potential lands;

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Moreover, further or different constraints may be adopted by the Biden Administration in the future, including but not limited to a delay in permitting procedures, which may reduce the desirability or viability of projects on federal lands or waters.

For example, in November 2022 the BLM proposed a rule that would limit flaring from well sites on federal lands, as well as allow the delay or denial of permits if BLM finds that an operator's methane waste minimization plan is insufficient.

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

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

In this regard, the Texas Railroad Commission has pursued several regulatory initiatives during the latter half of 2021 as a result of recent seismic activity in an area of the Midland Basin from northeast Ector County to southwest Martin County known as the Gardendale Seismic Response Area ("SRA"), including voluntary reductions in produced water disposals from produced water well facilities in the Gardendale SRA, suspending injection operations of certain deep disposal wells within the Gardendale SRA, and suspending all disposal well permits to inject oil and gas waste into deep strata within the boundaries of the Gardendale SRA.

In this regard, the Texas Railroad Commission has pursued several regulatory initiatives during the latter half of 2021 as a result of recent seismic activity in an area of the Midland Basin from northeast Ector County to southwest Martin County known as the Gardendale Seismic Response Area ("SRA"), including voluntary reductions in produced water disposals from injection wells in the Gardendale SRA, suspending injection operations of certain deep disposal wells within the Gardendale SRA, and suspending all disposal well permits to inject oil and gas waste into deep strata within the boundaries of the Gardendale SRA.

More recently, in response to a December 31, 2021 earthquake some 25 miles northeast of Midland, Texas, the Texas Railroad Commission established the Stanton SRA in January 2022 as a prelude to coordinating future industry-led actions to reduce the seismic hazard in this SRA.

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• Offshore marine safety .

In the United States, President Biden has placed a moratorium on new oil and natural gas leases on federal lands and waters, including the federal Outer Continental Shelf ("OCS").

While this moratorium has been enjoined pending legal challenge, the Biden Administration may pursue regulatory initiatives, executive actions and legislation in support of his regulatory agenda.

In the United States, President Biden has placed a moratorium on new oil and natural gas leases on federal lands and waters, including the federal Outer Continental Shelf ("OCS"), although a permanent injunction against this moratorium applicable to those leases canceled or postponed prior to March 24, 2021 was obtained in August 2022.

In addition, the Inflation Reduction Act of 2022 ("IRA 2022") contains provisions requiring particular offshore oil and gas lease sales under the 2017 – 2022 leasing program to proceed and the DOI has reinstated or announced plans for those sales.

In July 2022, the DOI published a proposed offshore leasing program for 2023 – 2028, although the approval process is ongoing and may be subject to change or challenge.

The Biden Administration may pursue further regulatory initiatives, executive actions and legislation in support of his regulatory agenda.

Additionally, regulatory agencies under the Biden Administration may issue new or amended rulemakings regarding deepwater leasing, permitting or drilling that could result in more stringent or costly restrictions, delays or cancellations to our oil and gas exploration and production customers with respect to their offshore operations or significantly increase financial assurances of operators for decommissioning of offshore facilities on the OCS.

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

However, several groups have filed litigation over this December decision, and the Biden Administration has announced plans to reconsider the December 2020 rule in favor of a more stringent ground-level ozone NAAQS.

However, several groups have filed litigation over this December 2020 decision, and in October 2021, the EPA announced it will reconsider its December 2020 decision and is targeting to complete its reconsideration by the end of 2023.

While a draft assessment released in April 2022 indicates that EPA staff have reached a preliminary conclusion that the December 2020 decision will stand, a final decision continues to not be expected until 2023.

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

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While the EPA and Corps under the Trump Administration issued a final rule in April 2020 narrowing federal jurisdictional reach over waters of the United States, President Biden issued an executive order in January 2021 to further review and assess these regulations consistent with the new administration's policy objectives, following which the EPA and Corps announced plans in June 2021 to initiate a new rulemaking process that would repeal the 2020 rule and restore protections that were in place prior to 2015.

Although the EPA and Corps did not seek to vacate the 2020 rule on an interim basis, two federal district courts in Arizona and New Mexico have vacated the 2020 rule in decisions announced during the third quarter of 2021.

While these district court decisions may be appealed, it is clear that the EPA and Corps intend to adopt a more expansive definition for waters of the United States.

As an initial step, the agencies published on December 7, 2021 a proposed rulemaking that would put back into place the pre-2015 definition of "waters of the United States" in effect prior to 2015 rule issued under the Obama Administration and updated to reflect consideration of Supreme Court decisions.

The proposed rule, if adopted, would serve as an interim approach to "waters of the United States" and provide the agency with time to develop a subsequent rule that builds upon the currently proposed rule based, in part, on additional stakeholder involvement.

Following two federal district court decisions to vacate the 2020 rule, the EPA and the Corps announced a final rule defining "waters of the United States" according to the broader pre-2015 standards and including updates to incorporate existing Supreme Court decisions, which was published in January 2023.

At the same time, the Supreme Court is also expected to rule on certain aspects of the definition in 2023, and the January 2023 rule is likely to be subject to legal challenge.

Therefore, the final substance of this definition and its impacts on the scope of the CWA remain uncertain at this time.

To the extent that the EPA and the Corps under the Biden Administration issues any rule that expands the scope of the CWA's jurisdiction in areas where our customers conduct operations, such developments could delay, restrict or halt permitting or development of projects, result in longer permitting timelines, or increased compliance expenditures or mitigation costs for our customers’ operations, which may reduce the rate of production from operators.

• Climate change .

In the United States, no comprehensive climate change legislation has been implemented at the federal level, but President Biden has made action on climate change a priority of his administration's agenda.

In the United States, no comprehensive climate change legislation has been implemented at the federal level.

However, President Biden has made action on climate change a priority of his administration's agenda, and laws, such as the IRA 2022, advance numerous climate-related objectives.

Moreover, with the U.S.

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

impose new standards reducing methane emissions from oil and gas operations through limitations on venting and flaring and the implementation of enhanced emission leak detection and repair requirements.

In recent years, there has been considerable uncertainty surrounding regulation of methane emissions.

In 2020, the Trump Administration revised performance standards for methane established in 2016 to lessen the impact of those standards.

However, shortly after taking office, President Biden issued an executive order calling on the EPA to revisit federal regulations regarding methane and establish new or more stringent standards for existing and new sources in the oil and gas sector.

Congress also passed, and President Biden signed into law, a revocation of the 2020 rulemaking, effectively reinstating the 2016 standards.

In response to President Biden's executive order, in November 2021, the EPA issued a proposed rule that, if finalized, would establish the so-called Quad Ob new source and Quad Oc first-time existing source standards of performance under applicable agency regulations established at 40 C.F.R.

While the Trump Administration took a number of actions to revise federal regulation of methane from the oil and natural gas sector, these actions were subsequently reversed by both the Biden Administration and Congress.

In November 2021, the EPA issued a proposed rule that, if finalized, would establish the so-called Quad Ob new source and Quad Oc first-time existing source standards of performance under applicable agency regulations established at 40 C.F.R.

Part 60 for methane and volatile organic compound ("VOC") emissions for the crude oil and natural gas source category new source and existing sources, respectively.

Owners or operators of affected emission units or processes would have to comply with specific standards of performance that may include leak detecting using optical gas imaging and subsequent repair requirements, reduction of regulated emissions through capture and control systems, zero-emission requirements for certain equipment or processes, operations and maintenance requirements and requirements for "green well" completions.

The EPA plans to issue a supplemental proposal enhancing the proposed rulemaking in 2022 that will contain proposed rule text, which was not included in the November 2021 proposed rule, and anticipates issuing a final rule by the end of 2022.

However, any such rule will likely be subject to litigation.

and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

The EPA published a supplemental proposal in November 2022, which, among other items, would impose expanded inspection, monitoring and emissions control requirements on oil and gas sites, as well as strengthen requirements related to emissions from equipment and routine flaring.

The proposal would also establish a "Super Emitter Response Program" that would require operator response to emissions events exceeding 200 pounds per hour, as detected by regulatory authorities or qualified third parties.

The proposal is currently subject to public comment and is expected to be finalized in 2023;

however, all of these regulatory actions will likely be subject to legal challenges.

As a result, we cannot predict the scope of any final methane regulatory requirements, or the expected cost to comply with such requirements, but any such increase in regulatory scope and oversight may increase compliance expenditures or mitigation costs for our or our customers' operations.

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

At the international level, there exists the United Nations-sponsored "Paris Agreement," which requires nations to submit non-binding GHG emissions reduction goals every five years after 2020.

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In addition, the 26th Conference of the Parties ("COP26"), resulted in multiple announcements, including a call for parties to eliminate certain fossil fuel subsidies and pursue further action on non-carbon dioxide GHGs.

Relatedly, the United States and European Union jointly announced at COP26 the launch of the Global Methane Pledge, an initiative which over 100 countries joined, committing to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030, including "all feasible reductions" in the energy sector.

While the degree and manner in which countries may implement COP26 commitments is uncertain at this time, there is increasing political risk regarding climate change.

Relatedly, the United States and European Union jointly announced at COP26 the launch of the Global Methane Pledge, an initiative which over 100 countries joined, committing to a collective goal of reducing global methane emissions by at least 30% from 2020 levels by 2030, including "all feasible reductions" in the energy sector.

These goals were reaffirmed at the 27th Conference of the Parties ("COP27") in November 2022.

While the degree and manner in which countries may implement COP26 or COP27 commitments is uncertain at this time, there is increasing political risk regarding climate change.

In the United States, President Biden has issued several executive orders calling for more expansive action to address climate change and limit new oil and gas operations on federal lands or waters.

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Other actions that may be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment of pipeline infrastructure or the permitting of liquefied natural gas export facilities, as well as more restrictive GHG emissions limitations for oil and gas facilities.

Additionally, the IRA 2022 was signed into law in August 2022, which contains hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, and supporting infrastructure and carbon capture and sequestration, among other provisions.

These incentives could further accelerate the transition of the U.S.

economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives.

The IRA 2022 also imposes the first-ever federal fee on the emissions of GHGs through a methane emissions charge.

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

Additionally, our access to capital may be impacted by climate change policies as shareholders and bondholders currently invested in fossil-fuel energy companies concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.

Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending and investment practices that favor "clean" power sources such as wind and solar, making those sources more attractive, and some of them may elect not to provide funding for fossil fuel energy companies.

Additionally, our access to capital may be impacted by climate change policies as stockholders and bondholders currently invested in carbon-intensive energy companies concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.

Institutional lenders who provide financing to carbon-intensive energy companies also have become more attentive to sustainable lending and investment practices that favor "clean" power sources such as wind and solar, making those sources more attractive, and some of them may elect not to provide funding for fossil fuel energy companies.

Many of the largest U.S.

banks have made "net zero" carbon emission commitments and have announced that they will be assessing their portfolios and taking steps to quantify and reduce funding to companies with carbon emissions.

At COP26, the Glasgow Financial Alliance for Net Zero ("GFANZ") announced that commitments from over 450 firms across 45 countries had resulted in over $130 trillion in capital committed to net zero goals.

At COP26, the Glasgow Financial Alliance for Net Zero ("GFANZ") announced that commitments from over 450 firms across 45 countries had resulted in over $130 trillion in

capital committed to net zero goals.

The various sub-alliance of GFANZ generally require participants to set short-term, sector-specific targets to transition their financing, investing, and/or underwriting activities to net zero by 2050.

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Federal Reserve issued a statement in support of the efforts of the NGFS to identify key issues and potential solutions for the climate-related challenges most relevant to central banks and supervisory authorities.

Such public and private sector efforts have made and may continue to make it more difficult to secure funding for oil and gas related activities.

Separately, the SEC has also announced that is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege an issuer's existing climate disclosures misleading or deficient.

In addition, the SEC has proposed a rule that would require registrants to make certain climate-related disclosures in registration statements and annual reports, including their governance of climate-related risks, material climate-related impacts on strategy, outlook and business model, climate risk management, Scope 1 and 2 GHG emissions and Scope 3 GHG emissions under certain circumstances, and if the registrant has set them, climate-related targets and goals.

The SEC missed its self-imposed October 2022 deadline for issuing a final rule, and the final rule is now expected in early 2023.

Separately, the SEC has also announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege that an issuer's existing climate disclosures were misleading or deficient.

Such public and private sector efforts have made and may continue to make it more difficult for certain of our customers' to secure financing for their projects, which in turn may reduce the demand for our products and services.

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business