What changed in this filing

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Item 1A. Risk Factors

2024-02-21 compared with 2023-02-17 · 82 added, 87 removed, 295 unchanged (36% of the section changed)

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Demand for the majority of our products and services is substantially dependent on the levels of expenditures by companies in the crude oil and natural gas industry.

The global response to COVID-19, ongoing uncertainties related to future crude oil demand and the willingness of operators to invest in U.S.

Ongoing uncertainties related to future crude oil demand and the willingness of operators to invest in U.S.

land-based drilling, completion and production activities given regulatory pressures has reduced the demand, and the prices we are able to charge, for our products and services.

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Demand for most of our products and services depends substantially on the level of capital expenditures invested in the oil and natural gas industry.

The global response to COVID-19, ongoing uncertainties related to future crude oil demand and the willingness of operators to invest in U.S.

Ongoing uncertainties related to future crude oil demand and the willingness of operators to invest in U.S.

land-based drilling, completion and production activities given regulatory pressures have resulted in an oversupply of many of our services and products and reduced the prices we could charge our customers for these services and products.

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• delays in major offshore and onshore oil and natural gas field permitting or development timetables;

• the ongoing impact of the COVID-19 pandemic;

• the availability of attractive offshore and onshore oil and natural gas field prospects that may be affected by governmental actions or environmental activists that may restrict, suspend or cancel development;

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• stockholder activism or activities by non-governmental organizations to limit or cease certain sources of funding for the energy sector or restrict the exploration, development, production and transportation of oil and natural gas;

• the impact of armed hostilities involving one or more oil and natural gas producing nations;

• rapid technological change and the timing and extent of development of energy sources, including liquefied natural gas as well as solar, wind and other renewable energy sources;

• the impact of military actions, including, but not limited to:

energy market disruptions, supply chain disruptions and increased costs, government sanctions, and delays or potential cancellation of planned customer projects;

• rapid technological change and the timing and extent of development of energy sources, including LNG as well as solar, wind and other renewable energy sources;

• environmental and other governmental laws, regulations and executive actions;

and foreign tax policies, including those regarding tariffs and duties.

In response to lower oil prices in 2020 and 2021, many of our customers materially reduced or delayed their capital spending, which reduced the demand for our products and services and exerted downward pressure on the prices paid for our products and services.

and foreign tax policies, including those regarding tariffs, duties and global minimum tax rates.

Any prolonged reduction in the overall level of exploration and production activities, whether resulting from changes in oil and natural gas prices or otherwise, could have an adverse effect on our equipment utilization, revenues, cash flows and profitability;

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and our ability to attract and retain skilled personnel.

The COVID-19 outbreak has negatively impacted, and may continue to negatively impact crude oil prices and demand for our products and services.

The outbreak of COVID-19 has adversely impacted and may continue to adversely impact our operations, the operations of our customers and the global economy, including the worldwide demand for oil and natural gas and the level of demand for our products and services.

The COVID-19 pandemic also altered the level of capital spending by oil and gas companies for exploration and production activities and adversely affected the economies and financial markets of many countries resulting in an economic downturn that affected demand for our products and services.

In response to the initial outbreak of COVID-19, many state and local jurisdictions imposed quarantines, executive orders and similar government orders and restrictions for their residents to control the spread of COVID-19.

Such orders or restrictions resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, travel restrictions and cancellation of events, among other effects.

In an effort to minimize the spread of illness, we and our customers implemented various worksite restrictions as well as quarantining in order to minimize the chances of a potential COVID-19 outbreak.

During 2021 and 2022, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded.

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

Widespread implementation of these or similar restrictions could result in commodity price volatility, reduced demand for our products and services, as well as delays in or inability to fulfill our contractual obligations to customers, logistic constraints, increases in our costs, and workforce and raw material shortages.

The effects of the COVID-19 pandemic and related economic, business and market disruptions thus could continue and adversely affect us.

We might be unable to compete successfully with other companies in our industry.

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Consolidation of our customers and competitors may impact our results of operations.

The oil and gas industry has historically experienced periods of consolidation which may result in reduced capital spending by some of our customers, the acquisition of one or more of our primary customers or competitors or consolidated entities using size and purchasing power to seek pricing or other concessions, which may lead to decreased demand for our products and services.

The oil and gas industry is undergoing rapid consolidation, which may result in reduced capital spending by some of our customers, the acquisition of one or more of our primary customers or competitors or consolidated entities using size and purchasing power to seek pricing or other concessions, which may lead to decreased demand for our products and services.

In addition, recent, ongoing and future mergers, combinations and consolidations in our industry could result in existing competitors increasing their market share.

As a result, industry consolidation may have a significant negative impact on our results of operations, financial position or cash flows.

We are unable to predict what effect industry consolidations may have on the pricing of our products and services, capital spending by our customers, our selling strategies, our competitive position, our ability to retain customers or our ability to negotiate favorable agreements with our customer and suppliers.

Disruption of our supply chain could adversely impact our ability to manufacture, transport and sell our products.

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The market for our products and services is characterized by continual technological developments to provide better performance in increasingly greater depths, higher pressure levels and harsher conditions.

If we are unable to design, develop and produce commercially competitive products in a timely manner in response to changes in technology, our business and revenues will be adversely affected.

Many of our competitors are large multinational companies that may have significantly greater financial resources than we have, and they may be able to devote greater resources to research and development of new systems, services and technologies than we are able to do.

If we are unable to design, develop

and produce commercially competitive products in a timely manner in response to changes in technology, our business and revenues will be adversely affected.

Many of our competitors are large multi-national companies that may have significantly greater financial resources than we have, and they may be able to devote greater resources to research and development of new systems, services and technologies than we are able to do.

In addition, competitors or customers may develop new technologies, which address similar or improved solutions to our existing technology.

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Should our technologies become the less attractive solution, our operations and profitability would be negatively impacted.

Our business and results of operations could be negatively impacted by security threats, including cybersecurity threats, and other disruptions.

We may experience various security threats, including cybersecurity threats to gain unauthorized access to sensitive information or to render data or systems unusable;

threats to the safety of our employees;

threats to the security of our facilities and infrastructure, or third-party facilities and infrastructure;

and threats from terrorist acts.

Although we devote significant resources to protect the information systems and data we rely on in our business, cybersecurity attacks in particular are evolving and include, use of phishing/ransomware attacks and fraudulent domain names/websites, among others, which increased following the outbreak of COVID-19 in 2020.

Our business, results of operations and financial condition could be adversely affected by security threats, including cybersecurity threats and other disruptions.

Our information and operational technology systems, and those of our vendors, suppliers, customers and other business partners, may experience various security threats, including cybersecurity threats designed to gain unauthorized access to sensitive information or to render data or systems unusable;

threats to the safety of our employees, threats to our infrastructure, or third-party infrastructure;

and terrorist attacks or related threats.

Cybersecurity attacks in particular are evolving and have increased in frequency.

Cybersecurity attacks are becoming more sophisticated and include, but are not limited to, ransomware attacks, credential stuffing, phishing, social engineering, use of deepfakes (i.e., highly realistic synthetic media generated by artificial intelligence) and other attempts to gain unauthorized access to data for purposes of extortion or other malfeasance.

Although we devote resources to protect the systems and data we rely on in our business, our information and operational technology systems may still be subject to cyberattacks or security breaches, including as a result of employee error, malfeasance or other threat vectors.

Any one of these threat vectors could lead to the corruption, loss, or disclosure of proprietary and sensitive data, misdirected wire transfers, and an inability to:

perform services for our customers;

complete or settle transactions;

maintain our books and records;

prevent environmental damage;

and maintain communications or operations.

While we utilize various procedures and controls to monitor these security threats and mitigate our exposure to such threats and other disruptions, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing.

If any of these events were to materialize, they could lead to losses of sensitive information (including our intellectual property, and employee and customer data), critical infrastructure, personnel or capabilities, essential to our operations, and could have a material adverse effect on our reputation, financial position, results of operations, or cash flows.

No security measure is infallible.

If any of these events were to materialize, they would lead to the loss, disclosure, or hindrance of sensitive information (including our intellectual property, and employee and customer data), critical infrastructure, personnel or capabilities essential to our operations.

In addition, a cyberattack or security breach could result in liability resulting from data privacy or cybersecurity claims, liquidated or other contractual damages, regulatory penalties, damage to our reputation, significant negative press coverage, long-lasting loss of confidence in us, or additional costs for remediation and modification or enhancement of our information systems to prevent future occurrences, all of which could have a material adverse effect on our reputation, financial position, results of operations, or cash flows.

We depend on several significant customers in each of our business segments, and the loss of one or more such customers or the inability of one or more such customers to meet their obligations to us, could adversely affect our results of operations.

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In addition, the concentration of customers in one industry impacts our overall exposure to credit risk, in that customers may be similarly affected by changes in economic and industry conditions.

While we perform ongoing credit evaluations of our customers, we do not generally require collateral in support of our trade receivables.

While we perform ongoing credit evaluations of our customers, we do not generally require collateral in support of our accounts receivables.

As a result of our industry concentration, risks of nonpayment and nonperformance by our counterparties are a concern in our business.

Many of our customers finance their activities through cash flow from operations, the incurrence of debt or the issuance of equity.

In 2020 and 2021, many of our customers experienced substantial reductions in their cash flows from operations, and some experienced liquidity shortages, lack of access to capital and credit markets, a reduction in borrowing bases under reserve-based credit facilities and other adverse impacts to their financial condition.

These conditions caused a number of our customers to claim bankruptcy protection.

The inability, or failure of, our significant customers to meet their obligations to us, or their insolvency or liquidation, may adversely affect our financial results.

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

In February 2022, Russian military forces invaded Ukraine and fighting between the two countries continues.

While we have no operations, personnel or material assets in either country as of December 31, 2022, the outcome of this ongoing military conflict is highly unpredictable and could lead to further market and other disruptions that could adversely affect us, such as:

The ongoing military actions in Europe and the Middle East could adversely affect our business, financial condition and results of operations.

The ongoing military conflicts in Europe and the Middle East could cause market and other disruptions that could adversely affect us, such as:

volatility in crude oil and natural gas prices, which can adversely affect demand for our products and services;

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higher inflation;

delays or cancellations of planned projects by our customers due to rising costs;

delays or cancellations of planned

projects by our customers due to rising costs;

changes in currency rates;

and increases in cyberattacks and espionage.

As a result of this conflict, governments in the European Union, the United States, the United Kingdom, Switzerland and other countries have enacted sanctions against Russia and Russian interests.

In addition, governments in the European Union, the United States, the United Kingdom, Switzerland and other countries have enacted sanctions against Russia and Russian interests as a result of Russia’s invasion of Ukraine.

Such sanctions, and other measures, as well as existing and potential further responses from Russia or other countries to such sanctions, could exacerbate the foregoing risks.

Any of these developments could adversely affect our business, financial condition and results of operations.

Our inability to control the inherent risks of identifying and integrating businesses that we have or may acquire, including any related increases in debt or issuances of equity securities, could adversely affect our operations.

We continually review complementary acquisition opportunities and we may seek to consummate acquisitions of such businesses in the future.

However, we may not be able to identify and acquire acceptable acquisition candidates on favorable terms in the future or at all.

In addition, we have in the past and may in the future incur indebtedness to finance acquisitions and also may issue equity securities in connection with such acquisitions, which could impose a significant burden on our results of operations and financial condition and could result in significant dilution to stockholders.

We expect to gain certain business, financial, and strategic advantages as a result of business combinations we undertake, including synergies and operating efficiencies.

However, these transactions involve risks including:

• retaining key employees and customers of acquired businesses;

• retaining supply and distribution relationships key to the supply chain;

• increased administrative burden, including additional costs associated with regulatory compliance;

• diversion of management time and attention;

• developing our sales and marketing capabilities;

• managing our growth effectively;

• integrating operations, workforce, product lines and technology;

• managing tax and foreign exchange exposure;

• operating a new line of business;

• inability to pursue and protect patents covering acquired technology;

• addition of acquisition-related debt and increased expenses and working capital requirements;

• substantial accounting charges for restructuring and related expenses, write-off of in-process research and development, impairments of goodwill, amortization of intangible assets, and stock-based compensation expense;

• becoming subject to unanticipated liabilities of the acquired business, including litigation related to the acquired business;

• achieving the expected benefits from the acquisition, including certain cost savings and operational efficiencies or synergies.

If we fail to manage any of these risks successfully, our business could be harmed.

Our capitalization and results of operations may change significantly following an acquisition, and our stockholders may not have the opportunity to evaluate the economic, financial, and other relevant information that we will consider in evaluating future acquisitions.

For example, see Note 15, "Commitments and Contingencies," to the Consolidated Financial Statements included in this Annual Report on Form 10‑K for a discussion of certain unanticipated issues and claims that arose following the GEODynamics Acquisition.

Climate events could adversely impact our operations or those of our customers or suppliers.

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Additionally, changing meteorological conditions, particularly temperature, may result in changes to the amount, timing or location of demand for energy or the products our customer produce, which may impact demand for our products and services.

From time to time, we review complementary acquisition opportunities and we may seek to consummate acquisitions of such businesses in the future.

However, we may not be able to identify and acquire acceptable acquisition candidates on favorable terms in the future or at all.

We expect to gain certain business, financial, and strategic advantages as a result of business combinations we undertake, including synergies and operating efficiencies.

However, these transactions, and the successful integration and operation of acquired businesses, involve numerous risks.

If we fail to manage any of these risks successfully, our business could be harmed.

Financial Risks

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We rely on our liquidity to pay our operating and capital expenditures, interest and principal payments on debt, taxes and other similar costs.

Historically, we have sought to finance the operation of our business primarily with cash on-hand and cash provided by operating activities, but we have also relied on capital from the bank and capital markets.

The COVID-19 pandemic initially resulted in significant disruption to and volatility in the global financial markets.

For companies like ours in the energy industry, this market disruption significantly impacted the value of our common stock and reduced our ability to access capital in the bank and capital markets.

Further outbreaks or the emergence of new strains of the COVID-19 virus could result in the return of these conditions, which could negatively affect our liquidity and our ability to fund our operations.

In addition, a recession or long-term market correction could further negatively impact the value of our common stock, our access to capital or our liquidity or ability to generate cash from operations in the near and long-term.

If we are unable to access the bank and capital markets on favorable terms, or if we are not successful in raising capital at an attractive cost within the time period required or at all, we may not be able to grow or maintain our business, which could have a material adverse effect on our business, results of operations and financial condition.

Historically, we have sought to finance the operation of our business primarily with cash on-hand and cash provided by operating activities, but we have also relied on the bank and capital markets.

A recession or long-term market correction could negatively impact the value of our common stock, our access to capital or our liquidity or ability to generate cash from operations in the near and long-term.

or maintain our business, which could have a material adverse effect on our business, results of operations and financial condition.

In addition, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about such events or other similar risks, have in the past and may in the future lead to acute or market-wide liquidity problems.

In addition, if any of our customers, suppliers or other business counterparties are unable to access funds held by such a financial institution, such parties' ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

We may be adversely affected by the effects of inflation.

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We typically have no contractual right to the total revenues reflected in our backlog once a project is canceled.

While backlog cancellations have not been significant in the past, we incurred cancellations totaling $3.5 million and $1.8 million during 2022 and 2021, respectively.

If commodity prices decline, we may incur additional cancellations or experience declines in our backlog.

While backlog cancellations have not been significant in the past, if commodity prices decline, we may incur additional cancellations or experience material declines in our backlog.

We may assume contractual risks in developing, manufacturing and delivering products in our Offshore/Manufactured Products segment.

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We are required to at least annually review the goodwill and other intangible assets of our applicable reporting units (Offshore/Manufactured Products, Completion Services and Downhole Technologies) for impairment in value and to recognize a non-cash charge against earnings causing a corresponding decrease in stockholders’ equity if circumstances, some of which are beyond our control, indicate that the carrying amounts will not be recoverable.

In the first quarter of 2020, we recognized aggregate goodwill impairment charges of $406.1 million in our three reporting units due to, among other factors, the significant decline in our stock price and that of our peers and reduced growth rate expectations given weak energy market conditions resulting from the demand destruction caused by the global response to the COVID-19 pandemic.

While no additional provisions for impairment were identified during our subsequent annual assessments, it is possible that we could recognize goodwill or other intangible assets impairment losses in the future if, among other factors:

While no provisions for impairment were recognized during 2023, it is possible that we could recognize goodwill or other intangible assets impairment losses in the future if, among other factors:

• global economic and industry conditions deteriorate;

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• foreign currency fluctuations;

• foreign taxation;

• foreign and global minimum taxation regulations;

• tariffs and duties on imported and exported goods;

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• changes in trade activity;

• military or social situations, such as a widespread outbreak of an illness such as COVID-19 or other public health issues, in foreign areas where we do business, and the possibilities of war, other armed conflict or terrorist attacks;

• military or social situations, such as a widespread outbreak of an illness or other public health issues, in foreign areas where we do business, and the possibilities of war, other armed conflict or terrorist attacks;

• regional economic downturns.

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Violations of foreign laws could result in monetary and criminal penalties against us or our subsidiaries and could damage our reputation and, therefore, our ability to do business.

The ultimate impact of recent changes to tariffs and duties imposed by the United States and other countries is uncertain.

We use a variety of domestically produced and imported raw materials and component products, including steel, in the manufacture of our products.

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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 and results of operations.

See Note 15, "Commitments and Contingencies," to the Consolidated Financial Statements included in this Annual Report on Form 10‑K for further discussion.

Explosive incidents arising out of dangerous materials used in our business could disrupt operations and result in bodily injuries and property damages, which occurrences could have a material adverse effect our business, results of operations and financial conditions.

Our Downhole Technologies segment operations include the licensing, storage and handling of explosive materials that are subject to regulation by the ATF and analogous state agencies.

Our Downhole Technologies segment operations include the licensing, storage and handling of explosive materials that are subject to regulation by the ATF and analogous state and international agencies.

Despite our use of specialized facilities to store and handle dangerous materials and our performance of employee training programs, the storage and handling of explosive materials could result in explosive incidents that temporarily shut down or otherwise disrupt our or our customers’ operations or could cause restrictions, delays or cancellations in the delivery of our services.

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Any explosion could expose us to adverse publicity and liability for damages or cause production restrictions, delays or cancellations, any of which occurrences could have a material adverse effect on our operating results, financial condition and cash flows.

Moreover, failure to comply with any applicable existing or newly established requirements, or the occurrence of an explosive incident, may also result in the loss of our ATF or analogous state license to store and handle explosives, which would have a material adverse effect on our business, financial condition and results of operations.

Moreover, failure to comply with any applicable existing or newly

established requirements, or the occurrence of an explosive incident, may also result in the loss of our ATF or analogous state and international license to store and handle explosives, which would have a material adverse effect on our business, financial condition and results of operations.

We may not have adequate insurance for potential liabilities and our insurance may not cover certain liabilities, including litigation risks.

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• we may be faced with types of liabilities that will not be covered by our insurance, such as damages from environmental contamination, fines and penalties imposed for failure to comply with applicable law, terrorist attacks or acts of war;

• we may face difficulties obtaining or maintaining insurance coverage to the extent we do not meet the ESG-related conditions or requirements of our insurers;

• the counterparties to our insurance contracts may pose credit risks;

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We might be unable to protect our intellectual property rights and we may be subject to litigation if another party claims that we have infringed upon its intellectual property rights.

We rely on a variety of intellectual property rights that we use in our businesses, including our patents and proprietary rights relating to our FlexJoint ® , Merlin ® , STRATX ® , Evolv ® and SmartStart Plus ® technologies, and intervention and downhole extended-reach tools (including our HydroPull ® tool) utilized in the completion or workover of oil and natural gas wells.

We rely on a variety of intellectual property rights that we use in our businesses, including our patents and proprietary rights relating to our FlexJoint ® , Merlin ® , Active Seat Gate Valves, Evolv ® and SmartStart Plus ® technologies, and intervention and downhole extended-reach tools (including our HydroPull ® tool) utilized in the completion or workover of oil and natural gas wells.

The market success of our technologies will depend, in part, on our ability to obtain and enforce our proprietary rights in these technologies, to preserve rights in our trade secret and non-public information.

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The Biden Administration has taken several actions intended to suspend or limit oil and gas leasing on federal lands and waters, though these actions have been subject to legal challenge.

Additionally, the BLM has recently proposed rules to update the terms of federal oil and gas leases, including increasing the associated costs and fees.

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 federals lands or waters.

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President Biden has issued an executive order that commits to substantial action on climate change, calling for, among other things, the elimination of subsidies provided to the fossil fuel industry and an increased emphasis on climate-related risks across government agencies and economic sectors.

President Biden may pursue additional executive orders, new legislation and regulatory initiatives to further implement his regulatory agenda beyond the IRA 2022.

President Biden may pursue additional executive orders, new legislation and regulatory initiatives to further implement his

regulatory agenda beyond the IRA 2022.

For example, on January 26, 2024, the Biden Administration announced a temporary pause pending Department of Energy review on decisions on new exports of LNG to countries with which the United States does not have free trade agreements.

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 in offshore oil and natural gas exploration and production activities, such as the Biden Administration’s suspension of the issuance of authorizations for oil and gas activities.

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In addition, the OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the Federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in our operations and that this information be provided to employees, state and local government authorities and citizens.

We are also subject to OSHA Process Safety Management regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable or explosive chemicals.

We are also subject to OSHA Process Safety Management regulations, which are designed

to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable or explosive chemicals.

Business – Environmental and Occupational Health and Safety Matters” for more discussion on these matters.

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One or more of these developments could have a material adverse effect on our business, financial condition and results of operation.

Moreover, the increased competitiveness of alternative energy sources (such as wind, solar, geothermal, tidal and biofuels), and government grants, incentives and subsidies such as those contained in the IRA 2022, could reduce demand for hydrocarbons, and therefore demand for our products and services, which would lead to a reduction in our revenues.

The ESA, the Migratory Bird Treaty Act and other laws intended to protect certain species of wildlife govern our and our oil and natural gas exploration and production customers’ operations, which constraints could have an adverse impact on our ability to expand some of our existing operations or limit our customers' ability to develop new oil and natural gas wells.

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For example, the FWS recently published a rule listing two distinct population segments of the lesser prairie-chicken under the ESA, a species found in some states where we operate, including Texas, Oklahoma and Colorado.

The designation of previously unidentified endangered or threatened species could indirectly cause us to incur additional costs, cause our or our oil and natural gas exploration and production customers' operations to become subject to operating restrictions or bans, and limit future development activity in affected areas, which could reduce demand for our products and services to those customers.

The dunes sagebrush lizard, located in west Texas and New Mexico, has also recently been proposed for listing as endangered under the ESA.

Further, agencies may also enact protections related to critical habitats of listed species, which require federal agencies to ensure their actions are not likely to destroy or adversely modify the critical habitat.

For example, in September 2023 the National Marine Fisheries Service proposed to designate certain waters in the Gulf of Mexico as critical habitat for the Rice’s whale under the ESA.

The designation of previously unidentified endangered or threatened species or their critical habitats

could indirectly cause us to incur additional costs, cause our or our oil and natural gas exploration and production customers’ operations to become subject to operating restrictions or bans, and limit future development activity in affected areas, which could reduce demand for our products and services to those customers.

Increasing attention to ESG matters may impact our business.

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Companies which do not adapt to or comply with investor or stakeholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.

Increasing attention to climate change, increasing societal expectations on companies to address climate change, and potential consumer use of substitutes to energy commodities may result in increased costs, reduced demand for our customers' hydrocarbon products and our services, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets, or ability to attract and retain a talented workforce.

Increasing attention to climate change, increasing societal expectations on companies to address climate change, and potential consumer use of substitutes to energy commodities may result in increased costs, reduced demand for our customers’ hydrocarbon products and our products and services, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets, or ability to attract and retain a talented workforce.

Increasing attention to climate change, for example, may result in demand shifts for our customers’ hydrocarbon products and additional governmental investigations and private litigation against those customers.

Our Board of Directors' Nominating, Governance and Sustainability Committee is responsible for overseeing and managing our ESG initiatives.

Our Board’s Nominating, Governance and Sustainability Committee is responsible for overseeing and managing our ESG initiatives.

Committee members review the implementation and effectiveness of our ESG programs and policies.

Through end-of-year 2022, we have sought to strengthen our ESG performance through certain voluntary operational strategies, including, for example (i) pursuing a goal to reduce GHG emissions generated by us;

During 2023, we have sought to strengthen our ESG performance through certain voluntary operational strategies, including, for example (i) pursuing a goal to reduce GHG emissions generated by us;

(ii) seeking to co-locate certain of our facilities and common processes, where feasible, to minimize our GHG emission impacts;

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The IRA 2022 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, amongst other provisions.

These incentives could further accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which could decrease demand for oil and gas and consequently adversely affect the business of our customers, thereby reducing demand for our services.

In addition, the IRA 2022 imposes the first ever federal fee on the emission of greenhouse gases through a methane emissions charge.

The IRA 2022 amends the federal CAA to impose a fee on the emission of methane from sources required to report their GHG emissions to the EPA, including those sources in the offshore and onshore petroleum and natural gas production and gathering and boosting source categories.

The methane emissions charge is scheduled to start in 2024 at $900 per ton of

methane, increase to $1,200 in 2025, and increase to $1,500 for 2026 and each year after.

The methane emissions charge starts in 2024 at $900 per ton of methane, increases to $1,200 in 2025, and increases to $1,500 for 2026 and each year after.

Regulations to implement the methane emissions charge were proposed in January 2024 and are subject to public comment.

Calculation of the fee is based on certain thresholds established in the IRA 2022.

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federal, state and local and foreign taxes.

federal, state and local and foreign tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect, and may have a material adverse effect on our business, results of operations and financial condition.

Unresolved Staff Comments

federal, state and local and foreign tax laws, policies, statutes, rules, regulations or ordinances could be implemented, interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect.

For example, the Organisation for Economic Co-operation and Development, an international association of 38 countries that includes the United States, has adopted a set of international tax model rules known as the “Pillar Two” framework, a central component of which is the imposition of a global minimum corporate tax rate of 15%.

Once we reach the Pillar Two applicable revenue thresholds, which we expect to occur no earlier than 2026, the Pillar Two rules could increase tax compliance complexity and uncertainty and result in additional administrative costs and income tax liabilities in those taxing jurisdictions where we operate that have implemented Pillar Two rules.

Further, absent U.S.

congressional action, the U.S.

federal tax rate applicable to certain income earned by our non-U.S.

subsidiaries will increase for tax years beginning after December 31, 2025, and certain taxpayer beneficial provisions of the Tax Cuts and Jobs Act will expire.

All of the above contemplated and non-contemplated changes in the applicable tax rules may have a material adverse effect on our business, results of operations and financial condition.

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

What changed 10-K

Item 1A. Risk Factors