What changed in this filing

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Item 1. Business

2025-02-21 compared with 2024-02-21 · 117 added, 135 removed, 195 unchanged (56% of the section changed)

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

The Company’s manufactured products include highly engineered capital equipment and consumable products.

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, defense and industrial companies.

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.

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

We operate through three business segments – Offshore Manufactured Products, Completion and Production Services (previously referred to as 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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The Financial Code of Ethics for Senior Officers applies to our principal executive officer, principal financial officer, principal accounting officer and other senior officers.

Copies of such documents will be provided to stockholders without charge upon written request to the corporate secretary at the address shown on the cover page of this Annual Report on Form 10‑K.

Copies of such

documents will be provided to stockholders without charge upon written request to the corporate secretary at the address shown on the cover page of this Annual Report on Form 10‑K.

Our Business Strategy

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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.

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.

Given the highly cyclical nature of select U.S.

service lines, we implemented strategic restructuring actions in our U.S.

land-based businesses during 2024 to reduce costs and improve future operating margins.

As part of our long-term strategy, we continue to:

review opportunities for offshore and international business expansion;

strategically optimize our U.S.

land-based operations;

market new technology offerings;

invest in research and development;

and fund organic capital expenditures to enhance our cash flows, leverage our cost structure and increase our stockholders’ returns.

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

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Recent Developments

Increased capital investments by our offshore and international customers, together with internal cost reduction and strict capital discipline measures and other corporate actions, have resulted in improvements to our consolidated operating results in 2023, as shown below (in thousands).

Increased capital investments by our offshore and international customers in 2024 was offset by a decline in U.S.

land-based investments by our customers, competitive market conditions and management’s decision to exit certain underperforming locations and service offerings in the United States, as shown below (in thousands).

Year ended December 31,

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Revenues $ 692,588 $ 782,283 $ (89,695)

Operating income

Operating income (loss) (1)

(1,689) 23,164 (24,853)

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45,894 56,575 (10,681)

The favorable impact of continued growth in offshore and international project activity and backlog conversion in 2023 was partially offset by the impact of an industry-wide decline in U.S.

well completions (the U.S.

year-end rig count declined 20% from December 2022) – triggered by weaker commodity prices.

Additionally, improvements in operating results have 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.

In February 2023, we repaid the $17.3 million in principal amount, plus accrued interest, outstanding under our 1.50% convertible senior notes due 2023 (the “2023 Notes”).

Additionally, our Board authorized a $25.0 million stock repurchase plan, which extends through February 2025.

During 2023, $6.9 million of share repurchases were made under this authorization.

On February 16, 2024, we amended our senior secured credit facility, which provides for a $125.0 million asset-based revolving credit facility (as amended, the “ABL Facility”), to extend its maturity date from February 10, 2025 to February 16, 2028.

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(1) Operating loss in 2024 included $24.6 million in non-cash goodwill, intangible asset and operating lease asset impairment charges, as well as other charges totaling $13.7 million associated with facility consolidations and exits, patent defense and other management actions.

These charges were partially offset by a net gain of $15.3 million associated with the sale of a previously idled facility.

Excluding these items, operating income would have been $21.3 million and net income would have been $11.2 million.

In 2023, we began implementing initiatives, which continued throughout 2024, to reduce costs.

Management actions in 2024 included:

the consolidation, relocation and exit of certain underperforming locations;

the exit of certain service offerings;

reductions in our U.S.

work force as well as the realignment of operations discussed below.

We also incurred legal and other related costs to enforce certain patents related to our proprietary technologies.

As a result of these actions, our reported pre-tax results for 2024 included $24.6 million in non-cash goodwill, intangible asset and operating lease asset impairment charges as well as $13.7 million of facility consolidation and exit costs, patent defense and other charges.

Certain short-cycle, consumable product operations historically reported within the Offshore Manufactured Products segment (legacy frac plugs and elastomer products) were integrated into the Downhole Technologies segment in early 2024 to better align with the underlying activity demand drivers and current segment management structure, as well as provide for additional operational synergies.

Historical financial data, supplemental disaggregated revenue and backlog information as of and for the years ended December 31, 2023 and 2022 (presented herein) were conformed with the 2024 segment presentation.

Additionally, following the sale of its remaining U.S.

land-based drilling rigs and the exit of the flowback and well testing service offering in the third quarter of 2024, our Well Site Services segment name was changed to the Completion and Production Services segment.

In February 2024, we amended our senior secured credit facility, which provides for a $125.0 million asset-based revolving credit facility (as amended, the “ABL Facility”), to extend its maturity date to February 16, 2028.

During 2024, we sold two manufacturing and service facilities that were classified as held for sale assets, generating net proceeds of $35.1 million, we purchased $14.2 million of our common stock, and we purchased $11.5 million principal amount of our 4.75% convertible senior notes (the “2026 Notes”) for $10.8 million.

In October 2024, our Board of Directors also terminated our existing common stock repurchase program and replaced it with a new $50.0 million common stock repurchase authorization, which expires in October 2026.

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 and market 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.

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The level of capital spending in recent years by oil and gas companies for exploration and production activities has improved from the lows observed during 2020 and 2021, which resulted from the economic downturn associated with the global response to the COVID-19 pandemic.

As discussed previously, we saw continued growth and recovery in offshore and international project activity in 2023, partially offset by a decline in U.S.

well completion activity due to a decline in commodity prices from 2022 levels.

As discussed previously, we saw continued growth and recovery in offshore and international project activity in 2024, offset by a decline in U.S.

activity due to well completion efficiencies leading to higher production and a decline in commodity prices from 2023 levels.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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, to a lesser extent, changes in land-based drilling and completion activity.

In this regard, exploration and production companies generally evaluate their capital expenditure commitments for

offshore (particularly deepwater) and international projects based on the longer-term outlook for commodity prices since they are expensive to drill and complete and have long lead times to first production.

Conversely, near-term variations in crude oil and natural gas prices affect land-based drilling and completion activity, particularly in the United States.

Bidding and quoting activity, along with customer orders, for offshore and international projects continued to increase in 2023, following improvements in recent years in the longer-term outlook for crude oil prices and associated increases in customer spending commitments.

Demand for the products and services supplied by our Offshore Manufactured Products segment is primarily driven by the longer-term outlook for commodity prices.

In this regard, exploration and production companies generally evaluate their capital expenditure commitments for offshore (particularly deepwater) and international projects based on the longer-term outlook for commodity prices since they are expensive to drill and complete and have long lead times to first production.

Bidding and quoting activity, along with customer orders, for offshore and international projects remained strong in 2024, following improvements in recent years in the longer-term outlook for the sustainability of crude oil and natural gas demand.

With these market improvements, we grew our backlog and related project-driven revenues in 2024.

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.

Demand for our Completion and Production Services segment is primarily affected by well completion activity in the United States, including the Gulf of America, and, to a lesser extent, the rest of the world.

well completion activity and, in turn, our Completion and Production Services segment results, are sensitive to near-term fluctuations in WTI crude oil and natural gas 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.

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For the years ended December 31, 2024, 2023 and 2022, our Offshore Manufactured Products segment generated 44% to 57% 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, managed pressure drilling systems, compact valves, deepwater mooring systems, cranes, subsea pipeline products, specialty welding, fabrication, cladding and machining services, offshore installation services and inspection and repair services.

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

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

In addition, we recently introduced other products and services used by non-oil and gas customers, including subsea mineral gathering systems, offshore wind applications, geothermal products and services, valves and sound and vibration dampening products used in military applications.

We have facilities globally that support our Offshore Manufactured Products segment.

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.

The market for products and services offered by our Offshore Manufactured Products segment centers primarily on the development of infrastructure for offshore production facilities and their subsequent operations, exploration and drilling

activities, and to a lesser extent, on-vessel construction, refurbishments or upgrades.

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

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

Products and Services

In operation for over 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.

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

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

To that end, we are investing in research, have been awarded select contracts and are bidding on additional projects that facilitate the development of alternative energy sources, including offshore wind and deepsea mineral gathering opportunities.

We invest in research and product development (and have been awarded select contracts and are bidding on additional projects) to facilitate the development of alternative energy sources, including offshore wind and deepsea mineral gathering opportunities.

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

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We expect approximately 70% of our backlog as of December 31, 2024 to be recognized as revenue during 2025.

In some instances, these purchase

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

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

While backlog cancellations have historically been insignificant, material cancellations may occur in the future.

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Regions of Operations

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, 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.

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

In addition, we provide a variety of products for use in applications outside the traditional energy industry in the United States and abroad.

Customers and Competitors

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

Our main competitors in this segment include Baker Hughes Company, Hutchinson Group (a subsidiary of Total S.A.), NOV Inc., Oceaneering International, Inc., OneSubsea (a joint venture between SLB, Aker Solutions and Subsea 7), Sparrows Offshore Group Limited, TenarisHydril (a division of Tenaris S.A.) and W-Industries LLC.

Well Site Services

For the years ended December 31, 2023, 2022 and 2021, our Well Site Services segment generated 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.

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

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.

Our main competitors in this segment include Baker Hughes Company, Hutchinson Group (a subsidiary of Total S.A.), NOV Inc., OneSubsea (a joint venture between SLB, Aker Solutions and Subsea 7), Sparrows Offshore Group Limited and TenarisHydril (a division of Tenaris S.A.).

Completion and Production Services

For the years ended December 31, 2024, 2023 and 2022, our Completion and Production Services segment generated 24% to 31% of our consolidated revenue.

Our Completion and Production Services segment includes equipment and services that are used to establish and maintain the flow of oil and natural gas from a well throughout its life cycle.

In this segment, our operations primarily include completion-focused equipment and services, which are used in both onshore and offshore applications throughout the completion and production phases of a well’s life cycle.

Prior to the sale of our remaining drilling rigs in August 2024, our operations included land drilling services 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.

Demand for our completion and production 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.

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

Our Well Site Services business, which is primarily marketed through the brand names Oil States Energy Services, Falcon and Tempress, provides a wide range of services used in the onshore and offshore oil and gas industry, including pressure control, flowback and well testing, downhole and extended-reach, and drilling services.

As of December 31, 2023, we provided completion and drilling services through approximately 20 locations serving our customers in the United States, including the Gulf of Mexico, and international markets.

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

Our Completion and Production Services business, which is primarily marketed through the brand names Oil States Energy Services and Tempress, currently provides services used in the onshore and offshore oil and gas industry, including pressure control equipment, and downhole and extended-reach technologies.

As of December 31, 2024, we provided completion and production services through 17 locations serving our customers in the United States, including the Gulf of America, and international markets.

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

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

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

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

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.

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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.

Competition in the Completion and Production 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

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

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.

Similar to our Completion and Production 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 and well decommissioning activity internationally.

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.

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

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

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

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

Human Capital

As of December 31, 2023, we had a total of 2,752 full-time employees – with 61% in our Offshore/Manufactured Products segment, 26% in our Well Site Services segment, 10% in our Downhole Technologies segment and 3% in our corporate headquarters.

As of December 31, 2024, we had a total of 2,439 full-time employees – with 60% in our Offshore Manufactured Products segment, 18% in our Completion and Production Services segment, 19% in our Downhole Technologies segment and 3% in our corporate headquarters.

We were party to collective bargaining agreements covering approximately 350 employees located outside the United States as of December 31, 2024.

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Our focus on safety was recognized with the 2023 NOIA Safety in Seas Culture of Safety Award, which recognizes overall organizational immersion in, and commitment to, safety through measurable and sustained safety performance over a prolonged period of time.

Our Global Workforce

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

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

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

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

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

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

For example, 65% of our full-time employee base was in the United States where we generated 76% of our revenues in 2023.

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

As of December 31, 2023, women made up 19% of our global workforce.

Additionally, 20% of our executive and senior management roles in 2023 were held by women, including our Chief Executive Officer and President who has served in this role and as a member of our Board since 2007.

As of December 31, 2023, three (43%) of our seven Board members are women and one (14%) of our Board members is Hispanic.

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

Hiring, Training and Development of our Workforce

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

We are committed to the principles of equal employment opportunity and prohibit all forms of unlawful discrimination in accordance with applicable law.

We strive to cultivate a workplace where all employees feel valued and have a sense of belonging.

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

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

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

We invest in ongoing training and development of our employees through technical and non-technical courses and programs, which are regularly refreshed to meet the requirements of an evolving business landscape.

We prioritize recalling our experienced employees for manufacturing and field positions to the extent possible.

We invest in ongoing training and development of our employees through technical and non-technical courses and programs, which are regularly refreshed and designed to meet the requirements of an evolving business landscape.

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

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

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

particular area.

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

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

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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.

The Biden Administration has also called for revisions and restrictions to the leasing and permitting programs for oil and gas development on federal lands and, for a time, suspended federal oil and gas leasing activities.

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;

revising bidding practices to avoid leasing of low potential lands;

and performing more meaningful public and tribal consultations regarding the leasing and permitting processes.

Several of the report recommendations require action by Congress and cannot be implemented unilaterally by the Biden Administration and, thus, the extent to which this administration will act upon the report’s recommendations cannot be predicted at this time;

however, any revisions to the federal leasing or permitting process that make it more difficult for our customers to pursue operations on federal lands or waters may adversely impact demand for our products and services.

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 federal Bureau of Land Management (“BLM”) proposed a rule that would limit flaring from well sites on federal lands, as well as allow an increase in the costs associated with federal oil and gas leasing and the delay or denial of permits if the BLM finds that an operator’s methane waste minimization plan is insufficient.

Additionally, in July 2023, the BLM proposed a rule to update the fiscal terms of federal oil and gas leases, increasing fees, rents, royalties, and bonding requirements.

The rule would also add new criteria for the BLM to consider when determining whether to lease nominated land, including the presence of important habitats or wetlands, the presence of historical properties or sacred sites, and recreational use of the land.

The BLM anticipates final action on this proposal in spring 2024.

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

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

• Lease development .

The Biden Administration has at times called for revisions and restrictions to the leasing and permitting programs for oil and gas development on federal lands and, for a time, suspended federal oil and gas leasing activities.

The Inflation Reduction Act (“IRA 2022”) contains provisions requiring particular offshore oil and gas lease sales under the 2017 – 2022 leasing program to proceed and the DOI has announced plans for those sales.

In 2023, the DOI published a final offshore leasing program for 2024-2029.

Although leasing has resumed, the areas offered for leasing in the 2024-2029 program are the smallest since federal offshore leasing for oil and gas development began.

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, in April 2024, the federal Bureau of Land Management (“BLM”) finalized a rule that would limit flaring from well sites on federal lands, increase the costs associated with federal oil and gas leasing and require operators to submit a methane waste minimization plan or a self-certification statement committing the operator to capturing 100% of the gas produced from a well and pay royalties on lost gas as part of the permit application process.

This rule is currently subject to litigation, its implementation has been halted in North Dakota, Texas, Utah, Montana, and Wyoming, and it is uncertain what actions the Trump Administration may take with respect to this rule, if any.

Additionally, the BLM finalized a rule to update the fiscal terms of federal oil and gas leases, increasing fees, rents, royalties, and bonding requirements according to provisions in the IRA 2022.

• Induced seismicity .

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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 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.

In response to a December 31, 2021 earthquake approximately 25 miles northeast of Midland, Texas, the Texas Railroad Commission established the Stanton SRA in January 2022, resulting in a May 2022 Operator-Led Response Plan to coordinate future industry-led actions to reduce the seismic hazard in this SRA.

In December 2023, the Northern Culberson-Reeves SRA was established, resulting in the suspension of 23 deep disposal permits in the area.

In this regard, the Texas Railroad Commission has pursued several regulatory initiatives in recent years as a result of recent seismic activity in areas of the Midland Basin, including voluntary reductions in produced water disposals through injection wells, suspending injection operations of certain deep disposal wells, and suspending all disposal well permits to inject oil and gas waste in certain areas.

The Oklahoma Corporation Commission has similarly suspended certain deep disposal well operations in the recent past following earthquakes of certain magnitudes in Oklahoma.

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• Offshore marine safety .

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

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 2023, the DOI published a final offshore leasing program for 2024-2029.

Although leasing has resumed, the areas offered for leasing in the 2024-2029 program are the smallest since federal offshore leasing for oil and gas development began.

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.

Regulatory agencies such as the federal Bureau of Safety and Environmental Enforcement and Bureau of Ocean Energy Management 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 Outer Continental Shelf.

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

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

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

However, several groups have filed litigation over this December 2020 decision, and the EPA’s consideration is still ongoing.

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 first 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.

The EPA’s consideration of this standard remains ongoing.

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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Army Corps of Engineers (“Corps”) under the Obama, Trump and Biden Administrations have pursued multiple rulemakings since 2015 in an attempt to determine the scope of such reach.

Following legal actions on a 2020 rule, the EPA and the Corps announced a final rule (published in January 2023) defining “waters of the United States” according to the broader pre-2015 standards that includes updates to incorporate then-existing Supreme Court decisions.

The January 2023 rule was subject to legal action, and is currently enjoined in 27 states.

Subsequently, the U.S.

Supreme Court ruled on Sackett v.

EPA , finding that the “continuous surface connection” test was the proper legal test to apply to wetlands to determine whether they are waters of the United States.

The agencies published a rule in September 2023 to incorporate this decision, but did not define the term “continuous surface connection.” Further, the injunction on the January 2023 rule continues to apply.

Therefore, implementation of the rule is currently split by jurisdiction:

for the 27 states subject to the injunction, the agencies are implementing the pre-2015 rule and the changes made by the Sackett decision;

in the remaining 23 states, the agencies are implementing their September 2023 rule.

Therefore, the implementation of this rule and its impacts on the scope of the CWA remain uncertain at this time.

Following legal actions, implementation of the most

recent rule is currently split by jurisdiction, with 27 states subject to an injunction resulting in implementation of the pre-2015 rule taking into account the changes made by the Supreme Court decision in Sackett v.

States outside the reach of that injunction are subject to a rule defining waters of the United States published in September 2023.

Additionally, the Trump Administration may seek to take additional action to revise or clarify the reach of federal jurisdiction, though the substance and timing of such action cannot be predicted.

Therefore, determinations regarding the reach of federal jurisdiction over waterbodies and wetlands under the CWA remain uncertain at this time.

To the extent that any action further 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.

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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 certain federal laws, such as the IRA 2022, were enacted to 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.

However, certain federal laws, such as the IRA 2022, have been enacted to advance numerous climate-related objectives.

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, among other provisions.

However, on January 20, 2025, President Trump issued an executive order pausing certain funding disbursements under the IRA 2022;

the potential impact of this action and any future similar attempts to limit the incentives under the IRA 2022 are uncertain.

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

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

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 December 2023, the EPA published a final rule that established 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.

The IRA 2022 also imposes the first-ever federal fee on the emission of GHGs through a methane emissions charge, which the EPA has finalized regulations to implement.

Additionally, in December 2023, the EPA published a final rule that established 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 emissions for the crude oil and natural gas source category.

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The rules also 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, as well as establish a “Super Emitter Response Program” that would trigger certain operator investigation and repair requirements in response to emissions events exceeding 200 pounds per hour, as detected by regulatory authorities or qualified third parties.

It is likely that the rule will be subject to legal challenges.

However, the Trump Administration or Congress may take actions to revise or repeal the methane charge or the finalized EPA rules related to methane emissions, though the timing and outcome of such actions cannot be predicted.

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.

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President Biden recommitted the United States to the Paris Agreement and, in April 2021, announced a GHG emissions reduction goal for the United States of 50% to 52% below 2005 levels by 2030.

In addition, the 26 th 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% from 2020 levels by 2030, including “all feasible reductions” in the energy sector.

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

At the 28 th Conference of the Parties in December 2023 (“COP28”), the parties agreed to transition away from fossil fuels in energy systems and increase renewable energy capacity, though no timeline for doing so was set.

While non-binding, the agreements coming out of COP28 could result in increased

pressure among financial institutions and various stakeholders to reduce or otherwise impose more stringent limitations on funding for and increase potential opposition to the production and use of fossil fuels.

While the degree and manner in which countries may implement these voluntary international climate 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.

See “Part I, Item 1.

Business – Environmental and Occupational Health and Safety Matters – Hydraulic fracturing” for more information.

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 LNG 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.

The regulations to implement such a charge were proposed in January 2024 and will be subject to public comment.

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.

In addition, the annual Conferences of the Parties have resulted in multiple announcements, including a call for parties to eliminate certain fossil fuel subsidies and pursue further action on non-carbon dioxide GHGs, agreements to transition away from fossil fuels in energy systems and increase renewable energy capacity, and similar initiatives, though none are legally binding.

However, on January 20, 2025, President Trump issued an executive order withdrawing from the Paris Agreement.

The United States’ future participation in these international climate-related conferences and the degree and manner in which countries, including the United States, may implement these voluntary international climate commitments is uncertain.

investors or customers by failing to adequately disclose those impacts.

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.

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.

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

President Biden signed an executive order calling for the development of a climate finance plan and, separately, the U.S.

Federal Reserve announced that it has joined the Network for Greening the Financial System (“NGFS”), a consortium of financial regulators focused on addressing climate-related risks in the financial sector.

More recently, in November 2021, the U.S.

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.

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.

However, this trend has waned in recent years.

In addition, the SEC has finalized 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 if the registrant has set them, climate-related targets and goals.

The implementation of this rule has been paused pending litigation, and the SEC is expected to repeal or further modify the rule;

however, the timeline for any such action, if at all, is subject to uncertainty and may face additional legal challenges.

Several states have also enacted or are considering enhanced climate-related disclosure requirements.

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These changes could also increase our litigation risks relating to alleged climate-related damages resulting from our operations, statements alleged to have been made by us or others in our industry regarding climate-change risks, or in connection with any future disclosures we may make regarding reported emissions, particularly given the inherent uncertainties and estimation with respect to calculation and reporting GHG emissions.

The SEC has also, from time to time, focused additional scrutiny on 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.

The SEC has also, from time to time, focused additional scrutiny on existing climate-change related disclosures in public filings, and there is 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.

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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