What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-05 compared with 2022-10-31 · 106 added, 324 removed, 163 unchanged (73% of the section changed)

5 unchanged sentences

Factors that could cause or contribute to such differences include, but are not limited to, market prices for oil and natural gas, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this report.

Please read Cautionary Note Regarding Forward-Looking Statements.

Also, please read the risk factors and other cautionary statements described under Part II, Item 1A.-“Risk Factors” included elsewhere in this Quarterly Report and in our Annual Report filed on Form 10-K for the year ended December 31, 2021 (our “Annual Report”).

Please read the Cautionary Note Regarding Forward-Looking Statements.

Also, please read the risk factors and other cautionary statements described under “Risk Factors” in this Quarterly Report and in our Annual Report filed on Form 10-K for the year ended December 31, 2022 (our “Annual Report”).

We assume no obligation to update any of these forward-looking statements.

2 unchanged sentences

How We Evaluate Our Operations

Our service offerings consist of well completion support, workover, well maintenance, wireline, fluid management, other complementary services, as well as installation, commissioning and operating of modular equipment, which are conducted in three reportable segments, as follows:

Our service offerings consist of well completion support, workover, well maintenance, wireline, fluid management, other complementary services, as well as well installation, commissioning and operating of modular equipment, which are conducted in three reportable segments, as follows:

• High Specification Rigs .

Provides high-specification (“high-spec”) well service rigs and complementary equipment and services to facilitate operations throughout the lifecycle of a well.

Provides high-specification well service rigs to facilitate operations throughout the lifecycle of a well.

• Wireline Services .

Provides services necessary to bring and maintain a well on production and consists of our wireline completion, wireline production and pump down lines of business.

Provides services necessary to bring and maintain a well on production and consists of our completion, production and pump down service lines.

• Processing Solutions and Ancillary Services .

Provides other services often utilized in conjunction with our High Specification Rigs and Wireline Services segments.

These services include equipment rentals, plug and abandonment, logistics hauling, processing solutions, as well as snubbing and coil tubing.

Provides complimentary services often utilized in conjunction with our High Specification Rigs and Wireline Services segments.

These services primarily include equipment rentals, coil tubing, plug and abandonment, snubbing, and processing solutions.

Other represents costs not allocable to the reporting segments and includes corporate general and administrative expense and depreciation of corporate furniture and fixtures, amortization, impairments, debt retirements and other items similar in nature.

For additional financial information about our segments, please see “Item 1.

Financial Information — Note 16 — Segment Reporting.”

Recent Events and Outlook

The Company recognizes the various global events—including COVID-19, the ongoing conflict in Ukraine, rising rates of inflation and the possibility of recession—that have an impact on its operational and financial performance.

Significant progress has been made to combat COVID-19 and its multiple variants, however, it remains a global challenge and continues to have an impact on our financial results.

The direct impact to our operations began to take affect at the close of the first quarter ended March 31, 2020, and has continued through September 30, 2022, however the extent of the COVID-19 outbreak on the Company’s operational and financial performance will significantly depend on further developments, including the duration and spread of the outbreak and continued impact on our personnel, customer activity and third-party providers.

Although commodity prices were lower in the quarter ended September 30, 2022, they, as well as our stock price and operational activity, have improved during the nine months ended September 30, 2022.

We expect this global market volatility to continue at least until the outbreak of COVID-19, including any new variants, stabilizes, if not longer.

Heightened levels of inflation and the potential worsening of macro-economic conditions, including the possibility of recession, may present a risk for our business, our suppliers and the stability of the broader oil and gas industry.

Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry.

As commodity prices rise, the cost of oilfield goods and services generally also increase, while during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do.

In addition, the U.S.

inflation rate has been steadily increasing since 2021 and into 2022.

These inflationary pressures may also result in increases to the costs of our goods, services and personnel, which would in turn cause our capital expenditures and operating costs to rise.

Sustained levels of high inflation will continue to cause the U.S.

Federal Reserve and other central banks to increase interest rates, which could have the effects of raining the cost of capital and depressing economic growth, either of which—or the combination thereof—could hurt our business.

government implemented a number of programs in the early wake of the impacts of COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the largest relief package in U.S.

history, and the Main Street Lending Program established by the Federal Reserve.

We qualified for limited aid under the CARES Act and have deferred payroll tax payments of $1.1 million as of September 30, 2022 under the CARES Act, which will become due on December 31, 2022.

In August 2022, President Biden signed the Inflation Reduction Act of 2022 (Public Law Number 117-169) into law.

This legislation is not expected to have a material impact on our financial statements.

Financial Information — Note 16 — Subsequent Events.”

Business Outlook

We continue to expect business opportunities and financial results to show mild increases as the global economy continues to slowly stabilize and improve.

The International Energy Agency stated that global oil demand is set to rise by 1.9 million barrels per day in 2023 where the U.S.

ranks as the world’s leading source of supply growth.

Commodity pricing reached over $130 per barrel with a low of $70 per barrel during 2022 and is expected to remain at approximately $80 to $85 per barrel during 2023 as global oil inventories increase.

However, this increased demand could prove to be a challenge as OPEC+ announced additional reductions of approximately 1.2 million barrels per day.

Additionally, we believe the geopolitical events will continue to have an impact on the macroeconomic backdrop of our industry, specifically surrounding China as COVID-19 restrictions are lifted and uncertainty regarding Russia’s oil supply while under sanctions.

In February 2022, Russia invaded neighboring Ukraine.

6 unchanged sentences

Financial Metrics

How We Generate Revenues

How We Generate Revenue

Rig hours and stage counts, as it relates to our High Specification Rigs and Wireline Services segments, respectively, are important indicators of our activity levels and profitability.

1 unchanged sentence

Rig hours represent the aggregate number of hours that our well service rigs actively worked, whereas stage counts represent the number of completed stages during the periods presented.

Generally, during the

period our services are being provided, our customers are billed on an hourly basis for our high-spec rig services or, as it relates to our wireline services, they are billed upon the earlier of the completion of the well or on a monthly basis.

The rates for such rig hours and completed wells at which the customer is billed is generally predetermined based upon a contractual agreement.

Generally, during the period our services are being provided, our customers are billed on an hourly basis for our high-spec rig services or, as it relates to our wireline services, they are billed upon the earlier of the completion of the well or on a monthly basis.

The rates for which the customer is billed is generally predetermined based upon a contractual agreement.

Costs of Conducting Our Business

3 unchanged sentences

A significant portion of these expenses are variable, and therefore typically managed based on industry conditions and demand for our services.

Further, there is generally a correlation between our revenues generated and personnel and repairs and maintenance costs, which are dependent upon the operational activity.

Further, there is generally a correlation between our revenue generated and personnel and repairs and maintenance costs, which are dependent upon the operational activity.

Personnel costs associated with our operational employees represent a significant cost of our business.

2 unchanged sentences

General & Administrative.

As described above general and administrative expenses are corporate in nature and are included within the Other segment.

As described above, general and administrative expenses are corporate in nature and are included within Other.

These costs are not attributable to any of our lines of businesses nor reporting segments.

Operating Income or Loss

We analyze our operating income or loss by segment, which we have defined as revenues less cost of services and depreciation expense.

We analyze our operating income or loss by segment, which we have defined as revenue less cost of services and depreciation expense.

We believe this is a key financial metric as it provides insight on profitability and operational performance based on the historical cost basis of our assets.

1 unchanged sentence

We view Adjusted EBITDA, which is a non‑GAAP financial measure, as an important indicator of performance.

We define Adjusted EBITDA as net income or loss before net interest expense, income tax expense (benefit), depreciation and amortization, equity‑based compensation, acquisition‑related and severance costs, gain and loss on disposal of assets, legal fees and settlements, and other non‑cash and certain other items that we do not view as indicative of our ongoing performance.

We define Adjusted EBITDA as net income or loss before net interest expense, income tax expense (benefit), depreciation and amortization, equity‑based compensation, acquisition‑related and severance costs, gain or loss on disposal of assets, legal fees and settlements, and other non‑cash and certain other items that we do not view as indicative of our ongoing performance.

See “—Results of Operations” and “—Note Regarding Non‑GAAP Financial Measure” for more information and reconciliations of net income (loss) to Adjusted EBITDA, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Results of Operations

Three Months Ended September 30, 2022 compared to Three Months Ended September 30, 2021

Three Months Ended March 31, 2023 compared to Three Months Ended March 31, 2022

The following is an analysis of our operating results.

See “—How We Evaluate Our Operations” for definitions of rig hours, stage counts and other analogous information.

See “—How We Evaluate Our Operations” for definitions of rig hours, stage counts and other analogous information, as well as key operating metrics.

Three Months Ended

September 30, Variance

March 31, Variance

2023 2022 $ %

2 unchanged sentences

Processing solutions and ancillary services 30.1 20.1 10.0 50 %

Total revenues 177.0 81.7 95.3 117 %

Total revenue 157.5 123.6 33.9 27 %

Operating expenses

6 unchanged sentences

Depreciation and amortization 10.0 11.6 (1.6) (14) %

Impairment of fixed assets 0.2 — 0.2 100 %

Gain (loss) on sale of assets (1.1) — (1.1) (100) %

Gain on sale of assets (1.0) (1.0) — — %

Total operating expenses 148.3 128.8 19.5 15 %

Operating income (loss) 9.2 (5.2) 14.4 277 %

Other (income) expenses

Other expenses

Interest expense, net 1.2 2.1 (0.9) (43) %

Gain on bargain purchase, net of tax (0.8) — (0.8) (100) %

Total other (income) expenses 1.0 1.2 (0.2) (17) %

Total other expenses 1.2 2.1 (0.9) (43) %

Income (loss) before income tax benefit 8.0 (7.3) 15.3 210 %

Tax (benefit) expense 3.4 (0.2) 3.6 (1800) %

Income tax expense (benefit) 1.8 (1.6) 3.4 213 %

Net income (loss) $ 6.2 $ (5.7) $ 11.9 209 %

Revenues for the three months ended September 30, 2022 increased $95.3 million, or 117%, to $177.0 million from $81.7 million for the three months ended September 30, 2021.

The change in revenues by segment was as follows:

Revenue for the three months ended March 31, 2023 increased $33.9 million, or 27%, to $157.5 million from $123.6 million for the three months ended March 31, 2022.

The change in revenue by segment was as follows:

High Specification Rigs.

High Specification Rig revenue for the three months ended September 30, 2022 increased $49.8 million, or 167%, to $79.7 million from $29.9 million for the three months ended September 30, 2021.

The increase in rig services revenue included a 140% increase in total rig hours to 123,000 for the three months ended September 30, 2022 from 51,200 for the three months ended September 30, 2021.

The average revenue per rig hour increased 11% to $648 for the three months ended September 30, 2022 from $584 for the three months ended September 30, 2021.

Of the total segment revenue increase, $40.5 million is attributable to the assets acquired in the Basic Acquisition.

The increase in revenue, rig hours and average revenue per rig hour is also related to increased crude oil pricing driving higher levels of oilfield activity.

High Specification Rig revenue for the three months ended March 31, 2023 increased $12.6 million, or 19%, to $77.5 million from $64.9 million for the three months ended March 31, 2022.

The revenue increase is attributable to improved efficiencies, as the average revenue per rig hour increased 19% to $689 for the three months ended March 31, 2023 from $577 for the three months ended March 31, 2022.

Total rig hours held consistent at 112,500 for both the three months ended March 31, 2023 and three months ended March 31, 2022.

Wireline Services.

Wireline Services revenue for the three months ended September 30, 2022 increased $15.2 million, or 33%, to $60.6 million from $45.4 million for the three months ended September 30, 2021.

The increased wireline services revenue was primarily attributable to completion services of $4.3 million related to increased pricing and the addition of standby charges, offset by a 19% decrease in completed stage counts to 9,200 for the three months ended September 30, 2022 from 11,400 for the three months ended September 30, 2021.

Additional increased wireline services revenue was attributable to production services of $7.3 million, primarily related to increased pricing and utilization of assets from the acquisition of Patriot and PerfX.

Wireline Services revenue for the three months ended March 31, 2023 increased $11.3 million, or 29%, to $49.9 million from $38.6 million for the three months ended March 31, 2022.

The increased wireline services revenue was primarily attributable to completion services of $3.1 million related to increased pricing and the addition of standby charges, offset by a 14% decrease in completed stage counts to 6,400 for the three months ended March 31, 2023 from 7,400 for the three months ended March 31, 2022.

Additional increased wireline services revenue was attributable to pump down services and production services of $5.4 million and $2.9 million, respectively.

Processing Solutions and Ancillary Services.

Processing Solutions and Ancillary Services revenue for the three months ended September 30, 2022 increased $30.3 million, or 473%, to $36.7 million from $6.4 million for the three months ended

September 30, 2021.

Of the total segment revenue increase, $20.3 million is attributable to the Basic Acquisition.

The increase in processing solutions and ancillary services is primarily attributable to our coil tubing, equipment rentals and plugging and abandonment services, which amounted to $12.7 million, $9.8 million and $7.5 million, respectively.

Processing Solutions and Ancillary Services revenue for the three months ended March 31, 2023 increased $10.0 million, or 50%, to $30.1 million from $20.1 million for the three months ended March 31, 2022.

The increase in processing solutions and ancillary services is primarily attributable to our coil tubing, plugging and abandonment services and equipment rentals, which amounted to $5.2 million, $2.0 million and $2.0 million, respectively.

Cost of services (exclusive of depreciation and amortization).

Cost of services (exclusive of depreciation and amortization) for the three months ended September 30, 2022 increased $64.1 million, or 87%, to $138.1 million from $74.0 million for the three months ended September 30, 2021.

As a percentage of revenue, cost of services was 78% and 91% for the three months ended September 30, 2022 and 2021, respectively.

Cost of services for the three months ended March 31, 2023 increased $22.9 million, or 21%, to $130.9 million from $108.0 million for the three months ended March 31, 2022.

a percentage of revenue, cost of services was 83% and 87% for the three months ended March 31, 2023 and 2022, respectively.

The change in cost of services by segment was as follows:

High Specification Rigs.

High Specification Rig cost of services for the three months ended September 30, 2022 increased $37.6 million, or 150% to $62.7 million from $25.1 million for the three months ended September 30, 2021.

The increase was primarily attributable to an increase in variable expenses, notably employee related labor costs and fuel costs, which amounted to $22.4 million and $3.2 million, respectively, coupled with a $4.2 million increase in expense related to general operating expenses.

Additionally, the increase corresponds with the increase in rig hours and revenues.

Of the segment cost of services, $31.9 million is attributable to the Basic Acquisition.

High Specification Rig cost of services for the three months ended March 31, 2023 increased $9.3 million, or 18% to $60.1 million from $50.8 million for the three months ended March 31, 2022.

The increase was primarily attributable to an increase in variable expenses, notably employee related labor, travel, and maintenance costs, which amounted to $5.9 million, $1.4 million, and $1.1 million, respectively, coupled with a $0.4 million increase in expense related to general operating expenses.

Additionally, the increase corresponds with the increase in average revenue per rig hour.

Wireline Services.

Wireline Services cost of services for the three months ended September 30, 2022 increased $5.2 million, or 12%, to $49.2 million from $44.0 million for the three months ended September 30, 2021.

Wireline Services cost of services as a percentage of revenue decreased from 97% for the three months ended September 30, 2021 to 81% for the three months ended September 30, 2022 due to the increase in revenues attributed to increased utilization of assets from the acquisition of Patriot and PerfX.

The increase was primarily attributable to increased employee costs of $3.5 million primarily due to the acquisitions of PerfX and Patriot, and, to a lesser extent, maintenance costs of approximately $2.1 million.

Wireline Services cost of services for the three months ended March 31, 2023 increased $5.3 million, or 13%, to $45.7 million from $40.4 million for the three months ended March 31, 2022.

Wireline Services cost of services as a percentage of revenue decreased from 105% for the three months ended March 31, 2022 to 92% for the three months ended March 31, 2023 due to the increase in revenue attributed to increased utilization of assets.

The increase was primarily attributable to increased employee costs of $2.7 million and increased maintenance costs of approximately $1.2 million.

Processing Solutions and Ancillary Services.

Processing Solutions and Ancillary Services cost of services for the three months ended September 30, 2022 increased $21.3 million, or 435%, to $26.2 million from $4.9 million for the three months ended September 30, 2021.

The increase was primarily attributable to increased employee and maintenance costs with the upturn in operational activity, which amounted to approximately $9.4 million and $3.6 million, respectively.

Processing Solutions and Ancillary Services cost of services for the three months ended March 31, 2023 increased $8.3 million, or 49%, to $25.1 million from $16.8 million for the three months ended March 31, 2022.

The increase was primarily attributable to increased employee costs with the upturn in operational activity, which amounted to approximately $3.1 million.

Additionally, cost of service expense increased by $2.4 million primarily related to increased activity in our coil tubing and plugging and abandonment services.

Of the segment cost of services increase, $16.5 million is attributable to the Basic Acquisition.

General & Administrative.

General and administrative expenses for the three months ended September 30, 2022 increased $3.9 million, or 55%, to $11.0 million from $7.1 million.

The increase in general and administrative expenses is primarily due to corporate employee costs added subsequent to the Basic Acquisition and increased professional fees during three months ended September 30, 2022.

Depreciation and Amortization.

Depreciation and amortization for the three months ended September 30, 2022 increased $2.1 million, or 24%, to $10.8 million from $8.7 million for the three months ended September 30, 2021.

The increase was attributable to assets acquired through the business combinations during the last half of the year ended December 31, 2021.

This was partially offset by depreciation expense related to fixed assets disposed of during the three months ended September 30, 2022.

Interest Expense, net.

Interest expense, net for the three months ended September 30, 2022 increased $0.6 million, or 50%, to $1.8 million from $1.2 million for the three months ended September 30, 2021.

The increase to net interest expense was attributable to the increased principal balance on our Revolving Credit Facility (as defined below), higher interest rates on each tranche of the Loan and Security Agreement that closed on September 27, 2021.

Nine Months Ended September 30, 2022 compared to Nine Months Ended September 30, 2021

The following is an analysis of our operating results.

See “—How We Evaluate Our Operations” for definitions of rig hours, stage counts and other analogous information.

Nine Months Ended

September 30, Variance

2022 2021 $ %

High specification rigs $ 220.6 $ 80.6 $ 140.0 174 %

Wireline services 148.7 73.1 75.6 103 %

Processing solutions and ancillary services 84.9 16.3 68.6 421 %

Total revenues 454.2 170.0 284.2 167 %

Operating expenses

Cost of services (exclusive of depreciation and amortization):

High specification rigs 175.3 68.1 107.2 157 %

Wireline services 134.8 70.4 64.4 91 %

Processing solutions and ancillary services 66.0 13.7 52.3 382 %

Total cost of services 376.1 152.2 223.9 147 %

General and administrative 32.4 16.7 15.7 94 %

Depreciation and amortization 33.8 24.9 8.9 36 %

Impairment of fixed assets 1.3 — 1.3 100 %

Gain (loss) on sale of assets — 0.1 (0.1) (100) %

Total operating expenses 443.6 193.9 249.7 129 %

Operating income (loss) 10.6 (23.9) 34.5 (144) %

Other (income) expenses

Interest expense, net 5.7 2.5 3.2 128 %

Gain on bargain purchase, net of tax (3.6) — (3.6) (100) %

Total other (income) expenses 2.1 2.5 (0.4) (16) %

Income (loss) before income tax (benefit) expense 8.5 (26.4) 34.9 (132) %

Tax expense 1.0 0.1 0.9 900 %

Net income (loss) $ 7.5 $ (26.5) $ 34.0 (128) %

Revenues for the nine months ended September 30, 2022 increased $284.2 million, or 167%, to $454.2 million from $170.0 million for the nine months ended September 30, 2021.

The change in revenues by segment was as follows:

High Specification Rigs.

High Specification Rig revenue for the nine months ended September 30, 2022 increased $140.0 million, or 174%, to $220.6 million from $80.6 million for the nine months ended September 30, 2021.

The increase in rig services revenue included a 143% increase in total rig hours to 355,400 for the nine months ended September 30, 2022 from 146,300 for the nine months ended September 30, 2021.

The average revenue per rig hour increased 13% to $621 from $551 for the nine months ended September 30, 2021.

Of the total segment revenue increase, $112.4 million is attributable to the assets acquired in the Basic Acquisition.

Wireline Services.

Wireline Services revenue for the nine months ended September 30, 2022 increased $75.6 million, or 103%, to $148.7 million from $73.1 million for the nine months ended September 30, 2021.

The increased wireline services revenue was primarily attributable to completion services of $47.3 million, which included a 43% increase in completed stage counts to 24,600 for the nine months ended September 30, 2022 from 17,200 for the nine months ended September 30, 2021.

Additional increased wireline services revenue was attributable to production services of $20.0 million, primarily related to increased pricing and utilization of assets from the acquisition of Patriot and PerfX.

Processing Solutions and Ancillary Services.

Processing Solutions and Ancillary Services revenue for the nine months ended September 30, 2022 increased $68.6 million, or 421%, to $84.9 million from $16.3 million for the nine months ended September 30, 2021.

Of the total segment revenue increase, $44.9 million is attributable to the Basic Acquisition.

in processing solutions and ancillary services is primarily attributable to a $26.2 million increase in our coil tubing services, a $23.3 million increase in our equipment rentals services and a $19.2 million in our plugging and abandonment services.

Cost of services (exclusive of depreciation and amortization).

Cost of services for the nine months ended September 30, 2022 increased $223.9 million, or 147%, to $376.1 million from $152.2 million for the nine months ended September 30, 2021.

As a percentage of revenue, cost of services was 83% and 90% for the nine months ended September 30, 2022 and 2021, respectively.

The change in cost of services by segment was as follows:

High Specification Rigs.

High Specification Rig cost of services for the nine months ended September 30, 2022 increased $107.2 million, or 157%, to $175.3 million from $68.1 million for the nine months ended September 30, 2021.

The increase was primarily attributable to an increase in variable expenses, notably employee-related labor costs, repair and maintenance costs, and general operating expenses of $63.9 million, $9.7 million, and $13.5 million, respectively.

Additionally, the increase corresponds with the increase in rig hours and revenues.

Of the segment cost of services, $87.3 million is attributable to the Basic Acquisition.

Wireline Services.

Wireline Services cost of services for the nine months ended September 30, 2022 increased $64.4 million, or 91%, to $134.8 million from $70.4 million for the nine months ended September 30, 2021.

The increase was primarily attributable to the wireline business, which includes activity from the acquisition of Patriot and PerfX during the nine months ended September 30, 2022.

The completion wireline activity accounted for approximately $57.0 million of the segment cost of services increase.

Processing Solutions and Ancillary Services.

Processing Solutions and Ancillary Services cost of services for the nine months ended September 30, 2022 increased $52.3 million, or 382%, to $66.0 million from $13.7 million for the nine months ended September 30, 2021.

The increase was primarily attributable to increased employee costs and maintenance and repair with the upturn in operational activity, which amounted to $23.7 million and $8.8 million, respectively.

Of the segment cost of services increase, $38.9 million is attributable to the Basic Acquisition.

General & Administrative.

General and administrative expenses for the nine months ended September 30, 2022 increased $15.7 million, or 94%, to $32.4 million from $16.7 million.

The increase in general and administrative expenses is primarily due to corporate employee costs added subsequent to the Basic Acquisition, coupled with professional fees and transactional costs incurred during the nine months ended September 30, 2022 related to the Basic Acquisition.

General and administrative expenses for the three months ended March 31, 2023 decreased $1.8 million, or 18%, to $8.4 million from $10.2 million.

The decrease in general and administrative expenses is primarily due to decreased accounting, legal and professional expenses, partially offset by increased employee costs during three months ended March 31, 2023.

Depreciation and Amortization.

Depreciation and amortization for the nine months ended September 30, 2022 increased $8.9 million, or 36%, to $33.8 million from $24.9 million for the nine months ended September 30, 2021.

The increase was attributable to assets acquired through the business combinations during the last half of the year ended December 31, 2021.

This was partially offset by depreciation expense related to fixed assets disposed of during the nine months ended September 30, 2022.

Depreciation and amortization for the three months ended March 31, 2023 decreased $1.6 million, or 14%, to $10.0 million from $11.6 million for the three months ended March 31, 2022.

The decrease was attributable to assets disposed of during 2022.

Interest Expense, net.

Interest expense, net for the nine months ended September 30, 2022 increased $3.2 million, or 128%, to $5.7 million from $2.5 million for the nine months ended September 30, 2021.

Interest expense, net for the three months ended March 31, 2023 decreased $0.9 million, or 43%, to $1.2 million from $2.1 million for the three months ended March 31, 2022.

The decrease to net interest expense was attributable to the decreased principal balance on our Revolving Credit Facility, M&E Term Loan Facility, and payoff of Term Loan B Facility.

Income Tax Expense (Benefit).

Income tax expense for the three months ended March 31, 2023increased $3.4 million, or 213%, to a tax expense of $1.8 million from a tax benefit of $1.6 million for the three months ended March 31, 2022.

The increase in tax expense was attributable to the increase in income over two consecutive quarters.

Note Regarding Non-GAAP Financial Measure

Adjusted EBITDA is not a financial measure determined in accordance with U.S.

We define Adjusted EBITDA as net income or loss before net interest expense, income tax expense (benefit), depreciation and amortization, equity-based compensation, acquisition-related and severance costs, gain or loss on disposal of assets, legal fees and settlements, and other non-cash and certain other items that we do not view as indicative of our ongoing performance.

We define Adjusted EBITDA as net income or loss before net interest expense, income tax expense (benefit), depreciation and amortization, equity-based compensation, gain or loss on disposal of assets, legal fees and settlements, and other non-cash or certain other items that we do not view as indicative of our ongoing performance.

We believe Adjusted EBITDA is a useful performance measure because it allows for an effective evaluation of our operating performance when compared to our peers, without regard to our financing methods or capital structure.

5 unchanged sentences

The following table presents reconciliations of net income (loss) to Adjusted EBITDA, our most directly comparable financial measure calculated and presented in accordance with U.S.

Three Months Ended September 30, 2022 compared to Three Months Ended September 30, 2021

Three Months Ended March 31, 2023 compared to Three Months Ended March 31, 2022

The following is an analysis of our Adjusted EBITDA.

Financial Information—Note 15—Segment Reporting” and “—Results of Operations” for further details.

Three Months Ended September 30, 2022

Financial Information—Note 15—Segment Reporting” and “—Results of Operations” for further details (in millions).

High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total

(in millions)

Three Months Ended March 31, 2023

Net income (loss) $ 11.9 $ 1.8 $ 3.4 $ (10.9) $ 6.2

Interest expense, net — — — 1.2 1.2

Tax (benefit) expense — — — 3.4 3.4

Income tax expense — — — 1.8 1.8

Depreciation and amortization 5.5 2.4 1.6 0.5 10.0

Impairment of fixed assets — — — 0.2 0.2

EBITDA 17.4 4.2 5.0 (7.4) 19.2

Equity based compensation — — — 1.1 1.1

Loss on retirement of debt — — — — —

Gain on disposal of property and equipment — — — (1.0) (1.0)

Bargain purchase gain, net of tax — — — (0.8) (0.8)

Severance and reorganization costs — — — 0.2 0.2

Acquisition related costs — — — 0.6 0.6

Legal fees and settlements — — — 0.2 0.2

Adjusted EBITDA $ 17.4 $ 4.2 $ 5.0 $ (6.5) $ 20.1

Three Months Ended September 30, 2021

High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total

(in millions)

Three Months Ended March 31, 2022

Net income (loss) $ 7.7 $ (4.5) $ 1.3 $ (10.2) $ (5.7)

Interest expense, net — — — 2.1 2.1

Tax (benefit) expense — — — (0.2) (0.2)

Income tax benefit — — — (1.6) (1.6)

Depreciation and amortization 6.4 2.7 2.0 0.5 11.6

Impairment of fixed assets — — — — —

EBITDA 14.1 (1.8) 3.3 (9.2) 6.4

Equity based compensation — — — 0.8 0.8

Loss on retirement of debt — — — 0.2 0.2

Gain on disposal of property and equipment — — — (1.0) (1.0)

Bargain purchase gain, net of tax — — — — —

Severance and reorganization costs — — — — —

3 unchanged sentences

High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total

(in millions)

Net income (loss) $ 4.2 $ 6.3 $ 2.1 $ (0.7) $ 11.9

Interest expense, net — — — (0.9) (0.9)

Tax (benefit) expense — — — 3.6 3.6

Income tax expense (benefit) — — — 3.4 3.4

Depreciation and amortization (0.9) (0.3) (0.4) — (1.6)

Impairment of fixed assets — — — — —

EBITDA 3.3 6.0 1.7 1.8 12.8

Equity based compensation — — — 0.3 0.3

Loss on retirement of debt — — — (0.2) (0.2)

Gain on disposal of property and equipment — — — — —

Bargain purchase gain, net of tax — — — (0.8) (0.8)

Severance and reorganization costs — — — 0.2 0.2

2 unchanged sentences

Adjusted EBITDA $ 3.3 $ 6.0 $ 1.7 $ (0.5) $ 10.5

Adjusted EBITDA for the three months ended September 30, 2022 increased $27.0 million to $30.3 million from $3.3 million for the three months ended September 30, 2021.

The change by segment was as follows:

High Specification Rigs .

High Specification Rigs Adjusted EBITDA for the three months ended September 30, 2022 increased $12.2 million to $17.0 million from $4.8 million for the three months ended September 30, 2021, primarily due to increased revenues of $49.8 million, partially offset by a corresponding increase in cost of services of $37.6 million.

Wireline Services.

Wireline Services Adjusted EBITDA for the three months ended September 30, 2022 increased $10.0 million to $11.4 million from $1.4 million for the three months ended September 30, 2021, primarily due to increased revenues of $15.2 million, partially offset by a corresponding increase in cost of services of $5.2 million.

Processing Solutions and Ancillary Services .

Processing Solutions and Ancillary Services Adjusted EBITDA for the three months ended September 30, 2022 increased $9.0 million to $10.5 million from $1.5 million for the three months ended September 30, 2021, due to increased revenues of $30.3 million, offset by a corresponding increase in cost of services of $21.3 million.

Other Adjusted EBITDA for the three months ended September 30, 2022 increased $4.2 million to a loss of $8.6 million from a loss of $4.4 million for the three months ended September 30, 2021.

The balances included in Other reflect other general and administrative costs, which are not directly attributable to High Specification Rigs, Wireline Services or Processing Solutions and Ancillary Services.

Nine Months Ended September 30, 2022 compared to Nine Months Ended September 30, 2021

TA Nine Months Ended September 30, 2022

High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total

(in millions)

Net income (loss) $ 24.5 $ 5.6 $ 15.6 $ (38.2) $ 7.5

Interest expense, net — — — 5.7 5.7

Tax (benefit) expense — — — 1.0 1.0

Depreciation and amortization 20.8 8.3 3.3 1.4 33.8

Impairment of fixed assets — — — 1.3 1.3

Equity based compensation — — — 2.8 2.8

Loss on retirement of debt — — — — —

Loss on disposal of property and equipment — — — — —

Bargain purchase gain, net of tax — — — (3.6) (3.6)

Severance and reorganization costs — — — 1.6 1.6

Acquisition related costs — — — 6.5 6.5

Legal fees and settlements — — — 1.3 1.3

Adjusted EBITDA $ 45.3 $ 13.9 $ 18.9 $ (20.2) $ 57.9

Nine Months Ended September 30, 2021

High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total

(in millions)

Net income (loss) $ (1.1) $ (2.8) $ (2.1) $ (20.5) $ (26.5)

Interest expense, net — — — 2.5 2.5

Tax (benefit) expense — — — 0.1 0.1

Depreciation and amortization 13.6 5.5 4.7 1.1 24.9

Impairment of fixed assets — — — — —

Equity based compensation — — — 2.1 2.1

Loss on retirement of debt — — — 0.2 0.2

Loss on disposal of property and equipment — — — 0.1 0.1

Bargain purchase gain, net of tax — — — — —

Severance and reorganization costs — — — (0.6) (0.6)

Acquisition related costs — — — 1.4 1.4

Legal fees and settlements — — — 0.9 0.9

Adjusted EBITDA $ 12.5 $ 2.7 $ 2.6 $ (12.7) $ 5.1

High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total

(in millions)

Net income (loss) $ 25.6 $ 8.4 $ 17.7 $ (17.7) $ 34.0

Interest expense, net — — — 3.2 3.2

Tax (benefit) expense — — — 0.9 0.9

Depreciation and amortization 7.2 2.8 (1.4) 0.3 8.9

Impairment of fixed assets — — — 1.3 1.3

Equity based compensation — — — 0.7 0.7

Loss on retirement of debt — — — (0.2) (0.2)

Loss on disposal of property and equipment — — — (0.1) (0.1)

Bargain purchase gain, net of tax — — — (3.6) (3.6)

Severance and reorganization costs — — — 2.2 2.2

Acquisition related costs — — — 5.1 5.1

Legal fees and settlements — — — 0.4 0.4

Adjusted EBITDA $ 32.8 $ 11.2 $ 16.3 $ (7.5) $ 52.8

Adjusted EBITDA for the nine months ended September 30, 2022 increased $52.8 million to $57.9 million from $5.1 million for the nine months ended September 30, 2021.

Adjusted EBITDA for the three months ended March 31, 2023 increased $10.5 million to $20.1 million from $9.6 million for the three months ended March 31, 2022.

The change by segment was as follows:

High Specification Rigs .

High Specification Rigs Adjusted EBITDA for the nine months ended September 30, 2022 increased $32.8 million to $45.3 million from $12.5 million for the nine months ended September 30, 2021, primarily due to increased revenues of $140.0 million, partially offset by a corresponding increase in cost of services of $107.2 million.

High Specification Rigs Adjusted EBITDA for the three months ended March 31, 2023 increased $3.3 million to $17.4 million from $14.1 million for the three months ended March 31, 2022, due to increased revenue of $12.6 million, partially offset by a corresponding increase in cost of services of $9.3 million.

Wireline Services.

Wireline Services Adjusted EBITDA for the nine months ended September 30, 2022 increased $11.2 million to $13.9 million from $2.7 million for the nine months ended September 30, 2021, primarily due to increased revenues of $75.6 million, partially offset by an increase in cost of services of $64.4 million.

Wireline Services Adjusted EBITDA for the three months ended March 31, 2023 increased $6.0 million to $4.2 million from a loss of $1.8 million for the three months ended March 31, 2022, due to increased revenue of $11.3 million, partially offset by a corresponding increase in cost of services of $5.3 million.

Processing Solutions and Ancillary Services .

Processing Solutions and Ancillary Services Adjusted EBITDA for the nine months ended September 30, 2022 increased $16.3 million to $18.9 million from $2.6 million for the nine months ended September 30, 2021, primarily due to increased revenues of $68.6 million, partially offset by an increase in cost of services of $52.3 million.

Other Adjusted EBITDA for the nine months ended September 30, 2022 increased $7.5 million to a loss of $20.2 million from a loss of $12.7 million for the nine months ended September 30, 2021.

Processing Solutions and Ancillary Services Adjusted EBITDA for the three months ended March 31, 2023 increased $1.7 million to $5.0 million from $3.3 million for the three months ended March 31, 2022, due to increased revenue of $10.0 million, offset by a corresponding increase in cost of services of $8.3 million.

Other Adjusted EBITDA for the three months ended March 31, 2023 decreased $0.5 million to a loss of $6.5 million from a loss of $6.0 million for the three months ended March 31, 2022.

2 unchanged sentences

Our primary sources of liquidity have historically been cash generated from operations and borrowings under our EBC Credit Facility.

As of September 30, 2022, we had total liquidity of $35.7 million, consisting of $5.2 million of cash on hand and availability under our Revolving Credit Facility of $30.5 million.

As of September 30, 2022, our borrowing base under the Revolving Credit Facility was $57.0 million compared to $37.5 million and $45.0 million as of September 30, 2021 and December 31, 2021, respectively, as a result of increased operational activity and accounts receivable balances.

As of March 31, 2023, we had total liquidity of $68.4 million, consisting of $14.4 million of cash on hand and availability under our Revolving Credit Facility of $54.0 million.

As of March 31, 2023, our borrowing base under the Revolving Credit Facility was $55.6 million compared to $51.2 million and $60.3 million as of March 31, 2022 and December 31, 2022, respectively.

We strive to maintain financial flexibility and proactively monitor potential capital sources to meet our investment and target liquidity requirements that permit us to manage the cyclicality associated with our business.

2 unchanged sentences

The following table presents our cash flows for the periods indicated:

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2023 2022 $ %

(in millions)

Net cash provided by operating activities $ 18.5 $ 23.4 $ (4.9) 21 %

Net cash provided by (used in) operating activities $ 17.4 $ (12.1) $ 29.5 244 %

Net cash provided by (used in) investing activities (1.1) 5.0 (6.1) (122) %

2 unchanged sentences

Operating Activities

Net cash from operating activities decreased $4.9 million to cash provided of $18.5 million for nine months ended September 30, 2022 compared to cash provided of $23.4 million for the nine months ended September 30, 2021.

The change in cash flows from operating activities is primarily attributable to an increase in contract assets for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The use of working capital cash increased $48.5 million to $26.6 million for the nine months ended September 30, 2022, compared to cash generated of $21.9 million for the nine months ended September 30, 2021.

Net cash from operating activities increased $29.5 million to cash provided of $17.4 million for three months ended March 31, 2023 compared to cash used of $12.1 million for the three months ended March 31, 2022.

The change in cash flows from operating activities is primarily attributable to an increase in gross margins and operating income for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The use of working capital cash increased $25.1 million to $16.5 million for the three months ended March 31, 2023, compared to cash used of $8.6 million for the three months ended March 31, 2022.

Investing Activities

Net cash from investing activities increased $18.4 million to a cash provided of $12.5 million for nine months ended September 30, 2022 compared to cash used of $5.9 million for the nine months ended September 30, 2021.

The change in cash flows from investing activities is attributable to the significant asset sales that took place during the nine months ended September 30, 2022, partially offset by fixed asset additions.

Net cash from investing activities decreased $6.1 million to cash used of $1.1 million for three months ended March 31, 2023 compared to cash provided of $5.0 million for the three months ended March 31, 2022.

The change in cash flows from investing activities is attributable to fixed asset additions that took place during the three months ended March 31, 2023, coupled with the asset disposals, related to assets acquired from Basic, that took place during the three months ended March 31, 2022.

Financing Activities

Net cash from financing activities decreased $50.9 million from cash provided of $24.5 million for the nine months ended September 30, 2021 compared to cash used of $26.4 million for the nine months ended September 30, 2022.

Net cash from financing activities decreased $15.9 million from cash provided of $10.3 million for the three months ended March 31, 2022 compared to cash used of $5.6 million for the three months ended March 31, 2023.

The change in cash flows from financing activities is primarily attributable to cash from asset sales and operations being utilized to pay down debt.

During the three and nine months ended September 30, 2022 the Company retired Term Loan B and paid an aggregate of $25.3 million on all debt and financing liabilities.

Supplemental Disclosures

During the nine months ended September 30, 2022, the Company added fixed assets of $4.2 million primarily related to finance leased assets across all operating segments.

During the three months ended March 31, 2023, the Company added fixed assets of $1.5 million primarily related to finance leased assets across all operating segments.

Working Capital

Our working capital, which we define as total current assets less total current liabilities, was $54.0 million as of September 30, 2022, compared to $2.5 million as of December 31, 2021.

The increased accounts receivable and contract assets, coupled with assets considered to be held for sale led to the working capital increase.

Our Debt Agreements

Our working capital, which we define as total current assets less total current liabilities, was $73.1 million as of March 31, 2023, compared to $65.6 million as of December 31, 2022.

The increase in working capital can be attributed to a higher cash balance and contract assets, as well as a decrease in accrued expenses.

Eclipse Loan and Security Agreement

1 unchanged sentence

Debt under the Eclipse Loan and Security Agreement is secured by a lien on substantially all of the Company’s assets.

The Company was in compliance with the Eclipse Loan and Security Agreement covenants as of September 30, 2022.

The Company was in compliance with the Eclipse Loan and Security Agreement covenants as of March 31, 2023.

On January 7, 2022, the Company entered into the First Amendment to Loan and Security Agreement with EBC and Eclipse Business Capital SPV, LLC, which increased the Maximum Revolving Facility Amount (as defined in the Amended Loan Agreement) to $65.0 million, among other things.

7 unchanged sentences

The borrowings of the Revolving Credit Facility, therefore, will be classified as Long-term debt, current portion on the Condensed Consolidated Balance Sheet.

Under the Revolving Credit Facility, the total loan capacity was $57.0 million, which was based on a borrowing base certificate in effect as of September 30, 2022.

The Company had outstanding borrowings of $24.9 million under the Revolving Credit Facility, leaving a residual $30.5 million available for borrowings as of September 30, 2022.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum ranging from 4.5% to 5% in excess of the LIBOR Rate and 3.5% to 4% in excess of the Base Rate, dependent on the fixed cost coverage ratio, through July 1, 2022.

The weighted average interest rate for the loan was approximately 5.9% for the nine months ended September 30, 2022.

The Company capitalized fees of $1.8 million associated with the Revolving Credit Facility, which are included in Other assets in the Condensed Consolidated Balance Sheets.

Such fees will continue to be amortized through maturity and are included in Interest expense, net on the Condensed Consolidated Statement of Operations.

Unamortized debt issuance costs as of September 30, 2022 were $1.4 million.

Under the Revolving Credit Facility, the total loan capacity was $55.6 million, which was based on a borrowing base certificate in effect as of March 31, 2023.

The Company did not have any borrowings under the Revolving Credit Facility and a $1.6 million Letter of Credit, leaving a residual $54.0 million available for borrowings as of March 31, 2023.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum ranging from 4.5% to 5% in excess of the SOFR Rate and 3.5% to 4% in excess of the Base Rate, dependent on the fixed cost coverage ratio, through July 1, 2022.

The weighted average interest rate for the loan was approximately 8.9% for the three months ended March 31, 2023.

M&E Term Loan Facility

Under the M&E Term Loan Facility, the Company had outstanding borrowings of $11.0 million where the monthly principal installments commenced on March 1, 2022.

Borrowings under the M&E Term Loan Facility bear interest at a rate per annum equal to 8% in excess of the LIBOR Rate and 7% in excess of the Base Rate.

The weighted average interest rate for the M&E Term Loan was 9.0% for the nine months ended September 30, 2022.

The M&E Term Loan Facility is scheduled to mature in September 2025.

Under the M&E Term Loan Facility, the Company had outstanding borrowings of $9.8 million where the monthly principal installments of $0.2 million commenced on March 1, 2022.

Borrowings under the M&E Term Loan Facility bear interest at a rate per annum equal to 8% in excess of the SOFR Rate and 7% in excess of the Base Rate.

The weighted average interest rate for the M&E Term Loan was 12.6% for the three months ended March 31, 2023.

The M&E Term Loan Facility is secured by a lien on certain high-spec rig assets and is scheduled to mature in September 2025.

Any principal amounts repaid may not be reborrowed.

The Company capitalized fees on $0.3 million associated with this M&E Term Loan Facility, which are included in the Condensed Consolidated Balance Sheets as a discount to the Long-term debt, net.

Such fees will continue to be amortized through maturity and are included in Interest expense, net on the Condensed Consolidated Statement of Operations.

Unamortized debt issuance costs as of September 30, 2022 were $0.2 million.

On October 1, 2021, the Term Loan B was finalized in connection with the closing of the Basic Acquisition.

Borrowings under Term Loan B bear interest at a rate per annum equal to 13% in excess of the LIBOR Rate and 11% in excess of the Base Rate.

Borrowings under Term Loan B bear interest at a rate per annum equal to 13% in excess of the SOFR Rate and 11% in excess of the Base Rate.

Term Loan B is scheduled to mature in September 2022.

The weighted average interest rate for Term Loan B was 12.4% through the maturity date of August 16, 2022.

On October 1, 2021, the Term Loan B was drawn in full to repay borrowings under the Revolving Credit Facility and as of September 30, 2022.

Principal payments are generated from the proceeds from the sale of Basic assets, and may not be reborrowed.

The Company capitalized fees of $0.6 million associated with Term Loan B, which are included in the Condensed Consolidated Balance Sheets as a discount to the Long-term debt, current portion.

Such fees will continue to be amortized through maturity and are included in Interest Expense, net on the Condensed Consolidated Statement of Operations.

On August 16, 2022, the outstanding balance of Term Loan B was terminated.

At this time, the remaining balance of the loan was $0.3 million, which was paid utilizing funds from the Revolving Credit Facility.

At the time of the termination, the Company had capitalized fees associated with Term Loan B of $0.1 million.

This amount was charged to interest expense on the Condensed Consolidated Statement of Operations.

On August 16, 2022, the outstanding balance of Term Loan B was $0.3 million, which was paid utilizing funds from the Revolving Credit Facility.

Secured Promissory Note

1 unchanged sentence

Certain of the assets acquired serve as collateral under the Secured Promissory Note.

As of September 30, 2022, the aggregate principal balance outstanding was $7.0 million.

As of March 31, 2023, the aggregate principal balance outstanding was $5.6 million.

Borrowings under the Secured Promissory Note bear interest at a rate of 8.5% per annum and is scheduled to mature in January 2024.

The Company made a cash payment of $1.5 million payment in February 2022 on the Secured Promissory Note, where such cash was generated from the sale of assets with an attached lien.

Other Installment Purchases

During the year ended December 31, 2021, the Company entered into various Installment and Security Agreements (collectively, the “Installment Agreements”) in connection with the purchase of certain ancillary equipment, where such assets are being held as collateral.

As of September 30, 2022, the aggregate principal balance outstanding under the Installment Agreements was $0.6 million and is payable ratably over 36 months from the time of each purchase.

As of March 31, 2023, the aggregate principal balance outstanding under the Installment Agreements was $0.4 million and is payable ratably over 36 months from the time of each purchase.

The monthly installment payments contain an imputed interest rate that are consistent with the Company’s incremental borrowing rate and is not significant to the Company.

Tax Receivable Agreement (“TRA”)

During the year ended December 31, 2021, the Company entered into a definitive agreement with affiliates of CSL Capital Management (“CSL”) and Bayou Holdings (“Bayou”) to terminate the TRA (such agreement, the “TRA Termination Agreement”).

In consideration of the TRA Termination Agreement, the Company issued an aggregate of 376,185 shares of Class A Common Stock of the Company to affiliates of CSL Capital Management and Bayou Holdings.

During the year ended December 31, 2021, pursuant to TRA Termination Agreement, Ranger LLC redeemed CSL’s and Bayou’s outstanding units in Ranger LLC, and the corresponding shares of the Company’s Class B Common Stock were exchanged for an equivalent number of shares of Class A Common Stock.

Following these transactions, no shares of Class B Common Stock were issued or outstanding.

Capital Returns Program

On March 1, 2023, the Board of Directors announced a $35.0 million share repurchase program that can be utilized for up to 36 months.

Additionally, the Board of Directors has approved a quarterly dividend of $0.05 per share, which will be initiated once the Company achieves its goal of being net debt zero.

The Company believes that a share repurchase and dividend framework provides the best overall value creation potential for investors and intends to return at least 25% of annual cash flows to investors going forward.

Critical Accounting Policies and Estimates

2 unchanged sentences

We currently have no material off-balance sheet arrangements.

Emerging Growth Company Status and Smaller Reporting Company Status

The Company is an “emerging growth company” as defined in the JOBS Act.

The Company will remain an emerging growth company until the earlier of (1) the last day of its fiscal year (a) following the fifth anniversary of the completion of the Offering, (b) in which its total annual gross revenue is at least $1.24 billion, or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of its most recently completed second fiscal quarter, or (2) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable to public companies.

The Company has irrevocably opted out of the extended transition period and, as a result, the Company will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

The Company will lose its EGC status on December 31, 2022, as this will represent the last day of the fiscal year following the fifth anniversary of our first Form S-1, which was filed in August 2017.

The Company is also a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act.

Smaller reporting company means an issuer that is not an investment company, an asset-back issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that (i) has a market value of common stock held by non-affiliates of less than $250 million;

or (i) has annual revenues of less than $100 million and either no common stock held by non-affiliates or a market value of common stock held by non-affiliates of less than $700 million.

Smaller reporting company status is determined on an annual basis.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended and Section 21E of the Exchange Act.

All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements.

When used in this Quarterly Report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in our Annual Report.

These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.

Forward-looking statements may include statements about:

• our business strategy;

• our operating cash flows, the availability of capital and our liquidity;

• our future revenue, income and operating performance;

• general economic conditions, including the impact of continued inflation and associated changes in monetary policy;

• the volatility in global crude oil demand and crude oil prices for an uncertain period of time that may lead to a significant reduction of domestic crude oil and natural gas production;

• global or national health concerns, including pandemics such as the outbreak of COVID-19;

• political and economic conditions and events in foreign oil, natural gas and NGL producing countries, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia, conditions in South America, Central America and China and acts of terrorism or sabotage;

• our ability to sustain and improve our utilization, revenues and margins;

• our ability to maintain acceptable pricing for our services;

• our future capital expenditures;

• our ability to finance equipment, working capital and capital expenditures;

• competition and government regulations, including new and proposed legislation by the Biden Administration aimed at reducing the impact of climate change;

• our ability to obtain permits and governmental approvals;

• pending legal or environmental matters;

• marketing of oil and natural gas;

• business or asset acquisitions;

• credit markets;

• our ability to successfully develop our research and technology capabilities and implement technological developments and enhancements;

• uncertainty regarding our future operating results;

• plans, objectives, expectations and intentions contained in this report that are not historical.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control.

These risks include, but are not limited to, the risks described under “Risk Factors” in our Annual Report previously filed.

Should one or more of the risks or uncertainties described occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement.

This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by

applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis