What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-03-05 · 73 added, 52 removed, 186 unchanged (40% of the section changed)

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Our common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “TTI.”

Our Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics for Senior Financial Officers, Audit Committee Charter, Compensation Committee Charter, and Nominating and Corporate Governance Committee Charter, as well as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and all amendments to those reports are all available, free of charge, on our website at www.tetratec.com as soon as practicable after we file the reports with the SEC.

Our Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics for Senior Financial Officers, Audit Committee Charter, Human Capital Management and Compensation Committee Charter, and Nominating, Governance and Sustainability Committee Charter, as well as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and all amendments to those reports are all available, free of charge, on our website at www.tetratec.com as soon as practicable after we file the reports with the SEC.

Information contained on or connected to our website is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any other filings with the SEC.

The documents referenced above are available in print at no cost to any stockholder who requests them from our Corporate Secretary.

TETRA Technologies, Inc., together with its consolidated subsidiaries, is a leading, geographically diversified oil and gas services company, focused on completion fluids and associated products and services, comprehensive water management, frac flowback and production well testing.

Prior to the closing of the GP Sale (as defined below) on January 29, 2021, we operated in three reporting segments organized into three Divisions.

Following the closing of the GP Sale, our products and services are delivered through two reporting segments organized into two Divisions - Completion Fluids & Products and Water & Flowback Services.

TETRA Technologies, Inc., together with its consolidated subsidiaries, is a leading, industrial oil and gas products and services company operating on six continents, focused on bromine-based completion fluids, calcium chloride, water management solutions, frac flowback and production well testing services.

We have two reportable segments - Completion Fluids & Products Division and Water & Flowback Services Division.

Our Completion Fluids & Products Division manufactures and markets clear brine fluids, additives, and associated products and services to the oil and gas industry for use in well drilling, completion, and workover operations in the United States and in certain countries in Latin America, Europe, Asia, the Middle East and Africa.

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Our Water & Flowback Services Division provides onshore oil and gas operators with comprehensive water management services.

The Division also provides frac flowback, production well testing, offshore rig cooling, and other associated services in many of the major oil and gas producing regions in the United States and Mexico, as well as in oil and gas basins in certain countries in Latin America, Europe, and the Middle East.

The Division also provides frac flowback, production well testing, and other associated services in many of the major oil and gas producing regions in the United States and Mexico, as well as in oil and gas basins in certain countries in Latin America, Europe, and the Middle East.

We continue to pursue a long-term growth strategy that includes expanding our core businesses, domestically and internationally, through the introduction of new technology, organic growth and accretive acquisitions.

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custom fluids blending;

and fluid management services.

management services.

The Division’s flagship CBF technology, TETRA CS Neptune ® completion fluids, are high-density monovalent and divalent fluids that are free of undissolved solids, zinc, priority pollutants, and formate ions.

They were developed by TETRA to be environmentally friendly alternatives to traditional zinc bromide high-density completion fluids and environmentally friendly and cost-effective alternatives to cesium formate high-density completion fluids, all of which are used in well completion and workover operations, as well as a low-solids reservoir drilling fluids.

The Completion Fluids & Products Division offers to repurchase, or “buy-back”, certain used CBFs from customers, which can be reconditioned and recycled.

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This facility also uses proprietary processes to manufacture calcium bromide and sodium bromide and to recondition and upgrade used CBFs that we have repurchased from our customers.

We are also pursuing low-carbon energy initiatives that leverage our fluids and aqueous chemistry core competencies, our significant bromine and lithium assets (including our approximately 31,100 net acres of brine leases in Arkansas) and technologies, and our leading calcium chloride production capabilities.

In May 2021, we signed a memorandum of understanding (“MOU”) with CarbonFree Chemicals Holdings, LLC (“CarbonFree”), a carbon capture company with patented technologies that capture CO 2 and mineralize emissions to make commercial, carbon-negative chemicals.

During the one-year MOU period, both Companies will work towards a definitive agreement that may include investments by TETRA into CarbonFree, a joint venture, or other commercial arrangements.

In December 2021, we invested $5.0 million in a convertible note issued by CarbonFree.

This was an investment alongside other investors that provided CarbonFree the necessary capital to construct the first SkyCycle TM facility.

We have also reached agreement with CarbonFree on the potential use of a unique solution proposed by TETRA to produce low carbon calcium chloride to support SkyCycle TM technology.

In August 2021, we announced completion of a preliminary technical assessment by an independent geological consulting firm to assess lithium and bromine exploration targets in our Southwest Arkansas brine leases.

Bromine has been identified as a key mineral resource in zinc-bromide energy storage systems and our TETRA PureFlow™ high purity zinc bromide has been qualified by several battery technology companies.

battery market is a rapidly growing market, affording us the opportunity to participate in a meaningful way.

In December, 2021, we announced a strategic agreement with Eos Energy Enterprises, Inc.

("Eos") (NASDAQ:

involving a long-term supply and collaboration agreement to supply our high purity zinc bromide solution, TETRA PureFlow TM .

TETRA and Eos expect to collaborate for improved battery performance, cost and system life including an end-of-life solution using TETRA's extensive experience with reclaiming and recycling zinc bromide.

In addition, as of February 25, 2022, we are in the process of drilling an exploratory brine well on our dedicated acreage in the Smackover Formation in Arkansas.

The results of the well, which is expected to be completed in the first quarter of 2022, are expected to advance our exploratory target lithium and bromine assets to more refined resources targets.

We will assess the next steps towards determining whether we can develop these key minerals to augment our current global infrastructure and chemistry expertise, allowing us to further expand beyond the oil and gas market.

Water & Flowback Services Division

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These services include fresh and produced water analysis, treatment and recycling, blending and distribution, storage and pit lining, transfer, engineering, and environmental risk mitigation.

The Water & Flowback Services Division’s patented and patent-pending equipment and processes include advanced hydrocyclones for sand management, certain produced- and fresh-water blending technologies, and TETRA Steel™ 1200 rapid deployment water transfer system.

The Water & Flowback Services Division’s patented and patent-pending equipment and processes include advanced hydrocyclones for sand management, certain produced- and fresh-water blending technologies, and the TETRA Steel™ 1200 rapid deployment water transfer system.

The Water & Flowback Services Division seeks to design sustainable solutions that meet the unique needs of each customer in order to maximize operational performance and efficiency and minimize the use of fresh water.

These include tailored “Last Mile” infrastructure - which consists of water storage ponds, movable storage tanks, a network of water transfer lines including poly pipe and TETRA Steel™ lay-flat hose, automated transfer and blending of produced water, and water treatment and recycling systems including the TETRA SwiftWater Automated Treatment (SWAT™) system that chemically treats produced water through a clarification process and the oil recovery from produced water via the TETRA Oil Recovery After Production Technology (Orapt™) mobile oil

separation system to transfer water around well pads in a safe, efficient and environmentally responsible manner.

Automation has also been deployed throughout 2020 across the TETRA water management portfolio to reduce health, safety and environmental risks and enhance reliability and cost-effectiveness.

Our Water & Flowback Services Division also provides frac flowback services, early production facilities and services, production well testing services, offshore rig cooling services, and other associated services, including well flow management and evaluation services that enable operators to quantify oil and gas reserves, optimize oil and gas production and minimize oil and gas reservoir damage.

These solutions include tailored “Last Mile” infrastructure to transfer water around well pads in a safe, efficient and environmentally responsible manner - which consists of water storage ponds, movable storage tanks, a network of water transfer lines including poly pipe and TETRA Steel™ lay-flat hose, automated transfer and blending of produced water, and water treatment and recycling systems.

These systems include the TETRA SwiftWater Automated Treatment (SWAT™) system that chemically treats produced water through a clarification process and the TETRA Oil Recovery After Production Technology (Orapt™) mobile oil separation system that recovers oil from produced water.

Automation has also been deployed throughout 2020 and 2021 across the TETRA water management portfolio, and across TETRA flowback services in 2021, to reduce health, safety and environmental risks and enhance reliability and cost-effectiveness.

Our Water & Flowback Services Division also provides frac flowback services, early production facilities and services, production well testing services, and other associated services, including well flow management and evaluation services that enable operators to quantify oil and gas reserves, optimize oil and gas production and minimize oil and gas reservoir damage.

In certain basins, water, sand, and other abrasive materials commonly accompany the initial production of natural gas or oil, often under high-pressure and high-temperature conditions and, in some cases, from reservoirs containing high levels of hydrogen sulfide gas.

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Our former Compression Division provided compression services and equipment for natural gas and oil production, gathering, artificial lift, transmission, processing and storage.

O ur former Compression Division’s operations were conducted through our partially-owned CSI Compressco LP (“CCLP”) subsidiary.

Through one of our former wholly-owned subsidiaries, CSI Compressco GP LLC (f/k/a CSI Compressco GP Inc.) (the “general partner”), we managed and controlled CCLP, and accordingly, we consolidated CCLP’s results of operations in our consolidated results of operations through December 31, 2020.

As of December 31, 2020, common units held by the public represented approximately a 65% common unit ownership interest in CCLP.

On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan Energy Partners, LP and Energy Holdco, LLC (together, “Spartan”) pursuant to which we sold the general partner of CCLP, including the incentive distribution rights (“IDRs”) in CCLP and approximately 23.1% of the outstanding limited partner interests in CCLP, in exchange for a combination of $13.4 million in cash paid at closing, $0.5 million in cash payable on the six-month anniversary of the closing and $3.1 million in contingent consideration in the form of cash and/or CCLP common units if CCLP achieves certain financial targets on or before December 31, 2022.

We were required to use all net cash proceeds received at closing from the sale to repay borrowings under our Term Credit Agreement.

Following the closing of the transaction, we retained approximately 11.1% of the outstanding CCLP common units.

O ur former Compression Division’s operations were conducted through our partially-owned CSI Compressco LP (“CSI Compressco”) subsidiary.

Through one of our former wholly-owned subsidiaries, CSI Compressco GP LLC (f/k/a CSI Compressco GP Inc.) (the “general partner”), we managed and controlled CSI Compressco, and accordingly, we consolidated CSI Compressco’s results of operations in our consolidated results of operations through January 31, 2021.

On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan Energy Partners, LP and Energy Holdco, LLC (together, “Spartan”) pursuant to which we sold the general partner of CSI Compressco, including the incentive distribution rights (“IDRs”) in CSI Compressco and approximately 23.1% of the outstanding limited partner interests in CSI Compressco, in exchange for a combination of $13.9 million in cash and $3.1 million in contingent consideration in the form of cash and/or CSI Compressco common units if CSI Compressco achieves certain financial targets on or before December 31, 2022.

As of December 31, 2021, we retained an interest in CSI Compressco consisting of approximately 3.8% of the outstanding common units.

Throughout this Annual Report, we refer to the transaction with Spartan as the “GP Sale.” We have reflected the operations of our former Compression Division as discontinued operations for all periods presented.

See Note 3 - “Discontinued Operations” and Note 18 - “Subsequent Event” in the Notes to Consolidated Financial Statements for further information.

See Note 3 - “Discontinued Operations” in the Notes to Consolidated Financial Statements for further information.

Sources of Raw Materials

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The Completion Fluids & Products Division’s primary sources of hydrochloric acid are co-product streams obtained from chemical manufacturers.

Substantial quantities of limestone are also consumed when converting

hydrochloric acid into calcium chloride.

Substantial quantities of limestone are also consumed when converting hydrochloric acid into calcium chloride.

Currently, hydrochloric acid and limestone are generally available from multiple sources.

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This plant was acquired in 1988 and is not operable.

We currently lease over 27,000 acres of brine leases in the vicinity of this plant, which contain bromine and lithium.

We currently lease over 31,100 net acres of brine leases in the vicinity of this plant, which contain bromine and lithium.

See our disclosures titled “Bromine and Lithium Exploration Targets” set forth in Item 2 of this Annual Report.

While this plant is designed to produce calcium bromide, it could be modified to produce elemental bromine or select bromine compounds.

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In addition, we are party to agreements with Standard Lithium Ltd.

(“Standard Lithium”) (TSXV:SLL), under which Standard Lithium has the right to explore, produce and extract lithium in our Arkansas leases as well as additional potential resources in the Mojave region (San Bernardino County) of California.

See Note 2 - “Summary of Significant Accounting Policies” and Note 15 - “Fair Value Measurements” in the Notes to Consolidated Financial Statements for further information.

(“Standard Lithium”) (NYSE:

SLI), under which Standard Lithium has the right to explore, produce and extract lithium in our Arkansas leases as well as additional potential resources in the Mojave region (San Bernardino County) of California.

See Note 2 - “Basis of Presentation and Significant Accounting Policies” and Note 14 - “Fair Value Measurements” in the Notes to Consolidated Financial Statements for further information.

The Water & Flowback Services Division purchases water management and production testing equipment and components from third-party manufacturers.

Market Overview and Competition

Our operations are highly dependent upon the demand for, and production of, natural gas and oil in the various domestic and international locations in which we operate, and were significantly affected by the unprecedented impact of the COVID-19 pandemic.

Demand for products and services of our Completion Fluids & Products Division remained resilient despite pandemic impacts on commodity prices.

Recent oil price volatility and much lower oil prices during the second and third quarters of 2020 particularly affected domestic onshore demand for our Water & Flowback Services Division services.

For example, in 2020 West Texas Intermediate oil prices ranged from a high of $63.27 per barrel in January 2020 to a low of negative $39.68 per barrel in April 2020.

Demand for products and services of our Completion Fluids & Products Division remained resilient despite pandemic impacts on commodity prices in 2020 and experienced significant recoveries during the second half of 2021.

West Texas Intermediate oil prices improved from an average of $39.16 per barrel during 2020 to an average of $77.33 per barrel during the fourth quarter of 2021.

Completion Fluids & Products Division

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The Completion Fluids & Products Division’s European calcium chloride operations market our calcium chloride products to certain European markets.

Our principal competitors in the non-

energy related calcium chloride markets include Occidental Chemical Corporation and Vitro in North America and NedMag in Europe.

Our principal competitors in the non-energy related calcium chloride markets include Occidental Chemical Corporation and Vitro in North America and NedMag in Europe.

Water & Flowback Services Division

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We collaborate as a team to execute for each other, our customers, and our shareholders.

As of December 31, 2020, we had approximately 1,800 people worldwide, including approximately 730 employees of CCLP.

As of December 31, 2021, we had approximately 1,100 people worldwide.

None of our U.S.

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Career Development

The board of directors, the chief executive officer, and the director of Human Resources, evaluate, from time to time each year, executive development and succession planning to prepare us for future success.

The board of directors, the chief executive officer, and the vice president of Human Resources, evaluate, from time to time each year, executive development and succession planning to prepare us for future success.

The succession planning process covers all senior management positions and certain other key positions.

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Proprietary Technology and Trademarks

As of December 31, 2020, we owned or licensed thirty-three issued U.S.

patents and had fifteen patent applications pending in the United States.

We also had thirty-six owned or licensed patents and forty-five patent applications pending in various other countries.

As of December 31, 2021, we owned or licensed 42 issued U.S.

patents and had 9 patent applications pending in the United States.

We also had 19 owned or licensed patents and 39 patent applications pending in various other countries.

The foreign patents and patent applications are primarily foreign counterparts to certain of our U.S.

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We are subject to numerous federal, state, local, and foreign laws and regulations relating to health, safety, and the environment, including regulations regarding air emissions, wastewater and storm water discharges, and the disposal of certain hazardous and nonhazardous wastes.

Compliance with such laws and regulations may

expose us to significant costs and liabilities, and cause us to incur significant capital expenditures in our operations.

Failure to comply with these laws and regulations or associated permits may result in the assessment of administration, civil or criminal fines and penalties, the imposition of other corrective action obligations or other injuctive relief, or both.

Compliance with such laws and regulations may expose us to significant costs and liabilities, and cause us to incur significant capital expenditures in our operations.

Our operations in the United States are subject to various evolving environmental laws and regulations that are enforced by the U.S.

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Occupational Safety and Health Administration, and other state and local agencies and authorities.

The primary environmental laws and regulations applicable to our operations include:

Some of the primary environmental laws and regulations applicable to our operations include:

(i) the Federal Water Pollution Control Act of 1972 (the “Clean Water Act”);

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(vii) the Hazardous Materials Transportation Act of 1975;

and (viii) and the Pollution Prevention Act of 1990.

Our operations routinely involve the handling of natural gas, oil, other petroleum products, and produced water.

(viii) the Pollution Prevention Act of 1990;

and (ix) the Endangered Species Act of 1973 (“ESA”).

Our operations outside the United States are subject to various foreign governmental laws and regulations relating to the environment, health and safety, and other regulated activities in the countries in which we operate, which may in some cases impose more stringent requirements than applicable laws in the United States.

Our operations routinely involve the handling of hydrocarbons and produced water.

Hydrocarbons or hazardous and nonhazardous wastes may have been released during our operations, by third parties on wellhead sites where we provide services or store our equipment, or on or under other locations where wastes have been taken for disposal.

Although most wastes associated with the exploration, development and production of oil and natural gas are currently exempt from the more stringent hazardous waste regulations under RCRA and its state analogs, it is possible that some of the material we handle now or may handle in the future may be subject to regulation under RCRA as a hazardous waste.

Although most wastes associated with the exploration, development and production of oil and

natural gas are currently exempt from the more stringent hazardous waste regulations under RCRA and its state analogs, it is possible that some of the material we handle now or may handle in the future may be subject to regulation under RCRA as a hazardous waste.

Additionally, we cannot assure you that such materials will not be subject to more stringent requirements or characterized as hazardous wastes in the future.

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These rules establish specific requirements associated with volatile organic compounds and methane emissions from certain hydraulically fractured natural gas wells, production-related wet seal and reciprocating compressors, and pneumatic controllers and storage vessels, and further require that most hydraulically fractured natural gas wells use so-called “green” completions.

While the EPA under the Trump Administration finalized rules to rescind or modify certain of these requirements in September 2020, including rescission of the methane-specific requirements applicable to sources in the production and processing segments of the oil and gas industry, various states and industry and environmental groups are separately challenging the EPA’s June 2016 standards and its September 2020 final rule.

Moreover, notwithstanding the current court challenges, the EPA under the Biden Administration is expected to reconsider the September 2020 final rule, which could result in more stringent rulemakings.

While we do not believe that compliance with current regulatory requirements will have a material adverse effect on our business or operations, additional or more stringent regulations could impose new air permitting or pollution control requirements on our equipment that could require us to incur material costs.

While the EPA under the Trump Administration finalized rules to rescind or modify certain of these requirements in September 2020, subsequently, the United States Congress approved, and President Biden signed into law, a resolution under the Congressional Review Act to repeal the September 2020 revisions, effectively reinstating the prior standards.

Additionally, in November 2021, EPA issued a proposed rule that, if finalized, would establish OOOO(b) new source and OOOO(c) first-time existing source standards of performance for methane and volatile organic compound emissions for oil and gas facilities.

Operators of affected facilities will have to comply with specific standards of performance to include leak detection using optical gas imaging and subsequent repair requirement, and reduction of emissions by 95% through capture and control systems.

EPA plans to issue a supplemental proposal in 2022 containing additional requirements not included in the November 2021 proposed rule and anticipates the issuance of a final rule by the end of the year.

We cannot predict the scope of any final methane regulatory requirements or the cost to comply with such requirements.

However, additional or more stringent regulations could impose new air permitting or pollution control requirements on our equipment that could require us to incur material costs.

In accordance with Section 402 of the Clean Water Act, the EPA is authorized to issue National Pollutant Discharge Elimination System (“NPDES”) General Permits to regulate offshore discharges in the Gulf of Mexico which includes Treatment, Completion and Workover (“TCW”) fluids.

Our operations include providing services and

materials to oil and gas operators for the use of TCW fluids in the Gulf of Mexico.

The EPA’s current NPDES permit for oil and gas operations in the federal waters of the Gulf of Mexico requires oil and gas operators to assess the toxicity characteristics of TCW fluids that are discharged and to submit the assessment results through 2021.

Although the results of such assessments are not expected to have a material adverse impact on our business or operations, they could result in additional restrictions on oil and gas operation in the Gulf of Mexico under the Clean Water Act, which could have an indirect effect on us.

Our operations include providing services and materials to oil and gas operators for the use of TCW fluids in the Gulf of Mexico.

The EPA’s current NPDES permit for oil and gas operations in the federal waters of the Gulf of Mexico expires on September 30, 2022.

While the terms of any subsequent NPDES General Permit applicable to our customers’ operations are uncertain at this time, any additional restrictions on oil and gas operation in the Gulf of Mexico under the Clean Water Act, could have an indirect effect on us.

In addition, the Clean Water Act, and comparable state laws and regulations thereunder, also prohibit the discharge of pollutants into regulated waters without a permit, including industrial wastewater discharges and storm water runoff, and establish limits on the levels of pollutants contained in such discharges.

The modification or reinterpretation of existing environmental laws or regulations, the more vigorous enforcement of existing environmental laws or regulations, or the adoption of new environmental laws or regulations could adversely affect oil and natural gas exploration and production operations, which in turn could have an adverse effect on us.

For example, the federal government regularly evaluates new species for listing under the ESA.

The ESA provides broad protection for species of fish, wildlife and plants that are listed as threatened or endangered, as well as certain “critical habitat” for such species.

Similar protections are offered to migratory birds under the Migratory Bird Treaty Act.

The listing of any new species, the relisting of a species from threatened to endangered, or the designation of critical habitat for any such species may cause us or our customers to incur additional costs or become subject to operating restrictions or bans at certain times or in certain areas.

Separately, regulators at both the federal and state levels have spent increasing attention on matters related to oil and gas operations, particularly hydraulic fracturing and the emission of greenhouse gases (“GHGs”).

For more information, see our risk factors titled “Our operations, and those of our suppliers and customers, are subject to a series of risks arising from climate change” and “Regulatory initiatives related to hydraulic fracturing in the countries where we and

our customers operate could result in operating restrictions or delays in the completion of oil and gas wells that may reduce demand for our services.”

We maintain various types of insurance intended to reimburse us for certain costs in the event of an accident, including an explosion or similar event, involving our onshore and offshore operations.

Our insurance program is reviewed not less than annually with our insurance brokers and underwriters.

As part of our insurance program for offshore operations, we maintain Commercial General Liability, Protection and Indemnity, and Excess Liability policies that provide third-party liability coverage, including but not limited to death and personal injury, collision, damage to property including fixed and floating objects, pollution, and wreck removal up to the applicable policy limits.

However, such insurance policies may not cover, or may only partially cover, certain losses or claims, which could result in a material adverse effect on our business and operations.

Such insurance policies may not cover, or may only partially cover, certain losses or claims, which could result in a material adverse effect on our business and operations.

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