TETRA TECHNOLOGIES INC 10-K

Item 9A. Controls and Procedures. Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2021. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our 38 assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021 was conducted based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (“COSO”). Based on this assessment, management has determined that our internal control over financial reporting was effective as of December 31, 2021. Grant Thornton LLP, our independent registered public accounting firm, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2021. Grant Thornton LLP’s report on our internal control over financial reporting is included herein. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the fourth quarter of the fiscal year ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. PART III Item 10. Directors, Executive Officers, and Corporate Governance. The information required by this Item is hereby incorporated by reference from the information appearing under the captions “Proposal No. 1: Election of Directors,” “Executive Officers,” “Corporate Governance,” “Board Meetings and Committees,” in our definitive proxy statement (the “Proxy Statement”) for the annual meeting of stockholders to be held on May 24, 2022, which involves the election of directors and is to be filed with the SEC pursuant to the Exchange Act within 120 days of the end of our fiscal year on December 31, 2021. Item 11. Executive Compensation. The information required by this Item is hereby incorporated by reference from the information appearing under the captions “Management and Compensation Committee Report,” “Management and Compensation Committee Interlocks and Insider Participation,” “Compensation Discussion and Analysis,” “Compensation of Executive Officers,” and “Director Compensation” in our Proxy Statement. Notwithstanding the foregoing, in accordance with the instructions to Item 407 of Regulation S-K, the information contained in our Proxy Statement under the subheading “Compensation Committee Report” shall be deemed furnished, and not filed, in this Form 10-K, and shall not be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act, as a result of this furnishing, except to the extent we specifically incorporate it by reference. 39 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item is hereby incorporated by reference from the information appearing under the captions “Beneficial Stock Ownership of Certain Stockholders and Management” and “Equity Compensation Plan Information” in our Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item is hereby incorporated by reference from the information appearing under the captions “Certain Transactions” and “Director Independence” in our Proxy Statement. Item 14. Principal Accounting Fees and Services. The information required by this Item is hereby incorporated by reference from the information appearing under the caption “Fees Paid to Principal Accounting Firm” in our Proxy Statement. PART IV Item 15. Exhibits and Financial Statement Schedules. (a) List of documents filed as part of this Report 1. Financial Statements of the Company Page Reports of Independent Registered Public Accounting Firm s (PCAOB ID Numbers Grant Thornton LLP: 248 & Ernst & Young LLP: 42 ) F- 1 Consolidated Balance Sheets at December 31, 2021 and 2020 F- 4 Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019 F- 6 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020, and 2019 F- 7 Consolidated Statements of Equity for the years ended December 31, 2021, 2020, and 2019 F- 8 Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019 F- 9 Notes to Consolidated Financial Statements F- 10 2. Financial statement schedules All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. 3. List of Exhibits 2.1+++ Asset Purchase and Sale Agreement, dated February 28, 2018, by and between Maritech Resources, LLC, TETRA Technologies, Inc., and Orinoco Natural Resources, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report filed on May 10, 2018 (SEC File No. 001-13455)). 2.2+++ Equity Interest Purchase and Sale Agreement, dated February 28, 2018, by and among TETRA Technologies, Inc., TETRA Production Testing Holding LLC, and Epic Offshore Specialty, LLC (incorporated by reference to Exhibit 2.2 to the Company’s Quarterly Report filed on May 10, 2018 (SEC File No. 001-13455)). 2.3+++ Equity Interest Purchase Agreement, dated February 13, 2018, by and among the sellers listed therein, the sellers representative and TETRA Technologies, Inc (incorporated by reference to Exhibit 2.3 to the Company’s Quarterly Report filed on May 10, 2018 (SEC File No. 001-13455)). 2.4+++ Membership Interest Purchase And Sale Agreement, dated as of February 28, 2018, by and among TETRA Applied Technologies, LLC, Maritech Resources, LLC, TETRA Technologies, Inc., and Orinoco Natural Resources, LLC (incorporated by reference to Exhibit 2.4 to the Company’s Quarterly Report filed on May 10, 2018 (SEC File No. 001-13455)). 2.5 +++ Purchase and Sale Agreement dated as of January 29, 2021 between Spartan Energy Holdco, LLC, TETRA Technologies, Inc., and, solely for the limited purposes set forth therein, Spartan Energy Partners LP (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on January 29, 2021 (SEC File No. 001-13455)). 40 3.1 Restated Certificate of Incorporation of TETRA Technologies, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed on December 22, 2016 (SEC File No. 333-215283)). 3.2 Amended and Restated Bylaws of TETRA Technologies, Inc. (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-8 filed on May 4, 2006 (SEC File No. 333-133790)). 3.3 Certificate of Amendment of Restated Certificate of Incorporation of TETRA Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report filed on August 9, 2017 (SEC File No. 001-13455)). 4.1 Form of Senior Indenture (including form of senior debt security) (incorporated by reference to Exhibit 4.10 to the Company's Registration Statement on Form S-3 filed on April 12, 2019 (SEC File No. 333-230818)). 4.2 Form of Subordinated Indenture (incorporated by reference to Exhibit 4.11 to the Company's Registration Statement on Form S-3 filed on April 12, 2019 (SEC File No. 333-230818)). 4.3 Credit Agreement, date September 10, 2018, among TETRA Technologies, Inc. and JPMorgan Chase Bank (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on September 13, 2018 (SEC File No. 001-13455)). 4.4 Credit Agreement, date September 10, 2018, among TETRA Technologies, Inc. and Wilmington Trust, National Association (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on September 13, 2018 (SEC File No. 001-13455)). 4.5 Intercreditor Agreement, date September 10, 2018, among TETRA Technologies, Inc., JPMorgan Chase Bank, and Wilmington Trust, National Association (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on September 13, 2018 (SEC File No. 001-13455)). 4.6 Term Loan Letter Agreement, dated March 29, 2021, amending Credit Agreement, dated September 10, 2018, among the Company and Wilmington Trust, National Association (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report filed on May 5, 2021 (SEC File No. 001-13455)). 4.7 Second Amendment to the Credit Agreement dated as of July 30, 2021, by and among the Company, certain subsidiaries of TETRA party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and each of the lenders and issuing banks party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 2, 2021 (SEC File No. 001-13455)). 4.8 Amendment to Credit Agreement dated as of July 30, 2021, by and among the Company, Wilmington Trust, National Association, as administrative agent, and each of the lenders party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on August 2, 2021 (SEC File No. 001-13455)). 4.9 Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 . 10.1*** TETRA Technologies, Inc. Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.9 to the Company’s Form 10-Q filed on August 13, 2002 (SEC File No. 001-13455)). 10.2*** TETRA Technologies, Inc. Nonqualified Deferred Compensation Plan and The Executive Excess Plan Adoption Agreement effective on June 30, 2005 (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q/A filed on March 16, 2006 (SEC File No. 001-13455)). 10.3*** TETRA Technologies, Inc. 401(k) Retirement Plan, as amended and restated (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed on February 22, 2008 (SEC File No. 333-149348)). 10.4*** TETRA Technologies, Inc. 2007 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 4.12 to the Company’s Registration Statement on Form S-8 filed on May 4, 2007 (SEC File No. 333-142637)). 10.5*** TETRA Technologies, Inc. Amended and Restated 2007 Equity Incentive Compensation Plan (incorporated by reference to Exhibit 4.12 to the Company’s Registration Statement on Form S-8 filed on May 9, 2008 (SEC File No. 333-150783)). 10.6*** TETRA Technologies, Inc. 2007 Long Term Incentive Compensation Plan (incorporated by reference to Exhibit 4.11 to the Company’s Registration Statement on Form S-8 filed on May 5, 2010 (SEC File No. 333-166537)). 10.7*** TETRA Technologies, Inc. Amended and Restated 2007 Long Term Incentive Compensation Plan, as amended through February 20, 2015 (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q filed on August 10, 2015 (SEC File No. 001-13455)). 10.8*** TETRA Technologies, Inc. 2011 Long-Term Incentive Compensation Plan (incorporated by reference to Exhibit 4.11 to the Company’s Registration Statement on Form S-8 filed on May 10, 2011 (SEC File No. 333-174090)). 10.9*** TETRA Technologies, Inc. 2011 Amended and Restated Long Term Incentive Compensation Plan (incorporated by reference to Exhibit 4.9 to the Company’s Registration Statement on Form S-8 filed on May 9, 2013 (SEC File No. 333-188494)). 10.10*** TETRA Technologies, Inc. Second Amended and Restated 2011 Long Term Incentive Compensation Plan, as amended through February 20, 2015 (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q filed on August 10, 2015 (SEC File No. 001-13455)). 41 10.11*** Third Amended and Restated 2011 Long Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on May 6, 2016 (SEC File No. 001-13455)). 10.12*** Employee Equity Award Agreement dated August 15, 2012 by and between TETRA Technologies, Inc. and Elijio V. Serrano (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 16, 2012 (SEC File No. 001-13455)). 10.13 Lease Agreement dated December 31, 2012 by and between Tetris Property LP and TETRA Technologies, Inc. (incorporated by reference to Exhibit 10.36 to the Company's Form 10-K filed on March 4, 2013 (SEC File No. 001-13455)). 10.14 Bonding Agreement, dated February 28, 2018, between TETRA Technologies, Inc., Orinoco Natural Resources, LLC, and Epic Offshore Specialty, LLC. 10.15*** Form of Change in Control Agreement (incorporated by reference to Exhibit 10.21 to the Company’s Form 10-K filed on March 16, 2020 (SEC File No. 001-13455)). 10.16*** TETRA Technologies, Inc. Cash Incentive Compensation Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form 10-Q filed on May 10, 2010 (SEC File No. 001-13455)). 10.17*** Amendment No. 2 to the TETRA Technologies, Inc. Cash Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on February 26, 2016 (SEC File No. 001-13455)). 10.18*** Stand-Alone Cash-Settled Stock Appreciation Rights Award Agreement, dated August 9, 2017, between TETRA Technologies, Inc. and Stuart M. Brightman (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report filed on November 9, 2017 (SEC File No. 001-13455)). 10.19*** Stand-Alone Cash-Settled Stock Appreciation Rights Award Agreement, dated February 22, 2018, between TETRA Technologies, Inc. and Stuart M. Brightman (incorporated by reference to Exhibit 10.44 to the Company’s Form 10-K filed on March 4, 2019 (SEC File No. 001-13455)). 10.20*** TETRA Technologies, Inc. 2018 Inducement Restricted Stock Plan (incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-8 filed on February 12, 2018 ((SEC File No. 333-222976)). 10.21*** Form of TETRA Technologies, Inc. 2018 Inducement Restricted Stock Plan Restricted Stock Award Agreement (incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-8 filed on February 12, 2018 (SEC File No. 333-222976)). 10.22*** Transition Agreement dated as of May 8, 2019 between TETRA Technologies, Inc. and Stuart M. Brightman (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 8, 2019 (SEC File No. 001-13455)). 10.23*** Amendment to Transition Agreement dated April 8, 2020 between TETRA Technologies, Inc. and Stuart M. Brightman (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report filed on August 7, 2020 (SEC File No. 001-13455)). 10.24*** Transition Agreement dated July 27, 2020 between TETRA Technologies, Inc. and Bass C. Wallace, Jr. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report filed on November 3, 2020 (SEC File No. 001-13455)). 10.25*** TETRA Technologies, Inc. 2018 Equity Incentive Plan (incorporated by reference to Exhibit 4.5 to the Company’s registration statement on Form S-8 filed on May 4, 2018 (SEC File No. 333-224679). 10.26*** Form of TETRA Technologies, Inc. 2018 Equity Incentive Plan Restricted Stock Award Agreement (incorporated by reference to Exhibit 4.6 to the Company’s registration statement on Form S-8 filed on May 4, 2018 (SEC File No. 333-224679). 10.27*** Form of TETRA Technologies, Inc. 2018 Equity Incentive Plan Incentive Stock Option Award Agreement (incorporated by reference to Exhibit 4.7 to the Company’s registration statement on Form S-8 filed on May 4, 2018 (SEC File No. 333224679). 10.28*** Form of TETRA Technologies, Inc. 2018 Equity Incentive Plan Nonqualified Stock Option Award Agreement (incorporated by reference to Exhibit 4.8 to the Company’s registration statement on Form S-8 filed on May 4, 2018 (SEC File No. 333-224679). 10.29*** Form of TETRA Technologies, Inc. 2018 Equity Incentive Plan Cash Retention Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report filed on November 3, 2020 (SEC File No. 001-13455)). 10.30*** TETRA Technologies, Inc. First Amended and Restated 2018 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed with the SEC on May 26, 2021 (SEC File No. 333-256494)). 10.31*** Form of TETRA Technologies, Inc. First Amended and Restated 2018 Equity Incentive Plan Restricted Stock Unit Award (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed with the SEC on May 26, 2021 (SEC File No. 333-256494)). 10.32*** Form of TETRA Technologies, Inc. First Amended and Restated 2018 Equity Incentive Plan Restricted Stock Unit Award for Outside Directors (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 filed with the SEC on May 26, 2021 (SEC File No. 333-256494)). 42 10.33*** Form of TETRA Technologies, Inc. First Amended and Restated 2018 Equity Incentive Plan Cash Award Agreement (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 filed with the SEC on May 26, 2021 (SEC File No. 333-256494)). 10.34*** Cooperation Agreement, dated March 24, 2021, by and among TETRA Technologies, Inc., Bradley L. Radoff and the Radoff Family Foundation (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 26, 2021 (SEC File No. 001-13455). 21+ Subsidiaries of the Company. 23.1+ Consent of Grant Thornton LLP 23.2+ Consent of Ernst & Young LLP 31.1+ Certification Pursuant to Rule 13(a)-14(a) or 15(d)-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2+ Certification Pursuant to Rule 13(a)-14(a) or 15(d)-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). 32.2** Certification Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). 101.INS++ XBRL Instance Document. 101.SCH++ XBRL Taxonomy Extension Schema Document. 101.CAL++ XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB++ XBRL Taxonomy Extension Label Linkbase Document. 101.PRE++ XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF++ XBRL Taxonomy Extension Definition Linkbase Document. 104++ Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). + Filed with this report ** Furnished with this report. *** Management contract or compensatory plan or arrangement. ++ Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019; (ii) Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019; (v) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019; and (vi) Notes to Consolidated Financial Statements for the year ended December 31, 2021. +++ Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any such omitted schedule to the SEC upon request. 43 Item 16. Form 10-K Summary. None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, TETRA Technologies, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TETRA Technologies, Inc. Date: February 28, 2022 By: /s/Brady M. Murphy Brady M. Murphy, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date /s/William D. Sullivan Chairman of February 28, 2022 William D. Sullivan the Board of Directors /s/Brady M. Murphy President, Chief Executive Officer, February 28, 2022 Brady M. Murphy and Director (Principal Executive Officer) /s/Elijio V. Serrano Senior Vice President February 28, 2022 Elijio V. Serrano and Chief Financial Officer (Principal Financial Officer) /s/Richard D. O’Brien Vice President – Finance and Global Controller February 28, 2022 Richard D. O’Brien (Principal Accounting Officer) /s/Mark E. Baldwin Director February 28, 2022 Mark E. Baldwin /s/Thomas R. Bates, Jr. Director February 28, 2022 Thomas R. Bates, Jr. /s/John F. Glick Director February 28, 2022 John F. Glick /s/Gina A. Luna Director February 28, 2022 Gina A. Luna /s/Sharon B. McGee Director February 28, 2022 Sharon B. McGee /s/Shawn D. Williams Director February 28, 2022 Shawn D. Williams 44 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders TETRA Technologies, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of TETRA Technologies, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 28, 2022 expressed an unqualified opinion. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2020. Houston, Texas February 28, 2022 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders of TETRA Technologies, Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated statements of operations, comprehensive income (loss), equity, and cash flows of TETRA Technologies, Inc. and subsidiaries (the Company) for the year ended December 31, 2019, and the related notes to the consolidated financial statements (collectively referred to as the “consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company’s operations and cash flows for the year ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Ernst & Young LLP We served as the Company's auditor from 1981 to 2020. Houston, Texas March 16, 2020, except for Note 3, as to which the date is March 5, 2021 F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders TETRA Technologies, Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting of TETRA Technologies, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2021, and our report dated February 28, 2022 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Houston, Texas February 28, 2022 F-3 TETRA Technologies, Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands) December 31, 2021 December 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 31,551 $ 67,252 Restricted cash — 65 Trade accounts receivable, net of allowance for doubtful accounts of $ 289 in 2021 and $ 6,824 in 2020 91,202 64,078 Inventories 69,098 76,658 Current assets associated with discontinued operations — 710,006 Prepaid expenses and other current assets 18,539 13,487 Total current assets 210,390 931,546 Property, plant, and equipment: Land and building 26,380 26,506 Machinery and equipment 345,454 365,296 Automobiles and trucks 16,174 18,446 Chemical plants 61,565 62,714 Construction in progress 5,349 1,526 Total property, plant, and equipment 454,922 474,488 Less accumulated depreciation ( 365,946 ) ( 377,632 ) Net property, plant, and equipment 88,976 96,856 Other assets: Other intangibles, net 36,958 41,487 Operating lease right-of-use assets 36,973 43,448 Investments 11,233 2,675 Other assets 13,736 16,827 Total other assets 98,900 104,437 Total assets $ 398,266 $ 1,132,839 See Notes to Consolidated Financial Statements F-4 TETRA Technologies, Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Share Amounts) December 31, 2021 December 31, 2020 LIABILITIES AND EQUITY Current liabilities: Trade accounts payable $ 37,943 $ 22,573 Compensation and employee benefits 20,811 14,336 Operating lease liabilities, current portion 8,108 8,795 Accrued taxes 7,085 4,323 Accrued liabilities and other 21,810 14,012 Current liabilities associated with discontinued operations 1,385 734,039 Total current liabilities 97,142 798,078 Long-term debt, net 151,936 199,894 Operating lease liabilities 31,429 37,569 Asset retirement obligations 12,984 12,484 Deferred income taxes 1,669 1,942 Other liabilities 4,543 11,810 Total long-term liabilities 202,561 263,699 Commitments and contingencies (Note 11) Equity: TETRA stockholders’ equity: Common stock, par value $ 0.01 per share; 250,000,000 shares authorized at December 31, 2021 and December 31, 2020; 130,075,838 shares issued at December 31, 2021, and 128,304,354 shares issued at December 31, 2020 1,301 1,289 Additional paid-in capital 475,624 472,134 Treasury stock, at cost; 3,138,675 shares held at December 31, 2021, and 2,953,976 shares held at December 31, 2020 ( 19,957 ) ( 19,484 ) Accumulated other comprehensive income (loss) ( 46,932 ) ( 49,914 ) Retained deficit ( 310,332 ) ( 413,665 ) Total TETRA stockholders’ equity 99,704 ( 9,640 ) Noncontrolling interests ( 1,141 ) 80,702 Total equity 98,563 71,062 Total liabilities and equity $ 398,266 $ 1,132,839 See Notes to Consolidated Financial Statements F-5 TETRA Technologies, Inc. and Subsidiaries Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) Year Ended December 31, 2021 2020 2019 Revenues: Product sales $ 215,229 $ 232,721 $ 259,553 Services 173,043 144,994 301,688 Total revenues 388,272 377,715 561,241 Cost of revenues: Cost of product sales 148,280 150,627 176,643 Cost of services 146,672 120,775 233,191 Depreciation, amortization, and accretion 33,502 38,214 47,563 Impairments and other charges 581 556 92,037 Total cost of revenues 329,035 310,172 549,434 Gross profit 59,237 67,543 11,807 General and administrative expense 75,049 76,697 96,466 Goodwill impairment — — 25,784 Interest expense, net 16,377 18,926 21,256 Gain on sales of assets ( 1,040 ) ( 2,878 ) ( 1,665 ) Other (income) expense, net ( 16,428 ) ( 116 ) ( 1,925 ) Loss before taxes and discontinued operations ( 14,721 ) ( 25,086 ) ( 128,109 ) Provision for income taxes 2,084 1,758 2,811 Loss from continuing operations ( 16,805 ) ( 26,844 ) ( 130,920 ) Income (loss) from discontinued operations, net of taxes 120,407 ( 72,089 ) ( 29,580 ) Net income (loss) 103,602 ( 98,933 ) ( 160,500 ) Less: (income) loss attributable to noncontrolling interest (1) ( 269 ) 47,790 13,087 Net income (loss) attributable to TETRA stockholders $ 103,333 $ ( 51,143 ) $ ( 147,413 ) Basic and diluted net income (loss) per common share attributable to TETRA stockholders: Loss from continuing operations $ ( 0.13 ) $ ( 0.22 ) $ ( 1.04 ) Income (loss) from discontinued operations 0.95 ( 0.19 ) ( 0.13 ) Net income (loss) $ 0.82 $ ( 0.41 ) $ ( 1.17 ) Weighted average common shares outstanding: Basic and diluted 126,602 125,838 125,600 (1) (Income) loss attributable to noncontrolling interest includes (income) loss from discontinued operations, net of taxes of $( 333 ), $ 47,898 and $ 13,538 for the years ended December 31, 2021, 2020 and 2019, respectively. See Notes to Consolidated Financial Statements F-6 TETRA Technologies, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) (In Thousands) Year Ended December 31, 2021 2020 2019 Net income (loss) 103,602 ( 98,933 ) ( 160,500 ) Foreign currency translation gain (loss), net of taxes of $0 in 2021, $0 in 2020, and $0 in 2019 ( 4,623 ) 2,386 ( 188 ) Comprehensive income (loss) 98,979 ( 96,547 ) ( 160,688 ) Less: comprehensive (income) loss attributable to noncontrolling interest ( 269 ) 47,673 12,755 Comprehensive income (loss) attributable to TETRA stockholders $ 98,710 $ ( 48,874 ) $ ( 147,933 ) See Notes to Consolidated Financial Statements F-7 TETRA Technologies, Inc. and Subsidiaries Consolidated Statements of Equity (In Thousands) Common Stock Par Value Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Earnings Noncontrolling Interest Total Equity Currency Translation Balance at December 31, 2018 $ 1,285 $ 460,680 $ ( 18,950 ) $ ( 51,663 ) $ ( 217,952 ) $ 139,349 $ 312,749 Net loss for 2019 — — — — ( 147,413 ) ( 13,087 ) ( 160,500 ) Translation adjustment, net of taxes of $0 — — — ( 520 ) — 332 ( 188 ) Comprehensive loss ( 160,688 ) Distributions to CSI Compressco public unitholders — — — — — ( 1,233 ) ( 1,233 ) Equity award activity ( 2 ) — — — — — ( 2 ) Treasury stock activity, net — — ( 214 ) — — — ( 214 ) Equity compensation expense — 6,358 — — — 986 7,344 Conversions of CSI Compressco Series A Preferred — — — — — 2,539 2,539 Cumulative effect adjustment 2,843 2,843 Other — ( 79 ) — — — ( 433 ) ( 512 ) Balance at December 31, 2019 $ 1,283 $ 466,959 $ ( 19,164 ) $ ( 52,183 ) $ ( 362,522 ) $ 128,453 $ 162,826 Net loss for 2020 — — — — ( 51,143 ) ( 47,790 ) ( 98,933 ) Translation adjustment, net of taxes of $0 — — — 2,269 — 117 2,386 Comprehensive loss ( 96,547 ) Distributions to CSI Compressco public unitholders — — — — — ( 1,244 ) ( 1,244 ) Equity award activity 6 — — — — — 6 Treasury stock activity, net — — ( 320 ) — — — ( 320 ) Equity compensation expense — 5,184 — — — 1,254 6,438 Other — ( 9 ) — — — ( 88 ) ( 97 ) Balance at December 31, 2020 $ 1,289 $ 472,134 $ ( 19,484 ) $ ( 49,914 ) $ ( 413,665 ) $ 80,702 $ 71,062 Net income for 2021 — — — — 103,333 269 103,602 Translation adjustment, net of taxes of $0 — — — ( 4,623 ) — — ( 4,623 ) Comprehensive income — — — — — — 98,979 Deconsolidation of CSI Compressco 7,605 — ( 82,775 ) ( 75,170 ) Dividend — — — — — ( 110 ) ( 110 ) Equity award activity 12 — — — — — 12 Treasury stock activity, net — — ( 473 ) — — — ( 473 ) Equity compensation expense — 4,664 — — — 580 5,244 Other — ( 1,174 ) — — — 193 ( 981 ) Balance at December 31, 2021 $ 1,301 $ 475,624 $ ( 19,957 ) $ ( 46,932 ) $ ( 310,332 ) $ ( 1,141 ) $ 98,563 See Notes to Consolidated Financial Statements F-8 TETRA Technologies, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In Thousands) Year Ended December 31, 2021 2020 2019 Operating activities: Net income (loss) $ 103,602 $ ( 98,933 ) $ ( 160,500 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization, and accretion 33,532 118,747 124,278 (Gain on sale) or loss on disposal of discontinued operations ( 120,137 ) — 7,500 Impairments and other charges 581 20,940 95,196 Impairment of goodwill — — 25,784 Unrealized loss on CSI Compressco units 2,227 — — Realized gain on sale of Standard Lithium shares ( 15,479 ) — — Equity-based compensation expense 4,664 6,616 8,127 (Recovery of) provision for doubtful accounts ( 654 ) 6,857 5,039 Amortization and expense of financing costs 3,091 5,252 4,782 CSI Compressco debt exchange expenses — 4,892 — CSI Compressco Series A Preferred Unit distributions and adjustments — — 3,574 Gain on sale of assets ( 482 ) ( 4,668 ) ( 2,333 ) Other non-cash charges and credits ( 805 ) ( 706 ) ( 4,692 ) Changes in operating assets and liabilities, net of assets acquired: Accounts receivable ( 27,795 ) 62,569 6,471 Inventories 5,387 16,983 ( 2,770 ) Prepaid expenses and other current assets ( 6,533 ) 1,672 579 Trade accounts payable and accrued expenses 27,006 ( 62,274 ) ( 16,545 ) Other ( 3,548 ) ( 1,035 ) ( 4,258 ) Net cash provided by operating activities 4,657 76,912 90,232 Investing activities: Purchases of property, plant, and equipment, net ( 20,533 ) ( 29,386 ) ( 108,273 ) Acquisition of businesses, net of cash acquired — — ( 12,024 ) Purchase of CarbonFree convertible note ( 5,000 ) — — Proceeds from sale of investment 17,627 — — Proceeds from sale of property, plant, and equipment 1,687 36,168 12,885 Proceeds from insurance recoveries associated with damaged equipment 110 643 1,771 Other investing activities 934 ( 1,387 ) ( 801 ) Net cash provided by (used in) investing activities ( 5,175 ) 6,038 ( 106,442 ) Financing activities: Proceeds from long-term debt 1,614 477,647 282,590 Principal payments on long-term debt ( 50,477 ) ( 487,574 ) ( 258,217 ) Distributions to CSI Compressco public unitholders — ( 1,244 ) ( 1,233 ) Redemptions of CSI Compressco Series A Preferred — — ( 28,049 ) Debt issuance costs and other financing activities ( 1,191 ) ( 6,458 ) ( 1,016 ) Net cash used in financing activities ( 50,054 ) ( 17,629 ) ( 5,925 ) Effect of exchange rate changes on cash ( 1,771 ) 805 ( 199 ) (Decrease) increase in cash and cash equivalents and restricted cash ( 52,343 ) 66,126 ( 22,334 ) Cash and cash equivalents and restricted cash at beginning of period 83,894 17,768 40,102 Cash and cash equivalents at beginning of period associated with discontinued operations 16,577 2,370 15,858 Cash and cash equivalents and restricted cash at beginning of period associated with continuing operations 67,317 15,398 24,244 Cash and cash equivalents and restricted cash at end of period 31,551 83,894 17,768 Cash and cash equivalents and restricted cash at end of period associated with discontinued operations — 16,577 2,370 Cash and cash equivalents and restricted cash at end of period associated with continuing operations $ 31,551 $ 67,317 $ 15,398 See Notes to Consolidated Financial Statements F-9 TETRA Technologies, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2021 NOTE 1 — ORGANIZATION AND OPERATIONS We are an 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 were incorporated in Delaware in 1981. Our products and services are delivered through two reporting segments – Completion Fluids & Products Division and Water & Flowback Services Division. Unless the context requires otherwise, when we refer to “we,” “us,” and “our,” we are describing TETRA Technologies, Inc. and its consolidated subsidiaries on a consolidated basis. 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. The Division also markets liquid and dry calcium chloride products manufactured at its production facilities or purchased from third-party suppliers to a variety of markets outside the energy industry. 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, 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. NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation Our consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Our former subsidiary, CSI Compressco LP (“CSI Compressco”) is a publicly traded limited partnership with its common units traded on the NASDAQ Exchange (“NASDAQ”) under the symbol “CCLP.” TETRA’s capital structure and CSI Compressco’s capital structure were separate, and did not include cross default provisions, cross collateralization provisions or cross guarantees. Through January 29, 2021, our cash flows from our investment in CSI Compressco were limited to the quarterly distributions we received on our CSI Compressco common units and general partner interest (including incentive distribution rights (“IDRs”)) and the amounts collected for services we performed on behalf of CSI Compressco. Through January 29, 2021, CSI Compressco was determined to be a variable interest entity and we, through our ownership of the general partner in CSI Compressco, controlled the financial interests of CSI Compressco and had the ability to direct the activities of CSI Compressco that most significantly impacted its economic performance. As such, we were considered the primary beneficiary and consolidated the financial statements of CSI Compressco through January 29, 2021. On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan Energy Partners LP and Spartan Energy Holdco, LLC (together, “Spartan”) pursuant to which we sold the general partner of CSI Compressco, including the 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. Following the closing of the transaction, we retained an interest in CSI Compressco representing approximately 3.8 % of the outstanding common units as of December 31, 2021. We refer to this transaction with Spartan as the “GP Sale.” Substantially all of our former Compression Division’s operations were conducted through our partially-owned CSI Compressco subsidiary. We have reflected the operations of our former Compression Division as discontinued operations for all periods presented. See Note 3 - “Discontinued Operations” for further information. F-10 Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses and impairments during the reporting period. Actual results could differ from those estimates, and such differences could be material. Reclassifications Certain previously reported financial information has been reclassified to conform to the current year’s presentation. For a discussion of the reclassification of the financial presentation of our former Compression Division as discontinued operations, see Note 3 - “Discontinued Operations”. Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate solely to continuing operations and exclude all discontinued operations. Cash Equivalents We consider all highly liquid cash investments with a maturity of three months or less when purchased to be cash equivalents. Financial Instruments Financial instruments that subject us to concentrations of credit risk consist principally of trade receivables with companies in the energy industry. Our policy is to evaluate, prior to providing goods or services, each customer’s financial condition and to determine the amount of open credit to be extended. We generally require appropriate, additional collateral as security for credit amounts in excess of approved limits. Our customers consist primarily of major, well-established oil and gas producers and independent oil and gas companies, as well as industrial, agricultural, road, and food and beverage purchasers for the chemicals we manufacture. Payment terms are on a short-term basis. We have currency exchange rate risk exposure related to transactions denominated in a foreign currency as well as to investments in certain of our international operations. Our risk management activities include the use of foreign currency forward purchase and sale derivative contracts as part of a program designed to mitigate the currency exchange rate risk exposure on selected international operations. We have $ 1.6 million outstanding balance under our variable rate revolving credit facilities as of December 31, 2021. Outstanding balances on variable-rate bank credit facilities create market risk exposure related to changes in applicable interest rates. Allowance for Doubtful Accounts The allowance for doubtful accounts is determined on a specific identification basis when we believe that the collection of specific amounts owed to us is not probable. Changes in the allowance are as follows: Year Ended December 31, 2021 2020 2019 (In Thousands) At beginning of period $ 6,824 $ 1,912 $ 1,354 Activity in the period: Provision for doubtful accounts ( 4 ) 5,672 2,580 Account (charge offs) recoveries, net ( 6,531 ) ( 760 ) ( 2,022 ) At end of period $ 289 $ 6,824 $ 1,912 F-11 Inventories Inventories are stated at the lower of cost or net realizable value. Except for work in progress inventory, cost is determined using the weighted average method. The cost of work in progress is determined using the specific identification method. Property, Plant, and Equipment Property, plant, and equipment are stated at cost. Expenditures that increase the useful lives of assets are capitalized. The cost of repairs and maintenance is charged to operations as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are generally as follows: Buildings 25 years Machinery and equipment 3 – 10 years Automobiles and trucks 4 – 5 years Chemical plants 15 – 30 years Leasehold improvements are depreciated over the shorter of the remaining term of the associated lease or its useful life. Depreciation expense, excluding impairments and other charges, for the years ended December 31, 2021, 2020, and 2019 was $ 27.8 million, $ 32.4 million and $ 42.9 million, respectively. Construction in progress as of December 31, 2021 and 2020 consisted primarily of equipment fabrication projects. Intangible Assets other than Goodwill Customer relationships, trademarks, tradenames, marketing rights and other intangible assets are amortized on a straight-line basis over their estimated useful lives, with remaining useful lives up to 12 years. Amortization of intangible assets was $ 5.1 million, $ 5.3 million, and $ 5.1 million for the years ended December 31, 2021, 2020, and 2019, respectively, and is included in depreciation, amortization and accretion. The estimated future annual amortization expense of intangible assets is $ 4.1 million for 2022, $ 3.8 million for 2023, $ 3.7 million for 2024, $ 3.7 million for 2025, $ 3.6 million for 2026 and $ 18.1 million thereafter. See Note 5 - “Intangibles” for additional discussion. Intangible assets other than goodwill are tested for recoverability whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In such an event, we will determine the fair value of the asset using an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. If an impairment has occurred, we will recognize a loss for the difference between the carrying value and the estimated fair value of the intangible asset. See “Impairments of Long-Lived Assets” section in Note 6 - “Impairments and Other Charges”. Leases As a lessee, unless the lease meets the criteria of short-term and is excluded per our policy election described below, we initially recognize a lease liability and related right-of-use asset on the commencement date. The right-of-use asset represents our right to use an underlying asset and the lease liability represents our obligation to make lease payments to the lessor over the lease term. Long-term operating leases are included in operating lease right-of-use assets, operating lease liabilities - current portion, and operating lease liabilities in our consolidated balance sheet as of December 31, 2021. Long-term finance leases are not material. We determine whether a contract is or contains a lease at inception of the contract. Where we are a lessee in a contract that includes an option to extend or terminate the lease, we include the extension period or exclude the period covered by the termination option in our lease term in determining the right-of-use asset and lease liability, if it is reasonably certain that we would exercise the option. As an accounting policy election, we do not include short-term leases on our balance sheet. Short-term leases include leases with a term of 12 months or less, inclusive of renewal options we are reasonably certain to exercise. The lease payments for short-term leases are included as operating lease costs on a straight-line basis F-12 over the lease term in cost of revenues or general and administrative expense based on the use of the underlying asset. We recognize lease costs for variable lease payments not included in the determination of a lease liability in the period in which an obligation is incurred. Our operating and finance leases are recognized at the present value of lease payments over the lease term. When the implicit discount rate is not readily determinable, we use our incremental borrowing rate to calculate the discount rate used to determine the present value of lease payments. Consistent with other long-lived assets or asset groups that are held and used, we test for impairment of our right-of-use assets when impairment indicators are present. Impairments of Long-Lived Assets Impairments of long-lived assets, including identified intangible assets, are determined periodically when indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on our judgments as to the future undiscounted operating cash flows to be generated from these assets throughout their remaining estimated useful lives. If these undiscounted cash flows are less than the carrying amount of the related asset, an impairment is recognized for the excess of the carrying value over its fair value. Assets held for disposal are recorded at the lower of carrying value or estimated fair value less estimated selling costs. See Note 6 - “Impairments and Other Charges” for additional discussion of recorded impairments. Revenue Recognition Performance Obligations. Revenue is generally recognized when we transfer control of our products or services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or providing services to our customers. We receive cash equal to the invoice price for most sales of product and services and payment terms typically range from 30 to 60 days from the date we invoice our customer. Since the period between when we deliver products or services and when the customer pays for such products or services is not expected to exceed one year, we have elected not to calculate or disclose a financing component for our customer contracts. Depending on the terms of the arrangement, we may also defer the recognition of revenue for a portion of the consideration received because we have to satisfy a future performance obligation. For any arrangements with multiple performance obligations, we use management’s estimated selling price to determine the stand-alone selling price for separate performance obligations. For revenue associated with mobilization of service equipment as part of a service contract arrangement, such revenue, if significant, is deferred and amortized over the estimated service period. Product Sales. Product sales revenues are recognized at a point in time when we transfer control of our product offerings to our customers, generally when we ship products from our facility to our customer. The product sales for our Completion Fluids & Products Division consist primarily of clear brine fluids (“CBFs”), additives, and associated manufactured products. Product sales for our Water & Flowback Services Division are typically attributed to specific performance obligations within certain production testing service arrangements. Services . Service revenues represent revenue recognized over time, as our customer arrangements typically provide agreed upon day-rates and we recognize service revenue based upon the number of days services have been performed. Service revenue recognized over time is associated with a majority of our Water & Flowback Services Division arrangements, and a small portion of Completion Fluids & Products Division revenue that is associated with completion fluid service arrangements. O ur customer contracts are generally for terms of one year or less. The majority of the service arrangements in the Water & Flowback Services Division are for a period of 90 days or less. Sales taxes, value added taxes, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We have elected to recognize the cost for freight and shipping costs as part of cost of product sales when control over our products (i.e. delivery) has transferred to the customer. Use of Estimates. In recognizing revenue for variable consideration arrangements, the amount of variable consideration recognized is limited so that it is probable that significant amounts of revenues will not be reversed in future periods when the uncertainty is resolved. For products returned by the customer, we estimate the expected F-13 returns based on an analysis of historical experience. For volume discounts earned by the customer, we estimate the discount (if any) based on our estimate of the total expected volume of products sold or services to be provided to the customer during the discount period. In certain contracts for the sale of CBFs, we may agree to issue credits for the repurchase of reclaimable used fluids from certain customers at an agreed price that is based on the condition of the fluids. Contract Assets and Liabilities. We consider contract assets to be trade accounts receivable when we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain instances, particularly those requiring customer specific documentation prior to invoicing, our invoicing of the customer is delayed until certain documentation requirements are met. In those cases, we recognize a contract asset rather than a billed trade accounts receivable until we are able to invoice the customer. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets. We classify contract liabilities as unearned income in our consolidated balance sheets. Unearned income includes amounts in which the Company was contractually allowed to invoice prior to satisfying the associated performance obligations. Operating Costs Cost of product sales includes direct and indirect costs of manufacturing and producing our products, including raw materials, fuel, utilities, labor, overhead, repairs and maintenance, materials, services, transportation, warehousing, equipment rentals, insurance, and certain taxes. Cost of services includes operating expenses we incur in delivering our services, including labor, equipment rental, fuel, repair and maintenance, transportation, overhead, insurance, and certain taxes. We include in product sales revenues the reimbursements we receive from customers for shipping and handling costs. Shipping and handling costs are included in cost of product sales. Amounts we incur for “out-of-pocket” expenses in the delivery of our services are recorded as cost of services. Reimbursements for “out-of-pocket” expenses we incur in the delivery of our services are recorded as service revenues. Depreciation, amortization, and accretion includes depreciation expense for all of our facilities, equipment and vehicles, amortization expense on our intangible assets, and accretion expense related to our decommissioning and other asset retirement obligations. We include in general and administrative expense all costs not identifiable to our specific product or service operations, including divisional and general corporate overhead, professional services, corporate office costs, sales and marketing expenses, insurance, and certain taxes. F-14 Equity-Based Compensation We have various equity incentive compensation plans which provide for the granting of restricted common stock, options for the purchase of our common stock, and other performance-based, equity-based compensation awards to our executive officers, key employees, nonexecutive officers, and directors. Total equity-based compensation expense, net of taxes, for the three years ended December 31, 2021, 2020, and 2019, was $ 4.6 million, $ 4.3 million and $ 4.6 million, respectively. For further discussion of equity-based compensation, see Note 13 – “Equity-Based Compensation and Other” . Mineral Resources Arrangements We are party to agreements in 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 of California. The Company receives cash and stock of Standard Lithium under the terms of the arrangements. The cash and stock component of consideration received is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. During the years ended December 31, 2021, 2020 and 2019, income from this arrangement was $ 1.1 million, $ 3.1 million and $ 1.1 million, respectively, including the value of cash and stock received, and changes in the value of stock held. This income is included in other income (expense), net in our consolidated statements of operations. We also recognized $ 15.5 million of income during 2021 from the sale of our shares in Standard Lithium. See Note 14 - “Fair Value Measurements” for further discussion. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis amounts. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. A portion of the carrying value of certain deferred tax assets are subject to a valuation allowance. See Note 15 – “Income Taxes” for further discussion. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Tax Reform Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period costs are both acceptable methods subject to an accounting policy election. We elected to account for GILTI as a period cost in the year the tax is incurred. Noncontrolling Interests Noncontrolling interests represent third-party ownership in the net assets of the Company’s consolidated subsidiaries and are presented as a component of equity. Substantially all of the Company’s noncontrolling interests represented third-party ownership in CSI Compressco prior to the GP sale in January 2021. Accumulated Other Comprehensive Income (Loss) Certain of our international operations maintain their accounting records in the local currencies that are their functional currencies. For these operations, the functional currency financial statements are converted to United States dollar equivalents, with the effect of the foreign currency translation adjustment reflected as a component of accumulated other comprehensive income (loss). Accumulated other comprehensive income (loss) is included in equity in the accompanying consolidated balance sheets and consists of the cumulative currency translation adjustments associated with such international operations. Activity within our accumulated other comprehensive income (loss) is not subject to reclassifications to net income. Income (Loss) per Common Share The calculation of basic and diluted earnings per share excludes losses attributable to noncontrolling interests. The calculation of basic earnings per share excludes any dilutive effects of equity awards or warrants. The calculation of diluted earnings per share includes the effect of equity awards and warrants, if dilutive, which is F-15 computed using the treasury stock method during the periods such equity awards and warrants were outstanding. For the years ended December 31, 2021, 2020, and 2019, the average diluted shares outstanding excludes the impact of all outstanding equity awards and warrants, as the inclusion of these shares would have been anti-dilutive due to the net losses recorded during the year. Foreign Currency Translation We have designated the Euro, the British pound, the Canadian dollar, the Brazilian real, and the Mexican peso as the functional currencies for our operations in Finland and Sweden, the United Kingdom, Canada, Brazil, and certain of our operations in Mexico, respectively. The United States dollar is the designated functional currency for all of our other non-U.S. operations. The cumulative translation effects of translating the applicable accounts from the functional currencies into the U.S. dollar at current exchange rates are included as a separate component of equity. Foreign currency exchange (gains) and losses are included in other (income) expense, net, and totaled $( 1.4 ) million, $ 2.7 million, and $( 0.5 ) million for the years ended December 31, 2021, 2020 and 2019, respectively. During 2021, we determined our business operations in Norway were primarily operating using the United States dollar. Effective July 1, 2021, the functional currency of our operations in Norway was changed from the Norwegian krone to the United States dollar. The remeasurement did not have a material impact on our consolidated financial position or results of operations. Fair Value Measurements We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized on a recurring basis in the determination of the carrying values of certain investments. See Note 14 - “Fair Value Measurements” for further discussion. Fair value measurements are also utilized on a nonrecurring basis in certain circumstances, such as in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets and goodwill (a Level 3 fair value measurement), the initial recording of our asset retirement obligations, and for the impairment of long-lived assets, including goodwill (a Level 3 fair value measurement). Supplemental Cash Flow Information Supplemental cash flow information from continuing and discontinued operations is as follows: Year Ended December 31, 2021 2020 2019 (in thousands) Supplemental cash flow information (1) : Interest paid $ 14,347 $ 63,935 $ 68,332 Income taxes paid 2,100 5,633 7,274 Accrued capital expenditures at year end 7,491 1,573 3,625 (1) Prior-year information includes the activity for CSI Compressco for the full period. Current-year information includes activity for CSI Compressco for January only. New Accounting Pronouncements Standards adopted in 2021 In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences. It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for transactions that results in a step-up in the tax basis of goodwill. On January 1, 2021, we adopted ASU 2019-12. The adoption of this standard did not have a material impact on our consolidated financial statements. F-16 Standards not yet adopted In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. Credit impairment will be accounted for as an allowance for credit losses deducted from the amortized cost basis at each reporting date. Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense. ASU 2016-13 is effective for us the first quarter of fiscal 2023. We continue to assess the potential effects of these changes to our consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. Entities may elect to apply the amendments for contract modifications made on or before December 31, 2022. During the three months ended September 30, 2021, our asset-based credit agreement and term credit agreement were amended to allow replacement of LIBOR with another benchmark rate, such as the secured overnight financing rate (“SOFR”) in the event that LIBOR cannot be determined or does not fairly reflect the cost to our lenders of funding our loans. If LIBOR is not available, we cannot predict what alternative index would be negotiated with our lenders. We will assess the impact of adopting ASU 2020-04 on our consolidated financial statements if or when our contracts are modified to eliminate references to LIBOR. NOTE 3 – DISCONTINUED OPERATIONS On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan pursuant to which we sold the general partner of CSI Compressco, including the IDRs in CSI Compressco and approximately 23.1 % of the outstanding limited partner interests in CSI Compressco. As a result of these transactions, we no longer consolidate CSI Compressco as of January 29, 2021. We recognized a primarily non-cash accounting gain of $ 120.1 million during the year ended December 31, 2021 related to the GP Sale. The gain is included in income (loss) from discontinued operations, net of taxes in our consolidated statement of operations. We also provided back-office support to CSI Compressco under a Transition Services Agreement for one year until CSI Compressco completed a full separation from our back-office support functions. During the year ended December 31, 2021, we received $ 7.0 million from CSI Compressco for services provided under the Transition Services Agreement and other reimbursements and paid $ 0.5 million to CSI Compressco for reimbursement of expenses. Our interest in CSI Compressco and the general partner represented substantially all of our Compression Division. In addition, on March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division, consisting of our Offshore Services and Maritech segments. Our former Compression and Offshore Divisions are reported as discontinued operations for all periods presented. Our consolidated balance sheets and consolidated statements of operations report discontinued operations separate from continuing operations. Our consolidated statements of comprehensive income, statements of equity and statements of cash flows combine continuing and discontinued operations. Our current-year consolidated statement of operations, statement of comprehensive income, statement of equity and statement of cash flows include CSI Compressco activity for January 1 through January 29. Our consolidated statements of cash flows for the years ended December 31, 2021, 2020 and 2019 included $ 3.0 million, $ 14.7 million and $ 75.8 million, respectively, of capital expenditures related to our former Compression division. Our consolidated statements of cash flows also included $ 411.1 million of proceeds from long-term debt, $ 413.1 million of payments of long-term debt, $ 19.4 million from proceeds from sale of property, plant and equipment, $ 4.9 million of debt exchange expenses and $ 2.6 million from amortization of deferred financing discounts, costs and gains for the year ended December 31, 2020, and included $ 45.0 million of proceeds from long-term debt, $ 41.6 million of payments of long-term debt, $ 11.0 million from proceeds from sale of property, plant and equipment, and $ 2.6 million from amortization of deferred financing discounts, costs and gains for the year ended December 31, 2019. Our current-year results do not include CSI Compressco depreciation or amortization as the assets were considered held for sale. A summary of financial information related to our discontinued operations is as follows: F-17 Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations (in thousands) Year Ended December 31, 2021 Compression Offshore Services Total Revenue $ 18,968 $ — $ 18,968 Cost of revenues 11,471 ( 142 ) 11,329 General and administrative expense 2,766 ( 179 ) 2,587 Interest expense, net 4,336 — 4,336 Other expense, net 164 252 416 Pretax income from discontinued operations 231 69 300 Pretax income on disposal of discontinued operations 120,137 Total pretax income from discontinued operations 120,437 Income tax provision 30 Income from discontinued operations 120,407 Income from discontinued operations attributable to noncontrolling interest ( 333 ) Income from discontinued operations attributable to TETRA stockholders $ 120,074 Year Ended December 31, 2020 Compression Offshore Services Total Revenue 338,246 — 338,246 Cost of revenues 212,253 ( 330 ) 211,923 Depreciation, amortization, and accretion 80,533 — 80,533 Impairments and other charges 20,841 — 20,841 General and administrative expense 37,895 473 38,368 Interest expense, net 52,771 — 52,771 Other expense, net 2,688 — 2,688 Pretax loss from discontinued operations ( 68,735 ) ( 143 ) ( 68,878 ) Income tax provision 3,211 Loss from discontinued operations ( 72,089 ) Loss from discontinued operations attributable to noncontrolling interest 47,898 Loss from discontinued operations attributable to TETRA stockholders ( 24,191 ) F-18 Year Ended December 31, 2019 Compression Offshore Services Maritech Total Revenue 476,692 — — 476,692 Cost of revenues 320,037 ( 192 ) — 319,845 Depreciation, amortization, and accretion 76,663 52 — 76,715 General and administrative expense 43,281 2,618 — 45,899 Interest expense, net 51,974 — — 51,974 CSI Compressco Series A Preferred Units fair value adjustment expense 1,309 — — 1,309 Other (income) expense, net ( 558 ) 117 118 ( 323 ) Pretax loss from discontinued operations ( 16,014 ) ( 2,595 ) ( 118 ) ( 18,727 ) Pretax loss on disposal of discontinued operations ( 7,500 ) Total pretax loss from discontinued operations ( 26,227 ) Income tax provision 3,353 Loss from discontinued operations ( 29,580 ) Loss from discontinued operations attributable to noncontrolling interest 13,538 Loss from discontinued operations attributable to TETRA stockholders $ ( 16,042 ) Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Statement of Financial Position (in thousands) December 31, 2021 Offshore Services Maritech Total Carrying amounts of major classes of liabilities included as part of discontinued operations Trade payables $ 1,157 $ — $ 1,157 Accrued liabilities and other — 228 228 Total liabilities associated with discontinued operations $ 1,157 $ 228 $ 1,385 F-19 December 31, 2020 Compression Offshore Services Maritech Total Carrying amounts of major classes of assets included as part of discontinued operations Cash and cash equivalents $ 16,577 $ — $ — $ 16,577 Trade receivables 43,837 — — 43,837 Inventories 31,220 — — 31,220 Other current assets 5,231 — — 5,231 Property, plant, and equipment 551,401 — — 551,401 Other assets 61,740 — — 61,740 Total assets associated with discontinued operations (1) $ 710,006 $ — $ — $ 710,006 Carrying amounts of major classes of liabilities included as part of discontinued operations Trade payables $ 19,766 $ 1,222 $ — $ 20,988 Unearned income 269 — — 269 Accrued liabilities and other 36,318 352 228 36,898 Long-term debt, net 638,631 — — 638,631 Other liabilities 37,253 — — 37,253 Total liabilities associated with discontinued operations (1) $ 732,237 $ 1,574 $ 228 $ 734,039 (1) All assets and liabilities associated with discontinued operations of our former Compression Division are classified as current as of December 31, 2020 due to completion of the GP Sale within one year. NOTE 4 — REVENUE FROM CONTRACTS WITH CUSTOMERS Our contract asset balances, primarily associated with customer documentation requirements, were $ 20.5 million, $ 12.8 million and $ 25.3 million as of December 31, 2021, 2020 and 2019, respectively. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets. Unearned income includes amounts in which the Company was contractually allowed to invoice prior to satisfying the associated performance obligations. Unearned income balances were $ 3.2 million and $ 1.9 million as of December 31, 2021 and 2020, respectively, and vary based on the timing of invoicing and performance obligations being met. Unearned income is included in accrued liabilities and other in our consolidated balance sheets. Revenue recognized during the years ended December 31, 2021 , 2020 and 2019 deferred as of the end of the preceding year was not significant. During the years ended December 31, 2021 , 2020 and 2019 , contract costs were not significant. F-20 We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our two reportable segments in Note 17 - Industry Segments and Geographic Information . In addition, we disaggregate revenue from contracts with customers by geography based on the following table below. Year Ended December 31, 2021 2020 2019 (In Thousands) Completion Fluids & Products United States $ 96,291 $ 100,076 $ 149,191 International 123,357 142,585 130,064 219,648 242,661 279,255 Water & Flowback Services United States 155,495 125,759 262,093 International 13,129 9,295 19,893 168,624 135,054 281,986 Total Revenue United States 251,786 225,835 411,284 International 136,486 151,880 149,957 $ 388,272 $ 377,715 $ 561,241 NOTE 5 — INTANGIBLES The components of intangible assets and their related accumulated amortization are as follows: December 31, 2021 Gross Intangibles Accumulated Amortization Net Intangibles (In Thousands) Customer Relationships $ 56,122 $ ( 24,470 ) $ 31,652 Trademarks and Tradenames 4,658 ( 2,091 ) 2,567 Marketing Rights 14,630 ( 13,310 ) 1,320 Other intangibles 5,871 ( 4,452 ) 1,419 Total intangibles $ 81,281 $ ( 44,323 ) $ 36,958 December 31, 2020 Gross Intangibles Accumulated Amortization Net Intangibles (In Thousands) Customer Relationships $ 56,117 $ ( 21,579 ) $ 34,538 Trademarks and Tradenames 4,672 ( 1,703 ) 2,969 Marketing Rights 14,728 ( 12,726 ) 2,002 Other intangibles 6,039 ( 4,061 ) 1,978 Total intangibles $ 81,556 $ ( 40,069 ) $ 41,487 F-21 NOTE 6 — IMPAIRMENTS AND OTHER CHARGES Impairments of Long-Lived Assets During the fourth quarter of 2019, we recorded an impairment of $ 91.6 million in our Completion Fluids & Products Division related to our El Dorado, Arkansas calcium chloride production plant facility assets. The impairment charge was primarily the result of a reduction in the cost of raw materials for certain of our other chemical production plants, following the execution of a long-term raw material supply agreement during the fourth quarter of 2019. As a result, we expected to reduce our dependence on calcium chloride produced at the El Dorado facility, which used a different production process, involving mechanical evaporation. In addition, demand for calcium chloride from the El Dorado plant was expected to be reduced due to general market conditions in the oil and gas industry. Using the reduced expected future net cash flows on an undiscounted basis, we determined that the carrying value of the El Dorado facility was not recoverable. Fair value of the El Dorado facility was determined using a fair value in-exchange assumption, and the difference between the carrying value of the El Dorado facility asset group and its indicated fair value was recorded as an impairment. Impairment of Goodwill Our Water & Flowback Services Division consists of two reporting units, Production Testing and Water Management. During the fourth quarter of 2019, coinciding with the timing of our annual goodwill assessment, there was further decline in the energy industry outlook, resulting in decreased expected future cash flows for our Water Management reporting unit. As part of the first step of goodwill impairment testing for our Water Management reporting unit, the only reporting unit with goodwill, we updated our assessment of the future cash flows, applying expected long-term growth rates, discount rates, and terminal values that we considered reasonable for the reporting unit. We calculated a present value of the cash flows for the Water Management reporting unit to arrive at an estimate of fair value using a combination of the income approach and the market approach. Based on these assumptions, we determined that the fair value of the Water Management reporting unit was less than its carrying value indicating an impairment. The amount of impairment was calculated based on the difference between the fair value and carrying value in accordance with our early adoption of ASU 2017-04 “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This resulted in an impairment of the entire goodwill balance of $ 25.8 million at December 31, 2019. NOTE 7 – INVENTORIES Components of inventories, net of reserve, are as follows: December 31, 2021 2020 (In Thousands) Finished goods $ 59,925 $ 68,121 Raw materials 2,827 2,910 Parts and supplies 4,713 4,001 Work in progress 1,633 1,626 Total inventories $ 69,098 $ 76,658 Finished goods inventories include newly manufactured clear brine fluids as well as used brines that are repurchased from certain customers for recycling. NOTE 8 — INVESTMENTS As of December 31, 2021, we retained an interest in CSI Compressco representing approximately 3.8 % of the outstanding common units. We are party to agreements in 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 of California. The Company receives cash and stock of Standard Lithium (NYSE:SLI) under the terms of the arrangements. The cash and stock component of consideration received is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. During the fourth quarter of 2021, F-22 we sold the 1.6 million shares of Standard Lithium shares we owned for approximately $ 17.6 million, before broker and transaction fees. 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 might 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. Our exposure to potential losses by CarbonFree is limited to our investment in the convertible note. Our investments as of December 31, 2021 and 2020, consist of the following: December 31, 2021 2020 (In Thousands) Investment in CSI Compressco $ 6,233 $ — Investment in CarbonFree 5,000 — Investment in Standard Lithium — 2,675 Total investments $ 11,233 $ 2,675 See Note 14 - “Fair Value Measurements” for further information. NOTE 9 — LEASES We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. We have finance leases for certain facility storage tanks and equipment rentals. These finance leases are not material to our financial statements. Our leases have remaining lease terms ranging from 1 to 13 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months . The office space, warehouse space, operating location leases, and machinery and equipment leases generally require us to pay all maintenance and insurance costs. Our corporate headquarters facility located in The Woodlands, Texas, was sold on December 31, 2012, pursuant to a sale and leaseback transaction. As a condition to the completion of the purchase and sale of the facility, the parties entered into a lease agreement for the facility having an initial lease term of 15 years, which is classified as an operating lease. Under the terms of the lease agreement, we have the ability to extend the lease for five successive five-year periods at base rental rates to be determined at the time of each extension. Components of lease expense, included in either cost of revenues or general and administrative expense based on the use of the underlying asset, are as follows (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less): Year Ended December 31, 2021 2020 2019 (In Thousands) Operating lease expense $ 12,905 $ 13,946 $ 15,131 Short-term lease expense 22,055 17,125 36,348 Total lease expense $ 34,960 $ 31,071 $ 51,479 For the years ended December 31, 2021, 2020 and 2019, we recognized sublease income of $ 1.0 million. Variable rent expense was not material. At December 31, 2021, future minimum rental receipts under non-cancelable subleases for office space in two of our locations totaled $ 5.1 million. F-23 Supplemental cash flow information: Year Ended December 31, 2021 2020 2019 (In Thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows - operating leases $ 12,962 $ 13,612 $ 15,064 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 3,168 $ 5,612 $ 3,944 Supplemental balance sheet information: December 31, 2021 December 31, 2020 (In Thousands) Operating leases: Operating lease right-of-use assets $ 36,973 $ 43,448 Operating lease liabilities, current portion $ 8,108 $ 8,795 Operating lease liabilities $ 31,429 $ 37,569 Total operating lease liabilities $ 39,537 $ 46,364 Additional operating lease information: December 31, 2021 December 31, 2020 Weighted average remaining lease term: Operating leases 6.4 years 6.8 years Weighted average discount rate: Operating leases 9.67 % 9.62 % Future minimum lease payments by year and in the aggregate, under non-cancelable operating leases with terms in excess of one year consist of the following at December 31, 2021: Operating Leases (In Thousands) 2022 $ 11,507 2023 9,241 2024 7,412 2025 5,721 2026 5,635 Thereafter 13,867 Total lease payments 53,383 Less imputed interest ( 13,846 ) Total lease liabilities $ 39,537 F-24 NOTE 10 — LONG-TERM DEBT AND OTHER BORROWINGS Consolidated long-term debt consists of the following: December 31, 2021 2020 (In Thousands) TETRA Scheduled Maturity Asset-based credit agreement (1) May 31, 2025 $ 67 $ — Term credit agreement (2) September 10, 2025 151,869 199,894 Total long-term debt $ 151,936 $ 199,894 (1) Net of deferred financing costs of $ 1.5 million as of December 31, 2021. Because there was no outstanding balance on the ABL Credit Agreement as of December 31, 2020, associated deferred financing costs of $ 1.0 million were classified as other long-term assets on the accompanying consolidated balance sheet. (2) Net of unamortized discount of $ 4.5 million and $ 5.5 million as of December 31, 2021 and 2020, respectively, and net of unamortized deferred financing costs of $ 6.7 million and $ 8.2 million as of December 31, 2021 and 2020, respectively. Scheduled maturities for the next five years and thereafter are as follows, not considering annual prepayment offers required by our Term Credit Agreement described below: December 31, 2021 (In Thousands) 2022 $ — 2023 — 2024 — 2025 164,685 2026 — Thereafter — Total maturities $ 164,685 Asset-Based Credit Agreement . On July 30, 2021, we entered into an amendment to our asset-based credit agreement (“ABL Credit Agreement”) that, among other things, extended the term of the credit facility to May 31, 2025 and revised our commitment to $ 80.0 million, with a $ 20.0 million accordion. The amendment increased the availability by adding the value of accrued Unites States receivables, increased the forward rates on accounts receivable for investment grade customers and incorporated a new $ 15.0 million sub-facility subject to a borrowing base consisting of certain trade receivables and inventory in the United Kingdom. As of December 31, 2021, TETRA had $ 1.6 million balance outstanding and had $ 7.5 million in letters of credit against its asset-based lending agreement (“ABL Credit Agreement”). The ABL Credit Agreement provides for a senior secured revolving credit facility of up to $ 80.0 million, with a $ 20.0 million accordion. The credit facility is subject to a borrowing base to be determined by reference to the value of inventory and accounts receivable, and includes a sublimit of $ 20.0 million for letters of credit, a swingline loan sublimit of $ 11.5 million, and a $ 15.0 million sub-facility subject to a borrowing base consisting of certain trade receivables and inventory in the United Kingdom. The ABL Credit Agreement is subject to compliance with the covenants, borrowing base, and other provisions of the agreement that may limit borrowings. TETRA had availability of $ 36.1 million under this agreement as of December 31, 2021. F-25 Borrowings under the ABL Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) LIBOR plus a margin based upon a fixed charge coverage ratio or (ii) a base rate plus a margin based on a fixed charge coverage ratio. The base rate is determined by reference to the highest of (a) the prime rate of interest as announced from time to time by JPMorgan Chase Bank, N.A. (b) the Federal Funds Effective Rate (as defined in the ABL Credit Agreement) plus 0.5 % per annum and (c) LIBOR (adjusted to reflect any required bank reserves) for a one-month period on such day plus 1.0 % per annum. Borrowings outstanding have an applicable margin ranging from 1.75 % to 2.25 % per annum for LIBOR-based loans and 0.75 % to 1.25 % per annum for base-rate loans, based upon the applicable fixed charge coverage ratio. As of December 31, 2021, the interest rate per annum on borrowings under the ABL Credit Agreement is 4.75 %. In addition to paying interest on the outstanding principal under the ABL Credit Agreement, TETRA is required to pay a commitment fee in respect of the unutilized commitments at an applicable rate ranging from 0.375 % to 0.5 % per annum, paid monthly in arrears based on utilization of the commitments under the ABL Credit Agreement. TETRA is also required to pay a customary letter of credit fee equal to the applicable margin on LIBOR-based loans and fronting fees. All obligations under the ABL Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the ABL Lenders on substantially all of the personal property of TETRA and certain subsidiaries of TETRA, the equity interests in certain domestic subsidiaries, and a maximum of 65 % of the equity interests in certain foreign subsidiaries. Term Credit Agreement As of December 31, 2021 TETRA had $ 151.9 million outstanding, net of unamortized discounts and unamortized deferred financing costs under the Term Credit Agreement. Our Term Credit Agreement requires us to offer to prepay a percentage of Excess Cash Flow (as defined in the Term Credit Agreement) within five business days of filing our Annual Report. The minimum amount of $ 8.2 million that we would have been required to offer to prepay pursuant to this obligation for the year ending December 31, 2021 was paid on July 30, 2021 in connection with the amendment of our ABL Credit Agreement. Borrowings under the Term Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) LIBOR (subject to a 1% floor) plus a margin of 6.25 % per annum or (ii) a base rate plus a margin of 5.25 % per annum. As of December 31, 2021, the interest rate per annum on borrowings under the Term Credit Agreement is 7.25 %. In addition to paying interest on the outstanding principal under the Term Credit Agreement, TETRA is required to pay a commitment fee in respect of the unutilized commitments at the rate of 1.0 % per annum, paid quarterly in arrears based on utilization of the commitments under the Term Credit Agreement. All obligations under the Term Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the Term Lenders on substantially all of the personal property of TETRA and certain of its subsidiaries, the equity interests in certain domestic subsidiaries, and a maximum of 65 % of the equity interests in certain foreign subsidiaries. Our credit agreements contain certain affirmative and negative covenants, including covenants that restrict the ability to pay dividends or other restricted payments. As of December 31, 2021, we were in compliance with all covenants under the credit agreements. NOTE 11 — COMMITMENTS AND CONTINGENCIES Litigation We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity. Product Purchase Obligations In the normal course of our Completion Fluids & Products Division operations, we enter into supply agreements with certain manufacturers of various raw materials and finished products. Some of these agreements have terms and conditions that specify a minimum or maximum level of purchases over the term of the agreement. F-26 Other agreements require us to purchase the entire output of the raw material or finished product produced by the manufacturer. Our purchase obligations under these agreements apply only with regard to raw materials and finished products that meet specifications set forth in the agreements. We recognize a liability for the purchase of such products at the time we receive them. As of December 31, 2021, the aggregate amount of the fixed and determinable portion of the purchase obligation pursuant to our Completion Fluids & Products Division’s supply agreements was approximately $ 114.5 million, including on average $ 15.3 million per year from 2022 to 2026 and $ 38.1 million thereafter, extending through 2029. Amounts purchased under these agreements for each of the years ended December 31, 2021, 2020, and 2019, was $ 23.2 million, $ 17.3 million, and $ 18.7 million, respectively. Contingencies of Discontinued Operations In early 2018, we closed the Maritech Asset Purchase and Sale Agreement with Orinoco Natural Resources, LLC (“Orinoco”) that provided for the purchase by Orinoco of Maritech’s remaining oil and gas properties and related assets. Also in early 2018, we closed the Maritech Membership Interest Purchase and Sale Agreement with Orinoco that provided for the purchase by Orinoco of all of the outstanding membership interests in Maritech. As a result of these transactions, we have effectively exited the business of our former Maritech segment. Under the Maritech Asset Purchase and Sale Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase and Sale Agreement, Orinoco assumed all other liabilities of Maritech, including the decommissioning liabilities associated with the oil and gas properties previously sold by Maritech (the “Legacy Liabilities”), subject to certain limited exceptions unrelated to the decommissioning liabilities. To the extent that Maritech or Orinoco fails to satisfy decommissioning liabilities associated with any of the Orinoco Lease Liabilities or the Legacy Liabilities, we may be required to satisfy such liabilities under third party indemnity agreements and corporate guarantees that we previously provided to the U.S. Department of the Interior and other parties, respectively. Pursuant to a Bonding Agreement entered into as part of these transactions (the “Bonding Agreement”), Orinoco provided non-revocable performance bonds in an aggregate amount of $ 46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace, within 90 days following the closing, the Initial Bonds with other non-revocable performance bonds, meeting certain requirements, in the aggregate sum of $ 47.0 million (collectively, the “Interim Replacement Bonds”). Orinoco further agreed to replace, within 180 days following the closing, the Interim Replacement Bonds with a maximum of three non-revocable performance bonds in the aggregate sum of $ 47.0 million , meeting certain requirements (the “Final Bonds” and, together with the Interim Replacement Bonds, the “Replacement Bonds”). Among the other requirements of the Final Bonds was that they must provide coverage for all of the asset retirement obligations of Maritech instead of only relating to specific properties. In the event Orinoco does not provide the Interim Replacement Bonds or the Final Bonds, Orinoco is required to make certain cash escrow payments to us. The payment obligations of Orinoco under the Bonding Agreement were guaranteed by Thomas M. Clarke and Ana M. Clarke pursuant to a separate guaranty agreement (the “Clarke Bonding Guaranty Agreement”). Orinoco has not delivered the Replacement Bonds and neither it nor the Clarkes has made any of the agreed upon cash escrow payments and we filed a lawsuit against Orinoco and the Clarkes to enforce the terms of the Bonding Agreement and the Clarke Bonding Guaranty Agreement. A summary judgment was initially granted in favor of Orinoco and the Clarkes which dismissed our claims against Orinoco under the Bonding Agreement and against the Clarkes under the Clarke Bonding Guaranty Agreement. We filed an appeal and also asked the trial court to grant a new trial on the summary judgment or to modify the judgment because we believe this judgment should not have been granted. On November 5, 2019, the trial court signed an order granting our motion for new trial and vacating the prior order granting summary judgment for Orinoco and the Clarkes. The parties are awaiting direction from the court on a new scheduling order and/or trial setting. The Initial Bonds, which are non-revocable, remain in effect. F-27 If we become liable in the future for any decommissioning liability associated with any property covered by either an Initial Bond or an Interim Replacement Bond while such bonds are outstanding and the payment made to us under such bond is not sufficient to satisfy such liability, the Bonding Agreement provides that Orinoco will pay us an amount equal to such deficiency and if Orinoco fails to pay any such amount, such amount must be paid by the Clarkes under the Clarke Bonding Guaranty Agreement. However, if the Final Bonds or the full amount of the escrowed cash have been provided, neither Orinoco nor the Clarkes would be liable to pay us for any such deficiency. Our financial condition and results of operations may be negatively affected if Orinoco is unable to cover any such deficiency or if we become liable for a significant portion of the decommissioning liabilities. In early 2018, we also closed the sale of our Offshore Division to Epic Companies, LLC (“Epic Companies,” formerly known as Epic Offshore Specialty, LLC). Part of the consideration we received was a promissory note of Epic Companies in the original principal amount of $ 7.5 million (the “Epic Promissory Note”). At the end of August 2019, Epic Companies filed for bankruptcy and we recorded a reserve of $ 7.5 million for the full amount of the promissory note, including accrued interest, and certain other receivables in the amount of $ 1.5 million during the quarter ended September 30, 2019. The Epic Promissory Note became due on December 31, 2019 and neither Epic nor the Clarkes made payment. TETRA filed a lawsuit against the Clarkes on January 15, 2020 for breach of the promissory note guaranty agreement. In September 2020, the court granted TETRA’s Motion for Summary Judgment and entered Final Judgment in our favor, dismissing counterclaims by the Clarkes and awarded TETRA $ 7.9 million in damages. The Clarkes have filed an appeal of the Final Judgment, and the parties are awaiting a ruling from the court of appeals. Since obtaining the Final Judgment, TETRA has undertaken efforts to abstract the judgment in Texas, Utah, Nevada, Massachusetts, and Georgia. TETRA continues to work on identifying potential assets and/or engage with the Clarkes to resolve this dispute. We cannot provide any assurance the Clarkes will pay the judgment or that they will not file for bankruptcy protection. If the Clarkes do file for bankruptcy protection, we likely would be unable to collect all, or even a significant portion of, the judgment owed to us. See Note 3 - “Discontinued Operations” for further discussion. NOTE 12 — CAPITAL STOCK Our Restated Certificate of Incorporation, as amended during 2017, authorizes us to issue 250,000,000 shares of common stock, par value $ .01 per share, and 5,000,000 shares of preferred stock, par value $ .01 per share. As of December 31, 2021, we had 126,937,163 shares of common stock outstanding, with 3,138,675 shares held in treasury, and no shares of preferred stock outstanding. The voting, dividend, and liquidation rights of the holders of common stock are subject to the rights of the holders of preferred stock. The holders of common stock are entitled to one vote for each share held. There is no cumulative voting. Dividends may be declared and paid on common stock as determined by our Board of Directors, subject to any preferential dividend rights of any then outstanding preferred stock. A summary of the activity of our common shares outstanding and treasury shares held for the three-year period ending December 31, 2021, is as follows: Common Shares Outstanding Year Ended December 31, 2021 2020 2019 At beginning of period 125,976,071 125,481,163 125,737,565 Exercise of common stock options, net 10,929 — — Grants of restricted stock, net (1) 950,163 494,908 ( 256,402 ) At end of period 126,937,163 125,976,071 125,481,163 (1) Prior to 2019, we primarily granted restricted stock awards, which immediately impacted common shares outstanding. In contrast, during 2021, 2020 and 2019, we primarily granted restricted stock units which do not impact common shares outstanding until vesting. Vesting for restricted stock units began in 2020. F-28 Treasury Shares Held Year Ended December 31, 2021 2020 2019 At beginning of period 2,953,976 2,823,191 2,717,569 Shares received upon vesting of restricted stock, net 184,699 130,785 105,622 At end of period 3,138,675 2,953,976 2,823,191 Our Board of Directors is empowered, without approval of the stockholders, to cause shares of preferred stock to be issued in one or more series and to establish the number of shares to be included in each such series and the rights, powers, preferences, and limitations of each series. Because the Board of Directors has the power to establish the preferences and rights of each series, it may afford the holders of any series of preferred stock preferences, powers and rights, voting or otherwise, senior to the rights of holders of common stock. The issuance of the preferred stock could have the effect of delaying or preventing a change in control of the Company. Upon our dissolution or liquidation, whether voluntary or involuntary, holders of our common stock will be entitled to receive all of our assets available for distribution to our stockholders, subject to any preferential rights of any then outstanding preferred stock. NOTE 13 — EQUITY-BASED COMPENSATION AND OTHER Equity-Based Compensation We have various equity incentive compensation plans that provide for the granting of restricted common stock, options for the purchase of our common stock, and other performance-based, equity-based compensation awards to our executive officers, key employees, nonexecutive officers, and directors. Stock options are exercisable for periods of up to ten years. Compensation cost for all share-based payments is based on the grant date fair value and is recognized in earnings over the requisite service period. Total equity-based compensation expense before tax for the three years ended December 31, 2021, 2020, and 2019, was $ 4.7 million, $ 5.5 million, and $ 5.8 million, respectively, and is included in general and administrative expense. Stock Incentive Plans In May 2007, our stockholders approved the adoption of the TETRA Technologies, Inc. 2007 Equity Incentive Compensation Plan. In May 2008, our stockholders approved the adoption of the TETRA Technologies, Inc. Amended and Restated 2007 Equity Incentive Compensation Plan, which among other changes, resulted in an increase in the maximum number of shares authorized for issuance. In May 2010, our stockholders approved further amendments to the TETRA Technologies, Inc. Amended and Restated 2007 Equity Incentive Compensation Plan (renamed as the 2007 Long Term Incentive Compensation Plan) which, among other changes, resulted in an additional increase in the maximum number of shares authorized for issuance. Pursuant to the 2007 Long Term Incentive Compensation Plan, we are authorized to grant up to 5,590,000 shares in the form of stock options (including incentive stock options and nonqualified stock options); restricted stock; bonus stock; stock appreciation rights; and performance awards to employees, and non-employee directors. As of February 2017, no further awards may be granted under the TETRA Technologies, Inc. Amended and Restated 2007 Equity Incentive Compensation Plan. In May 2011, our stockholders approved the adoption of the TETRA Technologies, Inc. 2011 Long Term Incentive Compensation Plan. Pursuant to this plan, we were authorized to grant up to 2,200,000 shares in the form of stock options, restricted stock, bonus stock, stock appreciation rights, and performance awards to employees, and non-employee directors. On May 3, 2013, shareholders approved the TETRA Technologies, Inc. 2011 Long Term Incentive Compensation Plan that, among other things, increased the number of authorized shares to 5,600,000 . On May 3, 2016, shareholders approved the TETRA Technologies, Inc. Third Amended and Restated 2011 Long Term Incentive Compensation Plan which, among other things, increased the number of authorized shares to 11,000,000 . As of May 2018, no further awards may be granted under the TETRA Technologies, Inc. Third Amended and Restated 2011 Long Term Incentive Compensation Plan. In February 2018, the board of directors adopted the 2018 Inducement Restricted Stock Plan (“2018 Inducement Plan”). The 2018 Inducement Plan provides for grants of restricted stock up to a plan maximum of 1,000,000 shares. F-29 In May 2018, our stockholders approved the adoption of the TETRA Technologies, Inc. 2018 Equity Incentive Plan (“2018 Equity Plan”) and the TETRA Technologies, Inc. 2018 Non-Employee Director Equity Incentive Plan (“2018 Director Plan”). In May 2021, our stockholders approved the First Amended and Restated 2018 Equity Incentive Plan (the “Amended 2018 Equity Plan”), which amended the 2018 Equity Plan and terminated the 2018 Director Plan. Pursuant to the Amended 2018 Equity Plan, we are authorized to grant up to 11,865,000 shares in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares, other stock-based awards and cash-based awards to employees and non-employee directors. Stock Options We did not grant any stock options during the year ended December 31, 2021 and 2020. The weighted average fair value of options granted during the year ended December 31, 2019 was $ 0.76 , using the Black-Scholes option valuation model with the following weighted average assumptions: Year Ended December 31, 2019 Expected stock price volatility 61 % Expected life of options 4.4 years Risk-free interest rate 2.3 % Expected dividend yield — The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the grant date for a period commensurate with the estimated expected life of the stock options. Expected volatility is based on the historical volatility of our stock over the period commensurate with the expected life of the stock options and other factors. The dividend yield is based on the current annualized dividend rate in effect during the quarter in which the grant was made. At the time of the stock option grant during the year ended December 31, 2019, we had not historically paid any dividends and did not expect to pay any dividends during the expected life of the stock options. The following is a summary of stock option activity for the year ended December 31, 2021: Shares Under Option Weighted Average Option Price Per Share Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value (In Thousands) (In Thousands) Outstanding at January 1, 2021 3,208 $ 6.73 Options canceled ( 61 ) 6.82 Options exercised ( 11 ) 3.87 Options expired ( 152 ) 12.94 Outstanding at December 31, 2021 2,984 6.42 4.0 years $ 13 Expected to vest at December 31, 2021 2,984 6.42 4.0 years 13 Exercisable at December 31, 2021 2,984 $ 6.42 4.0 years $ 13 Intrinsic value is the difference between the market value of our stock option multiplied by the number of stock options outstanding for those stock options where the market value exceeds their exercise price. The total intrinsic value of stock options exercised during the year ended December 31, 2021, was less than $ 0.1 million. There were no options exercised during the years ended December 31, 2020 or 2019. At December 31, 2021, total unrecognized compensation cost related to unvested stock options is not significant. F-30 Restricted Stock Restricted stock awards and restricted stock units are periodically granted to key employees, including grants for employment inducements, as well as to members of our Board of Directors. These awards historically have provided for vesting periods of three years. Non-employee director grants vest in full before the first anniversary of the grant. Upon vesting of restricted stock awards, shares are issued to award recipients. Restricted stock units may be settled in cash or shares at vest, as determined by the Compensation Committee or the Non-Executive Award Committee, as applicable. The following is a summary of activity for our outstanding restricted stock for the year ended December 31, 2021: Shares Weighted Average Grant Date Fair Value Per Share (In Thousands) Non-vested restricted stock outstanding at December 31, 2020 3,733 $ 2.11 Granted 2,246 2.74 Vested ( 2,294 ) 2.42 Canceled/Forfeited ( 94 ) 2.22 Non-vested restricted stock outstanding at December 31, 2021 3,591 2.31 Total compensation cost recognized for restricted stock was $ 4.6 million, $ 5.1 million, and $ 4.8 million for the years ended December 31, 2021, 2020, and 2019, respectively. Total unrecognized compensation cost at December 31, 2021, related to restricted stock is approximately $ 4.7 million which is expected to be recognized over a weighted-average remaining amortization period of 1.8 years. During the years ended December 31, 2021, 2020, and 2019, the total fair value of shares vested was $ 5.5 million, $ 4.5 million and $ 4.0 million, respectively. During 2021, 2020, and 2019, we received 184,699 , 130,785 and 105,622 shares, respectively, of our common stock related to the vesting of certain employee restricted stock. Such surrendered shares received by us are included in treasury stock. At December 31, 2021, net of options previously exercised pursuant to our various equity compensation plans, we have a maximum of 5,738,412 shares of common stock issuable pursuant to awards previously granted and outstanding and awards authorized to be granted in the future. 401(k) Plan We have a 401(k) retirement plan (the “Plan”) that covers substantially all employees and entitles them to contribute up to 75 % of their annual compensation, subject to maximum limitations imposed by the Internal Revenue Code. Effective October 1, 2018, enhancements were made to the Plan, including changing the employer match to 50 % of each employee’s contribution up to 8 %. Participants will be 100 % vested in employer match contributions after 3 years of service, instead of after 5 years of service. In addition, we can make discretionary contributions which are allocable to participants in accordance with the Plan. During the fourth quarter of 2021, we reinstated the 401(k) matching for our employees which was suspended during 2020 due to the COVID pandemic and market conditions. Total expense related to our 401(k) plan was $ 0.5 million, $ 1.5 million, and $ 5.1 million for the years ended December 31, 2021, 2020, and 2019, respectively. Deferred Compensation Plan We provide our officers, directors, and certain key employees with the opportunity to participate in an unfunded, deferred compensation program. There were 16 participants in the program at December 31, 2021. Under the program, participants may defer up to 100 % of their yearly total cash compensation. The amounts deferred remain our sole property, and we use a portion of the proceeds to purchase life insurance policies on the lives of certain of the participants. The insurance policies, which also remain our sole property, are payable to us upon the death of the insured. We separately contract with the participant to pay to the participant the amount of deferred compensation, as adjusted for gains or losses, invested in participant-selected investment funds. Participants may elect to receive deferrals and earnings at termination, death, or at a specified future date while still employed. Distributions while employed must be at least three years after the deferral election. The program is not qualified under Section 401 of the Internal Revenue Code. At December 31, 2021, the amounts payable under the plan approximated the value of the corresponding assets we owned. F-31 NOTE 14 — FAIR VALUE MEASUREMENTS Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that may differ from the transaction price or market price of the asset or liability. Under U.S. GAAP, the fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value. Fair value measurements should maximize the use of observable inputs and minimize the use of unobservable inputs, where possible. Observable inputs are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs may be needed to measure fair value in situations where there is little or no market activity for the asset or liability at the measurement date and are developed based on the best information available in the circumstances, which could include the reporting entity’s own judgments about the assumptions market participants would utilize in pricing the asset or liability. Financial Instruments Investments We retained an interest in CSI Compressco (NASDAQ: CCLP) representing approximately 3.8 % of the outstanding common units as of December 31, 2021. In December 2021, we invested $ 5.0 million in a convertible note issued by CarbonFree. The Company receives cash and stock of Standard Lithium (NYSE: SLI) under the terms of its arrangements. Our investments in CSI Compressco and Standard Lithium are recorded in investments on our consolidated balance sheets based on the quoted market stock price (Level 1 fair value measurements). The stock component of consideration received from Standard Lithium is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. Changes in the value of stock are recorded in other income (expense) in our consolidated statements of operations. Our investment in CarbonFree is also recorded in investments on our consolidated balance sheets based on an internal valuation (a Level 3 fair value measurement). Derivative Contracts We are exposed to financial and market risks that affect our businesses. We have concentrations of credit risk as a result of trade receivables owed to us by companies in the energy industry. We have currency exchange rate risk exposure related to transactions denominated in foreign currencies as well as to investments in certain of our international operations. As a result of our variable rate debt facilities, we face market risk exposure related to changes in applicable interest rates. Our financial risk management activities may at times involve, among other measures, the use of derivative financial instruments, such as swap and collar agreements, to hedge the impact of market price risk exposures. We entered into, and we may in the future enter into, short-term foreign currency forward derivative contracts with third parties as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. Although contracts pursuant to this program will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period. The fair values of foreign currency derivative instruments are based on quoted market values (a Level 2 fair value measurement). The fair values of our foreign currency derivative instruments as of December 31, 2021 and 2020 was insignificant. During the years ended December 31, 2021, 2020, and 2019, we recognized approximately less than $ 0.1 million, $ 0.2 million and $ 1.5 million of net (gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program. F-32 A summary of significant recurring fair value measurements by valuation hierarchy as of December 31, 2021 and December 31, 2020, is as follows: Fair Value Measurements Using Total as of Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Significant Unobservable Inputs Description Dec 31, 2021 (Level 1) (Level 2) (Level 3) (In Thousands) Investment in CSI Compressco $ 6,233 6,233 — — Investment in CarbonFree 5,000 — — 5,000 Total $ 11,233 Fair Value Measurements Using Total as of Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Significant Unobservable Inputs Description Dec 31, 2020 (Level 1) (Level 2) (Level 3) (In Thousands) Investment in Standard Lithium $ 2,675 $ 2,675 $ — $ — Total $ 2,675 During 2019, our Completion Fluids & Products and Water & Flowback Services Divisions each recorded certain long-lived tangible asset impairments. The Completion Fluids & Products Division recorded an impairment of $ 91.6 million related to our El Dorado, Arkansas calcium chloride production plant facility assets primarily due to a reduction in the cost of raw materials for certain of our other chemical production plants, following the execution of a long-term raw material supply agreement during the fourth quarter of 2019. Also in 2019, our Water & Flowback Services Division recorded goodwill impairment of $ 25.8 million. The fair values used in these impairment calculations were estimated based on discounted estimated future cash flows, including projected future cash flows and/or estimated replacement costs, or a fair value in-exchange assumption, which are based on significant unobservable inputs (Level 3) in accordance with the fair value hierarchy. For further discussion, see Note 6 - “Impairments and Other Charges”. A summary of these nonrecurring fair value measurements during the year ended December 31, 2019, using the fair value hierarchy, is as follows: Fair Value Measurements Using Description Fair Value Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Year-to-Date Impairment Losses (In Thousands) Completion Fluids & Products production facility $ 9,459 $ — $ — $ 9,459 $ 91,606 Water & Flowback Services goodwill $ — — — — 25,784 Water & Flowback Services equipment $ — — — — 284 Total $ 9,459 $ — $ — $ 9,459 $ 117,674 F-33 Other The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to TETRA's ABL Credit Agreement and Term Credit Agreement approximate their carrying amounts. NOTE 15 — INCOME TAXES The income tax provision attributable to continuing operations for the years ended December 31, 2021, 2020, and 2019, consists of the following: Year Ended December 31, 2021 2020 2019 (In Thousands) Current State $ 124 $ 191 $ 400 Foreign 2,031 1,598 2,837 2,155 1,789 3,237 Deferred Federal — ( 175 ) ( 161 ) State ( 4 ) ( 125 ) ( 395 ) Foreign ( 67 ) 269 130 ( 71 ) ( 31 ) ( 426 ) Total tax provision $ 2,084 $ 1,758 $ 2,811 A reconciliation of the provision (benefit) for income taxes attributable to continuing operations, computed by applying the federal statutory rate to income (loss) before income taxes and the reported income taxes, is as follows: Year Ended December 31, 2021 2020 2019 (In Thousands) Income tax benefit computed at statutory federal income tax rates $ ( 3,091 ) $ ( 5,268 ) $ ( 26,903 ) State income taxes (net of federal benefit) ( 386 ) ( 2,124 ) ( 2,388 ) Impact of international operations ( 4,083 ) 4,036 672 Valuation allowance 9,055 4,598 30,640 Other 589 516 790 Total tax provision $ 2,084 $ 1,758 $ 2,811 Income (loss) before taxes and discontinued operations includes the following components: Year Ended December 31, 2021 2020 2019 (In Thousands) Domestic $ ( 25,198 ) $ ( 25,929 ) $ ( 135,668 ) International 10,477 843 7,559 Total $ ( 14,721 ) $ ( 25,086 ) $ ( 128,109 ) F-34 A reconciliation of the beginning and ending amount of our gross unrecognized tax benefit is as follows: Year Ended December 31, 2021 2020 2019 (In Thousands) Gross unrecognized tax benefits at beginning of period $ 17 $ 137 $ 328 Lapse in statute of limitations ( 17 ) ( 120 ) ( 191 ) Gross unrecognized tax benefits at end of period $ — $ 17 $ 137 We recognize interest and penalties related to uncertain tax positions in income tax expense. During the years ended December 31, 2021, 2020, and 2019, we recognized less than $( 0.1 ) million, $( 0.2 ) million, and $( 0.3 ) million, respectively, of interest and penalties. As of December 31, 2021 and 2020, we had zero and less than $ 0.1 million, respectively, of accrued potential interest and penalties associated with uncertain tax positions. The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized was zero and less than $ 0.1 million as of December 31, 2021 and 2020, respectively. We do not expect a significant change to the unrecognized tax benefits during the next twelve months. We file tax returns in the U.S. and in various state, local, and non-U.S. jurisdictions. The following table summarizes the earliest tax years that remain subject to examination by taxing authorities in any major jurisdiction in which we operate: Jurisdiction Earliest Open Tax Period United States – Federal 2012 United States – State and Local 2004 Non-U.S. jurisdictions 2011 We use the liability method for reporting income taxes, under which current and deferred tax assets and liabilities are recorded in accordance with enacted tax laws and rates. Under this method, at the end of each period, the amounts of deferred tax assets and liabilities are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. We considered all available evidence, both positive and negative, in determining whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of our deferred tax assets. In determining the need for a valuation allowance on our deferred tax assets we placed greater weight on recent and objectively verifiable current information, as compared to more forward-looking information that is used in valuating other assets on the balance sheet. While we have considered taxable income in prior carryback years, future reversals of existing taxable temporary differences, future taxable income, and tax planning strategies in assessing the need for the valuation allowance, there can be no guarantee that we will be able to realize our net deferred tax assets. Significant components of our deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows: December 31, 2021 2020 (In Thousands) Net operating losses $ 114,597 $ 104,478 Accruals 16,500 16,515 Depreciation and amortization for book in excess of tax expense 10,965 12,608 Investment in Partnership — 23,344 All other 11,913 12,743 Total deferred tax assets 153,975 169,688 Valuation allowance ( 127,058 ) ( 146,678 ) Net deferred tax assets $ 26,917 $ 23,010 F-35 December 31, 2021 2020 (In Thousands) Right of use asset $ 7,071 $ 7,808 Depreciation and amortization for tax in excess of book expense 14,037 15,402 Investment in Partnership 5,471 — All other 2,007 1,690 Total deferred tax liabilities 28,586 24,900 Net deferred tax liabilities $ 1,669 $ 1,890 We believe that it is more likely than not we will not realize all the tax benefits of the deferred tax assets within the allowable carryforward period. Therefore, an appropriate valuation allowance has been provided. The valuation allowance as of December 31, 2021 and 2020 primarily relates to federal deferred tax assets. The $ 19.6 million decrease in the valuation allowance during the year ended December 31, 2021 was primarily due to the decrease in Federal deferred tax assets, the majority of which is related to the sale of our partnership interest in CSI Compressco in January 2021. Entering into the GP Sale in January 2021 resulted in the recognition of temporary deferred assets associated with the outside basis difference of some of our subsidiaries at December 31, 2020, which were then reversed at the time of the sale in January 2021. These temporary differences were fully offset by a valuation allowance. At December 31, 2021, we had federal, state, and foreign net operating loss carryforwards/carrybacks equal to approximately $ 92.5 million, $ 12.3 million, and $ 9.9 million, respectively. In those countries and states in which net operating losses are subject to an expiration period, our loss carryforwards, if not utilized, will expire at various dates from 2022 through 2041. Utilization of the net operating loss and credit carryforwards may be subject to a significant annual limitation due to ownership changes that have occurred previously or could occur in the future provided by Section 382 of the Internal Revenue Code. NOTE 16 — NET INCOME (LOSS) PER SHARE The average diluted shares outstanding excludes the impact of certain outstanding equity awards and warrants of 1.8 million, 21 thousand and 48 thousand shares for the twelve-month periods ended December 31, 2021, 2020 and 2019, respectively, as the inclusion of these shares would have been anti-dilutive due to the net loss from continuing operations recorded during these periods. NOTE 17 — INDUSTRY SEGMENTS AND GEOGRAPHIC INFORMATION We manage our operations through two divisions: Completion Fluids & Products Division and Water & Flowback Services Division. We generally evaluate the performance of and allocate resources to our segments based on profit or loss from their operations before income taxes and nonrecurring charges, return on investment, and other criteria. Transfers between segments and geographic areas are priced at the estimated fair value of the products or services as negotiated between the operating units. “Corporate overhead” includes corporate general and administrative expenses, corporate depreciation and amortization, interest income and expense, and other income and expense. F-36 Summarized financial information concerning the business segments is as follows: Year Ended December 31, 2021 2020 2019 (In Thousands) Revenues from external customers Product sales Completion Fluids & Products Division $ 211,201 $ 229,809 $ 258,632 Water & Flowback Services Division 4,028 2,912 921 Consolidated $ 215,229 $ 232,721 $ 259,553 Services Completion Fluids & Products Division $ 8,447 $ 12,852 $ 20,623 Water & Flowback Services Division 164,596 132,142 281,065 Consolidated $ 173,043 $ 144,994 $ 301,688 Total revenues Completion Fluids & Products Division $ 219,648 $ 242,661 $ 279,255 Water & Flowback Services Division 168,624 135,054 281,986 Consolidated $ 388,272 $ 377,715 $ 561,241 Depreciation, amortization, and accretion Completion Fluids & Products $ 7,542 $ 7,581 $ 13,518 Water & Flowback Services 25,060 29,913 33,410 Corporate 900 720 635 Consolidated $ 33,502 $ 38,214 $ 47,563 Interest expense Completion Fluids & Products $ 44 $ 73 $ 68 Water & Flowback Services 7 4 7 Corporate 16,506 19,249 21,733 Consolidated interest expense 16,557 $ 19,326 $ 21,808 Consolidated interest income ( 180 ) ( 400 ) ( 552 ) Consolidated interest expense, net $ 16,377 $ 18,926 $ 21,256 Income (loss) before taxes and discontinued operations Completion Fluids & Products $ 54,981 $ 55,334 $ ( 33,969 ) Water & Flowback Services ( 11,116 ) ( 21,850 ) ( 21,173 ) Interdivision eliminations 12 12 14 Corporate (1) ( 58,598 ) ( 58,582 ) ( 72,981 ) Consolidated $ ( 14,721 ) $ ( 25,086 ) $ ( 128,109 ) (1) Amounts reflected include the following general corporate expenses: Year Ended December 31, 2021 2020 2019 (In Thousands) General and administrative expense $ 39,990 $ 36,201 $ 51,466 Depreciation, amortization and impairment 1,032 818 631 Interest expense, net 17,483 20,727 21,977 Other general corporate (income) expense, net 93 836 ( 1,093 ) Total $ 58,598 $ 58,582 $ 72,981 F-37 December 31, 2021 2020 (In Thousands) Total assets Completion Fluids & Products $ 200,869 $ 218,952 Water & Flowback Services 146,110 136,511 Corporate, other and eliminations 51,287 67,370 Assets of discontinued operations — 710,006 Consolidated $ 398,266 $ 1,132,839 Year Ended December 31, 2021 2020 2019 (In Thousands) Capital expenditures Completion Fluids & Products $ 3,828 $ 4,016 $ 7,140 Water & Flowback Services 13,620 9,651 24,340 Corporate 105 1,023 1,033 Discontinued operations (1) 2,980 14,696 75,760 Consolidated $ 20,533 $ 29,386 $ 108,273 (1) Amounts presented are net of cost of equipment sold, including zero during 2021, $ 12.7 million during 2020 and $ 6.5 million during 2019 for our former Compression Division. Summarized financial information concerning the geographic areas of our customers and in which we operate at December 31, 2021, 2020, and 2019, is presented below: Year Ended December 31, 2021 2020 2019 (In Thousands) Revenues from external customers United States $ 251,786 $ 225,835 $ 411,284 Canada and Mexico 5,363 1,347 6,616 South America 10,473 11,583 13,188 Europe 88,136 90,303 93,327 Africa 2,262 8,128 16,874 Middle East, Asia and other 30,252 40,519 19,952 Total $ 388,272 $ 377,715 $ 561,241 Transfers between geographic areas: Europe 195 848 1,802 Eliminations ( 195 ) ( 848 ) ( 1,802 ) Total revenues $ 388,272 $ 377,715 $ 561,241 During each of the two years ended December 31, 2021 and 2020, no single customer accounted for more than 10% of our consolidated revenues. One customer provided more than 10% of our consolidated revenues during the year ended December 31, 2019. As of December 31, 2021 and 2020, no receivables from individual customers represented 10% or more of our consolidated trade accounts receivables net of allowance for doubtful accounts. F-38 December 31, 2021 2020 (In Thousands) Identifiable assets United States $ 291,986 $ 285,765 Canada and Mexico 5,891 6,452 South America 21,837 10,388 Europe 72,685 85,733 Africa 199 9,195 Middle East, Asia and other 5,668 25,300 Assets of discontinued operations — 710,006 Total identifiable assets $ 398,266 $ 1,132,839 NOTE 18 — SUBSEQUENT EVENTS The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements except for the transactions described below. In January 2022, the Company entered into a new revolving credit facility for seasonal working capital needs of subsidiaries in Sweden and Finland (“Swedish Credit Facility”). There are no borrowings and the facility has availability of 50.0 million Swedish Krona, or approximately $ 5.3 million United States dollars, as of February 25, 2022. During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days. Borrowings bear interest at a rate of 2.95 % per annum. The Swedish Credit Facility expires on December 31, 2022 and the Company intends to renew it annually. Our Lake Charles facility incurred damage due to Hurricane Laura in 2020 for which we received partial insurance proceeds in 2020. In February 2022, we reached a voluntary settlement of an additional approximately $ 3.8 million, which we expect to recognize as other income during the first quarter of 2022. F-39