What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-02-27 compared with 2022-02-28 · 73 added, 93 removed, 321 unchanged (34% of the section changed)

7 unchanged sentences

Oil prices fell beginning in early 2020 and recovered during 2021 and into early 2022.

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

The West Texas Intermediate price averaged $68.14 per barrel during 2021.

West Texas Intermediate oil prices averaged $39.16, $68.14, and $94.90 per barrel during 2020, 2021, and 2022, respectively.

Over this same period, U.S.

natural gas prices have also been volatile, with the Henry Hub price ranging from a high of $23.86 per million British thermal units (“MMBtu”) in February 2021 to a low of $1.33 per MMBtu in September 2020 and averaged $2.03 and $3.89 per MMBtu during 2020 and 2021, respectively.

As of February 25, 2022, the price of West Texas Intermediate oil was $91.90 per barrel and the Henry Hub price for natural gas was $4.48 per MMBtu.

natural gas prices have also been volatile, with the Henry Hub price averaging $2.03, $3.89, and $6.45 per MMBtu during 2020, 2021, and 2022, respectively.

The prolonged volatility and low levels of oil and natural gas prices and supply and demand imbalances depressed levels of exploration, development, and production activity during 2020 and early 2021.

If the drop in oil and natural gas prices experienced in 2020 and early 2021 returns or further declines and the supply and demand imbalances persist, there would be a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.

If oil and natural gas prices return to levels at or below those experienced in 2020 and early 2021 and supply and demand imbalances persist, there would be a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.

Should current market conditions worsen for an extended period of time, we may be required to record additional asset impairments.

4 unchanged sentences

weather conditions, natural disasters, and health or similar issues, such as pandemics or epidemics;

worldwide political, military, and economic conditions;

worldwide political, military, and economic conditions such as the Russia-Ukraine conflict;

the ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and non-OPEC countries, such as Russia, to set and maintain oil production levels;

4 unchanged sentences

and acceleration of the development of, and demand for, alternative energy sources.

The COVID-19 pandemic has had, and may in the future have, certain negative impacts on our business, and such impacts have had, and may in the future have, an adverse effect on our business, our financial condition, results of operations, or liquidity.

The COVID-19 pandemic and the resulting economic impact have had a significant negative impact on the oil and gas industry.

In addition to the deterioration in demand for oil in 2020 which had an adverse impact on the demand for our products and services, the public health crisis caused by the COVID-19 pandemic, and the measures that have been taken or that may be taken in the future by governments, various regulatory agencies, our customers and our suppliers, have had, and may in the future have, certain negative impacts on our financial condition, results of operations, and liquidity, including, without limitation, the following:

• actions undertaken by national, state and local governments and health officials to contain COVID-19 or treat its effects.

In response to various governmental directives, at points we have required most office-based employees, including most employees based at our headquarters in The Woodlands, Texas, to work remotely.

We may experience reductions in productivity and disruptions to our business routines to the extent work-from-home arrangements remain in place;

• We could encounter logistical complications and increased costs adapting our disclosure controls and procedures and our internal control over financial reporting in a changing environment that includes work-from-home arrangements and furloughs.

In the future we may encounter operational challenges or disruptions stemming from the pandemic that require us to implement new or enhanced internal controls to mitigate the risks of operating in a remote environment or increased risks of material misstatements resulting from changes to the business and other uncertainties;

• restrictions on importing and exporting products;

• higher logistics costs and global shipping delays;

• impacts related to late customer payments and contractual defaults associated with customer and supplier bankruptcies;

• potentially higher borrowing costs in the future;

• cybersecurity issues, as our network may become more vulnerable to cyberattacks due to increased remote access associated with work-from-home arrangements;

• our ability to use our net operating loss carryforwards may be limited;

• increased costs associated with possible facility closures to meet expected customer activity levels;

• we may be required to record significant impairment charges with respect to assets, whose fair values may be negatively affected by the effects of the COVID-19 pandemic on our operations.

Also, we may be required to write off obsolete inventory, and such charges may be significant.

Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a significant adverse effect on our financial condition, results of operations, or liquidity.

The full extent to which the COVID-19 pandemic will negatively affect our financial condition, results of operations, or liquidity will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the COVID-19 infection rate, the outbreak of new COVID-19 variants, the efficacy of distribution of COVID-19 vaccines, the actions taken by authorities to contain it or treat its impact and the resulting impact on the oil and gas industry.

Given the dynamic nature of these events, we cannot reasonably estimate the period of time that the COVID-19 pandemic and related market conditions will persist, the full extent of the impact they will have on our financial condition, results of operations, or liquidity or the pace or extent of any subsequent recovery.

We encounter, and expect to continue to encounter, intense competition in the sale of our products and services.

2 unchanged sentences

Other competitors have newer equipment that is better suited to our customers’ needs.

Particularly during a period of low oil and natural gas pricing, to the extent competitors offer products or services at lower prices or higher quality, or more cost-effective products or services, our business could be materially and adversely affected.

If we experience another period of low oil and natural gas pricing, to the extent competitors offer products or services at lower prices or higher quality, or more cost-effective products or services, our business could be materially and adversely affected.

In addition, certain of our customers may elect to perform services internally in lieu of using our services, which could also materially and adversely affect our operations.

4 unchanged sentences

Customer consolidation may also lead to reductions in capital spending that could have a material adverse effect on our business.

Low oil prices and the supply and demand imbalance are expected to adversely affect such levels of spending in the oil and natural gas industry.

In addition, Completion Fluids & Products Division profitability in future periods will continue to be affected by the mix of its products and services, including the timing of TETRA CS Neptune completion fluid projects, which are also dependent upon the success of customer offshore exploration and drilling efforts.

9 unchanged sentences

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 company receives cash and stock of Standard Lithium

under the terms of the arrangements.

If we elect to hold Standard Lithium stock received under these agreements, our operating results could be significantly affected by fluctuations in the market value of our stock holding.

5 unchanged sentences

The impact of reduced expected future cash flow could require the write-down of all or a portion of the carrying value for these assets, which would result in additional impairments, resulting in decreased earnings.

During the three-year period ending December 31, 2021, we recorded a total of $93.2 million of impairments and other charges for long-lived assets other than goodwill.

Most significantly, 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 as a result of a reduction in the cost of raw materials for certain of our other chemical production plants and reduced demand for calcium chloride from the El Dorado plant due to general market conditions in the oil and gas industry.

During the three-year period ending December 31, 2022, we recorded a total of $3.9 million of impairments and other charges for certain inventory and long-lived assets other than goodwill.

Depressed commodity prices and/or adverse changes in the economic environment could result in a greater decrease in the demand for many of our products and services, which could impact the expected utilization rates of certain of our long-lived assets, including plant facilities, operating locations, and operating equipment.

As part of our internal annual business outlook for each of our reporting units that we performed during the fourth quarter of 2019, we considered changes in the global economic environment that negatively impacted our stock price and market capitalization.

As part of the first step of goodwill impairment testing for our Water Management reporting unit (part of our Water & Flowback Services Division) as of December 31, 2019, the only reporting unit with goodwill, we determined that the fair value of the Water Management reporting unit was less than

its carrying value, and the remaining balance of $25.9 million of goodwill was impaired.

Additional internal annual business outlook analyses for each of our reporting units that we performed during the fourth quarters of 2020 and 2021 did not indicate additional impairments.

We are dependent on third-party suppliers for specific products and equipment necessary to provide certain of our products and services.

20 unchanged sentences

Our operations involve significant operating risks and insurance coverage may not be available or cost-effective.

We are subject to operating hazards normally associated with the oilfield service industry, including automobile accidents, fires, explosions, blowouts, formation collapse, mechanical problems, abnormally pressured formations, and environmental accidents.

Environmental accidents could include, but are not limited to, oil and produced water spills, gas leaks or ruptures, uncontrollable flows of oil, gas, or well fluids, or discharges of CBFs or toxic gases or other pollutants.

formations, and environmental accidents.

These operating hazards may also include injuries to employees and third parties during the performance of our operations.

4 unchanged sentences

To the extent we suffer losses or claims that are not covered, or are only partially covered by insurance, our results of operations could be adversely affected.

We are subject to a number of risks associated with the GP Sale, and these risks could adversely impact our operations, financial condition and business.

On January 29, 2021, we closed the sale of CSI Compressco’s general partner and approximately 23.1% of the outstanding limited partner interests in CSI Compressco to Spartan.

We are subject to a number of risks associated with this transaction, including risks associated with:

• any required payments of indemnification obligations under the Purchase Agreement for retained liabilities and breaches of representations, warranties or covenants;

• our failure to realize the full purchase price anticipated under the Purchase Agreement, including the ability of CSI Compressco to generate adjusted EBITDA on or prior to December 31, 2022 sufficient to result in payment of the contingent consideration.

As a result of these risks, we may be unable to realize the anticipated benefits of the transaction, including the total amount of consideration we expect to realize.

Our failure to realize the anticipated benefits of the transaction would adversely impact our operations, financial condition and business and could limit our ability to pursue additional strategic transactions.

We may not be able to economically extract lithium or bromine from the leased acreage in our Arkansas brine leases.

Our Arkansas brine leases currently only contain exploration targets of lithium and bromine, and we may never discover proven mineral reserves on these properties.

While we continue to evaluate the next steps regarding the potential development of our brine leases, we have only very recently started to conduct exploration work on the leases, and we are not currently able to determine the economic viability of the extraction of the lithium and bromine from the leased acreage.

Our Arkansas brine leases currently only contain inferred resources of lithium and bromine, and we may never convert any of these resources to proven mineral reserves on these properties, or enough of them to justify the decision to engage in the extraction of lithium and/or bromine.

While we continue to evaluate the next steps regarding the potential development of our brine leases, we have only very recently completed the initial assessment of the bromine resource, and we are not currently able to determine the economic viability of the extraction of the lithium and bromine from the leased acreage.

In addition, the extraction of lithium and bromine from these brine leases will likely require a significant amount of time and capital, which we are not able to estimate at this time and which may not be available to us on acceptable terms or at all.

There can be no assurance that any future exploration efforts on these properties will be successful.

As a result of these uncertainties, no assurance can be given that any future exploration programs will result in the discovery of commercial mineral resources or reserves.

Failure to effectively and timely execute our any of our low carbon energy initiatives could have an adverse effect on business and financial condition.

As a result of these uncertainties, no assurance can be given that any future exploration programs will result in the discovery of commercially viable mineral resources or reserves.

Failure to effectively and timely execute any of our low carbon energy initiatives could have an adverse effect on our business and financial condition.

Our future success may depend on our ability to effectively execute on our low carbon energy initiatives.

5 unchanged sentences

Certain of our operations are seasonal and depend, in part, on weather conditions.

In certain markets, the Water & Flowback Services Division’s onshore water management services can be dependent on adequate water supplies being available to its customers.

In certain markets, the Water & Flowback Services Division’s onshore water management services can be dependent on adequate water supplies being available to our customers.

To the extent severe drought or other weather-related conditions prevent our customers from obtaining needed water, frac water operations may not be possible and our Water & Flowback Services Division business may be negatively affected.

1 unchanged sentence

A portion of our operations is susceptible to adverse weather conditions in the Gulf of Mexico, including hurricanes and other extreme weather conditions.

Our 2021 results reflect an estimated unfavorable impact of $3.1 million due to the severe weather conditions during February that shut down fracking activity in several of our key markets and negatively impacted the supply chain for our industrial chemicals operations.

Our 2021 results reflect an estimated unfavorable impact of $3.1 million due to the severe weather conditions during February that shut down fracking activity in several of our

key markets and negatively impacted the supply chain for our industrial chemicals operations.

Even if we do not experience direct damage from storms, we may experience disruptions in our operations, because we are unable to operate or our customers or suppliers may curtail their activities due to damage to their wells, platforms, pipelines, and facilities.

14 unchanged sentences

In recent years, the stock market in general has experienced extreme price and volume fluctuations that have affected the market price for companies in industries similar to ours.

Some of these fluctuations have been unrelated to operating performance and are attributable, in part, to outside factors such as the COVID-19 pandemic and its impact on the world economy.

Some of these fluctuations have been unrelated to operating performance and are attributable, in part, to outside factors such as general economic conditions, including the impact of the COVID-19 pandemic, the ongoing Russia-Ukraine conflict and fear of a global recession.

The volatility of our common stock may make it difficult to resell shares of our common stock at attractive prices.

Our long-term debt agreements contain covenants and other provisions that restrict our ability to take certain actions and may limit our ability to operate or grow our business in the future.

As of December 31, 2021, our total long-term debt outstanding of $151.9 million consisted of the carrying amount outstanding under our credit agreement (the “Term Credit Agreement”) and our Asset-Based Credit Agreement (the “ABL Credit Agreement”), both of which we entered into in September 2018.

Following the closing of the GP Sale on January 29, 2021, we were required to use all net cash proceeds from the sale to repay borrowings under our Term Credit Agreement.

As of December 31, 2022, our total long-term debt outstanding of $156.5 million consisted of the carrying amount outstanding under our credit agreement (the “Term Credit Agreement”) [and our Asset-Based Credit Agreement (the “ABL Credit Agreement”)], both of which we entered into in September 2018, as well as borrowings under our revolving credit facility for seasonal working capital needs of subsidiaries in Sweden (“Swedish Credit Facility”), which was entered into in January 2022.

The ABL Credit Agreement and Term Credit Agreement each contain certain affirmative and negative covenants, including covenants that restrict the ability of TETRA and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, (i) incurring debt, (ii) granting liens, (iii) engaging in mergers and other fundamental changes, (iv) making investments, (v) entering into, or amending, transactions with affiliates, (vi) paying dividends and making other restricted payments, (vii) prepaying other indebtedness, and (viii) selling assets.

2 unchanged sentences

Our Term Credit Agreement requires us to annually prepay up to 50% of Excess Cash Flow (as defined in the Term Credit Agreement) from the most recent full fiscal year.

If our Leverage Ratio (as defined in the Term Credit Agreement) at year-end is less than 2.00 to

1.00 , the prepayment requirement is decreased to 25%.

If our Leverage Ratio (as defined in the Term Credit Agreement) at year-end is less than 2.00 to 1.00, the prepayment requirement is decreased to 25%.

If our Leverage Ratio at year-end is less than 1.50 to 1.00, then no prepayment is required.

27 unchanged sentences

Recent and additional anticipated changes to the supplemental bonding and financial assurance program managed by the U.S.

Department of the Interior could require all oil and gas owners and operators with infrastructure in the Gulf of Mexico to provide additional supplemental bonds or other acceptable financial

assurance for decommissioning liabilities.

Department of the Interior could require all oil and gas owners and operators with infrastructure in the Gulf of Mexico to provide additional supplemental bonds or other acceptable financial assurance for decommissioning liabilities.

These changes have the potential to adversely impact the financial condition of lease owners and operators in the Gulf of Mexico and increase the number of such owners and operators seeking bankruptcy protection, given current oil and gas prices.

In July 2016, the U.S.

Department of the Interior issued a Notice to Lessees and Operators (“2016 NTL”) that strengthened requirements for the posting of additional financial assurance by offshore lease owners and operators to assure that sufficient security is available to satisfy and extinguish decommissioning obligations with respect to offshore wells, platforms, pipelines and other facilities.

Department of the Interior issued a Notice to Lessees and Operators (“2016 NTL”) that strengthened requirements for the posting of

additional financial assurance by offshore lease owners and operators to assure that sufficient security is available to satisfy and extinguish decommissioning obligations with respect to offshore wells, platforms, pipelines and other facilities.

The 2016 NTL, which became effective in September 2016, eliminated the past practice of waiving supplemental bonding requirements where lease owners or operators, or their guarantors, could demonstrate a certain level of financial strength.

22 unchanged sentences

Our ability to collect from our customers could be impacted by volatility in the oil and natural gas price environment and we may face increased credit risks if the price of oil were to fall and remain low for an extended period of time.

As discussed in the preceding risk factors, we face the risk of having to satisfy decommissioning liabilities on properties presently or formerly owned by Maritech.

Continued decreased oil and natural gas prices have resulted in reduced revenues and cash flows for oil and gas lease owners and operators, including companies that have purchased Maritech properties or are joint owners in properties presently and formerly owned by Maritech and from whom Maritech is entitled to receive payments upon satisfaction of certain decommissioning obligations.

As discussed in the preceding risk factors, we face the risk of having to satisfy decommissioning liabilities on properties presently or formerly owned by Maritech, including companies that have purchased Maritech properties or are joint owners in properties presently and formerly owned by Maritech and from whom Maritech is entitled to receive payments upon satisfaction of certain decommissioning obligations.

Consequently, we face credit risk associated with the ability of these companies to satisfy their decommissioning liabilities.

If these companies are unable to satisfy their obligations, it will increase the possibility that we will become liable for such decommissioning obligations in the future.

If these companies are

unable to satisfy their obligations, it will increase the possibility that we will become liable for such decommissioning obligations in the future.

Our operating results and cash flows for certain of our subsidiaries are subject to foreign currency risk.

7 unchanged sentences

We are exposed to interest rate risks with regard to our credit facility debt and future refinancing thereof.

As of December 31, 2021, we had $1.6 million outstanding balance under our ABL Credit Agreement and $163.1 million outstanding under our Term Credit Agreement.

As of December 31, 2022, we had $163.1 million outstanding under our Term Credit Agreement and $3.0 million outstanding under our ABL Credit Agreement.

These credit facilities consist of floating rate loans that bear interest at an agreed upon percentage rate spread above London Interbank Offered Rate (“LIBOR”) or an alternate base rate.

Accordingly, whenever we have amounts outstanding under these facilities, our cash flows and results of operations will be subject to interest rate risk exposure associated with the debt balance outstanding.

During 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.

Whenever we have amounts outstanding under these facilities, our cash flows and results of operations will be subject to interest rate risk exposure associated with the debt balance outstanding.

We currently are not a party to an interest rate swap contract or other derivative instrument designed to hedge our exposure to interest rate fluctuation risk.

15 unchanged sentences

Certain environmental and other groups have suggested that additional federal, state, and local laws and regulations may be needed to more closely regulate the hydraulic fracturing process.

Several states have adopted regulations that require operators to disclose

the chemical constituents in hydraulic fracturing fluids.

Several states have adopted regulations that require operators to disclose the chemical constituents in hydraulic fracturing fluids.

We cannot predict whether any federal, state or local laws or regulations will be enacted regarding hydraulic fracturing, and, if so, what actions any such laws or regulations would require or prohibit.

Other jurisdictions where our products and services are used may impose similar or more stringent restrictions.

Other jurisdictions where our products and services are used may impose similar or more

stringent restrictions.

If additional levels of regulation or permitting requirements were imposed on oil and gas operators through the adoption of new laws and regulations, the demand for certain of our products and services could be decreased or subject to delays.

8 unchanged sentences

Regulators are becoming more focused on-air emissions from oil and gas operations, including volatile organic compounds, hazardous air pollutants, and GHGs.

In particular, the focus on GHGs and climate change, including incentives to conserve energy or use alternative energy sources, could have a negative impact on our financial results if such laws, regulations, treaties, or international agreements reduce the worldwide demand for oil and natural gas or otherwise result in reduced economic activity generally.

In particular, the focus on GHGs and climate change, including incentives to conserve energy or use alternative energy sources, such as those contained in recently passed laws like the Inflation Reduction Act (“IRA 2022”), could have a negative impact on our financial results if such laws, regulations, treaties, or international agreements reduce the worldwide demand for oil and natural gas or otherwise result in reduced economic activity generally.

In addition, such laws, regulations, treaties, or international agreements could result in increased compliance costs, capital spending requirements, or additional operating restrictions for us, which may have a negative impact on our financial results.

1 unchanged sentence

For more information on the environmental laws and regulations to which we are subject, see our disclosures titled “Health, Safety, and Environmental Affairs Regulation” set forth in Item 1 of this Annual Report.

The Inflation Reduction Act of 2022 could accelerate the transition to a low carbon economy and could impose new costs on our customers’ operations.

In August 2022, President Biden signed the IRA 2022 into law.

The IRA 2022 contains hundreds of billions in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions.

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

The IRA 2022 amends the federal Clean Air Act to impose a fee on the emission of methane from sources required to report their GHG emissions to the U.S.

Environmental Protection Agency (“EPA”), including those sources in the onshore petroleum and natural gas production and gathering and boosting source categories.

The methane emissions charge would start in calendar year 2024 at $900 per ton of methane, increase to $1,200 in 2025, and be set at $1,500 for 2026 and each year after.

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

While the tax incentives created by the IRA for carbon capture and sequestration may increase demand for some of the services we provide as part of our low carbon solutions business, the methane charge imposed on our oil and natural gas customers could further accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives.

This could decrease demand for oil and gas and consequently adversely affect the business of our customers, thereby reducing demand for our other services.

Our operations, and those of our suppliers and customers, are subject to a series of risks arising from climate change.

1 unchanged sentence

As a result, our operations as well as the operations of our oil and natural gas exploration and production customers and our suppliers are subject to a series of regulatory, political, litigation, and financial risks associated with the production and processing of fossil fuels and emission of GHGs.

In the United States, no comprehensive climate change legislation has been implemented at the federal level.

However, President Biden has highlighted addressing climate change as a priority of his administration and has issued several executive orders addressing climate change.

In the United States, no comprehensive climate change legislation has been implemented at the federal level, though recently passed laws such as the IRA 2022 advance numerous climate-related objectives.

President Biden has highlighted addressing climate change as a priority of his administration and has issued several executive orders addressing climate change.

Moreover, following the U.S.

4 unchanged sentences

Congress approved, and President Biden signed into law, a resolution under the Congressional Review Act to repeal the September 2020 revisions, effectively reinstating the prior standards.

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

Operators of affected facilities will have to comply with

specific standards of performance to include leak detection using optical gas imaging and subsequent repair requirement, and reduction of emissions by 95% through capture and control systems.

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

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

However, given the long-term trend toward increasing regulation, future federal GHG regulations of the oil and gas industry remain a significant possibility.

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

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

EPA issued a supplemental proposal in November 2022, which, among other items, sets forth specific revisions strengthening the first nationwide emission guidelines for states to limit emissions from existing oil and gas facilities.

The proposal also revises requirements for fugitive emissions monitoring and repair and as well as equipment leaks and the frequency of monitoring surveys, establishes a “super-emitter” response program to timely mitigate emissions events, and provides additional options for the use of advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions.

The proposal is currently subject to public comment and is expected to be finalized in 2023;

however, it is likely that these requirements will be subject to legal challenges.

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

However, given the long-term trend toward increasing regulation, further federal GHG regulations of the oil and gas industry remain a significant possibility.

Separately, various states and groups of states have adopted or are considering adopting legislation, regulation or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

3 unchanged sentences

an initiative committing to a collective goal of reducing global methane emissions by at least 30 percent from 2020 levels by 2030, including “all feasible reductions” in the energy sector.

These goals were reaffirmed at COP27 in November 2022, and countries were called upon to accelerate efforts to phase out inefficient fossil fuel subsidies, though no firm commitments or timelines were made.

The full impact of these actions is uncertain at this time, and it is unclear what additional initiatives may be adopted or implemented that may have adverse effects upon us and our customers’ operations.

4 unchanged sentences

Litigation risks are also increasing as a number of parties have sought to bring suit against oil and natural gas companies in state or federal court, alleging among other things, that such companies created public nuisances by producing fuels that contributed to climate change or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.

There is also a growing trend of the SEC or parties suing public companies for “greenwashing,” which is where a company makes unsubstantiated

statements designed to mislead consumers or shareholders into thinking that the company’s products or practices are more environmentally friendly than they are.

There are also increasing financial risks for companies in the fossil fuel sector as shareholders currently invested in such companies may elect in the future to shift some or all of their investments into other sectors.

5 unchanged sentences

Subsequently, in November 2021, the Federal Reserve issued a statement in support of the efforts of the NGFS to identify key issues and potential solutions for the climate-related challenges most relevant to central banks and supervisory authorities.

In January 2023, the Federal Reserve issued instructions for a pilot climate scenario analysis being undertaken by six of the United States’ largest banks, which is expected to conclude near the end of 2023.

Although we cannot predict the effects of these actions, such limitation of investments in and financing for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities, which could reduce demand for our products and services.

Additionally, the Securities and Exchange Commission announced its intention to promulgate rules requiring climate disclosures.

Although the form and substance of these requirements is not yet known, this may result in additional costs to comply with any such disclosure requirements.

Additionally, the Securities and Exchange Commission published a proposed rule that would require registrants to make climate-related disclosures, including any climate targets and goals, and data on Scope 1 and 2 GHG emissions and, in certain cases, Scope 3.

While we cannot predict the final form or substance of the rule, this may result in additional costs to comply with any such disclosure requirements.

Additionally, we cannot predict how financial institutions and investors might consider information disclosed under such rule, and as a result it is possible that we could face increases with respect to the costs of, or restrictions imposed on, our access to capital.

The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate the GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand for oil and natural gas, which could reduce demand for our products and services.

Additionally, political, litigation and financial risks may result in our oil and natural gas operators restricting or cancelling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce the demand for our products and services.

Actions taken on the federal, state or local levels to ban, limit, or restrict products that rely on oil or natural gas could also reduce demand for our products and services.

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

Climate change may also result in various physical risks, such as the increased frequency or intensity of extreme weather events or changes in meteorological and hydrological patterns, that could adversely impact us, our customers’, and our suppliers’ operations.

Such physical risks may result in damage to our customers’ facilities or otherwise adversely impact their operations, such as if they become subject to water use curtailments in response to drought, or demand for their products, such as to the extent warmer winters reduce the demand for energy for heating purposes, which may ultimately reduce demand for the products and services we provide.

Such physical risks may result in damage to our customers’ facilities or infrastructure, or otherwise adversely impact their operations, such as if they become subject to water use curtailments in response to drought, or demand for their products, such as to the extent warmer winters reduce the demand for energy for heating purposes, which may ultimately reduce demand for the products and services we provide.

Such physical risks may also impact our suppliers, which may adversely affect our ability to provide our products and services.

2 unchanged sentences

Increasing attention to climate change and environmental conservation, for example, may result in demand shifts for oil and natural gas products and additional governmental investigations and private litigation against us or our customers.

To the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to our causation of or contribution to the asserted damage, or to other mitigating factors.

damage, or to other mitigating factors.

For more information, see our risk factor titled “Our operations, and those of our suppliers and customers, are subject to a series of risks arising from climate change.”

10 unchanged sentences

We also cannot guarantee that any new product or service offerings we develop in light of ESG matters, including but not limited to the energy transition, will be suitable for our customers’ business operations.

To the extent alternative technologies are preferred, whether as a result of regulatory impacts or changes in industry practice, it may adversely impact our business or results of operation.

To the extent alternative technologies are preferred, whether as a result of regulatory impacts, technological developments, or changes in industry practice, it may adversely impact our business or results of operation.

Our operations in foreign countries exposes us to complex regulations and may present us with new obstacles to growth.

We plan to continue to grow both in the United States and in foreign countries.

We have established operations in Argentina, Brazil, Finland, Ghana, Mexico, Norway, Saudi Arabia, Sweden, and the United Kingdom, as well as other foreign countries.

We have established operations in Argentina, Brazil, Finland, Ghana, Norway, Saudi Arabia, Sweden, and the United Kingdom, as well as other foreign countries.

Foreign operations carry special risks.

10 unchanged sentences

While we and our subsidiaries are committed to conducting business in a legal and ethical manner, there is a risk of violating the U.S.

Foreign Corrupt Practices Act, the U.K Bribery Act, or laws or legislation promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or other applicable anti-corruption regulations that generally prohibit the making of improper payments to foreign officials for the purpose of obtaining or keeping business.

officials for the purpose of obtaining or keeping business.

Violation of these laws could result in monetary penalties against us or our subsidiaries and could damage our reputation and our ability to do business.

12 unchanged sentences

Moreover, the Biden Administration is expected to pursue regulatory initiatives that restrict hydraulic fracturing activities on federal lands as well as other actions to more stringently regulate certain aspects of oil and gas development such as air emissions and water discharges.

President Biden issued an executive order on

January 27, 2021, that suspends new leasing activities, but not operations under existing leases, for oil and gas exploration and production on non-Indian federal lands and offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices that take into consideration potential climate and other impacts associated with oil and gas activities on such lands and waters.

Although the federal court for the Western District of Louisiana issued a preliminary injunction against the leasing pause, in response to the executive order, the Department of Interior issued a report recommending various changes to the federal leasing program, though many such changes would require Congressional action.

President Biden issued an executive order on January 27, 2021, that effectively paused new leasing activities, but not operations under existing leases, for oil and gas exploration and production on non-Indian federal lands and offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices that take into consideration potential climate and other impacts associated with oil and gas activities on such lands and waters.

Although the federal court for the Western District of Louisiana issued a permanent injunction against the leasing pause, in response to the executive order, the Department of Interior issued a report recommending various changes to the federal leasing program, though many such changes would require Congressional action.

However, the Bureau of Land Management proposed a rule in November 2022 that would limit flaring from well sites on federal lands, as well as allow the delay or denial of permits if the Bureau finds that an operator’s methane waste minimization plan is insufficient.

As a result, we cannot predict the final scope of regulations or restrictions that may apply to oil and gas operations on federal lands and waters.

23 unchanged sentences

We also invest in security technology, perform penetration tests from time to time, and design our business processes to attempt to mitigate the risk of such breaches.

However, there can be no assurance that

security breaches will not occur.

However, there can be no assurance that security breaches will not occur.

Moreover, the development and maintenance of these measures requires continuous monitoring as technologies change and efforts to overcome security measures evolve.

6 unchanged sentences

tax laws, policies, statutes, rules, regulations, or ordinances could be interpreted, changed, modified, or applied adversely to us, in each case, possibly with retroactive effect, and may have an adverse effect on our business and future profitability.

For example, several tax proposals have been set forth that would, if enacted, make significant changes to United States tax laws.

Such proposals include an increase in the U.S.

income tax rate applicable to corporations (such as us) from 21%, the imposition of a minimum tax on book income for certain corporations, and the imposition of an excise tax on certain corporate stock repurchases that would be borne by the corporation repurchasing such stock.

The United States Congress may consider, and could include, some or all of these proposals in connection with tax reform that may be undertaken.

It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect.

The passage of any legislation as a result of these proposals and other similar changes in United States federal income tax laws could adversely affect our business and future profitability.

Unresolved Staff Comments.

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

What changed 10-K

Item 1A. Risk Factors