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Item 2. Properties

2023-02-27 compared with 2022-02-28 · 23 added, 41 removed, 18 unchanged (78% of the section changed)

1 unchanged sentence

We believe our facilities are adequate for our present needs.

We also hold brine leases on acreage which contains bromine and lithium.

We also hold brine leases on

acreage which contains bromine and lithium.

The following information describes facilities that we (i) leased or owned and (ii) leased acreage as of December 31, 2022.

6 unchanged sentences

In addition to the production facilities described above, the Completion Fluids & Products Division owns or leases multiple service center facilities in the United States and in other countries.

The Completion Fluids &

Products Division also leases several offices and numerous terminal locations in the United States and in other countries.

The Completion Fluids & Products Division also leases several offices and numerous terminal locations in the United States and in other countries.

Water & Flowback Services Division

The Water & Flowback Services Division conducts its operations through production testing and water management service centers (most of which are leased) in the United States, located in Colorado, Louisiana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas and Wyoming.

In addition, the Water & Flowback Services Division has leased facilities in Mexico, Argentina and certain countries in Asia, Europe, and the Middle East.

The Water & Flowback Services Division conducts its operations through production testing and water management service centers (most of which are leased) in the United States, located in Louisiana, New Mexico, Oklahoma, Pennsylvania and Texas.

In addition, the Water & Flowback Services Division has leased facilities in certain countries in Latin America, Europe, and the Middle East.

Our headquarters is located in The Woodlands, Texas, in a 153,000 square foot office building, which is located on 2.6 acres of land, under a lease that expires in 2027.

In addition, we own a 28,000 square foot technical facility in The Woodlands, Texas, to service our Completion Fluids & Products and Water & Flowback Services Divisions’ operations.

Bromine and Lithium Exploration Targets

Our Completion Fluids & Products Division leases approximately 31,100 net acres of brine leases in Magnolia, Arkansas, which contain bromine and lithium.

Bromine and Lithium Inferred Resources

Our Completion Fluids & Products Division leases approximately 40,000 gross acres of brine leases in Magnolia, Arkansas, which contain bromine and lithium.

This acreage is leased for possible future development and as a source of supply for our bromine and other raw materials.

In August 2021, we announced the completion of a preliminary technical assessment by an independent geological consulting firm, APEX Geoscience Ltd.

to assess lithium and bromine exploration targets in our approximately 31,100 net acres of brine leases in the Smackover Formation in Southwest Arkansas.

In August 2021, we announced the completion of a technical report for exploration results by an independent geological consulting firm, APEX Geoscience Ltd.

to assess existing sampling results regarding lithium and bromine exploration targets in our approximately 40,000 gross acres of brine leases in the Smackover Formation in Southwest Arkansas.

We have rights to the brine, including rights to the bromine and lithium contained in the brine underlying this acreage, pursuant to certain brine leases and brine deeds with various landowners.

With respect to approximately 27,500 acres of that total acreage, we have granted Standard Lithium an option to acquire the lithium rights.

The agreements governing this option contemplate a 2.5% royalty.

The exploration targets were estimated for two separate areas within the property based on our brine lease rights.

The scope of the exploration target assessment was for bromine in all of the approximately 31,100 net acres and lithium for the acreage where we hold the lithium rights not subject to the Standard Lithium Ltd.

option that cover roughly 3,600 net acres.

For bromine, the technical assessment identified a brine exploration target estimated to contain between 2.54 and 8.58 million tons of elemental bromine.

For lithium, the technical assessment identified an exploration target estimated to contain between 16,000 and 53,000 tons of elemental lithium.

Using an elemental to Lithium Carbonate Equivalent ("LCE") conversion ratio of 5.323, which is accepted in the industry, the estimates of the amounts of lithium present within these acres range from 85,000 to 286,000 tons of LCE.

As of February 2022, the market price for lithium is approximately $71,600 per ton and the market price for bromine is approximately $3,100 per metric ton.

The exploration target's estimated quantity and grade is conceptual in nature, as there has been insufficient exploration to estimate a mineral resource on this property, and it is uncertain if further exploration will result in the estimation of a mineral resource.

The exploration targets expressed should not be understood to represent or misconstrued as an estimate of a mineral resource or mineral reserve.

The basis for the lithium and bromine exploration targets is that hypersaline formation water, or brine, associated with some of the world’s oilfields and/or geothermal fields contains confined reservoirs, or aquifers, that are known to contain anomalous concentrations of lithium, bromine and other elements of interest.

With respect to approximately 35,000 acres of that total acreage, we had previously entered into an agreement granting Standard Lithium an option to acquire the lithium rights.

The agreements governing this option contemplate a 2.5% royalty that Standard Lithium would pay us based on gross lithium revenues.

During 2022, we completed the drilling of our Arkansas exploration well, obtained and analyzed fluid samples for multiple Smackover formation brine zones, and began a bromine front-end engineering design study and bromine initial assessment.

During the third quarter of 2022, the maiden inferred bromine and lithium brine resource estimation report for our leased acreage in the Smackover Formation in Southwest Arkansas was completed.

The report indicates the brine resource underlying the approximately 40,000 gross acres where we hold bromine mineral rights is estimated to contain an inferred resource of 5.25 million short tons of elemental bromine;

and the brine resource underlying the approximately 5,000 gross acres where we hold dedicated lithium mineral rights is estimated to contain an inferred resource of 44,000 short tons of elemental lithium.

Using an elemental to Lithium Carbonate Equivalent (“LCE”) conversion ratio of 5.323, which is accepted in the industry, the acreage is estimated to contain an inferred resource of 234,000 short tons of LCE.

We do not currently consider our current development efforts with regard to our inferred resources to be material mining operations within the meaning of SK1300 at this time.

As of January 2023, the market price for lithium is approximately $71,000 per ton and the market price for bromine is approximately $3,800 per metric ton.

The basis for the lithium and bromine inferred resource is that hypersaline formation water, or brine, associated with some of the world’s oilfields and/or geothermal fields contains confined reservoirs, or aquifers, that are known to contain anomalous concentrations of lithium, bromine and other elements of interest.

We propose to assess stratigraphically deep (more than 2,250 meters or 7,450 feet below surface) brine from oil and gas aquifers associated with the Late Jurassic Smackover Formation.

1 unchanged sentence

We expect that we will be able to develop or utilize evolving commercial technologies to economically remove the bromine and lithium from the brine underlying our acreage before the brine is reinjected back down into the subsurface aquifer.

The volume of the Upper and Middle areas of the Smackover Formation within each exploration target was calculated by wireframing the Smackover Formation aquifer domain to create a 3-D geological model.

The model utilized oil and gas well data from the AOGC and AGS Information Circular IC-14, which includes an electronic reprint of Vestal (1950) and a stratigraphic horizon pick file with 3,904 records.

Historical information was used to estimate mean porosity and mean bromine and lithium concentrations.

For the conceptual exploration target

estimates, the range of elemental bromine and lithium was derived by multiplying the mean volume, porosity, and bromine/lithium concentrations of the exploration targets by plus or minus 20%.

While we continue to evaluate the next steps regarding the potential development of our brine leases, we have only 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.

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.

The exploration targets are based on historical oil and gas well data and historical Smackover Formation brine geochemical analyses.

To advance the exploration targets to the mineral resource estimation and classification stage, we anticipate the implementation of a work program that will comprise some or all of the following activities:

• validating the historical brine geochemistry and attempting to obtain a greater understanding of the distribution of the bromine and lithium concentrations within the Smackover Formation brine underlying our acreage,

• conducting stratigraphic and hydrogeological studies to advance the geological domain boundaries and hydro-parameters of the Upper and Middle areas of the Smackover Formation, and

• conducting mineral processing test work to explore and develop the bromine and lithium extraction processes.

The timing for progressing the recommended work program will depend on the approach for obtaining Smackover Formation brine samples and conducting mineral processing test work.

We anticipate achieving brine access through agreements with current oil and gas operators to conduct appraisal drilling within the first half of 2022.

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

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

Upon completion of the inferred resources target, we intend to move towards a preliminary economic assessment (“PEA”) to determine the economics of developing our dedicated acreage for the bromine to meet our growing zinc bromide opportunities and to meet the lithium battery market demands.

The PEA is expected to be completed during 2022.

We anticipate that validation of the estimates for geology, mineralization, and mineral processing, would advance the confidence level of the deposit toward mineral resource estimations and a potential preliminary economic assessment study.

This work is anticipated to commence and be completed in 2022 and it is possible that the exploration target tonnage and grade could change as these proposed exploration activities are completed and evaluated.

Even if we are able to determine that some of these resources meet the definition of an “indicated or measured resource,” the extraction of lithium and bromine from these brine leases would likely require a significant amount of time and capital, which we are not able to estimate at this time.

We completed an initial preliminary economic assessment in early 2023 for a bromine extraction plant.

We expect an initial economic assessment to follow in late 2023 for a lithium extraction plant, subject to the progress of early engineering.

Only upon completion of an indicated resources study, pre-feasibility and/or feasibility study and attainment of capital commitment from either a joint venture partner, governments grants or loans, or other cost-effective sources of capital that will not over-lever TETRA, in addition to confirmation of a successful recapitalization of the long-duration zinc-bromide battery storage manufacturers, would we proceed to a final investment decision.

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 2. Properties