What changed in this filing

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Item 2. Properties

2024-02-27 compared with 2023-02-27 · 25 added, 17 removed, 24 unchanged (64% 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, 2023.

2 unchanged sentences

The two California locations consist of 29 square miles of leased mineral acreage and solar evaporation ponds, and related owned production and storage facilities.

In April 2020, in response to market conditions, we began the process of discontinuing chemical production operations at our El Dorado calcium chloride facility in Arkansas.

We continued to manufacture and deliver products through early June 2020, at which time we began a sequenced shutdown of the manufacturing facility.

As of December 31, 2020 and continuing through December 31, 2022, the plant was no longer operational.

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.

5 unchanged sentences

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 Inferred Resources

Bromine and Lithium Resources

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

3 unchanged sentences

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

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

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.

Standard Lithium delivered a notice to exercise this option to acquire lithium rights in the optioned acreage on October 6, 2023.

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.

The report indicated the brine resource underlying the approximately 40,000 gross acres where we hold bromine mineral rights was 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 was 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 was estimated to contain 234,000 tons of LCE.

In June 2023, we entered into the MOU with Saltwerx, LLC, an indirect wholly owned subsidiary of ExxonMobil Corporation, relating to a newly-proposed brine unit in the Smackover Formation in Southwest Arkansas (the “Evergreen Brine Unit”) and potential bromine and lithium production from brine produced from the unit.

We filed an amended unit application with the Arkansas Oil and Gas Commission (AOGC) covering approximately 6,138 acres, which combines brine acreage that is leased by each of TETRA and Saltwerx.

On September 26, 2023, the AOGC held a public hearing and unanimously approved our application to establish the Evergreen Brine Unit.

On October 17, 2023, the AOGC issued formal orders establishing the Evergreen Brine Unit and integrating all unleased owners within the Evergreen Brine Unit, subject to a 60-day statutory election period for each unleased party to elect whether or not to participate and share in costs of development of the Evergreen Brine Unit.

The 60-day statutory election period expired on December 16, 2023 and such unleased parties were deemed integrated within the Evergreen Brine Unit as described in the formal orders.

While bromine can be commercially extracted, among other events that must take place before we can commercially produce lithium from the Evergreen Brine Unit, the AOGC will need to establish an agreeable lithium royalty.

The MOU with Saltwerx includes provisions relating to:

(i) initial brine ownership percentages within the Evergreen Brine Unit, including the bromine and lithium contained in the brine, (ii) the transfer of certain leased acres outside the proposed Evergreen Brine Unit from us to Saltwerx, (iii) reimbursement by Saltwerx of certain expenses that we incurred for the development of leased acreage to be included in the Evergreen Brine Unit, and (iv) an allocation of certain future costs for the drilling of a brine production test well and other development operations, including front-end engineering and design studies for bromine and lithium production facilities.

During the second quarter of 2023, we also contracted a third-party firm to execute a front-end engineering and design (FEED) study for a lithium production facility.

On January 8, 2024, we announced the completion of the Resources Report for our Evergreen Brine Unit in Arkansas.

The Resources Report includes both “measured” and “indicated” resources in addition to the “inferred” category.

The Resources Report estimated that the Evergreen Brine Unit contains (i) a measured resource, indicated resource and inferred resource of 329,000 tons, 543,000 tons and 541,000 tons of elemental bromine, respectively, and (ii) a measured resource, indicated resource and inferred resource of 32,000 tons, 53,000 tons and 52,000 tons of lithium, respectively.

Using an elemental to LCE conversion ratio of 5.323, the acreage is estimated to contain 729,000 tons of LCE.

As of January 2024, the market price for lithium is approximately $13,500 per ton and the market price for bromine is approximately $3,400 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.

The basis for the lithium and bromine resources 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.

The brine is currently pumped from the aquifer to the earth’s surface as a wastewater product associated with hydrocarbon production (e.g., oil, gas, and condensate).

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 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 but whether we will ultimately be able to economically remove the bromine and lithium materials will depend on the outcome of further studies.

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.

We expect an initial economic assessment to follow in the first half of 2024 for a lithium extraction plant, subject to the progress of early engineering.

Only upon completion of a pre-feasibility and/or feasibility study and attainment of capital commitment from either a joint venture partner, government 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