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Item 1. Financial Statements

2024-07-31 compared with 2024-04-30 · 194 added, 81 removed, 463 unchanged (37% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Product sales

9 unchanged sentences

Depreciation, amortization, and accretion

8,774 8,457 17,530 17,127

Impairments and other charges

Insurance recoveries

— — — ( 2,850 )

Total cost of revenues

5 unchanged sentences

Loss on debt extinguishment

Other income, net

Other (income) expense, net

2,452 ( 6,435 ) ( 1,526 ) ( 6,649 )

Income before taxes and discontinued operations

12,479 21,080 13,774 28,614

Provision for income taxes

4,839 2,875 5,219 4,364

Income before discontinued operations 7,640 18,205 8,555 24,250

1 unchanged sentence

Loss from discontinued operations, net of taxes

— ( 8 ) — ( 20 )

Net income 7,640 18,197 8,555 24,230

3 unchanged sentences

Income from continuing operations

$ 0.06 $ 0.14 $ 0.07 $ 0.19

Income from discontinued operations

Net income attributable to TETRA stockholders

$ 0.06 $ 0.14 $ 0.07 $ 0.19

Weighted average basic shares outstanding 131,263 129,460 130,858 129,201

1 unchanged sentence

Income from continuing operations

$ 0.06 $ 0.14 $ 0.06 $ 0.19

Income from discontinued operations

Net income attributable to TETRA stockholders

$ 0.06 $ 0.14 $ 0.06 $ 0.19

Weighted average diluted shares outstanding 132,169 129,925 132,115 129,953

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net income $ 7,640 $ 18,197 $ 8,555 $ 24,230

1 unchanged sentence

( 1,959 ) 1,045 ( 3,593 ) 2,466

Unrealized gain on investment in CarbonFree

Comprehensive income (loss) ( 482 ) 7,575

Unrealized gain (loss) on investment in CarbonFree

( 5 ) 207 232 328

Comprehensive income

5,676 19,449 5,194 27,024

Comprehensive loss attributable to noncontrolling interests 3 18 3 25

Comprehensive income (loss) attributable to TETRA stockholders $ ( 482 ) $ 7,582

Comprehensive income attributable to TETRA stockholders

$ 5,679 $ 19,467 $ 5,197 $ 27,049

See Notes to Consolidated Financial Statements

7 unchanged sentences

$ 37,713 $ 52,485

Restricted cash

Trade accounts receivable, net of allowances of $ 369 in 2024 and

60 unchanged sentences

Common stock, par value 0.01 per share;

250,000,000 shares authorized at March 31, 2024 and December 31, 2023;

134,274,837 shares issued at March 31, 2024 and 133,217,848 shares issued at December 31, 2023

250,000,000 shares authorized at June 30, 2024 and December 31, 2023;

134,587,465 shares issued at June 30, 2024 and 133,217,848 shares issued at December 31, 2023

Additional paid-in capital

1 unchanged sentence

Treasury stock, at cost;

3,138,675 shares held at March 31, 2024 and December 31, 2023

3,138,675 shares held at June 30, 2024 and December 31, 2023

( 19,957 ) ( 19,957 )

33 unchanged sentences

$ 1,343 $ 488,440 $ ( 19,957 ) $ ( 47,520 ) $ 892 $ ( 275,794 ) $ ( 1,257 ) $ 146,147

Net income (loss) for second quarter 2024

— — — — — 7,643 ( 3 ) 7,640

Translation adjustment,

net of taxes of $ 0

— — — ( 1,959 ) — — — ( 1,959 )

Other comprehensive loss

— — — — ( 5 ) — — ( 5 )

Comprehensive income

Equity-based compensation — 1,800 — — — — — 1,800

Other 3 ( 48 ) — — — — — ( 45 )

Balance at June 30, 2024

$ 1,346 $ 490,192 $ ( 19,957 ) $ ( 49,479 ) $ 887 $ ( 268,151 ) $ ( 1,260 ) $ 153,578

Par Value Additional Paid-In

20 unchanged sentences

$ 1,325 $ 479,993 $ ( 19,957 ) $ ( 47,570 ) $ 49 $ ( 296,453 ) $ ( 1,234 ) $ 116,153

Net income (loss) for second quarter 2023

— — — — — 18,215 ( 18 ) 18,197

Translation adjustment, net of taxes of $ 0

— — — 1,045 — — — 1,045

Other comprehensive income

— — — — 207 — — 207

Comprehensive income

Equity compensation expense — 1,507 — — — — — 1,507

Other 2 ( 52 ) — — — — ( 2 ) ( 52 )

Balance at June 30, 2023

$ 1,327 $ 481,448 $ ( 19,957 ) $ ( 46,525 ) $ 256 $ ( 278,238 ) $ ( 1,254 ) $ 137,057

(1) Equity-based compensation for the three months ended March 31, 2023 includes $ 2.3 million for a portion of short-term incentive compensation that was settled through grants of restricted stock units rather than cash.

4 unchanged sentences

(In Thousands, Unaudited)

Three Months Ended

Six Months Ended

Operating activities:

2 unchanged sentences

Depreciation, amortization, and accretion 17,530 17,127

(Gain) loss on investments

Impairment and other charges — 777

Gain on investments

( 2,841 ) ( 403 )

Equity-based compensation expense 3,423 2,768

Recovery of credit losses

( 115 ) ( 21 )

(Recovery of) provision for credit losses

Amortization and expense of financing costs 884 1,781

Expense unamortized finance costs

Loss on debt extinguishment

Insurance recoveries associated with damaged equipment — ( 2,850 )

6 unchanged sentences

Trade accounts payable and accrued expenses ( 6,490 ) 443

Net cash provided by (used in) operating activities

Other 129 603

Net cash provided by operating activities

11,015 37,357

3 unchanged sentences

Proceeds from insurance recoveries associated with damaged equipment — 2,850

Purchase of investments

Other investing activities ( 194 ) ( 1,827 )

4 unchanged sentences

Payments on financing lease obligations ( 640 ) ( 689 )

Debt issuance costs

Shares withheld for taxes on equity-based compensation ( 2,387 ) —

Debt issuance costs and other financing activities ( 5,277 ) —

Net cash provided by financing activities

Other financing activities

Net cash provided by (used in) financing activities

10,978 ( 1,757 )

Effect of exchange rate changes on cash ( 685 ) 487

2 unchanged sentences

Cash and cash equivalents at beginning of period 52,485 13,592

Cash, cash equivalents, and restricted cash at end of period

$ 42,752 $ 27,675

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets

Cash and cash equivalents at end of period

$ 37,713 $ 27,675

Restricted cash at end of period

Total cash, cash equivalents, and restricted cash at end of period shown in the consolidated statements of cash flows

$ 42,752 $ 27,675

See Notes to Consolidated Financial Statements

18 unchanged sentences

The information furnished reflects all normal recurring adjustments, which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods.

Operating results for the period ended March 31, 2024 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2024.

Operating results for the period ended June 30, 2024 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2024.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S.

5 unchanged sentences

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2023 included in our 2023 Annual Report .

There have been no significant changes in our accounting policies or the application thereof during the first quarter of 2024.

Other than reporting restricted cash as described below, there have been no significant changes in our accounting policies or the application thereof during the second quarter of 2024.

Out-of-Period Correction

During the three months ended June 30, 2024, we discovered an error in which a prepaid tax balance denominated in a foreign currency was not remeasured at current rates, resulting in an overstatement of prepaid expenses and understatement of foreign exchange losses from 2018 through the current period.

We have corrected this error by making an out-of-period adjustment during the three months ended June 30, 2024, which reduced prepaid expenses and other current assets and retained deficit as of June 30, 2024 in the consolidated balance sheets, increased other (income) expense, net by $ 1.4 million and reduced net income per share attributable to TETRA stockholders by $ 0.01 in the consolidated statement of operations for the three and six months ended June 30, 2024.

The Company assessed the impact of this out-of-period adjustment and concluded that it was not material to the financial statements previously issued for any interim or annual period, and the cumulative adjustment during the quarter ended June 30, 2024 is not expected to be material to the annual financial statements for 2024.

The out-of-period adjustment is included in the Water & Flowback Services Division results.

Restricted Cash

Restricted cash is classified as a current asset when it is expected to be repaid or settled in the next twelve-month period.

In connection with the May 2024 amendment to our ABL Credit Agreement, our former administrative agent required us to collateralize our credit card facility and outstanding letters of credit.

See Note 5 - “Long-Term Debt and Other Borrowings” for additional discussion of the ABL Amendment.

Restricted cash as of June 30, 2024 consists of $ 4.4 million to secure our credit card facility and $ 0.6 million to secure our outstanding letters of credit with our former administrative agent.

The restriction for the credit card facility is expected to terminate during the third quarter of 2024 and the restriction for the outstanding letters of credit are expected to terminate as the letters of credit expire between September 2024 and March 2025.

Use of Estimates

7 unchanged sentences

On January 8, 2024, we announced the completion of a technical resources report for our Brine Unit in Arkansas.

During the three months ended March 31, 2024, we capitalized approximately $ 4.0 million of costs associated with the development of our properties in Arkansas.

We recognized $ 0.7 million of expense during the three months ended March 31, 2023 for exploration and pre-development costs representing expenditures incurred to evaluate potential future development of our lithium and bromine properties in Arkansas.

During the three and six months ended June 30, 2024, we capitalized approximately $ 9.8 million and $ 13.2 million, respectively, of costs associated with the development of our properties in Arkansas.

We recognized $ 2.3 million and $ 3.1 million of expenses during the three and six months ended June 30, 2023, respectively, for exploration and pre-development costs representing expenditures incurred to evaluate potential future development of our lithium and bromine properties in Arkansas.

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.

The United States dollar is the designated functional currency

for all of our other non-U.S.

The cumulative translation effects of translating the applicable accounts from the functional currencies into the United States dollar at current exchange rates are included as a separate component of equity.

Foreign currency exchange (gains) losses are included in other (income) expense, net and totaled $( 0.2 ) million and $ 0.2 million during the three months ended March 31, 2024 and March 31, 2023, respectively.

Foreign currency exchange losses are included in other (income) expense, net and totaled $ 2.5 million and $ 2.4 million during the three and six months ended June 30, 2024, respectively, including the $ 1.4 million out-of-period correction described above, and less than $ 0.1 million and $ 0.2 million during the three and six months ended June 30, 2023, respectively.

Fair Value Measurements

5 unchanged sentences

Supplemental cash flow information is as follows:

Three Months Ended

Six Months Ended

(in thousands)

1 unchanged sentence

Income taxes paid $ 2,991 $ 2,012

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in thousands)

10 unchanged sentences

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Our contract asset balances, primarily associated with contractual invoicing milestones and/or customer documentation requirements, were $ 25.4 million and $ 30.6 million as of March 31, 2024 and December 31, 2023, respectively.

Our contract asset balances, primarily associated with contractual invoicing milestones and/or customer documentation requirements, were $ 30.8 million and $ 30.6 million as of June 30, 2024 and December 31, 2023, 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 $ 5.8 million and $ 3.1 million as of March 31, 2024 and December 31, 2023, respectively, and vary based on the timing of invoicing and performance obligations being met.

Unearned income balances were $ 3.6 million and $ 3.1 million as of June 30, 2024 and December 31, 2023, 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.

We recognized approximately $ 0.1 million and $ 0.7 million of revenue during the three months ended March 31, 2024 and March 31, 2023, respectively, deferred in unearned income as of the beginning of the period.

During the three months ended March 31, 2024 and March 31, 2023, contract costs were not significant.

We recognized approximately $ 2.0 million and $ 1.0 million during the three and six months ended June 30, 2024, respectively, and $ 1.4 million and $ 0.9 million of revenue during the three and six months ended June 30, 2023, respectively, deferred in unearned income as of the beginning of the period.

During the six months ended June 30, 2024 and June 30, 2023, contract costs were not significant.

We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our two reportable segments in Note 9 - “Industry Segments.” In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(in thousands)

12 unchanged sentences

NOTE 3 – INVENTORIES

Components of inventories as of March 31, 2024 and December 31, 2023 are as follows:

March 31, 2024 December 31, 2023

Components of inventories as of June 30, 2024 and December 31, 2023 are as follows:

June 30, 2024 December 31, 2023

(in thousands)

7 unchanged sentences

NOTE 4 – INVESTMENTS

Our investments as of March 31, 2024 and December 31, 2023 consist of the following:

March 31, 2024 December 31, 2023

Our investments as of June 30, 2024 and December 31, 2023 consist of the following:

June 30, 2024 December 31, 2023

(in thousands)

Investment in CSI Compressco

Investment in Kodiak (1)

$ 12,279 $ 8,538

3 unchanged sentences

Total Investments $ 20,427 $ 17,354

Following the January 2021 sale of the general partner of CSI Compressco LP (“CSI Compressco”), we owned approximately 3.7 % of the outstanding CSI Compressco common units (NASDAQ:

CCLP) as of March 31, 2024.

CSI Compressco was acquired by Kodiak Gas Services, Inc.

KGS) (“Kodiak”) on April 1, 2024.

See Note 10 - “Subsequent Events” for further information.

(1) Kodiak Gas Services, Inc.

KGS) (“Kodiak”) acquired CSI Compressco LP (“CSI Compressco”) on April 1, 2024.

CarbonFree Chemicals Holdings LLC (“CarbonFree”) is a carbon capture company with patented technologies that capture CO 2 and mineralize emissions to make commercial, carbon-negative chemicals.

1 unchanged sentence

During the three month period ended March 31, 2024, the convertible note agreement was amended and, in connection with that amendment, note holders agreed to defer their right to electively convert the convertible notes to common units of CarbonFree (“CarbonFree Units”) for two years .

In exchange for the amendment, we received CarbonFree Units representing less than 1 % of the CarbonFree Units outstanding as of March 31, 2024.

In exchange for the amendment, we received CarbonFree Units representing less than 1 % of the CarbonFree Units outstanding as of June 30, 2024.

The CarbonFree Units are not publicly traded and may not be offered, sold, transferred or pledged until such common units are registered pursuant to an effective registration statement or pursuant to an exemption from registration.

5 unchanged sentences

NOTE 5 – LONG-TERM DEBT AND OTHER BORROWINGS

Consolidated long-term debt as of March 31, 2024 and December 31, 2023 consists of the following:

Scheduled Maturity March 31, 2024 December 31, 2023

Consolidated long-term debt as of June 30, 2024 and December 31, 2023 consists of the following:

Scheduled Maturity June 30, 2024 December 31, 2023

(in thousands)

2 unchanged sentences

Total long-term debt $ 179,670 $ 157,505

(1) Net of unamortized discount of $ 5.5 million and $ 2.2 million as of March 31, 2024 and December 31, 2023, respectively, and net of unamortized deferred financing costs of $ 5.1 million and $ 3.3 million as of March 31, 2024 and December 31, 2023, respectively.

(1) Net of unamortized discount of $ 5.4 million and $ 2.2 million as of June 30, 2024 and December 31, 2023, respectively, and net of unamortized deferred financing costs of $ 5.0 million and $ 3.3 million as of June 30, 2024 and December 31, 2023, respectively.

Term Credit Agreement

2 unchanged sentences

The Company is required to pay a commitment fee on the unutilized commitments with respect to the delayed-draw term loan at the rate of 1.5 % per annum.

The interest rate per annum on borrowings under the Term Credit Agreement is 11.17 % as of March 31, 2024 and the maturity date of the Term Credit Agreement is January 12, 2030.

The interest rate per annum on borrowings under the Term Credit Agreement is 11.17 % as of June 30, 2024 and the maturity date of the Term Credit Agreement is January 1, 2030.

The Company used the net proceeds to repay in full the balance of its prior credit facility, with approximately $ 15.2 million of additional cash, net of discounts and transaction expenses.

In connection with the Term Credit Agreement, we incurred approximately $ 5.3 million of fees which were deferred and will be amortized over the term of the Term Credit Agreement.

As a result of termination of the prior credit facility, a loss of $ 5.5 million was recognized during the three-month period ended March 31, 2024 primarily for unamortized deferred financing costs.

1 unchanged sentence

The Term Credit Agreement also requires the Company to maintain a Leverage Ratio (as defined in the new term loan credit agreement) of not more than 4.0 to 1.0 as of the end of each fiscal quarter and Liquidity (as defined in the Term Credit Agreement) of not less than $ 50.0 million at all times.

All obligations under the Term Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest on substantially all of the property of the Company and its domestic subsidiaries, subject to the lien priorities set forth in the intercreditor agreement with the agent under our ABL Credit Agreement.

domestic subsidiaries, subject to the lien priorities set forth in the intercreditor agreement with the agent under our ABL 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 beginning with the financial statements for the year ending December 31, 2024.

1 unchanged sentence

ABL Credit Agreement

As of March 31, 2024, our asset-based credit agreement (“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 determined monthly 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.

As of March 31, 2024, we had no balance outstanding and $ 0.5 million in letters of credit and guarantees under our ABL Credit Agreement.

Deferred financing costs of $ 0.5 million and $ 0.6 million as of March 31, 2024 and December 31, 2023, respectively, were classified as other long-term assets on the accompanying consolidated balance sheet as there was no outstanding balance on our ABL Credit Agreement.

On May 13, 2024, we entered into an amendment (the “ABL Amendment”) to the Asset-Based Lending agreement dated as of September 10, 2018 (as amended, the “ABL Credit Agreement”).

In connection with the ABL Amendment, Bank of America, N.A.

became successor administrative agent to JPMorgan Chase Bank, N.A.

Furthermore, approximately $ 0.6 million of fees were incurred in connection with the ABL Amendment, which were deferred and will be amortized over the term of the ABL Credit Agreement.

As of June 30, 2024, our ABL Credit Agreement provides, with certain restrictions, for a senior secured revolving credit facility of up to $ 100.0 million with a $ 25.0 million accordion.

The ABL Credit Agreement matures on May 13, 2029.

As of June 30, 2024, we had no borrowings outstanding and no letters of credit or guarantees under our ABL Credit Agreement.

Deferred financing costs of $ 0.8 million and $ 0.6 million as of June 30, 2024 and December 31, 2023, respectively, were classified as other long-term assets on the accompanying consolidated balance sheet as there was no outstanding balance on our ABL Credit Agreement.

Subject to compliance with the covenants, borrowing base, and other provisions of the ABL Credit Agreement that may limit borrowings, we had availability of $ 62.6 million under this agreement.

Borrowings under the ABL Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) the standard overnight financing rate plus 0.10%, (ii) a base rate plus a margin based on a fixed charge coverage ratio, (iii) the Daily Simple Risk Free Rate plus 0.10%, or (iv) with respect to borrowings denominated in Sterling, the Daily Simple Risk Free Rate for Sterling plus 0.0326%.

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) the standard overnight financing rate (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 March 31, 2024, the interest rate per annum on borrowings under the ABL Credit Agreement is 8.75 %.

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.

Borrowings under the ABL Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) the standard overnight financing rate plus 0.10 %, (ii) a base rate plus a margin based on a fixed charge coverage ratio, or (iii) the Daily Simple Risk Free Rate plus 0.10 %.

The base rate is determined by reference to the highest of (a) the prime rate of interest as announced from time to time by Bank of America, N.A.

(b) the Federal Funds Effective Rate (as defined in the ABL Credit Agreement) plus 0.5 % per annum and (c) the standard overnight financing rate (adjusted to reflect any required bank reserves) for a one-month period on such day plus 1.0 % per annum, provided that the base rate shall not be less than 1.0 %.

Borrowings outstanding have an applicable margin ranging from 2.00 % to 2.50 % per annum for SOFR-based loans and 1.00 % to 1.50 % per annum for base-rate loans, based upon the applicable fixed charge coverage ratio.

TETRA is also required to pay a customary letter of credit fee equal to the applicable margin on loans and fronting fees.

2 unchanged sentences

In January 2022, the Company entered into a revolving credit facility for seasonal working capital needs of subsidiaries in Sweden (“Swedish Credit Facility”).

As of March 31, 2024, we had no balance outstanding and availability of approximately $ 4.7 million under the Swedish Credit Facility.

As of June 30, 2024, we had no balance outstanding and availability of approximately $ 4.7 million under the Swedish Credit Facility.

During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days.

3 unchanged sentences

In January 2022, the Company also entered into an agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”).

As of March 31, 2024, there were $ 1.5 million of letters of credit outstanding against the Finland Credit Agreement.

As of June 30, 2024, there were $ 1.5 million of letters of credit outstanding against the Finland Credit Agreement.

The Finland Credit Agreement expires on January 31, 2025 and the Company intends to renew it annually.

Our credit agreements contain certain affirmative and negative covenants, including covenants that restrict the ability to pay dividends or other restricted payments.

As of March 31, 2024, we are in compliance with all covenants under the credit agreements.

As of June 30, 2024, we are in compliance with all covenants under the credit agreements.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business.

There have been no material developments in our legal proceedings during the quarter ended March 31, 2024.

On April 25, 2024, a purported stockholder of the Company filed a putative class action complaint in the Delaware Court of Chancery naming as defendants all current members of the Board, the Company and the Rights Agent.

The litigation is captioned Webb, et al.

Murphy, et al., C.A.

2024-0445 (Del.

The plaintiff alleged that the Board breached their fiduciary duties by adopting and maintaining the Company’s Tax Benefits Preservation Plan (the “Tax Plan”).

The plaintiff seeks, among other relief, to enjoin the Tax Plan.

On May 14, 2024, the plaintiff filed an Amended Motion for Dismissal without prejudice and the Court entered an Order Granting Plaintiff’s Amended Motion for Dismissal without prejudice on May 14, 2024.

For additional discussion of our legal proceedings, please see our 2023 Annual Report .

Also see Note 10 - “Subsequent Events” for information related to a putative class action complaint that was filed on April 25, 2024.

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.

5 unchanged sentences

We recognize a liability for the purchase of such products at the time we receive them.

As of March 31, 2024, 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 $ 69.0 million, including $ 20.9 million for the remainder of 2024, $ 22.5 million in 2025, $ 16.0 million in 2026, $ 7.4 million in 2027 and $ 2.2 million in 2028 .

As of June 30, 2024, 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 $ 57.7 million, including $ 10.7 million for the remainder of 2024, $ 21.9 million in 2025, $ 15.6 million in 2026, $ 7.2 million in 2027, and $ 2.3 million in 2028.

As of June 30, 2024, we also have commitments of $ 5.6 million related to long-lead infrastructure for our Completion Fluids & Products Division’s planned bromine plant in Arkansas.

Contingencies Related to Discontinued Operations

In early 2018, we closed the Maritech Asset Purchase and Sale Agreement (“Maritech APA") and Maritech Membership Interest Purchase Agreement (“Maritech MIPA”) with Orinoco Natural Resources, LLC (“Orinoco”) that together provided for the purchase by Orinoco of all of Maritech’s membership interests and remaining oil and gas properties and related assets.

Under the Maritech APA, Orinoco assumed responsibility for all of Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech MIPA, Orinoco assumed all other liabilities of Maritech, including the decommissioning liabilities associated with Maritech’s interests in oil and gas properties previously sold by Maritech and select infrastructure still operated 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 (“BSEE”) and other parties, respectively, for which costs may be significant.

Pursuant to a Bonding Agreement entered into as part of these Orinoco transactions (the “Bonding Agreement”), Orinoco provided non-revocable performance bonds from a surety company in an aggregate amount of $ 46.8 million to cover the performance by Orinoco and Maritech of certain specific asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace the Initial Bonds with other non-revocable performance bonds in the aggregate sum of $ 47.0 million (collectively, the “Replacement Bonds”).

In the event Orinoco does not provide the Replacement Bonds, Orinoco is required to make certain cash escrow payments to us.

To date, no cash escrow payments have been made.

In addition, Maritech has received decommissioning orders from BSEE and could receive additional decommissioning orders in the future.

From time to time, we receive demand notices from third parties related to certain corporate guarantees related to such decommissioning liabilities.

While the ultimate outcome of such matters cannot be predicted at this time, if Maritech or other interest owners default on their decommissioning obligations, BSEE or third parties may seek to enforce certain corporate guarantees or third party indemnity agreements, as applicable, in which event we could become liable, in certain scenarios, for a portion of such decommissioning obligations.

We have recently been advised that decommissioning work to plug and abandon certain wells is expected to commence later in 2024 and that the cost to abandon those wells is now projected to be significantly higher than a bond supporting the liability, which was put in place based on earlier cost estimates.

While the ultimate outcome of this matter cannot be predicted, if Maritech were to default on this decommissioning obligation, we could potentially become liable for an estimated amount in the range of $ 15 million to $ 18 million, depending on whether other partners or property owners in the chain of title fulfill their obligations.

NOTE 7 – FAIR VALUE MEASUREMENTS

Financial Instruments

We retained an interest in CSI Compressco representing approximately 3.7 % of CSI Compressco’s outstanding common units as of March 31, 2024.

CSI Compressco was acquired by Kodiak on April 1, 2024.

See Note 10 - “Subsequent Event” for further information.

We retained an interest in CSI Compressco, which was acquired by Kodiak on April 1, 2024;

we received shares of Kodiak in exchange for our common units in CSI Compressco in connection with such acquisition.

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

In addition, we receive stock of Standard Lithium under the terms of our arrangements as noted in Note 4 - “Investments.”

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).

Our investments in Kodiak, Standard Lithium, and, formerly, CSI Compressco 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 was 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.

5 unchanged sentences

The change in the fair value of the convertible note, excluding the embedded option, and common units are included in other comprehensive income (loss) in our consolidated statements of comprehensive income.

The change in our investments for the three-month periods ended March 31, 2024 and 2023 are as follows:

Three Months Ended March 31, 2024

The change in our investments for the three-month and six-month periods ended June 30, 2024 and 2023 are as follows:

Three Months Ended June 30, 2024

Fair Value Measurements Using

5 unchanged sentences

Unrealized gain on equity securities

Unrealized loss on embedded option

— ( 85 ) ( 85 )

Unrealized loss on convertible note, excluding embedded option

— ( 5 ) ( 5 )

Investment balance at end of period

$ 13,279 $ 7,148 $ 20,427

Three Months Ended June 30, 2023

Fair Value Measurements Using

Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Unobservable Inputs

(Level 1) (Level 3) Total

(in thousands)

Investment balance at beginning of period

$ 7,963 $ 5,939 $ 13,902

Purchase of investments

Unrealized gain on equity securities

2,236 — 2,236

Unrealized gain on embedded option

Unrealized gain on convertible note, excluding embedded option

Investment balance at end of period $ 10,199 $ 6,519 $ 16,718

Six Months Ended June 30, 2024

Fair Value Measurements Using

Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Unobservable Inputs

(Level 1) (Level 3) Total

(in thousands)

Investment balance at beginning of period

$ 10,154 $ 7,200 $ 17,354

Unrealized gain on equity securities

3,125 — 3,125

Unrealized loss on embedded option

3 unchanged sentences

$ 13,279 $ 7,148 $ 20,427

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Fair Value Measurements Using

4 unchanged sentences

$ 8,147 $ 6,139 $ 14,286

Unrealized loss on equity securities

Purchase of investments

Unrealized gain on equity securities

2,052 — 2,052

4 unchanged sentences

$ 10,199 $ 6,519 $ 16,718

Recurring fair value measurements by valuation hierarchy as of March 31, 2024 and December 31, 2023 are as follows:

Recurring fair value measurements by valuation hierarchy as of June 30, 2024 and December 31, 2023 are 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 March 31, 2024 (Level 1) (Level 2) (Level 3)

Description June 30, 2024 (Level 1) (Level 2) (Level 3)

(in thousands)

Investment in CSI Compressco

Investment in Kodiak

$ 12,279 $ 12,279 $ — $ —

18 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(in thousands)

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(in thousands)

19 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(in thousands)

1 unchanged sentence

Depreciation and amortization 84 92 165 202

Impairments and other charges — 777 — 777

Interest expense 6,252 5,813 12,397 11,273

2 unchanged sentences

Total $ 17,330 $ 18,890 $ 36,548 $ 36,178

NOTE 10 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q 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 transaction and event described below.

On April 1, 2024, Kodiak completed its acquisition of CSI Compressco.

In exchange for our 5.2 million CSI Compressco common units, we received approximately 450,000 shares of Kodiak common stock.

The litigation is captioned Webb, et al.

Murphy, et al., C.A.

2024-0445 (Del.

The plaintiff alleges that the Board breached their fiduciary duties by adopting and maintaining the Company’s Tax Benefits Preservation Plan (the “Tax Plan”).

The plaintiff seeks, among other relief, to enjoin the Tax Plan.

We believe that the plaintiff’s claims lack merit.

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-Q

Item 1. Financial Statements