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Item 1. Financial Statements

2024-10-29 compared with 2024-07-31 · 195 added, 113 removed, 544 unchanged (36% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

12 unchanged sentences

Impairments and other charges

109 — 109 777

Insurance recoveries

7 unchanged sentences

Loss on debt extinguishment

Other (income) expense, net

Other income, net

( 715 ) ( 2,041 ) ( 2,241 ) ( 8,690 )

7 unchanged sentences

( 5,830 ) ( 48 ) ( 5,830 ) ( 68 )

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

Net income (loss)

( 2,998 ) 5,420 5,557 29,650

Loss attributable to noncontrolling interests

Net income attributable to TETRA stockholders $ 7,643 $ 18,215 $ 8,558 $ 24,255

Basic net income per common share:

Net income (loss) attributable to TETRA stockholders

$ ( 2,998 ) $ 5,420 $ 5,560 $ 29,675

Basic net income (loss) per common share:

Income from continuing operations

$ 0.02 $ 0.04 $ 0.09 $ 0.23

Income from discontinued operations

Net income attributable to TETRA stockholders

Loss from discontinued operations

( 0.04 ) — ( 0.04 ) —

Net income (loss) attributable to TETRA stockholders

$ ( 0.02 ) $ 0.04 $ 0.05 $ 0.23

Weighted average basic shares outstanding 131,579 129,777 131,100 129,395

Diluted net income per common share:

Diluted net income (loss) per common share:

Income from continuing operations

$ 0.02 $ 0.04 $ 0.09 $ 0.23

Income from discontinued operations

Net income attributable to TETRA stockholders

Loss from discontinued operations

( 0.04 ) — ( 0.04 ) —

Net income (loss) attributable to TETRA stockholders

$ ( 0.02 ) $ 0.04 $ 0.05 $ 0.23

Weighted average diluted shares outstanding 132,029 132,089 132,093 130,835

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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

Net income (loss)

$ ( 2,998 ) $ 5,420 $ 5,557 $ 29,650

Foreign currency translation adjustment from continuing operations, net of taxes of $ 0 in 2024 and 2023

3,358 ( 2,750 ) ( 235 ) ( 284 )

Unrealized gain (loss) on investment in CarbonFree

Unrealized gain on investment in CarbonFree

556 146 788 474

9 unchanged sentences

(In Thousands)

September 30,

2024 December 31,

43 unchanged sentences

(In Thousands, Except Share Amounts)

September 30,

2024 December 31,

8 unchanged sentences

20,645 27,303

Current liabilities associated with discontinued operations 5,830 —

Total current liabilities

10 unchanged sentences

Common stock, par value 0.01 per share;

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

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

134,924,707 shares issued at September 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 June 30, 2024 and December 31, 2023

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

( 19,957 ) ( 19,957 )

45 unchanged sentences

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

Net loss for third quarter 2024

— — — — — ( 2,998 ) — ( 2,998 )

Translation adjustment,

net of taxes of $ 0

— — — 3,358 — — — 3,358

Other comprehensive income

— — — — 556 — — 556

Comprehensive income

Equity-based compensation — 1,481 — — — — — 1,481

Other 3 ( 566 ) — — — — — ( 563 )

Balance at September 30, 2024

$ 1,349 $ 491,107 $ ( 19,957 ) $ ( 46,121 ) $ 1,443 $ ( 271,149 ) $ ( 1,260 ) $ 155,412

Par Value Additional Paid-In

31 unchanged sentences

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

Net income for third quarter 2023

— — — — — 5,420 — 5,420

Translation adjustment, net of taxes of $ 0

— — — ( 2,750 ) — — — ( 2,750 )

Other comprehensive income

— — — — 146 — — 146

Comprehensive income

Equity compensation expense — 1,396 — — — — — 1,396

Other 5 ( 135 ) — — — — ( 2 ) ( 132 )

Balance at September 30, 2023

$ 1,332 $ 482,709 $ ( 19,957 ) $ ( 49,275 ) $ 402 $ ( 272,818 ) $ ( 1,256 ) $ 141,137

(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)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

2 unchanged sentences

Depreciation, amortization, and accretion 26,367 25,705

Impairment and other charges — 777

Gain on investments

Impairments and other charges

(Gain) loss on investments

( 3,591 ) 157

5 unchanged sentences

Gain on sale of assets ( 142 ) ( 432 )

Other non-cash credits ( 686 ) ( 737 )

Other non-cash charges (credits)

307 ( 1,721 )

Changes in operating assets and liabilities:

11 unchanged sentences

Purchase of investments

( 1,021 ) ( 350 )

Other investing activities ( 287 ) ( 1,836 )

36 unchanged sentences

The Division also provides frac flowback, production well testing, and other associated services in many of the major oil and gas producing regions in the United States, as well as in oil and gas basins in certain countries in Latin America, Europe, and the Middle East.

We are also developing and pilot testing technologies to treat and desalinate produced water from oil wells for beneficial reuse, including surface discharge.

Unless the context requires otherwise, when we refer to “we,” “us,” and “our,” we are describing TETRA Technologies, Inc.

3 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 June 30, 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 September 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.

3 unchanged sentences

These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2023 and notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2024 (the “ 2023 Annual Report ”).

Discontinued Operations

In early 2018, we closed a series of related transactions that resulted in the disposition of our former Offshore segment.

Our former Offshore segment is reported as discontinued operations for all periods presented.

We may be required to satisfy certain decommissioning liabilities under third-party indemnity agreements and corporate guarantees for which costs may be significant.

During the three months ended September 30, 2024, we accrued $ 5.8 million of decommissioning expense and liability associated with our former Offshore segment for which costs might be above the value of surety bonds on properties previously disposed.

See Note 6 - “Commitments and Contingencies” for additional discussion of contingencies related to discontinued operations.

Significant Accounting Policies

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 .

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.

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

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

We corrected this by making an out-of-period adjustment during the three months ended June 30, 2024, which reduced other income, 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 nine months ended September 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.

2 unchanged sentences

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.

In connection with the May 2024 amendment to our ABL Credit Agreement, our former administrative agent required us to collateralize our 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.

Restricted cash as of September 30, 2024 consists of $ 0.7 million to secure our outstanding letters of credit with our former administrative agent and is expected to terminate as the letters of credit expire by March 2025.

Use of Estimates

4 unchanged sentences

We have rights to the brine underlying our approximately 40,000 gross acres of brine leases in the Smackover Formation in Southwest Arkansas, including rights to the bromine and lithium contained in the brine.

In June 2023, we entered into a memorandum of understanding (“MOU”) with Saltwerx LLC (“Saltwerx”), an indirect wholly owned subsidiary of ExxonMobil Corporation, relating to a newly formed Brine Unit and potential bromine and lithium production from brine produced from the unit.

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

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

In June 2023, we entered into a memorandum of understanding (“MOU”) with Saltwerx LLC (“Saltwerx”), an indirect wholly owned subsidiary of ExxonMobil Corporation, relating to a newly formed Evergreen Unit known as the Evergreen Unit, and potential bromine and lithium production from brine produced from the unit.

We completed an initial preliminary economic assessment in early 2023 for the extraction of the brine and for a bromine processing plant.

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

During the three and nine months ended September 30, 2024, we capitalized approximately $ 8.7 million and $ 22.6 million, respectively, of costs associated with the development of our properties in Arkansas.

We recognized $ 3.8 million and $ 6.8 million of expenses during the three and nine months ended September 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 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 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.

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 losses are included in other (income) expense, net and totaled $ 0.5 million and $ 2.8 million during the three and nine months ended September 30, 2024, respectively, and less than $ 0.1 million and $ 0.3 million during the three and nine months ended September 30, 2023, respectively.

Fair Value Measurements

5 unchanged sentences

Supplemental cash flow information is as follows:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

1 unchanged sentence

Income taxes paid $ 4,867 $ 3,918

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in thousands)

9 unchanged sentences

The Company is currently evaluating the expected impact of these standards but does not expect them to have a significant impact on its consolidated financial statements upon adoption as the standards expand disclosures only.

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

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.

NOTE 2 – REVENUE

Revenue from Contracts with Customers

Our contract asset balances, primarily associated with contractual invoicing milestones and/or customer documentation requirements, were $ 26.3 million and $ 30.6 million as of September 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 $ 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 balances were $ 0.6 million and $ 3.1 million as of September 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 $ 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 recognized approximately $ 3.4 million and $ 2.5 million during the three and nine months ended September 30, 2024, respectively, and $ 1.2 million and $ 1.6 million of revenue during the three and nine months ended September 30, 2023, respectively, deferred in unearned income as of the beginning of the period.

During the nine months ended September 30, 2024 and September 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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

8 unchanged sentences

16,761 10,377 36,892 28,216

76,569 78,254 222,175 232,662

Total Revenue

2 unchanged sentences

48,529 47,103 162,963 153,523

$ 141,700 $ 151,464 $ 464,607 $ 473,136

(1) Includes $ 4.1 million of lease revenue described below for the three and nine months ended September 30, 2024.

Lease Revenue

During the three months ended September 30, 2024, in connection with the settlement of a revenue contract by our Water & Flowback Services division, we entered into an arrangement with a customer including an embedded sales-type lease.

Pursuant to this contract settlement, we recognized $ 7.4 million of revenues included in product sales revenues and including $ 4.1 million of revenues from the embedded lease.

We also recognized $ 3.0 million of cost, included cost of product sales in our consolidated statements of operations during the three and nine months ended September 30, 2024.

As of September 30, 2024, current lease receivables of $ 1.3 million and long-term lease receivables of $ 2.5 million are included in trade accounts receivable and other assets, respectively, in our consolidated balance sheets.

The long-term lease receivable is expected to be collected by the end of 2026.

NOTE 3 – INVENTORIES

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

June 30, 2024 December 31, 2023

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

September 30, 2024 December 31, 2023

(in thousands)

7 unchanged sentences

NOTE 4 – INVESTMENTS

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

June 30, 2024 December 31, 2023

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

September 30, 2024 December 31, 2023

(in thousands)

3 unchanged sentences

Investment in Standard Lithium 1,288 1,616

Other investments

Investment in KMX Technologies

Total Investments $ 22,754 $ 17,354

4 unchanged sentences

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 June 30, 2024.

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

Our exposure to potential losses by CarbonFree is limited to our investment, including capitalized and accrued interest associated with the CarbonFree convertible note and CarbonFree Units.

KMX Technologies (“KMX”) is advancing wastewater treatment and accelerating energy storage with its direct lithium recovery enhancement processes through its proprietary membrane distillation technology.

During 2023, we invested $ 0.4 million in convertible notes issued by KMX.

During the three months ended September 30, 2024, these convertible notes converted into preferred units and we invested $ 1.0 million in additional preferred units.

We also received common units issued by KMX.

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

We are party to agreements whereby Standard Lithium Ltd.

SLI) (“Standard Lithium”) has the rights to produce and extract lithium in a portion of our Arkansas leases.

The Company received stock of Standard Lithium under the terms of its arrangements.

The Company received and currently holds 800,000 shares of common stock of Standard Lithium under the terms of its arrangements.

See Note 7 - “Fair Value Measurements” for further information.

NOTE 5 – LONG-TERM DEBT AND OTHER BORROWINGS

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

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

Scheduled Maturity September 30, 2024 December 31, 2023

(in thousands)

2 unchanged sentences

Total long-term debt $ 179,709 $ 157,505

(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.

(1) Net of unamortized discount of $ 5.2 million and $ 2.2 million as of September 30, 2024 and December 31, 2023, respectively, and net of unamortized deferred financing costs of $ 5.1 million and $ 3.3 million as of September 30, 2024 and December 31, 2023, respectively.

Term Credit Agreement

On January 12, 2024, the Company entered into a definitive agreement for a $ 265.0 million credit facility, consisting of a $ 190.0 million funded term loan and a $ 75.0 million delayed-draw term loan (collectively the “Term Credit Agreement”) that refinanced the Company’s prior credit facility outstanding as of December 31, 2023 and provided capital to advance the Company’s Arkansas bromine processing project.

Pricing on the Term Credit Agreement is the secured overnight financing rate plus 5.75 %.

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 June 30, 2024 and the maturity date of the Term Credit Agreement is January 1, 2030.

Pricing on the Term Credit Agreement is the secured overnight financing rate (“SOFR”) plus 5.75 %.

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 11.19 % as of September 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.

3 unchanged sentences

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.

domestic subsidiaries, subject to the lien priorities set forth in the intercreditor agreement with the agent under our ABL Credit Agreement.

All obligations under the Term Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest 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.

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.

5 unchanged sentences

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.

As of September 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 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, and a swingline loan sublimit of $ 11.5 million.

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.

As of September 30, 2024, we had no borrowings outstanding and $ 0.2 million letters of credit or guarantees under our ABL Credit Agreement.

Deferred financing costs of $ 0.8 million and $ 0.6 million as of September 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 $ 68.2 million under this agreement.

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

As of September 30, 2024, we had no balance outstanding and availability of approximately $ 4.9 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 June 30, 2024, there were $ 1.5 million of letters of credit outstanding against the Finland Credit Agreement.

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

As of September 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.

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 .

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.

There have been no material developments in our legal proceedings during the quarter ended September 30, 2024.

For additional discussion of our legal proceedings, please see our 2023 Annual Report and Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.

Product Purchase Obligations

4 unchanged sentences

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

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.

As of September 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 $ 69.5 million, including $ 3.3 million for the remainder of 2024, $ 26.1 million in 2025, $ 22.3 million in 2026, $ 15.5 million in 2027, and $ 2.3 million in 2028.

As of September 30, 2024, we also have commitments of $ 5.6 million related to long-lead infrastructure for our Completion Fluids & Products Division’s proposed 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.

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 remaining oil and gas properties and related assets and all outstanding membership interests of Maritech.

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.

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.

2 unchanged sentences

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.

On August 16, 2024, we issued a letter to Orinoco and the bond company demanding realignment of the existing bonds and/or issuance of Replacement Bonds pursuant to the terms of the Bonding Agreement to better align bond coverage with the more likely liability risks.

To date, no written response has been received.

In addition, Maritech and certain other interest owners have received decommissioning orders from BSEE and could receive additional decommissioning orders in the future.

Such decommissioning orders received by Maritech and other interest owners relate to asset retirement obligations for certain properties in the Gulf of Mexico.

From time to time, we also receive demand notices from third parties related to certain corporate guarantees or other arrangements covering such decommissioning liabilities.

While the ultimate outcome of such matters cannot be predicted at this time, if Maritech or other interest owners default, BSEE or third parties may seek to enforce certain corporate guarantees or third party indemnity agreements against us for a portion of such decommissioning obligations, which may be significant.

With respect to certain properties in the Gulf of Mexico, we have been advised that the cost of the decommissioning work to plug and abandon certain wells is projected to be significantly higher than the approximately $ 10.7 million bond supporting the liability, which was put in place by Maritech and other interest owners based on earlier cost estimates.

We have also been advised more recently that Maritech’s prior working interest with respect those plugging and abandonment (“P&A”) costs are expected to exceed its share of the bond.

In September 2024, P&A operations commenced pursuant to a cost sharing agreement among certain parties for decommissioning certain properties in the Gulf of Mexico.

While Maritech is not a party to this cost sharing agreement, a predecessor of Maritech has advised us that it expects to seek reimbursement from us for the portion of decommissioning costs it has contractually agreed to pay pursuant to the terms of the cost sharing agreement.

While the ultimate outcome of this matter cannot be predicted, we could potentially be liable for an estimated amount in the range of $ 5.8 million to $ 19.4 million, depending on the outcome of negotiations and whether other partners or property owners in the chain of title fulfill their respective obligations under their agreements.

Additionally, we understand that in connection with the P&A operations being performed, Maritech and the other named obligees have made a demand on the related bond.

We have made efforts to protect Maritech’s proportionate share of the bond proceeds (approximately $ 3.9 million), including demanding that the surety

segregate or ensure that Maritech’s share is applied solely to satisfy its proportionate share of the decommissioning costs.

We accrued a liability of $ 5.8 million related to this obligation during the three months ended September 30, 2024.

NOTE 7 – FAIR VALUE MEASUREMENTS

Financial Instruments

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.

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

During 2023, we invested $ 0.4 million in convertible notes issued by KMX.

During the three months ended September 30, 2024, these convertible notes converted into preferred units and we invested $ 1.0 million in additional preferred units.

We also received common units issued by KMX.

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

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Changes in the value of stock are recorded in other (income) expense, net in our consolidated statements of operations.

Our investment in convertible notes and common units issued by CarbonFree is recorded in our consolidated financial statements based on an internal valuation with assistance from a third-party valuation specialist (Level 3 fair value measurement).

The valuation is impacted by key assumptions, including the assumed probability and timing of potential debt or equity offerings.

The convertible note includes an option to convert the note into equity interests issued by CarbonFree.

The change in the fair value of the embedded option is included in other (income) expense, net in our consolidated statements of operations.

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 and six-month periods ended June 30, 2024 and 2023 are as follows:

Three Months Ended June 30, 2024

Our investment in preferred units issued by KMX as of September 30, 2024 were recorded based on observable market-based inputs for preferred units issued to several investors during August and September 2024 (Level 2 fair value measurement).

Our investment in convertible notes and common units issued by CarbonFree and our investment in common units issued by KMX are recorded in our consolidated financial statements based on an internal valuations with assistance from a third-party valuation specialist (Level 3 fair value measurement).

The valuations are impacted by key assumptions, including the assumed probability and timing of potential debt or equity offerings.

The convertible note issued by CarbonFree includes an option to convert the note into equity interests issued by CarbonFree.

The change in the fair value of the embedded option, as well as the KMX preferred units and common units, are included in other (income) expense, net in our consolidated statements of operations.

The change in the fair value of the convertible note issued by CarbonFree, excluding the embedded option, is included in other comprehensive income (loss) in our consolidated statements of comprehensive income.

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

Three Months Ended September 30, 2024

Fair Value Measurements Using

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

(Level 1) (Level 3) Total

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

Significant Unobservable Inputs

(Level 1) (Level 2)

(Level 3) Total

(in thousands)

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$ 13,279 $ — $ 7,148 $ 20,427

Purchase of investments

— 1,000 21 1,021

Reclassification between Level 2 and Level 3 fair value

— 350 ( 350 ) —

Unrealized gain on equity securities

Unrealized loss on embedded option

1,072 38 193 1,303

Unrealized loss on convertible note, excluding embedded option

Unrealized loss on embedded option

— — ( 553 ) ( 553 )

Unrealized gain on convertible note, excluding embedded option

Investment balance at end of period

$ 14,351 $ 1,388 $ 7,015 $ 22,754

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Fair Value Measurements Using

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Purchase of investments

Unrealized gain on equity securities

Unrealized loss on equity securities

( 707 ) — ( 707 )

2 unchanged sentences

Investment balance at end of period $ 9,492 $ 6,913 $ 16,405

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Fair Value Measurements Using

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

(Level 1) (Level 3) Total

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

(Level 1) (Level 2) (Level 3) Total

(in thousands)

1 unchanged sentence

$ 10,154 $ — $ 7,200 $ 17,354

Purchase of investments

— 1,000 21 1,021

Reclassification between Level 2 and Level 3 fair value

— 350 ( 350 ) —

Unrealized gain on equity securities

5 unchanged sentences

$ 14,351 $ 1,388 $ 7,015 $ 22,754

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Fair Value Measurements Using

12 unchanged sentences

$ 9,492 $ 6,913 $ 16,405

Recurring fair value measurements by valuation hierarchy as of June 30, 2024 and December 31, 2023 are as follows:

Recurring fair value measurements by valuation hierarchy as of September 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 June 30, 2024 (Level 1) (Level 2) (Level 3)

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

(in thousands)

3 unchanged sentences

Investment in Standard Lithium 1,288 1,288 — —

Other investments

Investment in KMX Technologies

1,598 — 1,388 210

Total investments

7 unchanged sentences

Investment in Standard Lithium 1,616 1,616 — —

Other investments

Investment in KMX Technologies

Investments $ 17,354

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

20 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

3 unchanged sentences

Impairments and other charges 109 — 109 777

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

Interest expense, net

6,043 5,755 18,440 17,029

Loss on debt extinguishment

Other general corporate (income) expense, net 305 ( 386 ) ( 3,339 ) 272

Other general corporate income, net

( 808 ) ( 717 ) ( 4,147 ) ( 446 )

Total $ 16,217 $ 18,691 $ 52,765 $ 54,869

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