Risks Related to Our Business and the Industries We Serve
+Added: Our business and operations have been and will likely continue to be adversely affected by the COVID-19 pandemic.
+Added: The COVID-19 pandemic has caused, and is continuing to cause, severe disruptions in the worldwide and U.S.
+Added: economy, including the global and domestic demand for oil and natural gas, which has had and is expected to continue to have an adverse effect primarily on our oilfield services business and, as a result, our financial condition, results of operations, cash flows and stock price.
+Added: Moreover, the COVID-19 pandemic has caused significant disruption in the financial markets both globally and in the United States.
+Added: If COVID-19 continues to spread or the response to contain or mitigate the COVID-19 pandemic through the development and availability of effective treatments and vaccines, including the vaccines recently approved by the Federal Drug Administration for emergency use in the U.S., is unsuccessful, we could continue to experience material adverse effects on our business, financial condition and results of operations.
+Added: Due to the rapid development and fluidity of this situation, we cannot make any prediction as to the ultimate material adverse impact of the COVID-19 pandemic on our business, financial condition and results of operations.
Our customer base is concentrated and the loss of one or more of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue to decline substantially.
Our top five customers accounted for approximately 50% and 53%, respectively, of our revenue for the years ended December 31, 2020 and 2019.
−Removed: Gulfport was our largest customer for the year ended December 31, 2019 accounting for approximately 20% of our revenue and our second largest customer for the year ended December 31, 2018 accounting for approximately 8% of our revenue.
−Removed: PREPA was our second largest customer for the year ended December 31, 2019 accounting for approximately 15% of our revenue and our largest customer for the year ended December 31, 2018 accounting for approximately 60% of our revenue.
+Added: Gulfport was our largest customer for the year ended December 31, 2020 accounting for approximately 16% of our revenue and our largest customer for the year ended December 31, 2019 accounting for approximately 20% of our revenue.
+Added: PREPA was our second largest customer for the year ended December 31, 2019 accounting for approximately 15% of our revenue.
It is likely that we will continue to derive a significant portion of our revenue from a relatively small number of customers in the future.
−Removed: If a major customer decided not to continue to use our services, our revenue would decline and our operating results and financial condition could be harmed.
−Removed: In this regard, Gulfport is seeking to terminate our pressure pumping contract with it and our work for PREPA ended on March 31, 2019.
+Added: When a major customer discontinues the use our services, our revenue will decline and our operating results and financial condition will be harmed unless such loss is offset by new business.
+Added: In this regard, Gulfport is seeking to terminate our pressure pumping and sand contracts with it and Gulfport has filed chapter 11 proceedings on November 13, 2020.
+Added: As of that date, Gulfport owed us approximately $46.9 million, which included interest charges of $3.3 million.
+Added: Further, our work for PREPA ended on March 31, 2019.
See the risk factors below for additional information.
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In particular, as of December 31, 2020, PREPA owed us approximately $227 million for services performed excluding $74 million of interest charged on these delinquent balances as of December 31, 2020.
−Removed: Any nonperformance by our counterparties, including their failure to pay the amounts they owe us on a timely basis or at all, either as a result of changes in financial and economic conditions or otherwise, could have a material adverse impact on our operating results and could adversely affect our liquidity.
+Added: Any nonperformance by our counterparties, including their
+Added: failure to pay the amounts they owe us on a timely basis or at all, either as a result of changes in financial and economic conditions or otherwise, could have a material adverse impact on our operating results and could adversely affect our liquidity.
Cobra, one of our infrastructure services subsidiaries, was party to service contracts with PREPA.
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District Court for the District of Puerto Rico.
−Removed: As a result, PREPA's ability to meet its payment obligations under the contracts is largely dependent upon funding from the Federal Emergency Management Agency or other sources.
+Added: As a result, PREPA's ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources.
In the event that PREPA (i) does not have or does not obtain the funds necessary to satisfy its payment obligations to our subsidiary under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to us or (iii) otherwise does not pay amounts owed to us for services performed, our financial condition, results of operations and cash flows would be materially and adversely affected.
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District Court for the District of Puerto Rico.
−Removed: As a result, PREPA's ability to meet its payment obligations under the contracts is largely dependent upon funding from the Federal Emergency Management Agency or other sources.
+Added: As a result, PREPA's ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources.
On September 30, 2019, we filed a motion with the U.S.
−Removed: District Court for the District of Puerto Rico seeking recovery of the amounts owed to us by PREPA.
−Removed: PREPA filed a motion to stay our motion on the ground that the ongoing criminal proceedings described in the immediately following risk factor below against the former president of Cobra and two other individuals may affect our recovery of those amounts.
−Removed: On October 17, 2019, the court granted PREPA’s request to stay our motion and, on February 3, 2020, extended the stay until a status conference to be held on June 17, 2020.
−Removed: event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to us or (iii) otherwise does not pay amounts owed to us for services performed, the receivable may not be collected and our financial condition, results of operations and cash flows would be materially and adversely affected.
+Added: District Court for the District of Puerto Rico seeking recovery of the amounts owed to us by PREPA, which motion was stayed by the court.
+Added: On March 25, 2020, we filed an urgent motion to modify the stay order and allow our recovery of approximately $62 million in claims related to a tax gross-up provision contained in the emergency master service agreement, as amended, that was entered into with PREPA on October 19, 2017.
+Added: This emergency motion was denied on June 3, 2020 and the court extended the stay of our motion.
+Added: On December 9, 2020, the Court again extended the stay of our motion and directed PREPA to file a status motion by June 7, 2021.
+Added: In the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to us or (iii) otherwise does not pay amounts owed to us for services performed, the receivable may not be collected and our financial condition, results of operations and cash flows would be materially and adversely affected.
Further, as noted above, our contracts with PREPA have concluded and we have not obtained, and there can be no assurance that we will be able to obtain, one or more contracts with PREPA or other customers to replace the level of services that we provided to PREPA under our previous contracts.
+Added: Our largest customer in 2020, Gulfport, filed for voluntary relief under Chapter 11 of the Bankruptcy Code.
+Added: On November 13, 2020, Gulfport and its subsidiaries filed for voluntary relief under chapter 11 of the Bankruptcy Code.
+Added: As of that date, we had claims totaling $3.5 million against Gulfport and $43.4 million against subsidiaries of Gulfport primarily for hydraulic fracturing services and natural sand proppant.
+Added: Gulfport may take actions in its chapter 11 proceeding to terminate its agreements with us and/or seek to reduce our claims for services and damages to which we may be entitled.
+Added: Our recovery on our claims will be subject to factors outside of our control.
+Added: The termination of our relationship with Gulfport, the reduction of our claims for services and damages to which we may be entitled or the reduction in recovery rates for those claims for services and damages could have a material effect on our business, financial condition, results of operations and cash flows.
+Added: We may experience losses in excess of our recorded reserves for receivables.
+Added: We evaluate the collectability of our receivables based on consideration of a customer’s ability to make required payments, payment history, economic events and other factors.
+Added: Recorded reserves represent our estimate of current expected credit losses on existing receivables and are determined based on historical customer reviews, current financial conditions and reasonable and supportable forecasts.
+Added: An unexpected change in customer financial condition or future economic uncertainty could result in additional requirements for specific reserves, which could have a material effect on our business, financial condition, results of operations and cash flows.
The outcomes of investigations and litigation relating to our contracts with PREPA may have a material adverse effect on our business, financial condition, results of operations and cash flows.
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We are continuing to cooperate with the related investigation.
−Removed: Subsequent to the indictment, we received (i) a preservation request letter from the Securities and Exchange Commission related to documents relevant to an ongoing investigation it is conducting and (ii) a civil investigative demand, or CID, from the United States Department of Justice, or DOJ, requesting certain documents and answers to interrogatories relevant to an ongoing investigation DOJ is conducting.
+Added: Subsequent to the indictment, we received (i) a preservation request letter from the SEC related to
+Added: documents relevant to an ongoing investigation it is conducting and (ii) a civil investigative demand, or CID, from the United States Department of Justice, or DOJ, requesting certain documents and answers to interrogatories relevant to an ongoing investigation DOJ is conducting.
Both the SEC and DOJ investigations relate to the same subjects as those at issue in the criminal matter referenced above.
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On January 10, 2020, the defendants filed their motion to dismiss the first amended complaint.
+Added: On March 9, 2020, the plaintiffs filed a second amended complaint for violation of federal securities laws which contains allegations substantially similar to those contained in the plaintiff’s first amended complaint.
+Added: On March 30, 2020, the defendants filed their motion to dismiss the second amended complaint.
+Added: On January 26, 2021, the court granted the motion to dismiss in part and denied the motion to dismiss in part.
In September 2019, four derivative lawsuits were filed, two in the Western District of Oklahoma and two in the District of Delaware, purportedly on behalf of the company and against its officers and directors.
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On February 18, 2020, the defendants filed a motion to stay this action.
+Added: On August 3, 2020, the Court stayed the litigation pending the outcome of other matters.
On January 21, 2020, MasTec Renewables Puerto Rico, LLC, or MasTec, filed a lawsuit against us and Cobra in the U.S.
District Court in the Southern District of Florida.
−Removed: In its complaint, Mastec asserts claims against us and Cobra for violations of the federal Racketeer Influenced and Corrupt Organizations Act, tortious interference and violations of Puerto Rico state laws.
−Removed: Mastec alleges that it sustained injuries to its business and property in the amount of $500 million because of our and Cobra’s wrongful interference, payment of bribes and other inducement to a FEMA official in order to secure two infrastructure contracts to aid in the rebuilding of the energy infrastructure in Puerto Rico after Hurricane Maria.
+Added: MasTec's complaint asserts claims against us and Cobra for violations of the federal Racketeer Influenced and Corrupt Organizations Act, or RICO, tortious interference and violations of Puerto Rico state law.
+Added: Mastec alleges that it sustained injuries to its business and property in an unspecified amount because it lost the opportunity to perform work under a services contract with a maximum value of $500 million due to our and Cobra’s wrongful interference, payment of bribes and other inducement to a FEMA official in order to secure two infrastructure contracts to aid in the rebuilding of the energy infrastructure in Puerto Rico after Hurricane Maria.
+Added: On April 1, 2020, the defendants filed a motion to dismiss the complaint.
+Added: On October 14, 2020, the court dismissed the RICO claims.
We believe that the plaintiffs’ claims in the above referenced actions are without merit and will vigorously defend the actions.
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Government agencies may review a contractor’s performance, cost structure and compliance with applicable laws, regulations and standards.
−Removed: If government agencies determine through these reviews that costs were improperly allocated to
−Removed: specific contracts, they will not reimburse the contractor for those costs or may require the contractor to refund previously reimbursed costs.
+Added: If government agencies determine through these reviews that costs were improperly allocated to specific contracts, they will not reimburse the contractor for those costs or may require the contractor to refund previously reimbursed costs.
If government agencies determine that we engaged in improper activity, we may be subject to civil and criminal penalties.
Government contracts are also subject to renegotiation of profit and termination by the government prior to the expiration of the term.
−Removed: See the two preceding risk factors for information regarding pending investigations and legal proceedings relating to our contracts with PREPA.
−Removed: We provide our hydraulic fracturing completion services to a limited number of customers, and Gulfport, one of our customers, is seeking to terminate its agreement with us, which could adversely affect our operations.
−Removed: We provide completion services, which services include hydraulic fracturing.
−Removed: A portion of our revenue from this business is derived from Gulfport pursuant to a contract that expires in December 2021.
−Removed: On December 28, 2019, Gulfport filed a lawsuit alleging our breach of this contract and is seeking to terminate the contract and recover damages for alleged overpayments, audit costs and legal fees.
−Removed: We believe this action is without merit and will vigorously defend the lawsuit.
−Removed: However, we cannot assure you that we will be able to preserve, extend or renew our contract with Gulfport on favorable terms and conditions or at all.
−Removed: Likewise, we cannot assure you that we would be able to obtain replacement long-term contracts with other customers sufficient to continue providing the level of services that we currently provide to Gulfport.
−Removed: The termination of our relationship or nonrenewal of our contract with Gulfport, or one or more of our other customers, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: We provide natural sand proppant to a limited number of customers, and the termination of one or more of these relationships could adversely affect our operations.
−Removed: We provide natural sand proppant used for hydraulic fracturing.
−Removed: Historically, we have derived a large portion of our revenue from this business from Gulfport pursuant to a contract that expires in December 2021.
−Removed: The termination of our relationship or nonrenewal of our contract with Gulfport, or one or more of our other customers, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: See the preceding risk factors for information regarding pending investigations and legal proceedings relating to our contracts with PREPA.
Our revolving credit facility imposes, and any of our future credit facilities may impose, restrictions on us that may affect our ability to successfully operate our business.
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• selling all or substantially all of our assets.
−Removed: As of December 31, 2019, our revolving credit facility contained various customary affirmative and restrictive covenants.
−Removed: Among the covenants were two financial covenants, a minimum interest coverage ratio (3.0 to 1.0) and a maximum leverage ratio (4.0 to 1.0).
−Removed: As of December 31, 2019, we were in compliance with the financial covenants under our revolving credit facility.
−Removed: However, we believe that our adjusted EBITDA for the trailing four fiscal quarters would have resulted in a breach of the maximum leverage ratio and/or the interest coverage ratio as early as the end of the first quarter of 2020 if we did not receive payments due from PREPA before the end of such quarter.
−Removed: As we believe that such payments from PREPA are unlikely to be received by March 31, 2020, on February 26, 2020, we amended our revolving credit facility to, among other things, (i) amend our financial covenants, as outlined below, (ii) decrease the maximum revolving advance amount from $185 million to $130 million, (iii) decrease the amount that the maximum revolving advance can be increased to (the accordion) from $350 million to $180 million, (iv) increase the applicable margin ranges from 2.00% to 2.50% per annum in the case of the alternate base rate and from 3.00% to 3.50% per annum in the case of LIBOR, (v) increase the aggregate amount of permitted asset dispositions, and (vi) permit certain sale-leaseback transactions.
−Removed: The financial covenants under our revolving credit facility were amended as follows:
−Removed: the minimum interest coverage ratio of 3.0 to 1.0 was eliminated;
−Removed: the maximum leverage coverage ratio of 4.0 to 1.0 was eliminated for the first two fiscal quarters of 2020 and, beginning with the fiscal quarter ended September 30, 2020, changed to 2.5 to 1.0;
−Removed: beginning with the fiscal quarter ended September 30, 2020, a minimum fixed charge coverage ratio of at least 1.1 to 1.0 was added;
−Removed: from the effective date of February 26, 2020 through September 30, 2020, a minimum excess availability covenant of 10% of the maximum revolving advance amount was added.
We cannot assure you that we will be able to remain in compliance with the covenants contained in our revolving credit facility as amended and restated.
−Removed: If an event of default occurs under our revolving credit facility and remains uncured, it could have a material adverse affect on our business, financial condition, results of operations and cash flows.
+Added: If an event of default occurs under our revolving credit facility and remains uncured, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The lenders (i) would not be required to lend any additional amounts to us, (ii) could elect to declare all outstanding borrowings, together with accrued and unpaid interest and fees, to be due and payable, and (iii) may have the ability to require us to apply all of our available cash to repay our outstanding borrowings.
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Our failure to promptly and adequately recover on these types of claims could have an adverse impact on our financial condition, results of operations and cash flows.
−Removed: Competition within the energy services industry may adversely affect our ability to market our services.
−Removed: The energy services industry is highly competitive and fragmented and includes numerous small companies capable of competing effectively in our markets on a local basis, as well as large companies that possess substantially greater financial and other resources than we do.
−Removed: Our larger competitors’ greater resources could allow those competitors to compete more effectively than we can.
−Removed: The amount of equipment available may exceed demand, which could result in active price competition.
−Removed: Many contracts are awarded on a bid basis, which may further increase competition based primarily on price.
−Removed: In addition, adverse market conditions lower demand for well servicing equipment, which results in excess equipment and lower utilization rates.
−Removed: If market conditions in our oil and natural gas-oriented operating areas persist, utilization rates may decline.
We may not accurately estimate the costs associated with infrastructure services provided under fixed price contracts, which could have an adverse effect on our financial condition, results of operations and cash flows.
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Some of our infrastructure services contracts require performance and payment bonds.
−Removed: If we are not able to renew or obtain a sufficient level of bonding capacity in the future, we may be precluded from being able to bid for certain contracts or
−Removed: successfully contract with certain customers.
−Removed: In addition, even if we are able to successfully renew or obtain performance or payment bonds, we may be required to post letters of credit in connection with the bonds, which would reduce availability under our credit facility.
+Added: If we are not able to renew or obtain a sufficient level of bonding capacity in the future, we may be precluded from being able to bid for certain contracts or successfully contract with certain customers.
+Added: In addition, even if we are able to successfully renew or obtain performance or
+Added: payment bonds, we may be required to post letters of credit in connection with the bonds, which would reduce availability under our credit facility.
Furthermore, under standard terms in the surety market, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing or renewing any bonds.
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Certain of our infrastructure services customers assign work to us on a project-by-project basis under MSAs.
−Removed: Under these agreements, our customers often have no obligation to assign a specific amount of work
+Added: Under these agreements, our customers often have no obligation to assign a specific amount of work to us.
Our operations could decline significantly if the anticipated volume of work is not assigned to us or is canceled.
−Removed: Many of our contracts, including our MSAs, are opened to competitive bid at the expiration of their terms.
+Added: our contracts, including our MSAs, are opened to competitive bid at the expiration of their terms.
There can be no assurance that we will be the successful bidder on our existing contracts that come up for re-bid.
−Removed: Timing of revenue for our infrastructure services backlog can be subject to change as a result of our delays, customer delays, regulatory delays or other factors.
−Removed: These changes could cause estimated revenue to be realized in periods later than originally expected, or not at all.
−Removed: As a result, our backlog as of any particular date is an uncertain indicator of future revenue and earnings.
−Removed: Estimated backlog for our infrastructure services represents the amount of revenue we expect to realize over the next 36 months from future work on uncompleted construction projects, including new contracts under which work has not begun.
−Removed: Our estimated backlog also includes amounts payable to us under master service and other service agreements.
−Removed: Estimated infrastructure services backlog for work under master service and other service agreements is determined based on historical trends, experience from similar projects and estimates of customer demand based on communications with our customers.
−Removed: As of December 31, 2019 , our infrastructure services backlog was $490 million.
−Removed: In 2020, we expect to realize approximately $148 million of our backlog.
−Removed: However, approximately $479 million of our infrastructure services backlog as of December 31, 2019 is attributable to amounts under master service or other service agreements pursuant to which our customers are not contractually committed to purchase a minimum amount of services.
−Removed: Most of these agreements can be canceled on short or no advance notice.
−Removed: Timing of revenue for our infrastructure services backlog can be subject to change as a result of our delays, customer delays, regulatory delays or other factors.
−Removed: These changes could cause estimated revenue to be realized in periods later than originally expected, or not at all.
−Removed: We occasionally experience postponements, cancellations and reductions in expected future work from master service agreements or other service agreements due to changes in our customers’ spending plans, market volatility, governmental funding and regulatory factors.
−Removed: There can be no assurance as to our customers’ requirements or the accuracy of our estimates.
−Removed: As a result, our backlog as of any particular date is an uncertain indicator of future revenue and earnings.
−Removed: Backlog is not a term recognized under accounting principles generally accepted in the United States;
−Removed: however, it is a common measurement used in the infrastructure industry.
−Removed: As such, our methodology for determining backlog may not be comparable to the methodologies used by others.
Delays and reductions in government appropriations can negatively impact energy infrastructure construction, maintenance and repair projects and may impair the ability of our energy infrastructure customers to timely pay for products or services provided or result in their insolvency or bankruptcy, any of which exposes us to credit risk of our infrastructure customers.
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Delayed or reduced appropriations may cancel, curtail or delay projects and may have an adverse effect on our business, results of operations, cash flows and financial condition.
−Removed: A portion of our business depends on the oil and natural gas industry and particularly on the level of exploration and production activity within the United States and Canada, and the ongoing volatility in prices for oil and natural gas has had, and continues to have, an adverse effect on our revenue, cash flows, profitability and growth.
+Added: A portion of our business depends on the oil and natural gas industry and particularly on the level of exploration and production activity within the United States and Canada, and the sharp decline in oil prices and continued volatility in the oil and natural gas markets have negatively impacted, and are likely to continue to negatively impact, our oilfield services and, as a result, our business, financial condition, results of operations, cash flows and stock price.
Demand for our oil and natural gas products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry.
−Removed: Throughout 2019 oil prices fluctuated between a low of $45.41 on January 1, 2019 and a high of $66.30 on April 23, 2019, averaged $57.03 per barrel.
−Removed: Certain factors related to world politics and major oil producers caused fluctuations in the oil price during 2019.
−Removed: However, overall, the price of oil stayed relatively stable throughout the year.
−Removed: We anticipate demand for our oil and natural gas services and products will continue to be dependent on the level of expenditures by companies in the oil and natural gas industry and, ultimately, commodity prices.
−Removed: We experienced a weakening in demand for our oilfield services beginning in the third quarter of 2019 which continued throughout the fourth quarter of 2019 as a result of budget exhaustion and capital discipline from our customers.
+Added: In early March 2020, oil prices dropped sharply and then continued to decline reaching levels below zero dollars per barrel.
+Added: This was a result of multiple factors affecting global oil and natural gas markets, including the announcement of price reductions and production increases by OPEC members and other oil exporting nations and the ongoing COVID-19 pandemic.
+Added: Commodity prices are expected to continue to be volatile as a result of production levels, inventories and demand, and national and international economic performance.
+Added: Other significant factors that are likely to continue to affect commodity prices in current and future periods include, but are not limited to, the effect of U.S.
+Added: energy, monetary and trade policies, U.S.
+Added: and global political developments, including the results of the U.S.
+Added: presidential and congressional elections and their effect on energy and environmental policies, the impact and duration of the ongoing COVID-19 pandemic and conditions in the U.S.
+Added: oil and gas industry.We anticipate demand for our oil and natural gas services and products will continue to be dependent on the level of expenditures by companies in the oil and natural gas industry and, ultimately, commodity prices.
While we still expect commodity prices to be the primary driver of capex spending and industry activity levels in the future, other factors, such as debt repayment obligations and limited access to the capital markets, may play a significant role in the ultimate level of capex spend by the companies that use our completion and production, natural sand proppant and contract land and directional drilling service lines.
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We have, and may in the future, experience significant fluctuations in operating results as a result of the reactions of our customers to changes in oil and natural gas prices.
−Removed: For example, prolonged low commodity prices experienced by the oil and natural gas industry during 2015 and the first part of 2016 and again in the fourth quarter of 2018, combined with adverse changes in the capital and credit markets, caused many exploration and production companies to reduce their capital budgets and drilling activity.
+Added: For example, prolonged low commodity prices experienced by the oil and natural gas industry during the first half of 2020, combined with the ongoing COVID-19 pandemic, adverse changes in demand for our services and volatility in the capital and credit markets, caused many exploration and production companies to reduce their capital budgets and drilling activity.
This resulted in a significant decline in demand for oilfield services and adversely impacted the prices oilfield services companies could charge for their services.
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We cannot assure you that the reserves we have established for potential credit losses will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.
−Removed: To the extent one or more of our key customers commences bankruptcy proceedings, our contracts with these customers may be subject to rejection under applicable provisions of the United States Bankruptcy Code, or may be renegotiated.
+Added: To the extent one or more of our
+Added: key customers commences bankruptcy proceedings, as is the case with Gulfport, our contracts with these customers may be subject to rejection under applicable provisions of the United States Bankruptcy Code, or may be renegotiated.
Further, during any such bankruptcy proceeding, prior to assumption, rejection or renegotiation of such contracts, the bankruptcy court may temporarily authorize the payment of value for our services less than contractually required, which could also have a material adverse effect on our business, results of operations, cash flows and financial condition.
−Removed: Shortages, delays in delivery and interruptions in supply of drill pipe, replacement parts, other equipment, supplies and materials may adversely affect our contract land and directional drilling business or our pressure pumping business.
+Added: Shortages, delays in delivery and interruptions in supply of drill pipe, replacement parts, other equipment, supplies and materials may adversely affect our drilling business or our pressure pumping business.
During periods of increased demand for drilling and completion services, the industry has experienced shortages of drill pipe, replacement parts, other equipment, supplies and materials, including, in the case of our pressure pumping operations, replacement parts, other equipment, proppants, acid, gel and water.
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Oilfield services equipment or assets being upgraded, converted or re-activated following a period of inactivity may experience start-up complications and may encounter other operational problems that could result in significant delays, uncompensated downtime, reduced dayrates or the cancellation, termination or non-renewal of contracts.
−Removed: In this regard, due to market conditions, we have temporarily shut down certain of our service offerings, including contract land drilling, flowback,
−Removed: cementing and acidizing operations.
+Added: In this regard, due to market conditions, we have temporarily shut down certain of our service offerings, including contract land drilling, flowback, cementing and acidizing operations.
Further, construction and upgrade projects are subject to risks of delay or significant cost overruns inherent in any large construction project from numerous factors, including the following:
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As new horizontal and directional drilling, pressure pumping, pressure control and well service technologies develop, we may be placed at a competitive disadvantage, and competitive pressure may force us to implement new technologies at a substantial cost.
−Removed: We may not be able to successfully acquire or use new technologies.
+Added: We may not be able to successfully acquire or use new
+Added: technologies.
Further, our customers are increasingly demanding the services of newer, higher specification drilling rigs.
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In addition, our current customer contracts require us to deliver frac sand that meets certain specifications.
−Removed: If the estimates of the quality of our sand reserves, including the volumes of the various specifications of those reserves, prove to be inaccurate, we may incur significantly higher excavation costs without corresponding increases in revenues, we may not be able to meet our contractual obligations, or our facilities may have a shorter than expected reserve life, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: If the estimates of the quality of our sand reserves, including the volumes of the various specifications of those reserves, prove to be inaccurate, we may incur significantly higher excavation costs without corresponding increases in revenues, we may not be able to meet our
+Added: contractual obligations, or our facilities may have a shorter than expected reserve life, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
As part of our natural sand proppant services business, we rely on third parties for raw materials and transportation, and the suspension or termination of our relationship with one or more of these third parties could adversely affect our business, financial conditions, results of operations and cash flows.
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Competition in the industry is based on price, consistency and quality of product, site location, distribution and logistics capabilities, customer service, reliability of supply and breadth of product offering.
−Removed: The large, national producers with whom we compete include Badger Mining Corporation, Covia Holdings Corporation, Hi-Crush Partners LP, Preferred Proppants LLC, Smart Sand, Inc., Emerge Energy Services LP and U.S.
+Added: The large, national producers with whom we compete include Badger Mining Corporation, Covia Holdings Corporation, Hi-Crush Partners LP, Smart Sand, Inc.
Silica Holdings Inc.
Our larger competitors may have greater financial and other resources than we do, may develop technology superior to ours, may have production facilities that are located closer to sand mines from which raw sand is mined or to their key customers than our facilities or have a more cost effective access to raw sand and transportation facilities than we do.
−Removed: Should the demand for hydraulic fracturing services decrease, prices in the frac
−Removed: sand market could materially decrease as producers may seek to preserve market share or exit the market and sell frac sand at below market prices.
−Removed: In addition, oil and natural gas exploration and production companies and other providers of hydraulic fracturing services could acquire their own frac sand reserves, develop or expand frac sand production capacity or otherwise fulfill their own proppant requirements and existing or new frac sand producers could add to or expand their frac sand production capacity, which may negatively impact pricing and demand for our frac sand.
+Added: As the demand for hydraulic fracturing services has decreased due to commodity price volatility, prices in the frac sand market have materially decreased as demand for frac sand dropped and sand producers sought to preserve market share or exit the market and sell frac sand at below market prices.
+Added: In addition, some oil and natural gas exploration and production companies and other providers of hydraulic fracturing services have acquired their own frac sand reserves, developed or expanded frac sand production capacity or otherwise fulfilled their own proppant requirements and existing or new frac sand producers could add to or expand their frac sand production capacity, which may negatively impact pricing and demand for our frac sand.
We may not be able to compete successfully against either our larger or smaller competitors in the future, and competition could have a material adverse effect on our business, financial condition, results of operations and cash flows.
4 unchanged sentences
Future hydraulic fracturing-related legislation or regulations could restrict the ability of our customers to utilize, or increase the cost associated with, hydraulic fracturing, which could reduce demand for our proppants and adversely affect our business, financial condition, results of operations and cash flows.
−Removed: For additional information regarding the regulation of hydraulic fracturing, see “ —Risks Related to Our Business and the Oil and Natural Gas Industry—Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays .”
+Added: For additional information regarding the regulation of hydraulic fracturing, see Item 1.
+Added: Business — Regulation of Hydraulic Fracturing included elsewhere in this annual report.
An increase in the supply of raw frac sand having similar characteristics as the raw frac sand we produce and sell could make it more difficult for us to market our sand on favorable terms or at all.
12 unchanged sentences
The relatively high transportation expenses and related costs tend to favor frac sand producers located in close proximity to their customers.
−Removed: As we expand our frac sand production, our need for additional transportation services and transload network access increases.
−Removed: We contract with truck and rail services to move frac sand from our production facilities to transload sites and our customers, and increased costs under these contracts
−Removed: could adversely affect our results of operations.
+Added: If and when we expand our frac sand production, our need for additional transportation services and transload network access will increase.
+Added: We contract with truck and rail services to move frac sand from our production facilities to transload sites and our customers, and increased costs under these contracts could adversely affect our results of operations.
In addition, we bear the risk of non-delivery under our contracts.
41 unchanged sentences
At December 31, 2020, we had $2 million of cash in Canadian dollars, in Canadian accounts.
−Removed: A 10% increase in the strength of the Canadian dollar versus the U.S.
−Removed: dollar would have resulted in a decrease in pre-tax income of approximately $0.04 million as of December 31, 2019 .
−Removed: Conversely, a corresponding decrease in the strength of the Canadian dollar would have resulted in a comparable increase in pre-tax income.
We have not hedged our exposure to changes in foreign currency exchange rates and, as a result, could incur unanticipated translation gains and losses.
−Removed: Our business is difficult to evaluate because we have a limited operating history.
−Removed: Mammoth Energy Services, Inc.
−Removed: was formed in June 2016, and did not conduct any material business operations prior to its initial public offering, or the IPO, which closed on October 19, 2016.
−Removed: Many of our subsidiaries were formed, and their services and operations commenced, after the IPO.
−Removed: Prior to the IPO, Mammoth Energy Services, Inc.
−Removed: was a wholly-owned subsidiary of Mammoth Energy Partners LP, referred to as Mammoth Partners, which was originally formed in February 2014.
−Removed: Except as expressly noted otherwise, the historical financial information of Mammoth Energy Services, Inc.
−Removed: and operational data for the periods prior to October 12, 2016 is that of Mammoth Partners and its consolidated subsidiaries.
−Removed: These subsidiaries were formed or acquired between 2007 and 2016.
−Removed: As a result, there is only limited historical financial and operating information available upon which to base your evaluation of our performance.
In the course of our business, we may become subject to lawsuits, indemnity or other claims, which could materially and adversely affect our business, results of operations and cash flows.
3 unchanged sentences
Claimants may seek large damage awards and defending claims can involve significant costs.
−Removed: When appropriate, we establish accruals for litigation and contingencies that we believe to be adequate in light of current information, legal advice
−Removed: and our indemnity insurance coverages.
+Added: When appropriate, we establish accruals for litigation and contingencies that we believe to be adequate in light of current information, legal advice and our indemnity insurance coverages.
We reassess our potential liability for litigation and contingencies as additional information becomes available and adjust our accruals as necessary.
9 unchanged sentences
In particular, the loss of the services of our Chief Executive Officer or Chief Financial Officer could disrupt our operations.
−Removed: We do not have any written employment agreement with our executives at this time.
+Added: We do not have any written employment agreement with either our Chief Executive Officer or our Chief Financial Officer at this time.
Further, we do not maintain “key person” life insurance policies on any of our employees.
15 unchanged sentences
and Canada during severe weather conditions, which could have a material adverse effect on our financial condition and results of operations.
−Removed: We provide pressure pumping services, well services and drilling services in the Utica, SCOOP, STACK, Permian Basin, Marcellus, Granite Wash, Cana Woodford and Eagle Ford resource plays located in the continental U.S.
−Removed: We provide infrastructure services in the northeast, southwest and midwest portions of the United States.
+Added: We provide well completion services and drilling services in the Utica, SCOOP, STACK, Permian Basin, Marcellus, Granite Wash, Cana Woodford and Eagle Ford resource plays located in the continental U.S.
+Added: We provide infrastructure services
+Added: in the northeast, southwest and midwest portions of the United States.
We provide remote accommodation services in the oil sands in Alberta, Canada.
−Removed: We serve these markets through our facilities and service centers located in Ohio, Oklahoma, Texas, Wisconsin, Minnesota, Kentucky, California, Florida and Alberta, Canada.
+Added: We serve these markets through our facilities and service centers located in Ohio, Oklahoma, Texas, Wisconsin, Minnesota, Kentucky, California and Alberta, Canada.
For the years ended December 31, 2020 and 2019, we generated approximately 35% and 43%, respectively, of our revenue from our operations in Ohio, Wisconsin, Minnesota, North Dakota, Pennsylvania, West Virginia and Canada where weather conditions may be severe, particularly during winter and spring months.
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Our operations require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could limit our ability to grow.
−Removed: Our capital budget for 2020 is estimated to be up to $20 million depending upon industry conditions and our financial results.
−Removed: Since November 2014, we have funded our capital expenditures primarily with cash proceeds from our initial public offering, cash generated by operations, borrowings under our revolving credit facility and, in the case of our acquisitions in June 2017, the issuance of shares of our common stock.
+Added: Our capital budget for 2021 is estimated to be $9 million, depending upon industry conditions and our financial results.
+Added: We fund our capital expenditures primarily with cash generated by operations and borrowings under our revolving credit facility.
We may be unable to generate sufficient cash from operations and other capital resources to meet our operating needs and/or maintain planned or future levels of capital expenditures which, among other things, may prevent us from acquiring new equipment or properly maintaining our existing equipment.
4 unchanged sentences
Further, our actual capital expenditures for 2021 or future years could exceed our capital expenditure budget.
−Removed: In the event our operating or capital expenditure requirements at any time are greater than the amount we have available, we could be required to seek additional sources of capital, which may include debt financing, joint venture partnerships, sales of assets, sale-leaseback transactions, offerings of debt or equity securities or other means.
+Added: In the event our operating or capital expenditure requirements at any time are greater than the amount we have available, we could be required to seek additional sources of capital, which may include
+Added: debt financing, joint venture partnerships, sales of assets, sale-leaseback transactions, offerings of debt or equity securities or other means.
We may not be able to obtain any such alternative source of capital.
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Competition for acquisitions may increase the cost of, or cause us to refrain from, completing acquisitions.
−Removed: In addition, we may not have sufficient capital resources to complete additional acquisitions.
−Removed: Historically, we have financed capital expenditures primarily with funding from our initial public offering, cash generated by operations, borrowings under our revolving credit facility and funding from our equity investors.
We may incur substantial indebtedness to finance future acquisitions and also may issue equity, debt or convertible securities in connection with such acquisitions.
6 unchanged sentences
We may have difficulty managing growth in our business, which could adversely affect our financial condition and results of operations.
−Removed: As a recently formed company, growth in accordance with our business plan, if achieved, could place a significant strain on our financial, technical, operational and management resources.
+Added: Growth in accordance with our business plan, if achieved, could place a significant strain on our financial, technical, operational and management resources.
As we expand the scope of our activities, lines of our businesses and our geographic coverage through both organic growth and acquisitions, there will be additional demands on our financial, technical, operational and management resources.
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To the extent the interest rates applicable to our floating rate debt increase, our interest expense will increase, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow may be adversely affected.
−Removed: On July 27, 2017, the U.K.
−Removed: Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.
−Removed: It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021.
−Removed: Federal Reserve, in conjunction with the Alternative Reference Rates Committee, is considering replacing U.S.
−Removed: dollar LIBOR with a newly created index.
−Removed: It is not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates in the United States or elsewhere.
−Removed: We may not be able to provide services that meet the specific needs of oil and natural gas exploration and production companies or utilities at competitive prices.
+Added: Financial Conduct Authority (the authority that regulates LIBOR) has announced that it intends to stop one week and two month U.S.
+Added: Dollar LIBOR rates after 2021 with remaining U.S.
+Added: Dollar LIBOR rates ceasing to be published on June 30, 2023.
+Added: In the U.S., the Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate (“SOFR”) as an alternative to LIBOR.
+Added: It is not presently known whether SOFR or any other alternative reference rates that have been proposed will attain market acceptance as replacements of LIBOR.
+Added: In addition, the overall financial markets may be disrupted as a result of the phase-out replacement of LIBOR.
+Added: Uncertainty as to the nature of such phase-out and selection of an alternative reference rate, together with disruption in the financial markets, may cause our interest expense to increase and our available cash flow and/or financial condition to be adversely affected.
+Added: We may not be able to provide services that meet the specific needs of oil and natural gas exploration and production
+Added: companies or utilities at competitive prices.
The markets in which we operate are generally highly competitive and have relatively few barriers to entry.
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Pricing is often the primary factor in determining which qualified contractor is awarded a job.
−Removed: The competitive environment may be further
−Removed: intensified by mergers and acquisitions among oil and natural gas or utility companies or other events that have the effect of reducing the number of available customers.
+Added: The competitive environment may be further intensified by mergers and acquisitions among oil and natural gas or utility companies or other events that have the effect of reducing the number of available customers.
As a result of competition, we may lose market share or be unable to maintain or increase prices for our present services or to acquire additional business opportunities, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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Our business is significantly affected by stringent and complex federal, state and local laws and regulations governing the discharge of substances into the environment or otherwise relating to environmental protection and health and safety matters.
−Removed: As part of our business, we handle, transport and dispose of a variety of fluids and substances, including hydraulic fracturing fluids which can contain hydrochloric acid and certain petrochemicals.
+Added: As part of our business, we handle, transport and dispose of a variety of fluids and substances, including hydraulic
+Added: fracturing fluids which can contain hydrochloric acid and certain petrochemicals.
This activity poses some risks of environmental liability, including leakage of hazardous substances from the wells to surface and subsurface soils, surface water or groundwater.
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We could be exposed to liability for cleanup costs, natural resource damages and other damages under these and other environmental laws.
−Removed: Such liability is commonly on a strict,
−Removed: joint and several liability basis, without regard to fault.
+Added: Such liability is commonly on a strict, joint and several liability basis, without regard to fault.
Liability may be imposed as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties.
1 unchanged sentence
If existing environmental requirements or enforcement policies change and become more stringent, we may be required to make significant unanticipated capital and operating expenditures.
−Removed: Regulation of greenhouse gas emissions could result in increased operating costs and reduced demand for oil and natural gas.
−Removed: In recent years, federal, state and local governments have taken steps to reduce emissions of greenhouse gases, or GHGs.
−Removed: The Environmental Protection Agency, or the EPA, has finalized a series of GHG monitoring, reporting and emissions control rules for the oil and natural gas industry, and the U.S.
−Removed: Congress has, from time to time, considered adopting legislation to reduce emissions.
−Removed: Almost one-half of the states have already taken measures to reduce emissions of GHGs primarily through the development of GHG emission inventories and/or regional GHG cap-and-trade programs.
−Removed: While we are subject to certain federal GHG monitoring and reporting requirements, our operations currently are not adversely impacted by existing federal, state and local climate change initiatives.
−Removed: For a description of existing and proposed GHG rules and regulations, see “—Regulation of Hydraulic Fracturing.”
−Removed: At the international level, in December 2015, the United States participated in the 21st Conference of the Parties (COP-21) of the United Nations Framework Convention on Climate Change in Paris, France.
−Removed: The resulting Paris Agreement calls for the parties to undertake “ambitious efforts” to limit the average global temperature, and to conserve and enhance sinks and reservoirs of GHGs.
−Removed: The Agreement went into effect on November 4, 2016.
−Removed: The Agreement establishes a framework for the parties to cooperate and report actions to reduce GHG emissions.
−Removed: However, on June 1, 2017, President Trump announced that the United States would withdraw from the Paris Agreement, and begin negotiations to either re-enter or negotiate an entirely new agreement with more favorable terms for the United States.
−Removed: The Paris Agreement sets forth a specific exit process, whereby a party may not provide notice of its withdrawal until three years from the effective date, with such withdrawal taking effect one year from such notice.
−Removed: On November 4, 2019, the Trump Administration submitted its formal notification of withdrawal to the United Nations.
−Removed: It is not clear what steps, if any, will be taken to negotiate a new agreement, or what terms would be included in such an agreement.
−Removed: In response to the announcement, many state and local leaders have stated their intent to intensify efforts to uphold the commitments set forth in the international accord.
−Removed: Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact our business, any such future laws and regulations imposing reporting obligations on, or limiting emissions of GHGs from, our equipment and operations could require us to incur costs to reduce emissions of GHGs associated with our operations.
−Removed: In addition, substantial limitations on GHG emissions could adversely affect demand for oil and natural gas and, consequently, the services we provide.
−Removed: In addition, there have also been efforts in recent years to influence the investment community, including investment
−Removed: advisors and certain sovereign wealth, pension and endowment funds promoting divestment of fossil fuel equities and pressuring lenders to limit funding to companies engaged in the extraction of fossil fuel reserves.
−Removed: Such environmental activism and initiatives aimed at limiting climate change and reducing air pollution could interfere with our business activities, operations and ability to access capital.
−Removed: Furthermore, claims have been made against certain energy companies alleging that GHG emissions from oil and natural gas operations constitute a public nuisance under federal and/or state common law.
−Removed: As a result, private individuals or public entities may seek to enforce environmental laws and regulations against us and could allege personal injury, property damage or other liabilities.
−Removed: While our business is not a party to any such litigation, we could be named in actions making similar allegations.
−Removed: An unfavorable ruling in any such case could significantly impact our operations and could have an adverse impact on our financial condition.
−Removed: Moreover, climate change may cause more extreme weather conditions such as more intense hurricanes,
−Removed: thunderstorms, tornadoes and snow or ice storms, as well as rising sea levels and increased volatility in seasonal
−Removed: temperatures.
−Removed: Extreme weather conditions can interfere with our productivity and increase our costs and damage resulting
−Removed: from extreme weather may not be fully insured.
−Removed: However, at this time, we are unable to determine the extent to which climate
−Removed: change may lead to increased storm or weather hazards affecting our operations.
−Removed: Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.
−Removed: Our business is dependent on our ability to conduct hydraulic fracturing and horizontal drilling activities.
−Removed: Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons, particularly natural gas,
−Removed: from tight formations, including shales.
−Removed: The process involves the injection of water, sand and chemicals (also called “proppants”) under pressure into formations to fracture the surrounding rock and stimulate production.
−Removed: There has been increasing public controversy regarding hydraulic fracturing with regard to the use of fracturing fluids, induced seismic activity, impacts on drinking water supplies, use of water and the potential for impacts to surface water, groundwater and the environment generally.
−Removed: A number of lawsuits and enforcement actions have been initiated across the country implicating hydraulic fracturing practices.
−Removed: The hydraulic fracturing process is typically regulated by state oil and natural gas commissions.
−Removed: However, legislation has been proposed in recent sessions of Congress to amend the federal Safe Drinking Water Act, or SDWA, to repeal the exemption for hydraulic fracturing from the definition of “underground injection,” to require federal permitting and regulatory control of hydraulic fracturing, and to require disclosure of the chemical constituents of the fluids used in the fracturing process.
−Removed: Furthermore, several federal agencies have asserted regulatory authority over certain aspects of the process.
−Removed: In addition, several states and local jurisdictions in which we operate have adopted or are considering adopting regulations that could restrict or prohibit hydraulic fracturing in certain circumstances, impose more stringent operating standards and/or require the disclosure of the composition of hydraulic fracturing fluids.
−Removed: For a more detailed description, see “Business—Regulation—Regulation of Hydraulic Fracturing.”
−Removed: If new laws or regulations are adopted that significantly restrict hydraulic fracturing, such laws could make it more difficult or costly for us to perform fracturing to stimulate production from tight formations as well as make it easier for third parties opposing the hydraulic fracturing process to initiate legal proceedings based on allegations that specific chemicals used in the fracturing process could adversely affect groundwater.
−Removed: In addition, if hydraulic fracturing is further regulated at the federal, state or local level, our fracturing activities could become subject to additional permitting and financial assurance requirements, more stringent construction specifications, increased monitoring, reporting and recordkeeping obligations and also to attendant permitting delays and potential increases in costs, which could reduce the demand for our services.
−Removed: Such legislative or regulatory changes could cause us to incur substantial compliance costs, and compliance or the consequences of any failure to comply by us could have a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: At this time, it is not possible to estimate the impact on our business of newly enacted or potential federal, state or local laws governing hydraulic fracturing.
−Removed: Legislation or regulatory initiatives intended to address seismic activity could restrict certain of our customers’ drilling and production activities, as well as well as their ability to dispose of produced water gathered from such activities, which could have a material adverse effect on our business.
−Removed: State and federal regulatory agencies have recently focused on a possible connection between hydraulic fracturing related activities, particularly the underground injection of wastewater into disposal wells, and the increased occurrence of seismic activity, and regulatory agencies at all levels are continuing to study the possible linkage between oil and gas activity and induced seismicity.
−Removed: In addition, a number of lawsuits have been filed in some states alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal.
−Removed: In response to these concerns, regulators in some states are seeking to impose additional requirements, including requirements regarding the permitting of produced water disposal wells or otherwise to assess the relationship between seismicity and the use of such wells.
−Removed: Certain of our customers dispose of large volumes of produced water gathered from their drilling and production operations by injecting it into wells pursuant to permits issued to them by governmental authorities overseeing such disposal activities.
−Removed: While these permits are issued pursuant to existing laws and regulations, these legal requirements are subject to change, which could result in the imposition of more stringent operating constraints or new monitoring and reporting requirements, owing to, among other things, concerns of the public or governmental authorities regarding such gathering or disposal activities.
−Removed: The adoption and implementation of any new laws or regulations that restrict our ability to use hydraulic fracturing or dispose of produced water gathered from certain of our customers’ drilling and production activities by owned disposal wells, could have a material adverse effect on our business, financial condition and results of operations.
+Added: For a detailed description of environmental laws and regulations applicable to us and their impact on our oprations, see “Item 1.
+Added: Business—Regulations” above.
+Added: Further, in connection with providing our infrastructure services, we have made a substantial investment in
+Added: construction equipment that utilizes petroleum-based fuel.
+Added: Any changes in laws requiring us to use equipment that runs on
+Added: alternative fuels could require a significant investment, which could have a material adverse effect on our results of operations,
+Added: cash flows and liquidity.
+Added: The results of the 2020 U.S.
+Added: presidential and congressional elections may create regulatory uncertainty for the oil and
+Added: natural gas and energy infrastructure industries.
+Added: Changes in environmental laws could increase costs and harm our
+Added: business, financial condition and results of operations.
+Added: The results of the 2020 U.S.
+Added: presidential election and congressional elections may create regulatory uncertainty in the
+Added: oil and natural gas and energy infrastructure industries.
+Added: During his first weeks in office, President Biden issued several
+Added: executive orders promoting various programs and initiatives designed to, among other things, curtail climate change, control the
+Added: release of methane from new and existing oil and gas operations, and pause new oil and gas leasing on public lands.
+Added: unclear what additional actions President Biden will take and what support he will have for any potential legislative changes
+Added: from Congress.
+Added: Further, it is uncertain to what extent any new environmental laws or regulations, or any repeal of existing
+Added: environmental laws or regulations, may affect our oilfield services operations.
+Added: However, such actions could materially increase
+Added: our costs or impair our ability to explore and develop other projects, which could materially harm our business, financial
+Added: condition and results of operations.
Our operations in our natural sand proppant services business are dependent on our rights and ability to mine our properties and on our having renewed or received the required permits and approvals from governmental authorities and other third parties.
4 unchanged sentences
Army Corps of Engineers Wetland Permit is required.
−Removed: At the state level, a series of permits are required related to air quality, wetlands, water quality (waste water and storm water), grading, endangered species and archaeological assessments in addition to other permits depending upon site specific factors and
−Removed: operational detail.
+Added: At the state level, a series of permits are required related to air quality, wetlands, water quality (waste water and storm water), grading, endangered species and archaeological assessments in addition to other permits depending upon site specific factors and operational detail.
At the local level, zoning, building, storm water, erosion control, wellhead protection, road usage and access are all regulated and require permitting to some degree.
28 unchanged sentences
The Department of Transportation periodically conducts compliance reviews and may revoke registration privileges based on certain safety performance criteria that could result in a suspension of operations.
−Removed: Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct mining or drilling activities in some of the areas where we operate.
−Removed: Oil and natural gas operations in our operating areas can be adversely affected by seasonal or permanent restrictions on mining or drilling activities designed to protect various wildlife, which may limit our ability to operate in protected areas.
−Removed: Permanent restrictions imposed to protect endangered species could prohibit drilling in certain areas or require the implementation of expensive mitigation measures.
−Removed: Additionally, the designation of previously unprotected species as threatened or endangered in areas where we operate could result in increased costs arising from species protection measures.
−Removed: Restrictions on oil and natural gas operations to protect wildlife could reduce demand for our services.
Conservation measures and technological advances could reduce demand for oil and natural gas and our services.
7 unchanged sentences
The Tax Act is complex and far-reaching, and we cannot predict with certainty the resulting impact its enactment will have on us.
−Removed: The ultimate impact of the Tax Act may differ from our estimates due to changes in interpretations and assumptions made by us as well as additional regulatory guidance that may be issued, and any such changes in our interpretations and assumptions could have an adverse effect on our business, results of operations, financial condition and cash flow.
+Added: The ultimate impact of the Tax Act may differ from our estimates due to changes in interpretations and assumptions made by us as well as additional regulatory guidance that may be issued, and any such changes in our
+Added: interpretations and assumptions could have an adverse effect on our business, results of operations, financial condition and cash flow.
On December 10, 2018, the Governor of Puerto Rico signed into law House Bill 1544 as Act 257-2018, or Act 257, which amended the Puerto Rico Internal Revenue Code.
11 unchanged sentences
The results of audits or related disputes could have an adverse effect on our financial statements for the periods for which the applicable final determinations are made.
−Removed: Our operations are subject to a number of operational risks which may result in unexpected costs or liabilities.
−Removed: Unexpected costs or liabilities may arise from lawsuits or indemnity claims related to the services we perform or have performed in the past.
−Removed: We have in the past been, and may in the future be, named as a defendant in lawsuits, claims and other legal proceedings during the ordinary course of our business.
−Removed: These actions may seek, among other things, compensation for alleged personal injury, workers’ compensation, employment discrimination, breach of contract, property damage, environmental remediation, punitive damages, civil penalties or other losses, consequential damages or injunctive or declaratory relief.
−Removed: In addition, pursuant to our service arrangements, we generally indemnify our customers for claims related to the services we provide under those service arrangements.
−Removed: In some instances, our services are integral to the operation and performance of the electric distribution and transmission infrastructure.
−Removed: As a result, we may become subject to lawsuits or
−Removed: claims for any failure of the systems we work on, even if our services are not the cause for such failures.
−Removed: In addition, we may incur civil and criminal liabilities to the extent that our services contributed to any personal injury or property damage.
−Removed: The outcome of any of these lawsuits, claims or legal proceedings could result in significant costs and diversion of managements’ attention to the business.
Losses and liabilities from uninsured or underinsured activities could have a material adverse effect on our financial condition and operations.
28 unchanged sentences
Our systems and insurance coverage for protecting against cyber security risks may not be sufficient.
−Removed: As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and
−Removed: remediate any vulnerability to cyber incidents.
+Added: As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.
Our insurance coverage for cyberattacks may not be sufficient to cover all the losses we may experience as a result of such cyberattacks.
3 unchanged sentences
As a result, each of Wexford and Gulfport can exercise significant influence over matters requiring stockholder approval, including the election of directors, changes to our organizational documents and significant corporate transactions.
−Removed: Further, individuals who serve as our directors are affiliates of Wexford and one of our directors has been designated by Gulfport.
−Removed: This concentration of ownership and relationships with Wexford and Gulfport make it unlikely that any other holder or group of holders of our common stock will be able to affect the way we are managed or the direction of our business.
+Added: Further, individuals who serve as our directors are affiliates of Wexford, and Gulfport has the ability to designate a director.
+Added: This concentration of ownership and relationships with Wexford and Gulfport makes it unlikely that any other holder or group of holders of our common stock will be able to affect the way we are managed or the direction of our business.
In addition, we have engaged, and expect to continue to engage, in related party transactions involving Wexford and Gulfport, and certain companies they control.
1 unchanged sentence
This concentrated ownership will make it impossible for another company to acquire us and for you to receive any related takeover premium for your shares unless these stockholders approve the acquisition.
−Removed: We are currently involved in a lawsuit with Gulfport in which Gulfport is seeking to terminate our pressure pumping contract with it and receive certain alleged damages.
+Added: We are currently involved in lawsuits with Gulfport relating to our pressure pumping and natural sand proppant contracts with Gulfport.
Commitments and Contingencies to our consolidated financial statements included elsewhere in this annual report.
6 unchanged sentences
As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses.
−Removed: These include costs associated with our public company reporting requirements and corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, as well as rules implemented by the SEC, The Nasdaq Global Select Market and the Financial Industry Regulatory Authority.
+Added: These include costs associated with our public company reporting requirements and corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, as well as rules implemented
+Added: by the SEC, The Nasdaq Global Select Market and the Financial Industry Regulatory Authority.
These rules and regulations have increased our legal and financial compliance costs and made some activities more time-consuming and costly.
3 unchanged sentences
however, it is possible that our incremental costs of being a publicly traded company will be higher than we currently estimate.
−Removed: As a non-emerging growth company, we have incurred and expect to continue to incur significant additional expenses and devote substantial management effort toward ensuring compliance with the enhanced requirements applicable to such companies, including Section 404 of the Sarbanes-Oxley Act.
+Added: We have incurred and expect to continue to incur significant additional expenses and devote substantial management effort toward ensuring compliance with certain requirements applicable to us under Section 404 of the Sarbanes-Oxley Act.
See “-Risks Related to Our Common Stock-We are subject to certain requirements of Section 404 of the Sarbanes-Oxley Act.
−Removed: If we are unable to continue to comply with Section 404 or if the costs related to compliance are significant, our profitability, stock price, results of operations and financial condition could be materially adversely affected.”
+Added: If we are unable to continue to comply with the applicable requirements of Section 404 or if the costs related to compliance are significant, our profitability, stock price, results of operations and financial condition could be materially adversely affected.”
We are subject to certain requirements of Section 404 of the Sarbanes-Oxley Act.
If we are unable to continue comply with Section 404 or if the costs related to compliance are significant, our profitability, stock price, results of operations and financial condition could be materially adversely affected.
−Removed: As of December 31, 2018, we ceased to be an “emerging growth company” and are now required to comply with the enhanced provisions of Section 404 of the Sarbanes-Oxley Act of 2002 applicable to non-emerging growth companies.
−Removed: Section 404 requires that we not only document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting, as we have done in the past, but also that our independent registered
−Removed: public accounting firm attest to and report on the internal control assessments made by our management.
−Removed: As we perform the required testing of, and our auditors’ audit, our internal control over financial reporting, we or they may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review.
−Removed: We believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the enhanced requirements of Section 404 of the Sarbanes-Oxley Act applicable to non-emerging growth companies could be significant.
+Added: As a smaller reporting company and a non-accelerated filer, we are required to document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting under Section 404 of the Sarbanes Act of 2002.
+Added: As we perform the required testing of our internal control over financial reporting, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review.
+Added: We believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the requirements of Section 404 of the Sarbanes-Oxley Act could be significant.
If the time and costs associated with such compliance exceed our current expectations, our results of operations could be adversely affected.
−Removed: If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we or our auditors identify and report material weaknesses in internal control over financial reporting, the accuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
+Added: If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we or our auditors identify material weaknesses in internal control over financial reporting, the accuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.
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For a discussion of potential conflicts, see “ —Risks Inherent to Our Common Stock—Our two largest stockholders control a significant percentage of our common stock, and their interests may conflict with those of our other stockholders .”
−Removed: Prior to the IPO, there was no public market for our common stock and if the price of our common stock fluctuates significantly, your investment could lose value.
−Removed: Prior to the completion of the IPO in October 2016, there was no public market for our common stock.
+Added: If the price of our common stock fluctuates significantly, your investment could lose value.
Although our common stock is listed on The Nasdaq Global Select Market, an active public market for our common stock may not be maintained.
1 unchanged sentence
Without a large float, our common stock is less liquid than the securities of companies with broader public ownership and, as a result, the trading prices of our common stock may be more volatile.
−Removed: The market price for our common stock has fluctuated significantly, ranging from a high of $24.62 per share to a low of $1.22 per
−Removed: share during 2019.
+Added: The market price for our common stock has fluctuated significantly, ranging from a high of $5.19 per share to a low of $0.59 per share during 2020.
In addition, in the absence of an active public trading market, investors may be unable to liquidate their investment in us.
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These provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees.
−Removed: Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the covered proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
+Added: Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable to, or unenforceable in
+Added: respect of, one or more of the covered proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
The declaration of dividends on our common stock is within the discretion of our board of directors based upon a review of relevant considerations, and there is no guarantee that we will pay any dividends in the future or at levels anticipated by our stockholders.
On July 16, 2018, our board of directors initiated a quarterly dividend policy on shares of our common stock payable quarterly beginning with the second quarter of 2018.
−Removed: In July 2019, as a result of oilfield market conditions and other factors, which include collections from PREPA, our board of directors suspended the quarterly cash dividend.
+Added: In July 2019, as a result of oilfield market conditions and other factors, which included the status of collections from PREPA, our board of directors suspended the quarterly cash dividend.
The decision to pay dividends is solely within the discretion of, and subject to approval by, our board of directors.
3 unchanged sentences
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.