What changed in this filing

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Item 1A. Risk Factors

2022-03-04 compared with 2021-03-01 · 136 added, 186 removed, 610 unchanged (35% of the section changed)

Risks Related to Our Business and the Industries We Serve

Our business and operations have been and will likely continue to be adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has caused, and is continuing to cause, severe disruptions in the worldwide and U.S.

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.

Moreover, the COVID-19 pandemic has caused significant disruption in the financial markets both globally and in the United States.

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.

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.

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.

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.

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.

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.

As of that date, Gulfport owed us approximately $46.9 million, which included interest charges of $3.3 million.

Further, our work for PREPA ended on March 31, 2019.

See the risk factors below for additional information.

In addition, we are subject to credit risk due to the concentration of our customer base.

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.

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.

Cobra, one of our infrastructure services subsidiaries, was party to service contracts with PREPA.

PREPA is currently subject to bankruptcy proceedings, which were filed in July 2017 and are currently pending in the U.S.

District Court for the District of Puerto Rico.

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.

PREPA is currently subject to bankruptcy proceedings and, 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 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.

On October 19, 2017, one of our subsidiaries, Cobra, and PREPA entered into an emergency master services agreement for repairs to PREPA’s electrical grid as a result of Hurricane Maria.

The one-year contract, as amended, provided for payments of up to $945 million.

On May 26, 2018, Cobra and PREPA entered into a second one-year, $900 million master services agreement to provide additional repair services and begin the initial phase of reconstruction of the electrical power system in Puerto Rico.

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.

The one-year contract, as amended, provided for payments of up to $945 million (the “first contract”).

As of December 31, 2021, PREPA owed us approximately $227.0 million for services performed excluding $110.8 million of interest charged on these delinquent balances.

PREPA is currently subject to bankruptcy proceedings pending in the U.S.

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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.

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.

This emergency motion was denied on June 3, 2020 and the court extended the stay of our motion.

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.

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.

Our largest customer in 2020, Gulfport, filed for voluntary relief under Chapter 11 of the Bankruptcy Code.

On November 13, 2020, Gulfport and its subsidiaries filed for voluntary relief under chapter 11 of the Bankruptcy Code.

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.

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.

Our recovery on our claims will be subject to factors outside of our control.

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.

On December 9, 2020, the Court again extended the stay of our motion and directed PREPA to file a status report by June 7, 2021.

On April 6, 2021, we filed a motion to lift the stay order.

Following this filing, PREPA initiated discussion with Cobra, which resulted in PREPA and Cobra filing a joint motion to adjourn all deadlines relative to the April 6, 2021 motion until the June 16, 2021 omnibus hearing as a result of PREPA’s understanding that FEMA would be releasing a report in the near future relating to the first contract.

The joint motion was granted by the court on April 14, 2021.

On May 26, 2021, FEMA issued a Determination Memorandum related to the first contract between Cobra and PREPA in which, among other things, FEMA raised two contract compliance issues and, as a result, concluded that approximately $47 million in costs were not authorized costs under the contract.

On June 14, 2021, the Court issued an order adjourning Cobra’s motion to lift the stay order to a hearing on August 4, 2021 and directing Cobra and PREPA to meet and confer in good faith concerning, among other things, (i) the May 26, 2021 Determination Memorandum issued by FEMA and (ii) whether and when a second determination memorandum is expected.

The parties were further directed to file an additional status report, which was filed on July 20, 2021.

On July 23, 2021, with our aid, PREPA filed an appeal of the entire $47 million that FEMA de-obligated in the May 26, 2021 Determination Memorandum.

The appeal is currently pending.

On August 4, 2021, the Court denied Cobra ’ s April 6, 2021 motion to lift the stay order, extended the stay of our motion seeking recovery of amounts owed to Cobra and directed the parties to file an additional joint status report, which was filed on January 22, 2022.

On January 26, 2022, the Court extended the stay and directed the parties to file a further status report by July 25, 2022.

We believe all amounts charged to PREPA were properly in accordance with the terms of these contracts.

Further, we believe these receivables are collectible.

However, 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 other customers to replace the level of services that we provided to PREPA.

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.

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.

Our top five customers accounted for approximately 35% and 50%, respectively, of our revenue for the years ended December 31, 2021 and 2020.

Gulfport accounted for approximately 7% of our revenue for the year ended December 31, 2021 and was our largest customer for the year ended December 31, 2020, accounting for approximately 16% of our revenue;

however, our services with Gulfport ended in 2021.

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.

See the risk factors below for additional information.

In addition, we are subject to credit risk due to the

concentration of our customer base.

In particular, PREPA owed us approximately $337.8 million (including interest charged on overdue amounts) as of December 31, 2021, as discussed in more detail below.

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.

We may experience losses in excess of our recorded reserves for receivables.

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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.

Our business and operations have been and will likely continue to be adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has caused, and is continuing to cause, severe disruptions in the worldwide and U.S.

There continues to be many variables and uncertainties regarding the COVID-19 pandemic, including the emergence, contagiousness and threat of new and different strains of the virus and their severity;

the effectiveness of treatments or vaccines against the virus or its new strains;

the extent of travel restrictions, business closures and other measures that are or may be imposed in affected areas or countries by governmental authorities;

disruptions in the supply chain;

an increasingly competitive labor market due to a sustained labor shortage or increased turnover caused by the COVID-19 pandemic;

increased logistics costs;

additional costs due to remote working arrangements;

adherence to social distancing guidelines;

and other COVID-19-related challenges.

Further, there remain increased risks of cyberattacks on information technology systems used in remote working environments;

increased privacy-related risks due to processing health-related personal information;

absence of workforce due to illness;

the impact of the pandemic on any of our contractual counterparties;

and other factors that are currently unknown or considered immaterial.

It is difficult to assess the ultimate impact of the COVID-19 pandemic on our business, financial condition 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.

On September 10, 2019, the U.S.

District Court for the District of Puerto Rico unsealed an indictment that charged the former president of Cobra with conspiracy, wire fraud, false statements and disaster fraud.

Two other individuals were also charged in the indictment.

District Court for the District of Puerto Rico unsealed an indictment that charged three individuals, including the former president of Cobra with conspiracy, wire fraud, false statements and disaster fraud.

The indictment is focused on the interactions between a former FEMA official and the former President of Cobra.

Neither we nor any of our subsidiaries were charged in the indictment.

We are continuing to cooperate with the related investigation.

Subsequent to the indictment, we received (i) a preservation request letter from the SEC 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.

Subsequent to the indictment, we received (i) a preservation request letter from the SEC 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.

Both the SEC and DOJ investigations relate to the same subjects as those at issue in the criminal matter referenced above.

We are cooperating with both the SEC and DOJ.

We are cooperating with both the SEC and DOJ investigations.

Given the uncertainty inherent in the criminal proceeding and the SEC and DOJ investigations, it is not possible at this time to determine the potential outcome or other potential impacts that they will have on us.

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Accordingly, it is possible that additional investigations may arise in the future.

In June 2019 and August 2019, we were served with three class action lawsuits filed in the Western District of Oklahoma which, on September 13, 2019, were consolidated under the case caption In re Mammoth Energy Services, Inc.

Securities Litigation .

On November 12, 2019, the plaintiffs filed their first amended complaint against us, our Chief Executive Officer and our Chief Financial Officer.

Pursuant to their first amended complaint, the plaintiffs brought a consolidated putative federal securities class action on behalf of all investors who purchased or otherwise acquired our common stock between October 19, 2017 and June 5, 2019.

On January 10, 2020, the defendants filed their motion to dismiss the first amended complaint.

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.

On March 30, 2020, the defendants filed their motion to dismiss the second amended complaint.

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.

In October 2019, the plaintiffs in the two Oklahoma actions voluntarily dismissed their respective cases, with one plaintiff refiling his action in the District of Delaware.

On September 13, 2019, the Delaware court consolidated the three actions under the case caption In re Mammoth Energy Services, Inc.

Consolidated Shareholder Litigation.

On January 17, 2020, the plaintiffs filed their consolidated amended shareholder derivative complaint on behalf of nominal defendant, Mammoth Energy Services, Inc., and against our Chief Executive Officer, Chief Financial Officer, members of our board of directors, Gulfport and Wexford.

On February 18, 2020, the defendants filed a motion to stay this action.

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.

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.

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.

On April 1, 2020, the defendants filed a motion to dismiss the complaint.

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.

However, at this time, we are not able to predict the outcome of the investigations and lawsuits.

If one or more of the investigations and lawsuits is determined adversely to us, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Opportunities associated with government contracts could lead to increased governmental regulation applicable to us.

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• selling all or substantially all of our assets.

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.

We cannot assure you that we will be able to maintain compliance with the covenants contained in our revolving credit facility as amended by the recent amendment discussed elsewhere in this report, or, if applicable, obtain a waiver of forecasted or actual non-compliance with certain financial covenants from our lenders.

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.

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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.

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.

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.

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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Many of our contracts may be canceled upon short notice, typically 30 to 90 days, even if we are not in default under the contract, and we may be unsuccessful in replacing our contracts if they are canceled or as they are completed or expire.

We could experience a decrease in our revenue, net income and liquidity if contracts are canceled and if we are unable to replace canceled, completed or expired contracts.

We could experience a decrease in our revenue, net income and liquidity if contracts are canceled and if we are unable to replace

canceled, completed or expired contracts.

Certain of our infrastructure services customers assign work to us on a project-by-project basis under MSAs.

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Our operations could decline significantly if the anticipated volume of work is not assigned to us or is canceled.

our contracts, including our MSAs, are opened to competitive bid at the expiration of their terms.

Many of 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.

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.

Delays and reductions in government appropriations can negatively impact energy infrastructure engineering, design, 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.

Many of our infrastructure customers derive funding from federal, state and local bodies.

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.

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.

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 in 2020 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 capital expenditures by companies in the oil and natural gas industry.

In early March 2020, oil prices dropped sharply and then continued to decline reaching levels below zero dollars per barrel.

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.

Commodity prices are expected to continue to be volatile as a result of production levels, inventories and demand, and national and international economic performance.

Although commodity prices have generally recovered, they are expected to continue to be volatile as a result of production levels, inventories and demand, and national and international economic performance.

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.

energy, monetary and trade policies, U.S.

and global political developments, including the results of the U.S.

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.

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.

and global political developments, the impact and duration of the ongoing COVID-19 pandemic and conditions in the U.S.

oil and gas industry, actions of OPEC+ members, the impact of the current Russian/Ukrainian military conflict on the global energy and capital markets and global stability and other factors.

We anticipate demand for our oil and natural gas services and products will continue to be dependent on the level of capital 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 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.

Industry conditions are dynamic and the weakening of commodity prices from current levels may result in a material adverse impact on certain of our customers’ liquidity and financial position resulting in spending reductions, delays in the collection of amounts owing to us and similar impacts.

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• the price and quantity of foreign imports;

• political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia;

• political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia, including the impact of the current Russian/Ukrainian military conflict on the global energy and capital markets and global stability;

• the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;

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If the prices of oil and natural gas decline from current levels, our operations, financial condition and level of expenditures may be materially and adversely affected.

Failure to effectively and timely address the energy transition to a lower carbon footprint could adversely affect our oil and gas business

Our long-term success depends on our ability to effectively address the energy transition to a lower carbon footprint, which will require adapting our portfolio of oilfield services to potentially changing or more burdensome government requirements and customer preferences.

If the energy industry transition changes faster than anticipated or in a manner that we do not anticipate, demand for oilfield services could be adversely affected.

Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies in fossil fuel related industries, our business, access to capital and the market for our securities could be negatively impacted.

Deterioration of the commodity price environment can negatively impact oil and natural gas exploration and production companies and, in some cases, impair their ability 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 oil and natural gas exploration and production customers.

In weak economic and commodity price environments, we may experience increased difficulties, delays or failures in collecting outstanding receivables from our customers, due to, among other reasons, a reduction in their cash flow from operations, their inability to access the credit markets and, in certain cases, their insolvencies.

In certain economic and commodity price environments, we may experience increased difficulties, delays or failures in collecting outstanding receivables from our customers, due to, among other reasons, a reduction in their cash flow from operations, their inability to access the credit markets and, in certain cases, their insolvencies.

Such increases in collection issues could have a material adverse effect on our business, results of operations, cash flows and financial condition.

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.

To the extent one or more of our

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.

To the extent one or more of our key customers commences bankruptcy proceedings, as was 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.

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Oilfield services equipment, refurbishment and new asset construction projects, as well as the reactivation of oilfield service assets that have been idle for six months or longer, are subject to risks which could cause delays or cost overruns and adversely affect our business, cash flows, results of operations and financial position.

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.

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.

Oilfield services equipment or assets being upgraded, converted or re-activated following a period of inactivity may experience significant start-up costs and 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.

In this regard, due to market conditions, we have temporarily shut down certain of our service offerings, including contract land drilling, flowback, cementing, acidizing and crude oil hauling operations as well as certain of our facilities, such as our sand processing plant in Pierce County, Wisconsin.

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.

We may not be able to successfully acquire or use new

technologies.

We may not be able to successfully acquire or use new technologies.

Further, our customers are increasingly demanding the services of newer, higher specification drilling rigs.

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There are numerous uncertainties inherent in estimating quantities and qualities of sand reserves and costs to mine recoverable reserves, including many factors beyond our control.

Estimates of economically recoverable sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as:

Estimates of economically

recoverable sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as:

• geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience;

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In addition, our current customer contracts require us to deliver frac sand that meets certain specifications.

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.

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.

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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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.

From time to time we have entered into take-or-pay contracts with our principal raw frac sand supplier for our Pierce County, Wisconsin plant.

If significant new reserves of raw frac sand continue to be discovered and developed, and those frac sands have similar characteristics to the frac sand we produce and sell, the market price for our frac sand may decline.

If the market price for our frac sand falls below an amount equal to the contracted purchase price in our take-or-pay contract plus our processing and related transportation costs, this could have an adverse effect on our business, financial condition, results of operations and cash flows over the remaining term of this contract.

We face distribution and logistics challenges in our business.

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If implemented, these new regulations could also affect local municipalities and other industrial operations and could have a material adverse effect on costs involved in operating our processing plant.

Such changes in laws, regulations or government policy and related interpretations pertaining to water rights may alter the environment in which we do business, which may have an adverse effect on our business, financial condition, results of operations and cash flows.

operations and cash flows.

Additionally, a water discharge permit may be required to properly dispose of water at our processing sites when in operation.

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Development of permanent infrastructure in the Canadian oil sands region or other locations where we locate our remote accommodations could negatively impact our remote accommodations business.

Our remote accommodations business specializes in providing modular housing and related services for work forces in remote areas which lack the infrastructure typically available in towns and cities.

If permanent towns, cities and municipal infrastructure develop in the oil sands region of northern Alberta, Canada or other regions where we locate our modular camps, then demand for our accommodations could decrease as customer employees move to the region and choose to utilize permanent housing and food services.

Our remote accommodations business specializes in providing modular housing and related services for workforces in remote areas which lack the infrastructure typically available in towns and cities.

If significant development activity does not return to the Canadian oil sands region or if permanent towns, cities and municipal infrastructure develop in the oil sands region of northern Alberta, Canada or other regions where we locate our modular camps, then demand for our accommodations could decrease as customer employees move to the region and choose to utilize permanent housing and food services.

Revenue generated and expenses incurred by our remote accommodation business are denominated in the Canadian dollar and could be negatively impacted by currency fluctuations.

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These transactions could be materially affected by currency fluctuations.

Changes in currency exchange rates could adversely affect our combined results of operations or financial position.

Changes in currency exchange rates could

adversely affect our combined results of operations or financial position.

We also maintain cash balances denominated in the Canadian dollar.

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A significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both.

If either of these events were to occur, our capacity and profitability could be diminished and our growth potential could be impaired.

If either of these events were to occur, our capacity and profitability could be diminished and our growth potential could be impaired, particularly as our workforce has been significantly reduced over the past several years due to the lack of pyament from PREPA and the downturn in our business.

Unionization efforts could increase our costs or limit our flexibility.

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and Canada during severe weather conditions, which could have a material adverse effect on our financial condition and results of operations.

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.

We provide infrastructure services

in the northeast, southwest and midwest portions of the United States.

We provide well completion services and drilling services in the Utica, SCOOP, STACK, Permian Basin, Marcellus, Granite Wash, and Cana Woodford resource plays located in the continental U.S.

We provide infrastructure services in the northeast, southwest and midwest portions of the United States.

We provide remote accommodation services in the oil sands in Alberta, Canada.

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Our capital budget for 2022 is estimated to be $6 million, depending upon industry conditions and our financial results.

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.

As of February 24, 2021, we had approximately $42 million of available borrowing capacity under our revolving credit facility.

We fund our capital expenditures primarily with cash generated by operations, borrowings under our revolving credit facility and sale-leaseback transactions.

Also, on February 28, 2022, our revolving credit facility was amended to, among other things, provide for a reduction in the maximum revolving advance amount in an amount equal to 50% of

PREPA claims proceeds, subject to a floor equal to the sum of eligible billed and unbilled accounts receivables and, as a result, as of March 2, 2022, we had approximately $11 million of available borrowing capacity under our amended revolving credit facility.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Revolving Credit Facility.

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Further, our actual capital expenditures for 2022 or future years could exceed our capital expenditure budget.

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.

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.

We may not be able to obtain any such alternative source of capital.

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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.

The failure to continue to upgrade our technical, administrative, operating and financial control systems or the occurrences of unexpected expansion difficulties, including the failure to recruit and retain experienced managers, engineers and other professionals in the energy services industry, could have a material adverse effect on our business, financial condition, results of operations and our ability to successfully or timely execute our business plan.

managers, engineers and other professionals in the energy services industry, could have a material adverse effect on our business, financial condition, results of operations and our ability to successfully or timely execute our business plan.

If our intended expansion of our business is not successful, our financial condition, profitability and results of operations could be adversely affected, and we may not achieve increases in revenue and profitability that we hope to realize.

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• a lack of customer demand for the services we intend to provide;

• an inability to secure necessary equipment, raw materials (particularly sand and other proppants) or technology to successfully execute our expansion plans;

• an inability to secure necessary financing, equipment, raw materials (particularly sand and other proppants) or technology to successfully execute our expansion plans;

• shortages of water used in our sand processing operations and our hydraulic fracturing operations;

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LIBOR tends to fluctuate based on multiple facts, including general short-term interest rates, rates set by the U.S.

Federal Reserve and other central banks, the supply of and demand for credit in the London interbank market and general economic conditions.

At December 31, 2020, we had $78 million borrowings outstanding under our revolving credit facility and availability under our credit facility was approximately $39 million, after giving effect to $13 million of outstanding letters of credit.

Federal Reserve, which indicated plans for multiple interest rate increases in 2022, and other central banks, the supply of and demand for credit in the London interbank market and general economic conditions.

At December 31, 2021, we had $83 million borrowings outstanding under our revolving credit facility and availability under our credit facility was approximately $17 million, after giving effect to $9 million of outstanding letters of credit and the requirement to maintain a $10 million reserve out of the available borrowing capacity during the limited waiver period.

A 1% increase or decrease in the interest rate at that time would have increased or decreased our interest expense by approximately $1 million per year, based on $83 million outstanding and a weighted average interest rate of 4.17%.

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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.

Financial Conduct Authority (the authority that regulates LIBOR) has announced that it intends to stop one week and two month U.S.

Dollar LIBOR rates after 2021 with remaining U.S.

Dollar LIBOR rates ceasing to be published on June 30, 2023.

In the U.S., the Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate (“SOFR”) as an alternative to LIBOR.

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.

In addition, the overall financial markets may be disrupted as a result of the phase-out replacement of LIBOR.

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.

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.

Financial Conduct Authority (the authority that regulates LIBOR), which we refer to as FCA, has announced that it intends to stop one week and two month U.S.

Dollar LIBOR rates after 2021.

On March 5, 2021, the ICE Benchmark Administration, which administers LIBOR, and the FCA announced that all LIBOR settings will either cease to be provided by any administrator, or no longer be representative immediately after 2021, for all non-U.S.

dollar LIBOR settings and one-week and two-month U.S.

dollar LIBOR settings, and immediately after June 30, 2023 for the remaining U.S.

dollar LIBOR settings.

In light of these recent announcements, the future of LIBOR at this time is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phase-out could cause LIBOR to perform differently than in the past or cease to exist.

Our current credit agreement provides for any changes away from LIBOR to a successor rate to be based on prevailing or equivalent standards, however, changes in the method of calculating LIBOR, or the discontinuation, reform or replacement of LIBOR or any other benchmark rates may adversely affect interest rates and result in higher borrowing costs.

This could materially and adversely affect our results of operations, cash flow and liquidity.

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.

The markets in which we operate are generally highly competitive and have relatively few barriers to entry.

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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.

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.

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.

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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If existing environmental requirements or enforcement policies change and become more stringent, we may be required to make significant unanticipated capital and operating expenditures.

For a detailed description of environmental laws and regulations applicable to us and their impact on our oprations, see “Item 1.

For a detailed description of environmental laws and regulations applicable to us and their impact on our operations, see “Item 1.

Business—Regulations” above.

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cash flows and liquidity.

The results of the 2020 U.S.

presidential and congressional elections may create regulatory uncertainty for the oil and

natural gas and energy infrastructure industries.

Changes in environmental laws could increase costs and harm our

business, financial condition and results of operations.

The results of the 2020 U.S.

presidential election and congressional elections may create regulatory uncertainty in the

oil and natural gas and energy infrastructure industries.

During his first weeks in office, President Biden issued several

executive orders promoting various programs and initiatives designed to, among other things, curtail climate change, control the

release of methane from new and existing oil and gas operations, and pause new oil and gas leasing on public lands.

unclear what additional actions President Biden will take and what support he will have for any potential legislative changes

from Congress.

Further, it is uncertain to what extent any new environmental laws or regulations, or any repeal of existing

environmental laws or regulations, may affect our oilfield services operations.

However, such actions could materially increase

our costs or impair our ability to explore and develop other projects, which could materially harm our business, financial

condition and results of operations.

Changes in environmental laws could increase costs and harm our business, financial condition and results of operations.

President Biden has issued several executive orders promoting various programs and initiatives designed to, among other things, curtail climate change, control the release of methane from new and existing oil and gas operations, and pause new oil and gas leasing on public lands.

It remains unclear what additional actions President Biden will take and what support he will have for any potential legislative changes from Congress.

Further, it is uncertain to what extent any new environmental laws or regulations, or any repeal of existing environmental laws or regulations, may affect our oilfield services operations.

However, such actions could materially increase our costs or impair our ability to explore and develop other projects, which could materially harm our business, financial 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.

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A non-metallic mining reclamation permit is required.

A decision by a governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to continue operations.

A decision by a

governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to continue operations.

Title to, and the area of, mineral properties and water rights may also be disputed.

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Changes in tax laws and regulations or adverse outcomes resulting from examination of our tax returns may adversely affect our business, results of operations, financial condition and cash flow.

On December 22, 2017, the President of the United States signed into law Public Law No.

115-97, a comprehensive tax reform bill commonly referred to as the Tax Cuts and Jobs Act, or the Tax Act, that significantly reforms the Internal Revenue Code of 1986, as amended, or the Code.

Among other changes, the Tax Act (i) permanently reduced the U.S.

corporate income tax rate, (ii) provided for a transition tax (toll tax) on a one-time “deemed repatriation” of accumulated foreign earnings, (iii) repealed the corporate alternative minimum tax, (iv) imposed new limitations on the utilization of net operating losses, and (v) provided for more general changes to the taxation of corporations, including changes to the deductibility of interest expense, the adoption of a modified territorial tax system, and introducing certain anti-base erosion provisions.

The Tax Act is complex and far-reaching, and we cannot predict with certainty the resulting impact its enactment will have on us.

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.

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.

Among other changes, Act 257 (i) reduces the corporate income tax rate from 39% to 37.5%, (ii) provides that the 51% disallowance with respect to expenses paid or incurred with a related party may not apply under certain circumstances and (iii) adds requirements for the deductibility of expenses, including meals and entertainment, travel and motor vehicles.

We cannot predict with certainty the resulting impact the enactment of Act 257 will have on us.

The ultimate impact of Act 257 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.

In addition, we are subject to tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use and value-added taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes.

We are subject to tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes (excise/duty, sales/use and value-added taxes), payroll taxes, franchise taxes, withholding taxes and ad valorem taxes.

New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future, which could have a material adverse effect on our results of operations, financial condition and cash flows.

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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.

Wexford, through its affiliate MEH Sub LLC, and Gulfport beneficially own approximately 48.2% and 21.5%, respectively, of our outstanding common stock.

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.

Further, individuals who serve as our directors are affiliates of Wexford, and Gulfport has the ability to designate a director.

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.

The interests of Wexford and Gulfport with respect to matters potentially or actually involving or affecting us, such as services provided, future acquisitions, financings and other corporate opportunities, and attempts to acquire us, may conflict with the interests of our other stockholders.

Our largest stockholder controls a significant percentage of our common stock, and its interests may conflict with those of our other stockholders.

Wexford, through its affiliate MEH Sub LLC, beneficially own approximately 47.6% of our outstanding common stock.

As a result, Wexford can exercise significant influence over matters requiring stockholder approval, including the election of directors, changes to our organizational documents and significant corporate transactions.

Further, individuals who serve as our directors are affiliates of Wexford.

This concentration of ownership and relationship with Wexford 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 certain companies they control.

The interests of Wexford with respect to matters potentially or actually involving or affecting us, such as services provided, future acquisitions, financings and other corporate opportunities, and attempts to acquire us, may conflict with the interests of our other stockholders.

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.

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.

A significant reduction by Wexford of its ownership interests in us could adversely affect us.

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Such actions could adversely affect our ability to successfully implement our business strategies which could adversely affect our cash flows or results of operations.

We have and will continue to incur increased costs and obligations as a result of being a public company.

As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses.

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.

These rules and regulations have increased our legal and financial compliance costs and made some activities more time-consuming and costly.

These rules and regulations may also make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.

We estimate that we incur approximately $2.5 million of incremental costs per year associated with being a publicly traded company;

however, it is possible that our incremental costs of being a publicly traded company will be higher than we currently estimate.

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.

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.

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.

As a smaller reporting company and an 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.

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.

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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.

The corporate opportunity provisions in our certificate of incorporation could enable Wexford, Gulfport or other affiliates of ours to benefit from corporate opportunities that might otherwise be available to us.

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.

The corporate opportunity provisions in our certificate of incorporation could enable Wexford or other affiliates of ours to benefit from corporate opportunities that might otherwise be available to us.

Subject to the limitations of applicable law, our certificate of incorporation, among other things:

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As described elsewhere in this report, including in the notes to our consolidated financial statements, these transactions include, among others, a joint venture, agreements to provide our services and frac sand products to our affiliates and agreements pursuant to which our affiliates provide or will provide us with certain services, including administrative and advisory services and office space.

Each of these entities is either controlled by or affiliated with Wexford or Gulfport, as the case may be, and the resolution of any conflicts that may arise in connection with such related party transactions, including pricing, duration or other terms of service, may not always be in our or our stockholders’ best interests because Wexford and/or Gulfport may have the ability to influence the outcome of these conflicts.

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 .”

Each of these entities is either controlled by or affiliated with Wexford, as the case may be, and the resolution of any conflicts that may arise in connection with such related party transactions, including pricing, duration or other terms of service, may not always be in our or our stockholders’ best interests because Wexford may have the ability to influence the outcome of these conflicts.

For a discussion of potential conflicts, see “ —Risks Inherent to Our Common Stock—Our largest stockholder controls a significant percentage of our common stock, and its interests may conflict with those of our other stockholders .”

If the price of our common stock fluctuates significantly, your investment could lose value.

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The price of our common stock could fluctuate based upon factors that have little or nothing to do with our company and these fluctuations could materially reduce the price for our common stock.

Wexford and Gulfport beneficially own a substantial amount of our common stock and may sell such common stock in the public or private markets.

Wexford beneficially owns a substantial amount of our common stock and may sell such common stock in the public or private markets.

Sales of these shares of common stock or sales of substantial amounts of our common stock by other stockholders, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock.

As of December 31, 2020, Wexford and Gulfport beneficially owned 48.2% and 21.5% shares of our common stock, respectively.

As of December 31, 2021, Wexford beneficially owned 47.6% shares of our common stock, respectively.

Sales of these shares of common stock or sales of substantial amounts of our common stock by other stockholders, or the perception that such sales may occur, could cause the price of our common stock to decline.

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These provisions also could discourage proxy contests and make it more difficult for you and other stockholders to elect directors and take other corporate actions.

As a result, these provisions could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders, which may limit the price that investors are willing to pay in the future for shares of our common stock.

As a result, these provisions could make it more difficult for a third party to

acquire us, even if doing so would benefit our stockholders, which may limit the price that investors are willing to pay in the future for shares of our common stock.

Our certificate of incorporation designates courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

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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.

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.

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.

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors