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“Risk Factors” and the section entitled “Forward-Looking Statements” appearing elsewhere in this annual report.
−Removed: We are an integrated, growth-oriented company serving both the electric utility and oil and gas industries in North America.
+Added: We are an integrated, growth-oriented energy services company focused on the construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through its infrastructure services businesses.
+Added: We also provide products and services to enable the exploration and development of North American onshore unconventional oil and natural gas reserves.
Our primary business objective is to grow our operations and create value for stockholders through organic growth opportunities and accretive acquisitions.
−Removed: Our suite of services includes infrastructure services, well completion services, natural sand proppant services, drilling services and other services, which includes aviation, equipment rental, crude oil hauling, remote accommodations, equipment manufacturing and infrastructure engineering and design services.
−Removed: Our infrastructure services division provides construction, upgrade, maintenance and repair services to the electrical infrastructure industry.
−Removed: Our well compeltion services division provides hydraulic fracturing, sand hauling and water transfer services.
+Added: Our suite of services includes infrastructure services, well completion services, natural sand proppant services, drilling services and other services.
+Added: Our infrastructure services division provides engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry.
+Added: Our well completion services division provides hydraulic fracturing, sand hauling and water transfer services.
Our natural sand proppant services division mines, processes and sells natural sand proppant used for hydraulic fracturing.
Our drilling services division currently provides rental equipment, such as mud motors and operational tools, for both vertical and horizontal drilling.
−Removed: In addition to these service divisions, we also provide aviation services, equipment rentals, crude oil hauling services, remote accommodations, equipment manufacturing and infrastructure engineering and design services.
+Added: In addition to these service divisions, we also provide aviation services, equipment rentals, crude oil hauling services, remote accommodations and equipment manufacturing.
We believe that the services we offer play a critical role in maintaining and improving electrical infrastructure as well as in increasing the ultimate recovery and present value of production streams from unconventional resources.
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Our transformation towards an industrial based company is ongoing.
−Removed: During the fourth quarter of 2019, we began infrastructure engineering operations focused on the transmission and distribution industry and also commenced equipment manufacturing operations.
+Added: We offer infrastructure engineering services focused on the transmission and distribution industry and also have equipment manufacturing operations and offer fiber optic services.
Our equipment manufacturing operations provide us with the ability to repair much of our existing equipment in-house, as well as the option to manufacture certain new equipment we may need in the future.
The equipment manufacturing operations have initially served the internal needs for our water transfer, equipment rental and infrastructure businesses, but we expect to expand into third party sales in the future.
+Added: Our fiber optic services include the installation of both aerial and buried fiber.
We are continuing to explore other opportunities to expand our business lines as we shift to a broader industrial focus.
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and drilling services.
−Removed: In 2019, we included Barracuda Logistics LLC, or Barracuda, in our pressure pumping segment, Cobra Aviation Services LLC, or Cobra Aviation, Air Rescue Systems Corporation, or ARS, and Leopard Aviation LLC, or Leopard, in our infrastructure segment and Mako Acquisitions LLC, or Mako, in our drilling segment.
−Removed: Based on our assessment of FASB ASC 280, Segment Reporting , guidance at December 31, 2020, we changed our presentation in 2020 to move Barracuda to the sand segment and Cobra Aviation, ARS, Leopard and Mako to the reconciling column titled “All Other”.
−Removed: Additionally, we changed the name of our pressure pumping segment to the well completion segment in 2020.
−Removed: The results for the years ended December 31, 2019 and 2018 have been retroactively adjusted to reflect these changes.
Since the dates presented below, we have conducted our operations through the following entities:
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• 5 Star Electric LLC—July 2017
−Removed: • Cobra Logistics LLC—February 2018
−Removed: • Cobra Caribbean LLC—October 2018
• Python Equipment LLC—December 2018
+Added: • Aquawolf LLC—September 2019
+Added: • Falcon Fiber Solutions LLC—May 2021
Well Completion Services Segment
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• Muskie Proppant LLC—September 2011
−Removed: • Barracuda—October 2014
+Added: • Barracuda Logistics LLC—October 2014
• Piranha Proppant LLC—May 2017
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• Bison Trucking LLC—August 2013
−Removed: • White Wing Tubular Services LLC—September 2014
• Great White Sand Tiger Lodging Ltd.—October 2007
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• Redback Coil Tubing, LLC—May 2012
+Added: • Anaconda Rentals LLC, formerly White Wing Tubular Services LLC—September 2014
• WTL Oil LLC, or WTL, formerly Silverback—June 2016
−Removed: • Mammoth Energy Partners, LLC—June 2016
−Removed: • Mako —March 2017
+Added: • Mammoth Energy Services Inc.—June 2016
+Added: • Mammoth Energy Partners, LLC—October 2016
+Added: • Mako Acquisitions LLC—March 2017
• Stingray Energy Services LLC, or Stingray Energy Services—June 2017
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• Tiger Shark Logistics LLC—October 2017
−Removed: • Dire Wolf Energy Services LLC—January 2018
−Removed: • Cobra Aviation—January 2018
+Added: • Cobra Aviation Services LLC—January 2018
• Black Mamba Energy LLC—March 2018
−Removed: • Stingray Cementing and Acidizing, formerly RTS Energy Services LLC—June 2018
+Added: • Stingray Cementing and Acidizing LLC, formerly RTS Energy Services LLC—June 2018
• Ivory Freight Solutions LLC—July 2018
• IFX Transport LLC—December 2018
−Removed: • ARS—December 2018
−Removed: • Predator Aviation LLC—April 2019
−Removed: • Leopard—April 2019
+Added: • Air Rescue Systems LLC—December 2018
+Added: • Leopard Aviation LLC—April 2019
• Anaconda Manufacturing LLC—September 2019
−Removed: • Aquawolf LLC—September 2019
Impact of the Ongoing COVID-19 Pandemic and Volatility in Commodity Prices
−Removed: On March 11, 2020, the World Health Organization characterized the global spread of the novel strain of coronavirus, COVID-19, as a “pandemic.” To limit the spread of COVID-19, governments have taken various actions including the issuance of stay-at-home orders and social distancing guidelines, causing some businesses to suspend operations and a reduction in demand for many products from direct or ultimate customers.
−Removed: While many of the stay-at-home orders have expired, the COVID-19 pandemic has resulted in a widespread health crisis and a swift and unprecedented reduction in international and U.S.
−Removed: economic activity which, in turn, has adversely affected, and continues to adversely affect, the demand for oil and natural gas and caused significant volatility and disruption of the capital and financial markets.
In March and April 2020, concurrent with the spread of COVID-19 and quarantine orders in the U.S.
and worldwide, oil prices dropped sharply to below zero for the first time in history due to factors including significantly reduced demand and a shortage of storage facilities.
−Removed: While OPEC members and certain other nations agreed in April 2020 to cut production and subsequently extended such production cuts through December 2020, which helped to reduce a portion of the excess supply in the market and improve crude oil prices, they agreed to increase production by 500,000 barrels per day beginning in January 2021.
−Removed: As a result, downward pressure on commodity prices could continue for the foreseeable future.
−Removed: We cannot predict if, or when, commodity prices will stabilize and at what price points and when global inventories will return to normalized levels.
−Removed: Beginning in early March 2020, in response to the ongoing COVID-19 pandemic and the depressed commodity prices, many exploration and production companies, including our customers, immediately began to substantially reduce their capital expenditure budgets.
−Removed: As a result, demand for our oilfield services, which was already under considerable pressure from reductions in our customers' capital expenditure budgets in 2019, declined further at the end of the first quarter of 2020 and continued to decline further throughout the remainder of 2020.
−Removed: Demand for both gasoline and oil rebounded to some extent toward the end of the second quarter of 2020 and stabilized to some degree throughout the second half of 2020, but remains below historical levels.
−Removed: As a result, depressed levels of oilfield service activity are expected to continue for the foreseeable future.
−Removed: The ongoing COVID-19 pandemic, the broad reduction in economic activity, the current conditions in the energy industry and the adverse macroeconomic conditions have also had, and are likely to continue to have, an adverse effect on both pricing and utilization for our oilfield services.
+Added: Beginning in March 2020, in response to the COVID-19 pandemic and the depressed commodity prices, many exploration and production companies, including our customers, substantially reduced their capital expenditure budgets.
+Added: As a result, demand for our oilfield services declined at the end of the first quarter of 2020 and continued to decline further throughout the remainder of 2020.
+Added: Exploration and production companies set their 2021 budgets based on the prevailing prices for oil and gas at the time.
+Added: Although demand for oil and natural gas and commodity prices increased during the fourth quarter of 2021, these budgets for the publicly traded exploration and production companies remained relatively unchanged throughout 2021 with any excess cash flows used for debt repayment or shareholder returns rather than to increase production, as has been the case in the past.
+Added: Although activity levels for many exploration and production companies increased during the fourth quarter of 2021 and early 2022 due to the recent improvement in the U.S.
+Added: and global economic activity, easing of the COVID-19 pandemic related restrictions, availability of vaccines and treatments and rising energy use and commodity prices, the emergence of the Delta COVID-19 variant in the latter part of 2021 and the subsequent surge of the highly transmissible Omicron variant continued to contribute to the economic and pricing volatility and a cautious production outlook for 2022.
+Added: On July 18, 2021, the OPEC+ reached an agreement to phase out 5.8 million barrels per day of oil production cuts by September 2022 as prices of crude oil reached their highest levels in more than two years.
+Added: Coordinated increases in oil supply by OPEC+ began in August 2021, increasing overall oil production by 400,000 barrels per day on a monthly basis from that point forward.
+Added: Further, on January 4, 2022, OPEC+ agreed to raise its output target by 400,000 Bbl per day in February 2022, which move is expected to further boost oil supply in response to rising demand.
+Added: In its report issued on February 10, 2022, OPEC noted its expectation that world oil demand will rise by 4.15 million Bbl per day in 2022, as the global economy continues to post a strong recovery from the COVID-19 pandemic.
+Added: Although this demand outlook is expected to underpin oil prices, which have already seen a seven-year high in early 2022, we cannot predict the impact of these events on commodity prices and expect a competitive market for oilfield services for the foreseeable future.
+Added: In addition, the current Russian/Ukrainian military conflict could result in a humanitarian crisis and have an adverse impact on the global energy and capital markets and global stability.
We have taken, and continue to take, responsible steps to protect the health and safety of our employees during the COVID-19 pandemic.
−Removed: We are also actively monitoring the impact of the COVID-19 pandemic and the adverse industry and market conditions and have taken mitigating steps to preserve liquidity, reduce costs and lower capital expenditures.
+Added: We are also continuing to monitor the adverse industry and market conditions resulting from the COVID-19 pandemic and have taken mitigating steps in an effort to preserve liquidity, reduce costs and lower capital expenditures.
These actions have included reducing headcount, adjusting pay and limiting spending.
−Removed: We will continue to take further actions that we deem to be in the best interest of the Company and our stockholders if the current conditions continue, do not improve or worsen.
−Removed: Given the dynamic nature of these events, we are unable to predict the ultimate impact of the COVID-19 pandemic, the depressed commodity markets, the reduced demand for oil and oilfield services and adverse macroeconomic conditions on our business, financial condition, results of operations, cash flows and stock price or the pace or extent of any subsequent recovery.
+Added: We will continue to take further actions that we deem to be in the best interest of the Company and our stockholders if the current conditions worsen.
+Added: Given the dynamic nature of these events, we are unable to predict the ultimate impact of the COVID-19 pandemic, the volatility in commodity markets, the reduced demand for oil and oilfield services and uncertain macroeconomic conditions on our business, financial condition, results of operations, cash flows and stock price or the pace or extent of any subsequent recovery.
2021 Highlights
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See “Non-GAAP Financial Measures” below for a reconciliation of net loss to Adjusted EBITDA.
−Removed: • In the fourth quarter of 2020, approximately 66% of our revenue was derived from the industrial sector.
−Removed: Given the expected demand in the industrial sector, we believe that we are well positioned to grow our industrial business rapidly over the coming years.
+Added: • Organically started a fiber division, which was awarded a fiber installation contract with a cooperative in the Midwest in late 2021 with an expected aggregate revenue of $4.5 million throughout 2022.
+Added: • Awarded a contract by a major utility to provide engineering and design services for the building of electric vehicle charging station infrastructure with an expected aggregate revenue of $5 million over the next three years.
Overview of Our Industries
Energy Infrastructure Industry
−Removed: Our infrastructure services business provides construction, upgrade, maintenance and repair services to the electrical infrastructure industry.
−Removed: We offer a broad range of services on electric transmission and distribution, or T&D, networks and substation facilities, which include construction, upgrade, maintenance and repair of high voltage transmission lines, substations and lower voltage overhead and underground distribution systems.
+Added: Our infrastructure services business provides engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry.
+Added: We offer a broad range of services on electric transmission and distribution, or T&D, networks and substation facilities, which include engineering, design, construction, upgrade, maintenance and repair of high voltage transmission lines, substations and lower voltage overhead and underground distribution systems.
Our commercial services include the installation, maintenance and repair of commercial wiring.
−Removed: We also provide storm repair and restoration services in response to storms and other disasters.
−Removed: We provide infrastructure services primarily in the northeast, southwest and midwest portions of the United States.
+Added: We also provide storm repair and restoration
+Added: services in response to storms and other disasters.
+Added: We provide infrastructure services primarily in the northeast, southwest, midwest and western portions of the United States.
We currently have agreements in place with private utilities, public IOUs and Co-Ops.
−Removed: Since we commenced operations in this line of business, a substanital portion of our infrastructure revenue has been generated from storm restoration work, primarily from PREPA, due to damage caused by Hurricane Maria.
+Added: Since we commenced operations in this line of business, a substantial portion of our infrastructure revenue has been generated from storm restoration work, primarily from PREPA, due to damage caused by Hurricane Maria.
On October 19, 2017, Cobra and PREPA entered into an emergency master services agreement for repairs to PREPA’s electrical grid.
−Removed: The one-year contract, as amended, provided for payments of up to $945 million.
−Removed: 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.
+Added: The one-year contract, as amended, provided for payments of up to $945 million (the “first contract”).
+Added: 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 (the “second contract”).
Our work under each of the contracts with PREPA ended on March 31, 2019.
As of December 31, 2021, PREPA owed us approximately $227 million for services we performed, excluding $110.8 million of interest charged on these delinquent balances as of December 31, 2021.
−Removed: Summary of Significant Accounting Policies-Accounts Receivable to our consolidated financial statements included elsewhere in this annual report.
+Added: Summary of Significant Accounting Policies—Accounts Receivable to our consolidated financial statements included elsewhere in this report.
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.
−Removed: As a result, PREPA's ability to meet its payment obligations under the contracts is
−Removed: largely dependent upon funding from the FEMA 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 Federal Emergency Management Agency, or FEMA, or other sources.
On September 30, 2019, we filed a motion with the U.S.
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.
−Removed: 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: 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 first contract.
This emergency motion was denied on June 3, 2020 and the Court extended the stay of our motion.
−Removed: 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.
+Added: 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.
+Added: On April 6, 2021, we filed a motion to lift the stay order.
+Added: 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.
+Added: The joint motion was granted by the Court on April 14, 2021.
+Added: 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.
+Added: 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.
+Added: The parties were further directed to file an additional status report, which was filed on July 20, 2021.
+Added: 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.
+Added: The appeal is currently pending.
+Added: 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.
+Added: On January 26, 2022, the Court extended the stay and directed the parties to file a further status report by July 25, 2022.
+Added: We believe all amounts charged to PREPA were in accordance with the terms of the contracts.
+Added: Further, we believe these receivables are collectible.
+Added: 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.
In addition, government contracts are subject to various uncertainties, restrictions and regulations, including oversight audits and compliance reviews by government agencies and representatives.
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Given the uncertainty inherent in the criminal litigation, investigations and legal proceedings, it is not possible at this time to determine the potential outcome or other potential impacts that they could have on us.
−Removed: Commitments and Contingencies to our consolidated financial statements included elsewhere in this annual report for additional information regarding these investigations and proceedings.
−Removed: 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.
−Removed: Demand for our infrastructure services in the continental United States remains steady, and our crew count remained stable at approximately 115 crews throughout 2020.
−Removed: The COVID-19 pandemic and resulting economic conditions have not had a material impact on demand or pricing for our infrastructure services.
−Removed: Transmission crew size varies based upon the scope of the project and factors such as voltage, structure type, number of conductors and type of foundation.
−Removed: Each distribution crew generally consists of five employees.
−Removed: These transmission and distribution crews work for multiple utilities primarily across the northeastern, midwestern and southwestern portions of the United States.
−Removed: During the fourth quarter of 2019, we hired a new president for our infrastructure division and have added experienced industry personnel to key management positions.
−Removed: Our infrastructure management team also has experience with both solar and wind projects and we believe that this experience, combined with our vertically integrated service offering, positions us well to compete and win renewable projects.
−Removed: With this team in place, we believe we will be able to grow our customer base and increase our revenues in the continental United States over the coming years.
−Removed: We also believe that the skill sets and experience of our crews will afford us enhanced bidding opportunities in both the U.S.
−Removed: and overseas.
+Added: Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information regarding these investigations and proceedings.
+Added: 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.
+Added: Although the COVID-19 pandemic and resulting economic conditions have not had a material impact on demand or pricing for our infrastructure services, revenues for our infrastructure services declined in 2021 as a result of certain
+Added: management changes, which resulted in crew departures, as well as a decline in storm restoration activities.
+Added: Our crew count declined from approximately 100 crews as of December 31, 2020 to approximately 82 crews as of December 31, 2021.
+Added: During the third quarter of 2021, we made leadership changes in our infrastructure group.
+Added: We are focused on cutting costs and enhancing accountability across the division, and we have already seen improvement in both areas.
+Added: Funding for projects in the infrastructure space remains strong with added opportunities expected from the Infrastructure Investment and Jobs Act, which was signed into law on November 15, 2021.
+Added: We continue to pursue opportunities within this sector as we strategically structure our service offerings for growth, intending to increase our infrastructure services activity and expand both our geographic footprint and depth of projects.
+Added: In late 2021, we were awarded a fiber installation contract as well as an electric vehicle charging station engineering contract.
+Added: Both of these projects are currently in process.
+Added: We work for multiple utilities primarily across the northeastern, southwestern, midwestern and western portions of the United States.
+Added: We believe that we are well-positioned to compete for new projects due to the experience of our infrastructure management team, combined with our vertically integrated service offerings.
+Added: We are seeking to leverage this experience and our service offerings to grow our customer base and increase our revenues in the continental United States over the coming years.
Oil and Natural Gas Industry
−Removed: The oil and natural gas industry has traditionally been volatile and is influenced by a combination of long-term, short-term and cyclical trends, including the domestic and international supply and demand for oil and natural gas, current and expected future prices for oil and natural gas and the perceived stability and sustainability of those prices, production depletion rates and the resultant levels of cash flows generated and allocated by exploration and production companies to their drilling, completion and related services and products budget.
+Added: The oil and natural gas industry has traditionally been volatile and is influenced by a combination of long-term, short-term and cyclical trends, including the domestic and international supply and demand for oil and natural gas, current and expected future prices for oil and natural gas and the perceived stability and sustainability of those prices, production depletion rates and the resultant levels of cash flows generated and allocated by exploration and production companies to their drilling, completion and related services and products budgets.
The oil and natural gas industry is also impacted by general domestic and international economic conditions, political instability in oil producing countries, government regulations (both in the United States and elsewhere), levels of customer demand, the availability of pipeline capacity, storage capacity and other conditions and factors that are beyond our control.
−Removed: See “Recent Developments—Impact of the Ongoing COVID-19 Pandemic and Volatility in Commodity Prices” above.
−Removed: Demand for most of our oil and natural gas products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry.
+Added: See “Recent Developments—Impact of the COVID-19 Pandemic and Volatility in Commodity Prices” above.
+Added: Demand for most of 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.
The levels of capital expenditures of our customers are predominantly driven by the prices of oil and natural gas.
−Removed: As discussed above, oil prices dropped sharply throughout March and April of 2020 and have continued to experience significant volatility.
−Removed: Oil and natural gas prices are expected to continue to be volatile and we cannot predict if, or when, commodity prices will improve and stabilize.
+Added: As discussed above, oil prices dropped sharply throughout March and April of 2020.
+Added: While improved commodity pricing has contributed to positive industry movement and increased equipment utilization, oil and natural gas prices are expected to continue to be volatile and we cannot predict if, or at what levels, commodity prices will stabilize.
We experienced a weakening in demand for our oilfield services during 2019 as a result of reductions in our customers’ capital expenditure budgets.
−Removed: The sharp decline in oil prices beginning in March 2020 further reduced the utilization and pricing of our oilfield services.
−Removed: In response to market conditions, we temporarily shut down our cementing and acidizing operations and flowback operations beginning in July 2019, our contract drilling operations beginning in December 2019, our rig hauling operations
−Removed: beginning in April 2020 and our coil tubing and full service transportation operations beginning in July 2020.
+Added: The sharp decline in oil prices beginning in March 2020, the continued volatility and strategic operating decisions by producers to curtail drilling activity have continued to adversely impact the utilization and pricing of our oilfield services.
+Added: In response to market conditions, we have temporarily shut down our cementing and acidizing operations and flowback operations beginning in July 2019, our contract drilling operations beginning in December 2019, our rig hauling operations beginning in April 2020, our coil tubing, pressure control and full service transportation operations beginning in July 2020 and our crude oil hauling operations beginning in July 2021.
We continue to monitor the market to determine if and when we can recommence these services.
−Removed: Further, we are currently only operating one of our six pressure pumping fleets.
−Removed: Based on current feedback from our exploration and production customers, they are taking a cautious approach to activity levels for 2021 given the recent volatility in oil prices and investor sentiment calling for activities to remain within or below cash flows.
−Removed: Market fundamentals are challenging for our oilfield businesses and we expect this trend to continue for at least the first half of 2021.
−Removed: Although we believe the reported retirement of equipment across the industry may, at some point, help the market, pricing and utilization for our oilfield services are expected to remain depressed for the foreseeable future.
−Removed: While the oilfield portion of our service offerings continue to experience significant challenges, we expect to be ready to ramp up our oilfield service offerings when oilfield demand, pricing and margins strengthen.
−Removed: We intend to closely monitor our cost structure in response to market conditions and pursue cost savings where possible.
−Removed: Further, a significant portion of our revenue from our pressure pumping 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 seeking to terminate the contract and recover damages for alleged overpayments, audit costs and legal fees.
−Removed: Gulfport has not made the payments owed to us under this contract for any periods subsequent to its alleged December 28, 2019 termination date.
−Removed: We believe Gulfport's actions are without merit and are vigorously defending the lawsuit.
+Added: We are currently operating two of our six pressure pumping fleets.
+Added: Based on feedback from our exploration and production customers, we believe they plan to take a cautious approach with respect to their activity levels for 2022 given the recent volatility in oil prices and investor sentiment calling for activities to remain within or below cash flows.
+Added: Market fundamentals are challenging for our oilfield businesses and we expect this trend to continue.
+Added: Although the reported retirement of equipment across the industry may, at some point, help the market, we believe pricing and utilization for our oilfield services will remain challenging for the foreseeable future.
+Added: Subject to our liquidity requirements, we expect to be ready to ramp up our oilfield service offerings when oilfield demand, pricing and margins strengthen.
+Added: We continue to closely monitor our cost structure in response to market conditions and intend to pursue additional cost savings where possible.
+Added: Further, a significant portion of our revenue from our pressure pumping business had historically been derived from Gulfport.
+Added: On December 28, 2019, Gulfport filed a lawsuit alleging our breach of our pressure pumping contract with Gulfport and seeking to terminate the contract and recover damages for alleged overpayments, audit costs and legal fees.
+Added: Gulfport did not make the payments owed to us under this contract for any periods subsequent to its alleged December 28, 2019 termination date.
Further, on November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
−Removed: Gulfport may take action in its chapter 11 proceeding to terminate its agreement with us and/or seek to reduce our claims for services and damages to which we may be entitled.
−Removed: We cannot assure you of the outcome of our claims in Gulfport’s chapter 11 proceeding, what our recovery on those claims might be or whether 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 whether 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 significant customers, would have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: On September 21, 2021, we reached a settlement with Gulfport under which all litigation relating to the Stingray Pressure Pumping contract was terminated, Stingray Pressure Pumping released all claims against Gulfport and its
+Added: subsidiaries with respect to Gulfport’s bankruptcy proceedings and each of the parties released all claims they had against the others with respect to the litigation matters discussed above.
+Added: We have not been able to obtain long-term contracts with other customers to replace our contract with Gulfport.
+Added: Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information.
Natural Sand Proppant Industry
4 unchanged sentences
This oversupply resulted in several industry participants idling and closing high cost mines in an attempt to restore the supply and demand balance and reduce the number of industry participants.
−Removed: Nevertheless, demand for our sand declined significantly in the second half of 2019 and throughout 2020 as a result of completion activity falling due to lower oil demand and pricing as discussed above, increased capital discipline by our customers and budget exhaustion, among other factors.
−Removed: We cannot predict if and when demand and pricing will recover sufficiently to return our natural sand proppant services segment to profitability.
+Added: Nevertheless, demand for our sand declined significantly in the second half of 2019 and throughout 2020 as a result of completion activity falling due to lower oil demand and pricing as discussed above, increased capital discipline by our customers, budget exhaustion and the COVID-19 pandemic.
+Added: Activity has rebounded modestly in 2021 as we have seen an increase in the volume of sand sold, however the prices of frac sand have continued to be depressed compared to prior levels.
+Added: We cannot predict if and when pricing and demand will recover sufficiently to return our natural sand proppant services segment to profitability.
Further, as a result of adverse market conditions, production at our Muskie sand facility in Pierce County, Wisconsin has been temporarily idled since September 2018.
−Removed: Our Taylor sand facility in Taylor, Wisconsin and Piranha sand facility in New Auburn, Wisconsin are currently running at approximately 12% capacity.
−Removed: Our contracted capacity has provided a strong baseline of business, which has kept our Taylor and Piranha plants operating and our costs low.
−Removed: A portion of our revenue from our natural sand proppant business is derived from Gulfport pursuant to a contract that expires in December 2021.
−Removed: Gulfport has not made the payments owed to us under this contract for any periods subsequent to May 2020.
+Added: Our contracted capacity has provided a baseline of business, which has kept our Taylor and Piranha plants operating and our costs low.
+Added: A portion of our revenue from our natural sand proppant business historically had been derived from Gulfport pursuant to a long-term contract.
+Added: Gulfport did not made the payments owed to us under this contract for any periods subsequent to May 2020.
In September 2020, we filed a lawsuit seeking to recover delinquent payments owed to us under this contract.
−Removed: Further, on November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
−Removed: Gulfport may take action in its chapter 11 proceeding to terminate its agreement with us and/or seek to reduce our claims for services and damages to which we may be entitled.
−Removed: We cannot assure you of the outcome of our claims in Gulfport’s chapter 11 proceeding, what our recovery on those claims might be or whether we will be able to preserve, extend or renew our contract with Gulfport on favorable terms and conditions or at all.
−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: On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
+Added: On September 21, 2021, the Company and Gulfport reached a settlement under which all litigation relating to the Muskie contract was terminated and a portion of Muskie’s contract claim against Gulfport was allowed under Gulfport’s plan of reorganization.
+Added: Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information.
Results of Operations
28 unchanged sentences
Revenue for 2021 decreased $84.1 million, or 27%, to $229.0 million from $313.1 million for 2020.
−Removed: The decrease in total revenue is attributable to declines in revenue across all business lines.
+Added: The decrease in total revenue is attributable to declines in revenue across all business lines other than our natural sand proppant services division.
Revenue derived from related parties was $17.9 million, or 8% of our total revenue, for 2021 and $50.6 million, or 16% of our total revenue, for 2020.
−Removed: Substantially all of our related party revenue is derived from Gulfport under pressure pumping and sand contracts.
−Removed: For additional information regarding the status of these contracts, see “Industry Overview – Oil and Natural Gas Industry,” “Industry Overview – Natural Sand Proppant Industry” and Note 20.
+Added: Substantially all of our related party revenue was derived from Gulfport under pressure pumping and sand contracts which have ended.
+Added: For additional information regarding the status of these contracts and the related litigation, see “Industry Overview – Oil and Natural Gas Industry,” “Industry Overview – Natural Sand Proppant Industry” and Note 19.
Commitments and Contingencies to our consolidated financial statements included elsewhere in this report.
1 unchanged sentence
Infrastructure Services.
−Removed: Infrastructure services division revenue decreased $58 million, or 27%, to $155 million for 2020 from $213 million for 2019 primarily due to the conclusion on March 31, 2019 of the work we performed under our contracts with PREPA for repairs to Puerto Rico's electrical grid as a result of Hurricane Maria.
−Removed: For additional information regarding our contracts with PREPA and our infrastructure services, see “Overview of Our Industries - Electrical Infrastructure Industry” above.
−Removed: Revenue from our operations in the continental United States increased $37 million, or 31%, to $155 million for 2020 from $118 million for 2019.
+Added: Infrastructure services division revenue decreased $64.3 million, or 41%, to $93.4 million for 2021 from $157.8 million for 2020 primarily due to less storm activity during the year ended December 31, 2021 compared to the year ended December 31, 2020 resulting in an $58.4 million decline in storm restoration revenue.
+Added: Additionally, infrastructure services revenue was negatively impacted by the decrease in crew count from
+Added: approximately 100 crews as of December 31, 2020 to 82 crews as of December 31, 2021.
+Added: These crew departures were driven by changes in division level management.
Well Completion Services .
1 unchanged sentence
Revenue derived from related parties was $15 million, or 18% of total well completion revenue, for 2021 and $42.5 million, or 48% of total well completion revenue, for 2020.
−Removed: Substantially all of our related party revenue is derived from Gulfport under a pressure pumping contract.
−Removed: On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
−Removed: In 2020, we recognized pre-petition revenue totaling $39 million and post-petition revenue totaling $4 million in accordance with the terms of this contract.
+Added: Substantially all of our related party revenue was derived from Gulfport under a pressure pumping contract which has ended.
+Added: In 2021, we recognized revenue totaling $15 million related to the modification of our pressure pumping contract with Gulfport.
For additional information regarding the status of this contract, see “Industry Overview – Oil and Natural Gas Industry” above.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our other services and sand segment, totaled $1 million and $2 million, respectively, for 2020 and 2019.
−Removed: The decrease in our well completion services revenue was primarily driven by a decline in pricing as well as a decline in utilization.
+Added: Intersegment revenue, consisting primarily of revenue derived from our other services and sand segment, totaled $0.1 million and $1.1 million, for 2021 and 2020, respectively.
+Added: The decrease in our well completion services revenue was primarily driven by a decline in utilization.
The number of stages completed decreased 12% to 2,544 for 2021 from 2,880 for 2020.
−Removed: An average of 1.5 of our fleets were active throughout 2020 compared to 2.4 fleets for 2019.
+Added: An average of 1.1 of our six fleets were active throughout 2021 compared to 1.5 fleets for 2020.
Natural Sand Proppant Services.
−Removed: Natural sand proppant services division revenue decreased $63 million, or 65%, to $34 million for 2020, from $97 million for 2019.
+Added: Natural sand proppant services division revenue increased $0.5 million, or 1%, to $34.9 million for 2021, from $34.4 million for 2020.
Revenue derived from related parties was $2.1 million, or 6% of total sand revenue, for 2021 and $8.4 million, or 24% of total sand revenue, for 2020.
−Removed: All of our related party revenue is derived from Gulfport under a sand supply contract.
+Added: All of our related party revenue was derived from Gulfport under a sand supply contract.
On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
−Removed: In 2020, we recognized pre-petition revenue totaling $7 million and post-petition revenue totaling $1 million in accordance with the terms of this contract.
+Added: In 2021, we recognized revenue totaling $2 million related to the modification of our sand supply contract with Gulfport.
For additional information regarding the status of this contract, see “Industry Overview – Natural Sand Proppant Industry” above.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was nominal for 2020 and $30 million, or 31% of total sand revenue, for 2019.
−Removed: The decrease in our natural sand proppant services revenue was primarily attributable to a 75% decline in tons of sand sold from approximately 2.0 million tons in 2019 to 0.5 million tons in 2020 coupled with a 51% decline in average price per ton of sand sold from $29.70 in 2019 to $14.58 in 2020.
−Removed: Included in natural sand proppant services revenue is shortfall revenue of $25 million and $3 million, respectively, for the 2020 and 2019.
+Added: Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was $4.0 million, or 11% of total sand revenue, for 2021 and a nominal amount for 2020.
+Added: The increase in our natural sand proppant services revenue was primarily attributable to a 107% increase in tons of sand sold from approximately 0.5 million tons in 2020 to 1.0 million tons in 2021 coupled with a 15% increase in average price per ton of sand sold from $14.58 in 2020 to $16.76 in 2021.
+Added: Included in natural sand proppant services revenue is shortfall revenue of $12.0 million and $24.8 million, for 2021 and 2020, respectively.
Drilling Services .
Drilling services division revenue decreased $3.5 million, or 44%, to $4.3 million for 2021, from $7.8 million for 2020.
−Removed: Revenue derived from related parties, consisting primarily of directional drilling revenue from El Toro Resources LLC, was nominal for 2020 and $1 million for 2019.
−Removed: The decline in our drilling services revenue was primarily attributable to declines in contract land drilling, rig hauling and directional drilling revenue of $9 million, $9 million and $6 million, respectively.
+Added: Revenue derived from related parties, consisting primarily of directional drilling revenue from El Toro Resources LLC, was $0.6 million for 2021 and a nominal amount for 2020.
+Added: The decline in our drilling services revenue was primarily attributable to declines in utilization for our directional drilling and rig hauling businesses.
In response to market conditions, we temporarily shut down our contract land drilling operations beginning in December 2019 and our rig hauling operations beginning in April 2020.
Other Services.
−Removed: Revenue from other services, consisting of revenue derived from our aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rental, crude oil hauling, full service transportation, remote accommodation, equipment manufacturing and infrastructure engineering and design businesses, decreased $58 million, or 65%, to $31 million for 2020 from $89 million for 2019.
+Added: Revenue from other services, consisting of revenue derived from our aviation, coil tubing, pressure control, equipment rental, crude oil hauling, full service transportation, remote accommodation and equipment manufacturing, decreased $10.3 million, or 36%, to $18.5 million for 2021 from $28.8 million for 2020.
Revenue derived from related parties, consisting primarily of equipment rental revenue from Gulfport and aviation revenue from Brim Equipment Leasing, Inc., or Brim, was $0.4 million, or 2% of total other services revenue, for 2021 and $1.0 million, or 3% of total other services revenue, for 2020.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, totaled $3 million and $15 million, respectively, for 2020 and 2019.
+Added: Intersegment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, totaled $2.2 million and $2.7 million, for 2021 and 2020, respectively.
The decrease in our other services revenue was primarily due to a decline in utilization for our equipment rental business.
1 unchanged sentence
Additionally, utilization for our crude oil hauling and aviation businesses declined.
−Removed: Due to market conditions, we temporarily shut down our cementing and acidizing operations as well as our flowback operations in July 2019 and our coil tubing and full service transportation operations beginning in July 2020.
−Removed: These decreases were partially offset by increases in revenue for our remote accommodations and infrastructure engineering businesses.
+Added: Due to market conditions, we temporarily shut down our coil tubing and full service transportation operations beginning in July 2020 and our crude oil hauling operations beginning in July 2021.
Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense) .
−Removed: Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $312 million from $544 million, or 87% of
−Removed: total revenue, for 2019 to $232 million, or 74% of total revenue, for 2020.
+Added: Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $33.7 million from $232.0 million, or 74% of total revenue, for 2020 to $198.3 million, or 87% of total revenue, for 2021.
The decrease was primarily due to a decline in activity across all of our business lines.
1 unchanged sentence
Infrastructure Services.
−Removed: Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, decreased $51 million from $173 million for 2019 to $122 million for 2020.
−Removed: The decline is due to the conclusion on March 31, 2019 of the work we performed under our contracts with PREPA for repairs to Puerto Rico's electrical grid as a result of Hurricane Maria.
−Removed: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $29 million in 2020 and $30 million in 2019, was 79% and 81%, respectively, for 2020 and 2019.
+Added: Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, decreased $34.0 million from $124.6 million for 2020 to $90.6 million for 2021, primarily due to a decline in activity.
+Added: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $21.9 million in 2021 and $29.4 million in 2020, was 97% and 79%, for 2021 and 2020, respectively.
+Added: The increase as a percentage of revenue is primarily due to increased labor costs as a percentage of revenue.
Well Completion Services .
−Removed: Well completion services division cost of revenue, exclusive of depreciation and amortization expense, decreased $160 million, or 77%, from $207 million for 2019 to $47 million for 2020 primarily due to a decline in activity.
−Removed: As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $30 million in 2020 and $40 million in 2019, was 54% and 85%, respectively, for 2020 and 2019.
−Removed: The decrease was primarily due to the recognition of standby revenue during 2020, of which there was a lower percentage of costs recognized compared to 2019.
+Added: Well completion services division cost of revenue, exclusive of depreciation and amortization expense, increased $17.1 million, or 36%, from $47.5 million for 2020 to $64.6 million for 2021 primarily due to an increase in cost of goods sold as a result of providing sand and chemicals with our service package to customers in 2021.
+Added: As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $26.4 million in 2021 and $30.4 million in 2020, was 77% and 54%, for 2021 and 2020, respectively.
+Added: The increase as a percentage of revenue was primarily due to the recognition of more pressure pumping services standby revenue in 2020, of which there was a lower percentage of costs recognized compared to 2021.
Additionally, during 2021 we provided sand and chemicals with our service package to customers, resulting in higher cost of goods sold as a percentage of revenue for this period in comparison to 2020.
Natural Sand Proppant Services.
−Removed: Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $62 million, or 70%, from $88 million for 2019 to $26 million for 2020 primarily due to a decrease in cost of goods sold as a result of a decrease in tons of sand sold.
−Removed: As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $10 million in 2020 and $14 million in 2019, was 76% and 90%, respectively, for 2020 and 2019.
−Removed: The decrease in cost as a percentage of revenue is primarily due to an increase in shortfall revenue, partially offset by a 51% decline in average price per ton of sand sold.
+Added: Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, increased $1.2 million, or 5%, from $26.0 million for 2020 to $27.2 million for 2021.
+Added: As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $9.0 million in 2021 and $9.8 million in 2020, was 78% and 76%, for 2021 and 2020, respectively.
Drilling Services.
Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $4.8 million, or 44%, from $10.9 million for 2020 to $6.1 million for 2021, as a result of reduced activity.
−Removed: In response to market conditions, we temporarily shut down our contract land drilling operations beginning in December 2019 and our rig hauling operations beginning in April 2020.
−Removed: As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $10 million in 2020 and $13 million in 2019, was 140% and 116%, respectively, for 2020 and 2019.
−Removed: The increase was primarily due to a decline in utilization.
+Added: In response to market conditions, we have temporarily shut down our contract land drilling operations beginning in December 2019 and our rig hauling operations beginning in April 2020.
+Added: As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $8.0 million in 2021 and $10.0 million in 2020, was 139% and 116%, for 2021 and 2020, respectively.
+Added: The increase as a percentage of revenue was primarily due to a decline in utilization.
Other Services .
−Removed: Other services cost of revenue, exclusive of depreciation and amortization expense, decreased $60 million, or 67%, from $89 million for 2019 to $29 million for 2020, primarily due to declines in costs for our equipment rental and crude oil hauling businesses as a result of reduced activity.
−Removed: Additionally, due to market conditions, we temporarily shut down our cementing and acidizing operations as well as our flowback operations beginning in July 2019 and our coil tubing and full service transportation operations beginning in July 2020.
−Removed: We continue to monitor market conditions to evaluate if and when we can recommence providing these services.
−Removed: These declines were partially offset by an increase in costs for our equipment manufacturing and infrastructure engineering and design businesses.
−Removed: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $16 million in 2020 and $19 million in 2019, was 93% and 101%, respectively, for 2020 and 2019.
+Added: Other services cost of revenue, exclusive of depreciation and amortization expense, decreased $10.7 million, or 40%, from $27.1 million for 2020 to $16.3 million for 2021, primarily due to a decline in costs for our equipment rental, coil tubing, and full service transportation businesses as a result of reduced activity.
+Added: Due to market conditions, we have temporarily shut down our coil tubing and full service transportation operations beginning in July 2020 and our crude oil hauling operations beginning in July 2021.
+Added: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $13.2 million in 2021 and $15.7 million in 2020, was 88% and 94%, for 2021 and 2020, respectively.
+Added: The decrease as a percentage of revenue is primarily due to a decline in equipment rental costs as a percentage of revenue.
Selling, General and Administrative Expenses .
12 unchanged sentences
Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
+Added: The bad debt provision for the year ended December 31, 2021 includes $41.2 million related to the Stingray Pressure Pumping and Muskie contracts with Gulfport.
+Added: The bad debt provision for the year ended December 31, 2020, included $19.4 million related to the voluntary petitions for relief filed on November 13, 2020, by Gulfport and certain of its subsidiaries.
+Added: See Notes 2 and 19 of the Notes to the Consolidated Financial Statements.
Depreciation, Depletion, Amortization and Accretion .
Depreciation, depletion, amortization and accretion decreased $16.8 million, or 18%, to $78.5 million for 2021 from $95.3 million in 2020.
−Removed: The decrease is primarily due to a decline in property and equipment depreciation expense as well as a decline in depletion expense.
+Added: The decrease is primarily due to a decline in property and equipment depreciation expense as a result of lower capital expenditures.
Impairment of Goodwill .
−Removed: We recorded impairment of goodwill of $55 million and $34 million, respectively, in 2020 and 2019.
+Added: We recorded impairment of goodwill of $0.9 million and $55.0 million in 2021 and 2020, respectively.
+Added: As a result of our annual assessment of goodwill, we determined that the carrying value of goodwill for certain of our entities exceeded their fair values at December 31, 2021, resulting in impairment expense of $0.9 million.
As a result of market conditions, we performed an impairment assessment of our goodwill as of March 31, 2020.
We determined that the carrying value of goodwill for certain of our entities exceeded their fair values, resulting in impairment expense of $55.0 million.
−Removed: As a result of our annual assessment of goodwill, we determined that the carrying value of goodwill for certain of our entities exceeded their fair values at December 31, 2019, resulting in impairment expense of $30 million.
−Removed: During 2019, we temporarily shut down our cementing and acidizing operations, resulting in impairment of goodwill totaling $3 million.
Impairment of Other Long-lived Assets .
−Removed: We recorded impairments of other long-lived assets of $13 million and $7 million, respectively, in 2020 and 2019.
+Added: We recorded impairments of other long-lived assets of $1.2 million and $12.9 million, in 2021 and 2020, respectively.
+Added: Beginning in 2021, we temporarily shut down our crude oil hauling operations, resulting in impairment of trade names of $0.5 million.
+Added: Additionally, as a result of a review of intangible asset balances as of December 31, 2021, we determined the fair value of Higher Power’s trade names and customer relationships was less than their carrying value, resulting in impairment expense of $0.7 million.
During 2020, we recorded impairment of property and equipment, including water transfer, crude oil hauling, coil tubing and equipment rental assets, totaling $12.9 million.
−Removed: During 2019, we temporarily shut down our flowback operations, resulting in fixed asset impairments of $4 million during 2019.
−Removed: Additionally, we recorded impairment expense $3 million related to specified drilling rigs and $1 million related to WTL's customer relationship intangible asset during 2019.
Operating Loss.
We reported an operating loss of $128.2 million for 2021 compared to an operating loss $149.3 million for 2020.
−Removed: The increased operating loss was primarily due to increases in impairment expense of $27 million and SG&A expense of $15 million, partially offset by a 15% decline in cost of revenue as a percentage of revenue.
+Added: The reduced operating loss was primarily due to the recognition of $67.9 million in impairment expenses during 2020, as compared to $2.1 million in 2021, partially offset by a $19.7 million increase in bad debt expense primarily due to the settlement with Gulfport.
Interest Expense, net .
−Removed: Interest expense, net remained relatively flat at $5 million for each of 2020 and 2019.
+Added: Interest expense, net increased $1.0 million to $6.4 million for 2021 from $5.4 million for 2020, primarily due to an increase in expense recognized on sale-leaseback transactions.
Other Income (Expense), net.
−Removed: Other income, net decreased $7 million during 2020 compared to 2019 primarily due to a decline in the recognition of interest on trade accounts receivable pursuant to the terms of our contracts with PREPA.
+Added: Other income, net decreased $22.7 million during 2021 compared to 2020.
+Added: During 2021, we recognized expense of $25.0 million related to an agreement to settle a legal matter and legal fees related to the matter totaling $5.4 million.
+Added: This expense was partially offset by a $4.4 million increase in gains on asset disposals and a $4.4 million increase in interest on delinquent account receivables.
Income Taxes .
25 unchanged sentences
Impairment of other long-lived assets 12,897 7,358
−Removed: Operating income (128,383) 394,451
+Added: Operating loss (149,317) (128,383)
Interest expense, net (5,397) (4,958)
−Removed: Other expense, net 42,216 (2,036)
−Removed: Income before income taxes (91,125) 389,228
−Removed: Provision for income taxes (12,081) 153,263
−Removed: Net income $ (79,044) $ 235,965
−Removed: Revenue for 2019 decreased $1.1 billion, or 63%, to $625 million from $1.7 billion for 2018.
−Removed: The decrease in total revenue is primarily attributable to a $873 million decrease in infrastructure services revenue, representing 82% of the overall decrease.
−Removed: Additionally, well completion services and natural sand proppant services revenue decreased $113 million and $79 million, respectively, representing 11% and 7% of the overall decrease.
−Removed: Revenue derived from related parties was $130 million, or 21% of our total revenues, for 2019 and $143 million, or 8% of our total revenues, for 2018.
−Removed: Substantially all of our related party revenue is derived from Gulfport under pressure pumping and sand contracts.
+Added: Other income, net 34,938 42,216
+Added: Loss before income taxes (119,776) (91,125)
+Added: Benefit for income taxes (12,169) (12,081)
+Added: Net loss $ (107,607) $ (79,044)
+Added: Revenue for 2020 decreased $311.9 million, or 50%, to $313.1 million from $625.0 million for 2019.
+Added: The decrease in total revenue is attributable to declines in revenue across all business lines.
+Added: Revenue derived from related parties was $50.6 million, or 16% of our total revenue, for 2020 and $130.3 million, or 21% of our total revenue, for 2019.
+Added: Substantially all of our related party revenue was derived from Gulfport under pressure pumping and sand contracts.
For additional information regarding the status of these contracts, see “Industry Overview – Oil and Natural Gas Industry,” “Industry Overview – Natural Sand Proppant Industry” and Note 19.
2 unchanged sentences
Infrastructure Services .
−Removed: Infrastructure services division revenue decreased $873 million, or 80%, to $213 million for 2019 from $1.1 billion for 2018 primarily due to the conclusion on March 31, 2019 of the work we performed under our contracts with PREPA for repairs to Puerto Rico's electrical grid as a result of Hurricane Maria.
−Removed: For additional information regarding our contracts with PREPA and our infrastructure services, see “Overview of Our
−Removed: Industries - Electrical Infrastructure Industry” above.
+Added: Infrastructure services division revenue decreased $55.5 million, or 26%, to $157.8 million for 2020 from $213.3 million for 2019 primarily due to the conclusion on March 31, 2019 of the work we performed under our contracts with PREPA for repairs to Puerto Rico’s electrical grid as a result of Hurricane Maria.
+Added: For additional information regarding our contracts with PREPA and our infrastructure services, see “Overview of Our Industries - Electrical Infrastructure Industry” above.
Revenue from our operations in the continental United States increased $41.1 million, or 35%, to $157.8 million for 2020 from $116.7 million for 2019.
3 unchanged sentences
Substantially all of our related party revenue was derived from Gulfport under a well completion contract.
+Added: On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
+Added: In 2020, we recognized pre-petition revenue totaling $38.5 million and post-petition revenue totaling $3.9 million in accordance with the terms of this contract.
For additional information regarding the status of this contract, see “Industry Overview – Oil and Natural Gas Industry” above.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our sand segment, was $2 million and $1 million, respectively, for 2019 and 2018.
+Added: Intersegment revenue, consisting primarily of revenue derived from our other services and sand segment, was $0.9 million and $1.9 million, respectively, for 2020 and 2019.
The decrease in our well completion services revenue was primarily driven by a decline in pricing as well as a decline in utilization.
3 unchanged sentences
Natural sand proppant services division revenue decreased $62.7 million, or 65%, to $34.4 million for 2020, from $97.1 million for 2019.
−Removed: Revenue derived from related parties was $28 million, or 29% of total sand revenues, for 2019 and $25 million, or 14% of total sand revenues, for 2018.
−Removed: All of our related party revenue is derived from Gulfport under a sand supply contract.
+Added: Revenue derived from related parties was $8.4 million, or 24% of total sand revenue, for 2020 and $27.7 million, or 29% of total sand revenue, for 2019.
+Added: All of our related party revenue was derived from Gulfport under a sand supply contract.
+Added: On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
+Added: In 2020, we recognized pre-petition revenue totaling $6.5 million and post-petition revenue totaling $1.0 million in accordance with the terms of this contract.
For additional information regarding the status of this contract, see “Industry Overview – Natural Sand Proppant Industry” above.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was $30 million, or 31% of total sand revenue, for 2019 and $69 million, or 39% of total sand revenue, for 2018.
+Added: Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was nominal for 2020 and $30 million, or 31% of total sand revenue, for 2019.
The decrease in our natural sand proppant services revenue was primarily attributable to a 75% decline in tons of sand sold from approximately 2.0 million tons in 2019 to 0.5 million tons in 2020 coupled with a 51% decline in average price per ton of sand sold from $29.70 in 2019 to $14.58 in 2020.
+Added: Included in natural sand proppant services revenue is shortfall revenue of $24.8 million and $2.8 million, respectively, for 2020 and 2019.
Drilling Services.
Drilling services division revenue decreased $24.2 million, or 76%, to $7.8 million for 2020, from $32.0 million for 2019.
−Removed: Revenue derived from related parties, consisting primarily of directional drilling revenue from El Toro Resources LLC, was $1 million for each of 2019 and 2018.
−Removed: The decline in our drilling services revenue was primarily attributable to decreases in revenue for our contract land drilling and directional drilling businesses of $19 million and $11 million, respectively, due to declines in utilization.
−Removed: Our average active rigs decreased from 4.3 in 2018 to 1.4 in 2019.
−Removed: Directional drilling utilization declined from 49% in 2018 to 30% in 2019.
+Added: Revenue derived from related parties, consisting primarily of directional drilling revenue from El Toro Resources LLC, was nominal for 2020 and $0.6 million for 2019.
+Added: The decline in our drilling services revenue was primarily attributable to declines in contract land drilling, rig hauling and directional drilling revenue of $9.2 million, $8.6 million, and $6.3 million, respectively.
+Added: In response to market conditions, we temporarily shut down our contract land drilling operations beginning in December 2019 and our rig hauling operations beginning in April 2020.
Other Services .
−Removed: Revenue from other services, consisting of revenue derived from our aviation, coil tubing, pressure control, flowback, cementing, equipment rental and remote accommodation businesses, decreased $33 million, or 27%, to $89 million for 2019 from $122 million for 2018.
−Removed: Revenue derived from related parties, consisting primarily of equipment rental and cementing revenue from Gulfport and aviation revenue from Brim, was $11 million, or 12% of total other services revenue, for 2019 and $21 million, or 17% of total other services revenue, for 2018.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, was $15 million and $44 million, respectively for 2019 and 2018.
−Removed: The decrease in other services revenue was primarily due to a decline in intersegment aviation revenue with our infrastructure segment.
−Removed: We provided aviation services to our transmission and distribution business in Puerto Rico under their contracts with PREPA for repairs to Puerto Rico's electrical grid as a result of Hurricane Maria.
−Removed: Work under these contracts concluded on March 31, 2019.
−Removed: Additionally, other services revenue decreased due to a decline in utilization from 39% in 2018 to 17% in 2019 for our coil tubing business.
−Removed: Due to market conditions, we temporarily shut down our cementing and acidizing operations as well as our flowback operations during the third quarter of 2019 resulting in a decline in revenue.
−Removed: We continue to monitor market conditions to evaluate if and when we can recommence providing these services.
−Removed: These decreases were partially offset by an increase in activity for our equipment rental business.
−Removed: An average of 557 pieces of equipment were rented during 2019, an increase of 41% from 395 pieces of equipment rented during 2018.
−Removed: Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion) .
−Removed: Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $550 million from $1.1 billion, or 65% of total revenue, for 2018 to $544 million, or 87% of total revenue, for 2019.
+Added: Revenue from other services, consisting of revenue derived from our aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rental, crude oil hauling, full service transportation, remote accommodation, equipment manufacturing and infrastructure engineering and design businesses, decreased $59.8 million, or 67%, to $28.8 million for 2020 from $88.6 million for 2019.
+Added: Revenue derived from related parties, consisting primarily of equipment rental revenue from Gulfport and aviation revenue from Brim Equipment Leasing, Inc., or Brim, was $1.0 million, or 3% of total other services revenue, for 2020 and $10.9 million, or 12% of total other services revenue, for 2019.
+Added: Intersegment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, totaled $2.7 million and $15.2 million, respectively for 2020 and 2019.
+Added: The decrease in our other services revenue was primarily due to a decline in utilization for our equipment rental business.
+Added: We rented an average of 204 pieces of equipment to customers during 2020, a decrease of 63% from an average of 557 pieces of equipment rented to customers during 2019.
+Added: Additionally, utilization for our crude oil hauling and aviation businesses declined.
+Added: Due to market conditions, we temporarily shut down our cementing and acidizing operations as well as our flowback operations in July 2019 and our coil tubing and full service transportation operations beginning in July 2020.
+Added: These decreases were partially offset by an increase in revenue for our remote accommodations business.
+Added: Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense) .
+Added: Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $311.8 million from $543.8 million, or 87% of total revenue, for 2019 to $232.0 million, or 74% of total revenue, for 2020.
The decrease was primarily due to a decline in activity across all business lines.
7 unchanged sentences
As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $30.4 million in 2020 and $40.2 million in 2019, was 54% and 85%, respectively, for 2020 and 2019.
−Removed: The increase in costs as a percentage of revenue was primarily due to a decline in utilization.
+Added: The decrease was primarily due to the recognition of standby revenue during 2020, of which there was a lower percentage of costs recognized compared to 2019.
+Added: Additionally, during 2019 we provided sand and chemicals with our service package to customers, resulting in higher costs of goods sold as a percentage of revenue for this period in comparison to 2020.
Natural Sand Proppant Services.
−Removed: Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $56 million, or 39%, from $144 million for 2018 to $88 million for 2019 primarily due to a decrease in cost of goods sold as well as a 24% decline in production costs per ton of sand.
−Removed: As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $14 million in both 2019 and 2018, was 90% and 82%, respectively, for 2019 and 2018.
−Removed: The increase in cost as a percentage of revenue is primarily due to a 24% decline in average price per ton of sand sold.
+Added: Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $61.7 million, or 70%, from $87.7 million for 2019 to $26.0 million for 2020 primarily due to a decrease in cost of goods sold as a result of a decrease in tons of sand sold.
+Added: As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $9.8 million in 2020 and $14.1 million in 2019, was 76% and 90%, respectively, for 2020 and 2019.
+Added: The decrease in cost as a percentage of revenue is primarily due to an increase in shortfall revenue, partially offset by a 51% decline in average price per ton of sand sold.
Drilling Services.
−Removed: Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $24 million, or 39%, from $61 million for 2018 to $37 million for 2019 primarily due a decline in activity for our contract land drilling and directional drilling businesses.
−Removed: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $13 million in 2019 and $18 million in 2018, was 116% and 92%, respectively, for 2019 and 2018.
−Removed: The increase is primarily due to an increase in labor-related costs as a percentage of revenue.
+Added: Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $26.0 million, or 70%, from $37.0 million for 2019 to $10.9 million for 2020, as a result of reduced activity.
+Added: In response to market conditions, we temporarily shut down our contract land drilling operations beginning in December 2019 and our rig hauling operations beginning in April 2020.
+Added: As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $10.0 million in 2020 and $13.1 million in 2019, was 140% and 116%, respectively, for 2020 and 2019.
+Added: The increase was primarily due to a decline in utilization.
Other Services .
−Removed: Other services cost of revenue, exclusive of depreciation and amortization expense, decreased $17 million, or 16%, from $106 million for 2018 to $89 million for 2019, primarily due to a decline in costs for our coil tubing business as a result of reduced activity.
−Removed: Additionally, due to market conditions, we temporarily shut down our cementing and acidizing operations as well as our flowback operations during the third quarter of 2019 resulting in a decline in cost of revenue.
+Added: Other services cost of revenue, exclusive of depreciation and amortization expense, decreased $62.7 million, or 71%, from $88.8 million for 2019 to $27.1 million for 2020, primarily due to a decline in costs for our equipment rental and crude oil hauling businesses as a result of reduced activity.
+Added: Additionally, due to market conditions, we temporarily shut down our cementing and acidizing operations as well as our flowback operations beginning in July 2019 and our coil tubing, pressure control and full service transportation operations beginning in July 2020.
We continue to monitor market conditions to evaluate if and when we can recommence providing these services.
−Removed: These declines were partially offset by an increase in costs for our equipment rental and crude oil hauling businesses.
−Removed: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $19 million and $17 million in 2019 and 2018, was 101% and 87%, respectively, for 2019 and 2018.
+Added: These declines were partially offset by an increase in costs for our equipment manufacturing business.
+Added: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $15.7 million in 2020 and $19.3 million in 2019, was 93% and 101%, respectively, for 2020 and 2019.
Selling, General and Administrative Expenses .
−Removed: Selling, general and administrative expenses represent the costs associated with managing and supporting our operations.
+Added: Selling, general and administrative expenses, or SG&A, represent the costs associated with managing and supporting our operations.
Following is a breakout of SG&A expenses for the periods indicated (in thousands):
3 unchanged sentences
Professional services 19,905 17,128
−Removed: 10,300 10,718
Total cash SG&A expense 43,609 46,792
Non-cash expenses:
−Removed: Bad debt provision (b)
−Removed: 1,434 (14,578)
−Removed: Equity based compensation (c)
+Added: Bad debt provision 21,958 1,434
Stock based compensation 1,618 3,326
2 unchanged sentences
Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
−Removed: During the year ended December 31, 2018, we received payment for amounts reserved in 2017.
−Removed: As a result, during the year ended December 31, 2018, we reversed bad debt expense of $16 million recognized in 2017.
−Removed: Represents compensation expense for non-employee awards, which were issued and are payable by certain affiliates of Wexford (the sponsor level).
Depreciation, Depletion, Amortization and Accretion .
Depreciation, depletion, accretion and amortization decreased $21.7 million, or 19%, to $95.3 million for 2020 from $117.0 million in 2019.
−Removed: The decrease is primarily due to a decline in intangible asset amortization expense partially offset by an increase in property and equipment depreciation expense.
+Added: The decrease is primarily due to a decline in property and equipment depreciation expense as well as a decline in depletion expense.
Impairment of Goodwill .
We recorded impairment of goodwill of $55.0 million and $33.7 million, respectively, in 2020 and 2019.
+Added: As a result of market conditions, we performed an impairment assessment of our goodwill as of March 31, 2020.
+Added: We determined that the carrying value of goodwill for certain of our entities exceeded their fair values, resulting in impairment expense of $55.0 million.
As a result of our annual assessment of goodwill, we determined that the carrying value of goodwill for certain of our entities exceeded their fair values at December 31, 2019, resulting in impairment expense of $33.7 million.
During 2019, we temporarily shut down our cementing and acidizing operations, resulting in impairment of goodwill totaling $3.1 million.
−Removed: We recorded expense of $3 million in 2018 related to impairment of goodwill as a result of the movement of certain cementing equipment from the Utica Shale to the Permian Basin.
Impairment of Other Long-lived Assets .
We recorded impairments of other long-lived assets of $12.9 million and $7.4 million, respectively, in 2020 and 2019.
+Added: During 2020, we recorded impairment of property and equipment, including water transfer, crude oil hauling, coil tubing and equipment rental assets, totaling $12.9 million.
During 2019, we temporarily shut down our flowback operations, resulting in fixed asset impairments of $3.6 million during 2019.
Additionally, we recorded impairment expense $3.0 million related to specified drilling rigs and $0.8 million related to WTL’s customer relationship intangible asset during 2019.
−Removed: We recorded impairment expense of $4 million related to specified drilling rigs in 2018 and $1 million related to impairment of intangible assets as a result of the movement of certain cementing equipment from the Utica shale to the Permian basin.
−Removed: Operating (Loss) Income.
−Removed: Operating income decreased $522 million to an operating loss of $128 million for 2019 compared to operating income of $394 million for 2018.
−Removed: The decrease is primarily due to a $432 million decline in operating income for our infrastructure services division due to a decline in activity.
+Added: Operating Loss.
+Added: We reported an operating loss of $149.3 million for 2020 compared to operating loss of $128.4 million for 2019.
+Added: The increased operating loss was primarily due to increases in impairment expense of $26.8 million and SG&A expense of $15.6 million, partially offset by a 15% decline in cost of revenue as a percentage of revenue.
Interest Expense, net .
−Removed: Interest expense, net increased $2 million to $5 million during 2019 compared to $3 million during 2018 primarily due to an increase in average borrowings outstanding under our revolving credit facility.
+Added: Interest expense, net remained relatively flat at $5.4 million and $5.0 million for 2020 and 2019, respectively.
Other Income (Expense), net.
−Removed: Other income, net increased $44 million during 2019 compared to 2018 primarily due to the recognition of interest on trade accounts receivable totaling $42 million pursuant to the terms of our contracts with PREPA.
+Added: Other income, net decreased $7.3 million during 2020 compared to 2019 primarily due to a decline in the recognition of interest on trade accounts receivable pursuant to the terms of our contracts with PREPA.
Income Taxes .
−Removed: During 2019, we recorded an income tax benefit of $12 million on pre-tax loss of $91 million compared to income tax expense of $153 million on pre-tax income of $389 million for 2018.
+Added: During 2020, we recorded an income tax benefit of $12.2 million on pre-tax loss of $119.8 million compared to income tax benefit of $12.1 million on pre-tax loss of $91.1 million for 2019.
Our effective tax rate was 10.2% for 2020 compared to 13.3% for 2019.
−Removed: Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as discrete items, such as return to provision adjustments, goodwill impairment and equity based compensation that may not be consistent from year to year.
+Added: Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn in those jurisdictions, as well as discrete items, such as return to provision adjustments, goodwill impairment and changes in the valuation allowance that may not be consistent from year to year.
See Note 13 to our consolidated financial statements for additional detail regarding our change in tax expense.
2 unchanged sentences
Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies.
−Removed: We define Adjusted EBITDA as net (loss) income before depreciation, depletion, amortization and accretion, impairment of goodwill, impairment of other long-lived assets, inventory obsolescence charges, acquisition related costs, public offering costs, equity based compensation, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets and interest on trade accounts receivable) and (benefit) provision for income taxes, further adjusted to add back interest on trade accounts receivable.
+Added: We define Adjusted EBITDA as net (loss) income before depreciation, depletion, amortization and accretion, impairment of goodwill, impairment of other long-lived assets, inventory obsolescence charges, acquisition related costs, public offering costs, equity based compensation, stock based compensation, interest expense, net, other (income) expense, net (which is comprised of the (gain) or loss on disposal of long-lived assets, interest on trade accounts receivable and certain legal expenses) and (benefit) provision for income taxes, further adjusted to add back interest on trade accounts receivable.
We exclude the items listed above from net (loss) income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industries depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired.
5 unchanged sentences
Years Ended December 31,
−Removed: Reconciliation of Adjusted EBITDA to net (loss) income:
+Added: Reconciliation of Adjusted EBITDA to net loss:
2021 2020 2019
−Removed: Net (loss) income $ (107,607) $ (79,044) $ 235,965
+Added: Net loss $ (101,430) $ (107,607) $ (79,044)
Depreciation, depletion, amortization and accretion 78,475 95,317 117,033
4 unchanged sentences
Public offering costs 91 — —
−Removed: Equity based compensation — — 17,487
Stock based compensation 1,191 1,952 4,177
Interest expense, net 6,406 5,397 4,958
−Removed: Other (income) expense, net (34,938) (42,216) 2,036
−Removed: (Benefit) provision for income taxes (12,169) (12,081) 153,263
+Added: Other income, net (10,301) (34,938) (42,216)
+Added: Benefit for income taxes (22,863) (12,169) (12,081)
Interest on trade accounts receivable 34,709 34,130 42,040
6 unchanged sentences
Depreciation, depletion, amortization and accretion 21,880 29,373 30,349
+Added: Impairment of goodwill 891 — —
Impairment of other long-lived assets 665 — —
3 unchanged sentences
Interest expense 3,925 2,794 1,674
−Removed: Other (income) expense, net (32,437) (41,949) 555
+Added: Other income, net (6,785) (32,437) (41,949)
Provision for income taxes 712 7,133 7,908
11 unchanged sentences
Public offering costs 31 — —
−Removed: Equity based compensation — — 17,487
Stock based compensation 333 527 1,693
Interest expense 1,107 1,130 1,228
−Removed: Other (income) expense, net (2,274) 580 100
+Added: Other expense (income), net 1,073 (2,274) 580
Interest on trade accounts receivable (1,841) 1,888 —
4 unchanged sentences
2021 2020 2019
−Removed: Net (loss) income $ (11,324) $ (12,589) $ 10,383
+Added: Net loss $ (6,328) $ (11,324) $ (12,589)
Depreciation, depletion, amortization and accretion 9,005 9,771 14,050
4 unchanged sentences
Interest expense 474 312 193
−Removed: Other expense, net 1,839 67 859
+Added: Other (income) expense, net (874) 1,839 67
Interest on trade accounts receivable (1) 3 —
11 unchanged sentences
Interest expense 293 454 862
−Removed: Other (income) expense, net (227) (9) 461
+Added: Other income, net (177) (227) (9)
Adjusted EBITDA $ (3,117) $ (6,070) $ (8,803)
3 unchanged sentences
2021 2020 2019
−Removed: Net loss $ (10,315) $ (20,156) $ (64,787)
+Added: Net income (loss) $ 10,967 $ (9,417) $ (19,514)
Depreciation, depletion, amortization and accretion 13,217 15,722 19,332
6 unchanged sentences
Interest expense, net 607 707 1,001
−Removed: Other (income) expense, net (1,839) (905) 61
−Removed: (Benefit) provision for income taxes (19,302) (19,989) 52,489
+Added: Other income, net (3,538) (1,839) (905)
+Added: Benefit for income taxes (23,575) (19,302) (19,989)
Interest on trade accounts receivable — 25 —
Adjusted EBITDA $ (1,688) $ (3,952) $ (6,272)
−Removed: Includes results for our aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, equipment manufacturing and infrastructure engineering and design services and corporate related activities.
+Added: Includes results for our aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations and equipment manufacturing and corporate related activities.
Our corporate related activities do not generate revenue.
−Removed: Adjusted Net (Loss) Income and Adjusted (Loss) Earnings per Share
−Removed: Adjusted net (loss) income and adjusted basic and diluted (loss) earnings per share are supplemental non-GAAP financial measures that are used by management to evaluate our operating and financial performance.
−Removed: Management believes these measures provide meaningful information about the Company's performance by excluding certain non-cash charges, such as impairment expense and equity based compensation, that may not be indicative of the Company's ongoing operating results.
−Removed: Adjusted net (loss) income and adjusted (loss) earnings per share should not be considered in isolation or as a substitute for net (loss) income and (loss) earnings per share prepared in accordance with GAAP and may not be comparable to other similarly titled measures of other companies.
−Removed: The following tables provide a reconciliation of adjusted net (loss) income and adjusted (loss) earnings per share to the GAAP financial measures of net (loss) income and (loss) earnings per share for the periods specified.
+Added: Adjusted Net Loss and Adjusted Loss per Share
+Added: Adjusted net loss and adjusted basic and diluted loss per share are supplemental non-GAAP financial measures that are used by management to evaluate our operating and financial performance.
+Added: Management believes these measures provide meaningful information about the Company’s performance by excluding certain non-cash charges, such as impairment expense, that may not be indicative of the Company’s ongoing operating results.
+Added: Adjusted net loss and adjusted loss per share should not be considered in isolation or as a substitute for net loss and loss per share prepared in accordance with GAAP and may not be comparable to other similarly titled measures of other companies.
+Added: The following tables provide a reconciliation of adjusted net loss and adjusted loss per share to the GAAP financial measures of net loss and loss per share for the periods specified.
Years Ended December 31,
1 unchanged sentence
(in thousands, except per share amounts)
−Removed: Net (loss) income, as reported $ (107,607) $ (79,044) $ 235,965
+Added: Net loss, as reported $ (101,430) $ (107,607) $ (79,044)
Impairment of goodwill 891 54,973 33,664
Impairment of other long-lived assets 1,212 12,897 7,358
−Removed: Equity based compensation — — 17,487
−Removed: Adjusted net (loss) income $ (39,737) $ (38,022) $ 262,307
−Removed: Basic (loss) earnings per share, as reported $ (2.36) $ (1.76) $ 5.27
+Added: Adjusted net loss $ (99,327) $ (39,737) $ (38,022)
+Added: Basic loss per share, as reported $ (2.18) $ (2.36) $ (1.76)
Impairment of goodwill 0.02 1.20 0.75
Impairment of other long-lived assets 0.03 0.28 0.16
−Removed: Equity based compensation — — 0.39
−Removed: Adjusted basic (loss) earnings per share $ (0.88) $ (0.85) $ 5.86
−Removed: Diluted (loss) earnings per share, as reported $ (2.36) $ (1.76) $ 5.24
+Added: Adjusted basic loss per share $ (2.13) $ (0.88) $ (0.85)
+Added: Diluted loss per share, as reported $ (2.18) $ (2.36) $ (1.76)
Impairment of goodwill 0.02 1.20 0.75
Impairment of other long-lived assets 0.03 0.28 0.16
−Removed: Equity based compensation — — 0.39
−Removed: Adjusted diluted (loss) earnings per share $ (0.88) $ (0.85) $ 5.83
+Added: Adjusted diluted loss per share $ (2.13) $ (0.88) $ (0.85)
Liquidity and Capital Resources
2 unchanged sentences
Our primary uses of capital have been for investing in property and equipment used to provide our services and acquire complementary businesses.
−Removed: In July 2019, as a result of oilfield market conditions as well as other factors, which include collections from PREPA, our board of directors suspended our quarterly cash dividend.
+Added: In July 2019, as a result of oilfield market conditions as well as other factors, which include the status of collections from PREPA, our board of directors suspended our quarterly cash dividend.
Future declaration of cash dividends are subject to approval by our board of directors and may be adjusted at its discretion based on market conditions and capital availability.
3 unchanged sentences
Revolving credit facility availability 118,948 129,787
−Removed: Less borrowings (78,000) (80,000)
+Added: Less long-term debt (85,240) (81,338)
+Added: Less available borrowing capacity reserve (10,000) —
Less letter of credit facilities (bonding program) (1,000) (5,000)
7 unchanged sentences
As of December 31, 2020, net working capital (less cash) is calculated by subtracting total current liabilities of $128.6 million and cash and cash equivalents of $14.8 million from total current assets of $464.7 million.
−Removed: Amounts include receivables due from PREPA and Gulfport of $301 million and $28 million, respectively, at December 31, 2020, and $269 million and $7 million, respectively, at December 31, 2019.
−Removed: As of February 24, 2021, we had $75 million in borrowings outstanding under our revolving credit facility, leaving an aggregate of $42 million of available borrowing capacity under this facility, after giving effect to $13 million of outstanding letters of credit.
+Added: Amounts include receivables due from PREPA of $337.8 million and $301.2 million and corresponding liabilities of $42.3 million and $33.5 million at December 31, 2021 and 2020, respectively.
+Added: As of March 2, 2022, we had $83.7 million in borrowings outstanding under our revolving credit facility, leaving an aggregate of $10.6 million of available borrowing capacity under this facility, after giving effect to $8.5 million of outstanding letters of credit and the requirement to maintain a $7.5 million reserve out of the available borrowing capacity.
+Added: Continued prolonged volatility in the capital, financial and/or credit markets due to the COVID-19 pandemic, volatility in commodity prices and/or adverse macroeconomic conditions may further limit our access to, or increase our cost of, capital or make capital unavailable on terms acceptable to us or at all.
+Added: In addition, if we are unable to comply with the covenants under our amended revolving credit facility following the expiration of the waiver period contemplated thereunder, or obtain an additional waiver of such covenants, as discussed below, and an event of default occurs and remains uncured, our lenders would not be required to lend any additional amounts to us, could elect to increase our interest rate by 200 basis points, could elect to declare all outstanding borrowings, together with accrued and unpaid interest and fees, to be due and payable, may have the ability to require us to apply all of our available cash to repay our outstanding borrowings and may foreclose on substantially all of our assets.
Liquidity and Cash Flows
2 unchanged sentences
2021 2020 2019
−Removed: Net cash provided by (used in) operating activities $ 6,967 $ (95,318) $ 386,668
−Removed: Net cash used in investing activities (2,295) (33,224) (211,955)
−Removed: Net cash provided by (used in) financing activities 4,266 66,702 (112,592)
+Added: Net cash (used in) provided by operating activities $ (18,865) $ 6,967 $ (95,318)
+Added: Net cash provided by (used in) investing activities 5,507 (2,295) (33,224)
+Added: Net cash provided by financing activities 8,428 4,266 66,702
Effect of foreign exchange rate on cash 7 12 87
1 unchanged sentence
Operating Activities
−Removed: Net cash provided by (used in) operating activities was $7 million, ($95) million and $387 million, respectively, for the years ended December 31, 2020, 2019 and 2018.
−Removed: The increase in operating cash flows was primarily attributable to the timing of cash inflows for accounts receivable and cash outflows for income tax payments during 2019.
+Added: Net cash (used in) provided by operating activities was ($18.9) million, $7.0 million and ($95.3) million, respectively, for the years ended December 31, 2021, 2020 and 2019.
+Added: The decrease in operating cash flows was primarily attributable to the timing of cash inflows for accounts receivable.
Investing Activities
−Removed: Net cash used in investing activities was $2 million, $33 million and $212 million, respectively, for the years ended December 31, 2020, 2019 and 2018.
−Removed: Net cash used for acquisitions totaled $21 million for 2018.
−Removed: We did not make any acquisitions during 2020 or 2019.
+Added: Net cash provided by (used in) investing activities was $5.5 million, ($2.3) million and ($33.2) million, respectively, for the years ended December 31, 2021, 2020 and 2019.
Substantially all remaining cash used in investing activities was used to purchase property and equipment that is utilized to provide our services, which was partially offset by proceeds from the disposal of property and equipment.
10 unchanged sentences
361 716 11,569
−Removed: 716 11,569 32,530
Total capital expenditures $ 5,843 $ 6,837 $ 35,761
Capital expenditures primarily for truck, tooling and equipment purchases for new infrastructure crews for the years ended December 31, 2021, 2020 and 2019.
−Removed: Capital expenditures primarily for various pressure pumping and water transfer equipment for the years ended December 31, 2020, 2019 and 2018.
−Removed: Capital expenditures primarily for the upgrade and expansion of our plants for the year ended December 31, 2018 and maintenance for the years ended December 31, 2020 and 2019.
−Removed: Capital expenditures primarily for directional drilling equipment for the year ended December 31, 2020 and upgrades to our rig fleet for the years ended December 31, 2019 and 2018.
−Removed: Capital expenditures primarily for equipment for our equipment rental and crude hauling businesses for the years ended December 31, 2019 and 2018 and various equipment for the year ended December 31, 2020.
+Added: Capital expenditures primarily for upgrades to our pressure pumping fleet and water transfer equipment for the years ended December 31, 2021, 2020 and 2019.
+Added: Capital expenditures primarily for maintenance for the years ended December 31, 2021, 2020 and 2019.
+Added: Capital expenditures primarily for directional drilling equipment for the year ended December 31, 2020 and upgrades to our rig fleet for the year ended December 31, 2019.
+Added: Capital expenditures primarily for equipment for our equipment rental and crude hauling businesses for the years ended December 31, 2021, 2020 and 2019.
Financing Activities
−Removed: Net cash provided by (used in) financing activities was $4 million, $67 million and ($113) million, respectively, for the years ended December 31, 2020, 2019 and 2018.
−Removed: Net cash provided by financing activities for the year ended December 31, 2020 was primarily attributable to proceeds of $5 million received from a sale leaseback transaction and proceeds of $5 million received from a note payable, partially offset by net payments under our revolving credit facility of $2 million, principal payment on financing leases and equipment notes of $2 million and payment of debt issuance costs of $1 million.
+Added: Net cash provided by financing activities was $8.4 million, $4.3 million and $66.7 million, respectively, for the years ended December 31, 2021, 2020 and 2019.
+Added: Net cash provided by financing activities for the year ended December 31, 2021 was primarily attributable to net proceeds received from sale-leaseback transactions of $6.5 million and net borrowings under our revolving credit facility of $4.2 million, partially offset by principal payment on financing leases and equipment notes of $2.3 million.
+Added: Net cash provided by financing activities for the year ended December 31, 2020 was primarily attributable to net proceeds of $4.7 million received from a sale-leaseback transaction and net borrowings under our revolving credit facility of $2.6 million, principal payment on financing leases and equipment notes of $2.0 million and payment of debt issuance costs of $1.0 million.
Net cash provided by financing activities for the year ended December 31, 2019 was primarily attributable to net borrowings under our revolving credit facility of $80.0 million, partially offset by dividends paid of $11.2 million.
−Removed: Net cash used in financing activities for the year ended December 31, 2018 was primarily attributable to net repayments under our revolving credit facility of $100 million and cash dividends paid totaling $11 million.
Effect of Foreign Exchange Rate on Cash
−Removed: The effect of foreign exchange rate on cash was a nominal amount, $0.1 million and ($0.1) million, respectively, for the years ended December 31, 2020, 2019 and 2018.
+Added: The effect of foreign exchange rate on cash was a nominal amount for both of the years ended December 31, 2021 and 2020, and $0.1 million for 2019.
The year-over-year effect was driven primarily by a favorable (unfavorable) shift in the weakness (strength) of the Canadian dollar relative to the U.S.
3 unchanged sentences
Our cash balances totaled $9.9 million and $14.8 million, respectively, at December 31, 2021 and 2020.
+Added: Included in working capital are receivables due from PREPA totaling $337.8 million and $301.2 million and corresponding liabilities of $42.3 million and $33.5 million at December 31, 2021 and 2020, respectively.
Our Revolving Credit Facility
On October 19, 2018, we and certain of our direct and indirect subsidiaries, as borrowers, entered into an amended and restated revolving credit facility, as subsequently amended, with the lenders party thereto and PNC Bank, National Association, as a lender and as administrative agent for the lenders.
−Removed: At December 31, 2020, we had outstanding borrowings under our revolving credit facility of $78 million and $39 million of available borrowing capacity, after giving effect to $13 million of outstanding letters of credit.
−Removed: As of December 31, 2020, we were in compliance with the covenants under our revolving credit facility.
+Added: At December 31, 2021, we had outstanding borrowings under our revolving credit facility of $83.4 million and $16.5 million of available borrowing capacity, after giving effect to $9.0 million of outstanding letters of credit and the requirement to maintain a $10.0 million reserve out of the available borrowing
+Added: capacity during the limited waiver period as discussed below.
+Added: As a result of the lack of payment from PREPA, we projected that we would likely breach the leverage ratio covenant contained in our revolving credit facility for the fiscal quarter ended on September 30, 2021.
+Added: On November 3, 2021, we entered into a third amendment to the revolving credit facility (the “Third Amendment”) to, among other things, (i) suspend the leverage ratio and fixed charges coverage ratio covenants for the quarters ending September 30, 2021 and December 31, 2021, (ii) permanently reduce the maximum revolving advance amount from $130 million to $120 million, (iii) add a minimum adjusted EBITDA financial covenant of $6.0 million for the quarter ending December 31, 2021, (iv) set the applicable margin on all loans at 3.50% during the limited covenant waiver period, (v) add a requirement to maintain revolver availability of not less than $10.0 million at all times during the limited covenant waiver period, (vi) permanently reduce the maximum revolving advance amount in an amount equal to fifty percent (50%) of any mandatory prepayments made with non-recurring proceeds that are received during the limited covenant waiver period, and (vii) eliminate the declaration of unrestricted subsidiaries during the limited covenant waiver period.
+Added: The limited covenant waiver period commenced on the effective date of the Third Amendment and was scheduled to end on the earlier to occur of (i) May 15, 2022, (ii) our reporting compliance with both the leverage ratio and the fixed charge coverage ratio covenants for either its fiscal quarter ending September 30, 2021 or December 31, 2021, and (iii) the occurrence of any event of default after the effective date of the Third Amendment.
+Added: Under the Third Amendment, we also agreed to engage an advisor during the limited covenant waiver period to advise us and our subsidiaries with regard to, among other things, efforts to achieve certain operational efficiencies, improvement in results of operations, and general business strategy, and provide assistance to us and our subsidiaries in the preparation of the supplemental reporting and information required by the Third Amendment.
+Added: As of December 31, 2021, we were in compliance with the covenants under our revolving credit facility, as amended and waived by the Third Amendment.
+Added: On February 28, 2022, we entered into a fourth amendment to the revolving credit facility (the “Fourth Amendment”) to, among other things, (i) amend our financial covenants as outlined below, (ii) provide for a conditional increase of the applicable interest margin, (iii) permit certain sale-leaseback transactions, (iv) provide for a reduction in the maximum revolving advance amount in an amount equal to 50% of the PREPA claims proceeds, subject to a floor equal to the sum of eligible billed and unbilled accounts receivables, and (v) classifies the payments pursuant to our settlement agreement with MasTec Renewables Puerto Rico, LLC as restricted payments and requires $20.0 million of availability both before and after making such payments.
+Added: The financial covenants under our revolving credit facility were amended as follows:
+Added: • the leverage ratio was eliminated;
+Added: • the fixed charge coverage ratio was reduced to 0.85 to 1.0 for the six months ended June 30, 2022 and increases to 1.1 to 1.0 for the periods thereafter;
+Added: • a minimum adjusted EBITDA covenant of $4.7 million, excluding interest on the accounts receivable from PREPA, for the five months ending May 31, 2022 was added;
+Added: • the minimum excess availability covenant was reduced to $7.5 million through the earlier of (i) March 31, 2022 or (ii) the date on which proceeds of permitted sale-leaseback transactions are received, after which the minimum excess availability covenant will increase to $10.0 million.
+Added: The Fourth Amendment also permanently waived compliance by the borrowers with the leverage ratio and fixed charge coverage ratio covenants in our revolving credit facility for the fiscal quarters ended September 30, 2021 and December 31, 2021, respectively, ending the limited covenant waiver period under the Third Amendment.
For additional information regarding our revolving credit facility, see Note 10.
Debt to our consolidated financial statements included elsewhere in this report.
−Removed: Sale Leaseback Transaction
+Added: Sale-Leaseback Transactions
On December 30, 2020, we entered into an agreement with First National Capital, LLC, or FNC, whereby we agreed to sell certain assets from our infrastructure segment to FNC for aggregate proceeds of $5.0 million.
Concurrent with the sale of assets, we entered into a 36 month lease agreement whereby we will lease back the assets at a monthly rental rate of $0.1 million.
−Removed: Under the agreement, we have the option to purchase the assets at the end of the lease term.
+Added: On June 1, 2021, we entered into another agreement with FNC whereby we sold additional assets from our infrastructure segment to FNC for aggregate proceeds of $9.5 million and entered into a 42 month lease agreement whereby we lease back the assets at a monthly rental rate of $0.2 million.
+Added: Under the agreements, we have the option to purchase the assets at the end of the lease term.
We recorded a liability for the proceeds received and will continue to depreciate the assets.
−Removed: We imputed an interest rate so that the carrying amount of the financial liability will be the expected repurchase price at the end of the initial lease term.
+Added: We imputed an interest rate so that the carrying amount of the financial liabilities will be the expected repurchase price at the end of the initial lease terms.
Aviation Note
1 unchanged sentence
The Aviation Note bears interest at a rate based on the Wall Street Journal Prime Rate plus a margin of 1%.
−Removed: Principal and interest payments of $0.1 million are due monthly beginning on March 1, 2021, with a final payment of $0.2 million due on February 1, 2024.
+Added: Principal and interest payments of $0.1 million are due monthly, with a final payment of $0.2 million due on February 1, 2024.
The Aviation Note is collateralized by Leopard and Cobra Aviation’s assets, including a $1.8 million certificate of deposit.
The Aviation Note contains various customary affirmative and restrictive covenants.
+Added: As of December 31, 2021, we did not meet the minimum debt coverage ratio of 1.25 to 1.0 set forth in the Aviation Note.
+Added: On March 2, 2022, Bank7 granted us a waiver of this event of default.
Capital Requirements and Sources of Liquidity
−Removed: During 2020, our capital expenditures totaled $7 million and included $0.3 million in our infrastructure segment primarily related to truck, tooling and equipment purchases for new crews, $4 million in our well completion segment primarily related to various pressure pumping and water transfer equipment, $1 million in our natural sand proppant services segment for various maintenance equipment, $0.4 million in our drilling services segment primarily for upgrades to our rig fleet and $1 million for our other businesses primarily related to equipment additions for our equipment rental business.
+Added: As we pursue our business and financial strategy, we regularly consider which capital resources are available to meet our future financial obligations and liquidity requirement.
+Added: We believe that our cash on hand, operating cash flow and available borrowings under our credit facility will be sufficient to meet our short-term and long-term funding requirements, including funding our current operations, planned capital expenditures, debt service obligations, litigation settlement obligations and other known contingencies.
+Added: However, future cash flows are subject to a number of variables (including receipt of payments from our customers, including PREPA).
+Added: As of December 31, 2021, PREPA owed Cobra approximately $337.8 million for services performed, including $110.8 million of interest charges.
+Added: Throughout 2021, we released significant data that we obtained through Freedom of Information Act requests that affirm the work performed by Cobra in Puerto Rico.
+Added: We believe these documents in conjunction with the current Administration’s focus on the recovery of Puerto Rico and our enhanced lobbying efforts will aid in collecting the outstanding amounts owed to us by PREPA.
+Added: 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 Cobra or (iii) otherwise does not pay amounts owed to Cobra for services performed, the receivable may not be collectible, which may adversely impact our liquidity.
+Added: During 2021, our capital expenditures totaled $5.8 million and included $0.6 million in our infrastructure segment primarily related to truck, tooling and equipment purchases for new crews, $4.3 million in our well completion segment primarily related to upgrades to our pressure pumping fleet and water transfer equipment, $0.5 million in our natural sand proppant services segment for various maintenance equipment and $0.4 million for our other businesses primarily related to equipment additions for our equipment rental business.
During 2022, we currently estimate that our aggregate capital expenditures will be $6 million, depending upon industry conditions and our financial results.
−Removed: These capital expenditures include $6 million in our infrastructure segment for assets for additional crews, $2.5 million in our well completion segment for conversion of a portion of our fleet to include DGB capabilities and maintenance to our existing pressure pumping fleet and $0.5 million for our other divisions, primarily for additional equipment for our rental business.
−Removed: We believe that our cash on hand, operating cash flow and available borrowings under our credit facility will be sufficient to fund our operations for at least the next twelve months.
−Removed: However, future cash flows are subject to a number of variables (including receipt of payments from our customers, including PREPA and Gulfport).
−Removed: Further, significant additional capital expenditures could be required to conduct our operations.
−Removed: Accordingly, there can be no assurance that operations and other capital resources, including potential sales of assets or businesses, will provide cash in sufficient amounts to meet our operating needs and/or maintain planned or future levels of capital expenditures.
+Added: These capital expenditures include $2.5 million in our infrastructure segment for assets for additional equipment, $3.0 million in our well completion segment for conversion of a portion of our fleet to include DGB capabilities and maintenance to our existing pressure pumping fleet and $0.5 million for our other divisions, primarily for additional equipment for our rental business.
+Added: Also, as noted above in this report, in response to market conditions we have (i) temporarily shut down certain of our oilfield service offerings, including coil tubing, pressure control, flowback, crude oil hauling, cementing, acidizing and land drilling services, (ii) idled certain facilities, including our sand processing plant in Pierce County, Wisconsin and (iii) reduced our workforce across all of our operations.
+Added: We continue to monitor market conditions to determine if and when we will recommence these services and operations and increase our workforce.
+Added: Any such recommencement and expansion will further increase our liquidity requirements in advance of revenue generation.
In addition, while we regularly evaluate acquisition opportunities, we do not have a specific acquisition budget for 2022 since the timing and size of acquisitions cannot be accurately forecasted.
2 unchanged sentences
In the event we make one or more acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital.
−Removed: If we seek additional capital for that or other reasons, we may do so through borrowings under our revolving credit facility, joint venture partnerships, sale-leaseback transactions, asset sales, offerings of debt or equity securities or other means.
−Removed: We cannot assure you that this additional capital will be available on acceptable terms or at all.
−Removed: If we are unable to obtain funds we need, our ability to conduct operations, make capital expenditures and/or complete acquisitions that may be favorable to us will be impaired.
+Added: If we seek additional capital for any of the above or other reasons, we may do so through borrowings under our revolving credit facility, joint venture partnerships, sale-leaseback transactions, asset sales, offerings of debt or equity securities or other means.
+Added: Although we expect that our sources of capital will be adequate to fund our short-term and long-term liquidity requirement, we cannot assure you that this additional capital will be available on acceptable terms or at all.
+Added: If we are unable to obtain funds we need, our ability to conduct operations, make capital expenditures, satisfy debt services obligations, pay
+Added: litigation settlement obligations, fund contingencies and/or complete acquisitions that may be favorable to us will be impaired, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.
Contractual and Commercial Commitments
8 unchanged sentences
3,569 1,620 1,949 — —
−Removed: Sale leaseback arrangement (d)
+Added: Legal settlement obligation (d)
20,274 20,274 — — —
−Removed: Operating lease obligations (e)
+Added: Sale-leaseback arrangement (e)
10,565 4,382 6,183 — —
−Removed: Financing lease obligations (f)
+Added: Operating lease obligations (f)
12,532 6,220 5,241 663 408
−Removed: Equipment financing obligations (g)
+Added: Financing lease obligations (g)
6,549 2,004 3,226 1,319 —
−Removed: Purchase commitments (h)
+Added: Equipment financing obligations (h)
490 482 8 — —
−Removed: Capital purchase commitments (i)
+Added: Purchase commitments (i)
521 395 126 — —
+Added: Capital purchase commitments (j)
915 915 — — —
+Added: $ 145,456 $ 40,004 $ 103,062 $ 1,982 $ 408
Excludes interest payments.
1 unchanged sentence
Assumption of an interest rate of 5%.
+Added: Obligation under a legal settlement, including accrued interest.
+Added: See Note 19 to our consolidated financial statements.
Obligations under a sale-leaseback arrangement for a portion of our infrastructure segment assets.
4 unchanged sentences
Obligations arising from capital improvements and equipment purchases.
−Removed: Off-Balance Sheet Arrangements
−Removed: Minimum Purchase Commitments
−Removed: We have entered into agreements with suppliers that contain minimum purchase obligations.
−Removed: Our failure to purchase the minimum amounts specified may require us to pay shortfall fees.
−Removed: However, the minimum quantities set forth in the agreements are not in excess of our current expected future requirements.
−Removed: Capital Spend Commitments
−Removed: We have entered into agreements with suppliers to acquire capital equipment.
−Removed: These commitments are included in our 2020 capital budget discussed under the heading “Capital Requirements and Sources of Liquidity.”
−Removed: Aggregate future minimum payments under these agreements in effect at December 31, 2020 are as follows (in thousands):
−Removed: Year ended December 31:
−Removed: Capital Spend Commitments Minimum Purchase Commitments (a)
−Removed: 2020 $ 1,275 $ 698
−Removed: Thereafter — —
−Removed: $ 1,275 $ 800
−Removed: Critical Accounting Policies and Estimates
−Removed: The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
−Removed: Below, we have provided expanded discussion of our more significant accounting policies, estimates and judgments.
−Removed: We believe these accounting policies reflect our more significant estimates and assumptions used in preparation of our financial statements.
−Removed: See Note 2 of our consolidated financial statements included elsewhere in this annual report for a discussion of additional accounting policies and estimates made by management.
−Removed: Use of Estimates .
−Removed: In preparing the financial statements, our management makes informed judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.
−Removed: Actual results could differ from those estimates.
−Removed: Significant estimates include but are not limited to our sand reserves and their impact on calculating depletion expense, allowance for doubtful accounts, asset retirement obligations, reserves for self-insurance, depreciation and amortization of property and equipment, business combination valuations, amortization of intangible assets, and future cash flows and fair values used to assess recoverability and impairment of long-lived assets, including goodwill, estimates of income taxes and the estimated effects of litigation and other contingencies.
−Removed: Revenue Recognition .
−Removed: On January 1, 2018, we adopted the new revenue guidance under ASC 606, Revenue from Contracts with Customers , using the modified retrospective method applied to contracts which were not completed as of January 1, 2018.
−Removed: The adoption of ASC 606 did not have a material impact on our consolidated financial statements.
−Removed: Our primary revenue streams include infrastructure services, well completion services, natural sand proppant services, drilling services and other services, which includes aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, equipment manufacturing and infrastructure engineering and design services.
−Removed: Infrastructure Services.
−Removed: Infrastructure services are typically provided pursuant to master service agreements, repair and maintenance contracts or fixed price and non-fixed price installation contracts.
−Removed: Pricing under these contracts may be unit priced, cost-plus/hourly (or time and materials basis) or fixed price (or lump sum basis).
−Removed: Generally, we account for infrastructure services as a single performance obligation satisfied over time.
−Removed: In certain circumstances, we supply materials that are utilized during the jobs as part of the agreement with the customer.
−Removed: We account for these infrastructure agreements as multiple performance obligations satisfied over time.
−Removed: Revenue is recognized over time as work progresses based on the days completed or as the contract is completed.
−Removed: Under certain customer contracts in our infrastructure services segment, we warrant equipment and labor performed for a specified period following substantial completion of the work.
−Removed: Well Completion Services.
−Removed: Well completion services are typically provided based upon a purchase order, contract or on a spot market basis.
−Removed: Services are provided on a day rate, contracted or hourly basis.
−Removed: Generally, we account for well completion services as a single performance obligation satisfied over time.
−Removed: In certain circumstances, we supply proppant that is utilized for pressure pumping as part of the agreement with the customer.
−Removed: These pressure pumping agreements are accounted for as multiple performance obligations satisfied over time.
−Removed: Jobs for well completion services are typically short-term in nature and range from a few hours to multiple days.
−Removed: Generally, revenue is recognized over time upon the completion of each segment of work based upon a completed field ticket, which includes the charges for the services performed, mobilization of the equipment to the location and personnel.
−Removed: Pursuant to a contract with Gulfport, we have agreed to provide that customer with use of up to two pressure pumping fleets for the period covered by the contract.
−Removed: Under this agreement, performance obligations are satisfied as services are rendered based on the passage of time rather than the completion of each segment of work.
−Removed: We have the right to receive consideration from this customer even if circumstances prevent us from performing work.
−Removed: All consideration owed to us for services performed during the contractual period is fixed and the right to receive it is unconditional.
−Removed: Gulfport has filed a legal action in Delaware state court seeking the termination of this contract and monetary damages.
−Removed: Further, On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
−Removed: For additional information regarding the status of this contract, see “Industry Overview – Oil and Natural Gas Industry” above.
−Removed: Additional revenue is generated through labor charges and the sale of consumable supplies that are incidental to the service being performed.
−Removed: Such amounts are recognized ratably over the period during which the corresponding goods and services are consumed.
−Removed: Natural Sand Proppant Services.
−Removed: We sell natural sand proppant through sand supply agreements with our customers.
−Removed: Under these agreements, sand is typically sold at a flat rate per ton or a flat rate per ton with an index-based adjustment.
−Removed: We recognize revenue at the point in time when the customer obtains legal title to the product, which may occur at the production facility, rail origin or at the destination terminal.
−Removed: Certain of our sand supply agreements contain a minimum volume commitment related to sand purchases whereby we charge a shortfall payment if the customer fails to meet the required minimum volume commitment.
−Removed: These agreements may also contain make-up provisions whereby shortfall payments can be applied in future periods against purchased volumes exceeding the minimum volume commitment.
−Removed: If a make-up right exists, we have future performance obligations to deliver excess volumes of product in subsequent periods.
−Removed: In accordance with ASC 606, if the customer fails to meet the minimum volume commitment, we assess whether we expect the customer to fulfill its unmet commitment during the contractually specified make-up period based on discussions with the customer and management's knowledge of the business.
−Removed: If we expect the customer will make-up deficient volumes in future periods, revenue related to shortfall payments is deferred and recognized on the earlier of the date on which the customer utilizes make-up volumes or the likelihood that the customer will exercise its right to make-up deficient volumes becomes remote.
−Removed: If we do not expect the customer will make-up deficient volumes in future periods, we apply the breakage model and revenue related to shortfall payments is recognized when the model indicates the customer's inability to take delivery of excess volumes.
−Removed: In certain of our sand supply agreements, the customer obtains control of the product when it is loaded into rail cars and the customer reimburses us for all freight charges incurred.
−Removed: We have elected to account for shipping and handling as activities to fulfill the promise to transfer the sand.
−Removed: If revenue is recognized for the related product before the shipping and handling activities occur, we accrue the related costs of those shipping and handling activities.
−Removed: Drilling Services.
−Removed: Contract drilling services were provided under daywork contracts.
−Removed: Directional drilling services, including motor rentals, are provided on a day rate or hourly basis, and revenue is recognized as work progresses.
−Removed: Performance obligations are satisfied over time as the work progresses based on the measure of output.
−Removed: Mobilization revenue and costs were recognized over the days of actual drilling.
−Removed: As a result of market conditions, we temporarily shutdown our contract land drilling operations beginning in December 2019 and our rig moving operations beginning in April 2020.
−Removed: Other Services.
−Removed: During the periods presented in this report, we also provided aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, equipment manufacturing and infrastructure engineering and design services, which are reported under other services.
−Removed: As a result of market conditions, we have temporarily shut down our cementing and acidizing operations as well as our flowback operations beginning in July 2019 and our coil tubing and full service transportation operations beginning in July 2020.
−Removed: Other services are typically provided based upon a purchase order, contract or on a spot market basis.
−Removed: Services are provided on a day rate, contracted or hourly basis.
−Removed: Performance obligations for these services are satisfied over time and revenue is recognized as the work progresses based on the measure of output.
−Removed: Jobs for these services are typically short-term in nature and range from a few hours to multiple days.
+Added: Critical Accounting Estimates
+Added: The preparation of financial statements requires the use of judgments and estimates.
+Added: Our critical accounting policies are described below to provide a better understanding of how we develop our assumptions and judgments about future events and related estimates and how they can impact our financial statements.
+Added: A critical accounting estimate is one that requires our most difficult, subjective, or complex judgments and assessments and is fundamental to our results of operations.
+Added: We identified our most critical accounting estimates to be:
– allowance for doubtful accounts;
+Added: – valuations of long-lived assets, including goodwill and intangible assets;
+Added: – litigation and contingencies.
+Added: We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
+Added: We believe the following are the critical accounting policies used in the preparation of our consolidated financial statements, as well as the significant estimates and judgments affecting the application of these policies.
+Added: This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in this report.
+Added: Allowance for Doubtful Accounts
We regularly review receivables and provide for estimated losses through an allowance for doubtful accounts.
1 unchanged sentence
As the financial condition of customers changes, circumstances develop, or additional information becomes available, adjustments to the allowance for doubtful accounts may be required.
−Removed: In the event we expect that a customer may not be able to make required payments, we would increase the allowance through a charge to income in the period in which that determination is made.
−Removed: If it is determined that previously reserved amounts are collectible, we would decrease the allowance through a credit to income in the period in which that determination is made.
−Removed: Uncollectible accounts receivable are periodically charged against the allowance for doubtful accounts once a final determination is made regarding their uncollectability.
−Removed: Depreciation, Depletion, Amortization and Accretion .
−Removed: In order to depreciate and amortize our property and equipment, we estimate useful lives, attrition factors and salvage values of these items.
−Removed: Our estimates may be affected by such factors as changing market conditions, technological advances in the industries in which we operate or changes in regulations governing such industries.
−Removed: Depletion of our mining property and development costs is calculated using the units-of-production method on estimated measured tons of in-place reserves.
−Removed: Impairment of Long-Lived Assets .
−Removed: Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
−Removed: Recoverability of such assets is evaluated by measuring the carrying amount of the assets against the estimated undiscounted future cash flows associated with the assets.
+Added: This process involves judgment and estimation.
+Added: Accordingly, our results of operations can be affected by adjustments to the allowance due to actual write-offs that differ from estimated amounts.
+Added: As of December 31, 2021 and 2020, our allowance for doubtful accounts totaled $18.1 million and $30.1 million, respectively, which is primarily comprised of accounts receivable from Gulfport.
+Added: During 2021, we wrote-off accounts receivable totaling $83.0 million, substantially all of which related to Gulfport.
+Added: See Notes 2, 3 and 19 to the consolidated financial statement for further information related to Gulfport.
+Added: Our accounts receivable balance included $337.8 million and $301.2 million related to PREPA as of December 31, 2021 and 2020, respectively, which includes interest charged on delinquent balances.
+Added: PREPA has not made any payments to us on their outstanding receivable since 2019.
+Added: PREPA is currently subject to bankruptcy proceedings and, as a result, their ability to meet their obligations is largely dependent upon funding from the FEMA or other sources.
+Added: On September 30, 2019, we filed a motion with the U.S.
+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 first contract.
+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: On April 6, 2021, we filed a motion to lift the stay order.
+Added: Following this filing, PREPA initiated discussion, 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 will release a report in the near future relating to the first contract.
+Added: The joint motion was granted by the court on April 14, 2021.
+Added: 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.
+Added: 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 (i) the May 26, 2021 Determination Memorandum issued by FEMA and (ii) whether and when a second determination memorandum is expected.
+Added: The parties were further directed to file an additional status report, which was filed on July 20, 2021.
+Added: 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.
+Added: On August 10, 2021, after hearing oral argument at the August 4, 2021 omnibus hearing, the Court issued an order denying Cobra’s April 2021 motion to lift the stay and directing Cobra and PREPA to file a status report on January 22, 2022.
+Added: On January 26, 2022, the Court issued an order directing the parties to file a further status report by July 25, 2022.
+Added: We continuously review the facts and circumstances related to this receivable to determine if an allowance is needed.
+Added: We believe all amounts charged to PREPA, including interest charged on delinquent accounts receivable, were in accordance with the terms of the contracts.
+Added: Further, there have been multiple reviews prepared by or on behalf of FEMA that have concluded that the amounts Cobra charged PREPA were reasonable, that PREPA adhered to Puerto Rican legal statutes regarding emergency situations and that PREPA engaged in a reasonable procurement process.
+Added: As noted above, in May 2021 FEMA raised two contract compliance issues and concluded that $47 million in costs were not eligible under the contract.
+Added: PREPA, however, has filed an appeal of the entire $47 million, which is currently pending.
+Added: We believe these receivables are collectible and for the reasons previously described as well as other factors, no allowance was deemed necessary at December 31, 2021 or 2020.
+Added: 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 collectible.
+Added: See Note 2 to our consolidated financial statements for additional detail regarding our allowance for doubtful accounts.
+Added: Valuation of Long-Lived Assets
+Added: Long-lived assets on our balance sheet include property, plant and equipment, goodwill and intangible assets.
+Added: We test goodwill for impairment annually, or more frequently if events or changes in circumstances indicate that an impairment may exist.
+Added: We conduct impairment tests on long-lived assets, other than goodwill, whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
+Added: Under generally accepted accounting principles, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one or more of our reporting units is greater than its carrying amount.
+Added: If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, there is no need to perform any further testing.
+Added: However, if we conclude otherwise, then we are required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit.
+Added: If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.
+Added: During the years ended December 31, 2021 and 2020, and 2019, we recorded goodwill impairment charges of $0.9 million, $55.0 million and $33.7 million, respectively.
+Added: See Note 6 to our consolidated financial statements for details regarding the facts and circumstances that led to this impairment and how the fair value of each reporting unit was estimated, including significant assumptions used and other details.
+Added: Other Long-Lived Assets.
+Added: Impairment of other long-lived assets, including property, plant and equipment and intangible assets is evaluated by measuring the carrying amount of the assets against the estimated undiscounted future cash flows associated with the assets.
If such evaluations indicate that the future undiscounted cash flow from the assets is not sufficient to recover the carrying value of such assets, the assets are adjusted to their estimated fair values.
−Removed: Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.
−Removed: If it is determined that an impairment exists, an impairment charge is recognized for the excess of carrying value over implied fair value.
−Removed: The fair value is determined using a combination of the income and market approaches.
−Removed: Asset Retirement Obligations.
−Removed: Mine reclamation costs, future remediation costs for inactive mines or other contractual site remediation costs are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at a site.
−Removed: Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs.
−Removed: Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised.
−Removed: Equity-based Compensation.
−Removed: We measure equity-based payments at fair value on the date of grant and expense the value of these equity-based payments in compensation expense over the applicable vesting periods.
−Removed: Share-based Compensation.
−Removed: The share-based compensation program consists of restricted stock units granted to employees and restricted stock units granted to non-employee directors under the Mammoth Energy Services, Inc.
−Removed: 2016 Incentive Plan (the “2016 Plan”).
−Removed: We recognize in our financial statements the cost of employee services received in exchange for restricted stock based on the fair value of the equity instruments as of the grant date.
−Removed: In general, this value is amortized over the vesting period;
−Removed: for grants with a non-substantive service condition, this value is recognized immediately.
−Removed: Amounts are recognized in cost of revenues and selling, general, and administrative expenses.
−Removed: Income Taxes .
−Removed: Our operations are included in a consolidated federal income tax return and other state returns.
−Removed: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
−Removed: Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
−Removed: The effect of deferred tax assets and liabilities as a result of a change in tax rate is recognized in the period that includes the statutory enactment date.
−Removed: A valuation allowance for deferred tax assets is recognized when it is more likely than not that the benefit of deferred tax assets will not be realized.
+Added: During the years ended December 31, 2021 and 2020, and 2019, we recorded impairment charges of other long-lived assets totaling $1.2 million, $12.9 million and $7.4 million, respectively.
+Added: See Note 6 to our consolidated financial statements for additional details.
+Added: The assumptions used in the impairment evaluation for long-lived assets are inherently uncertain and require management’s judgment.
+Added: A continued period of low oil and natural gas prices or continued reductions in capital expenditures by our customers would likely have an adverse impact on our utilization and the prices that we receive for our services.
+Added: This could result in the recognition of future material impairment charges on the same, or additional, property and equipment if future cash flow estimates, based upon information then available to management, indicate that their carrying values are not recoverable.
Litigation and Contingencies
+Added: As discussed in Note 19 of our consolidated financial statements, we are involved in various litigation matters arising in the ordinary course of business.
Accruals for litigation and contingencies are based on our assessment, including advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings and/or the expected resolution of contingencies.
−Removed: Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount is reasonably estimable.
+Added: For matters in which a liability is probable and reasonably estimable, we accrue an estimate for the resolution of the matter.
+Added: For matters in which a liability is not probable and reasonably estimable, we do not accrue any amounts.
+Added: Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount is
+Added: reasonably estimable.
Accruals are based on information available at the time of the assessment due to the uncertain nature of such matters.
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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.