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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.
−Removed: The appeal is currently pending.
−Removed: 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: FEMA approved the appeal in part and denied the appeal in part.
+Added: FEMA found that staffing costs of $24.4 million are eligible for funding.
+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
+Added: joint status report, which was filed on January 22, 2022.
On January 26, 2022, the Court extended the stay and directed the parties to file a further status report by July 25, 2022.
+Added: On June 7, 2022, Cobra filed a motion to lift the stay order.
+Added: On June 29, 2022 the Court denied Cobra’s motion and extended the stay to January 2023.
+Added: On November 21, 2022, FEMA issued a Determination Memorandum related to the 100% federal funded portion of the second contract between Cobra and PREPA in which FEMA concluded that approximately $5.6 million in costs were not authorized costs under the contract.
+Added: On December 21, 2022, FEMA issued a Determination Memorandum related to the 90% federal cost share portion of the second contract between Cobra and PREPA in which FEMA concluded that approximately $68.1 million in costs were not authorized costs under the contract.
+Added: PREPA filed a first-level administrative appeal of the November 21, 2022 Determination Memorandum and has indicated that they will review the December 21, 2022 Determination Memorandum and, to the extent they feel plausible, file a first-level administrative appeal of the unauthorized amounts.
+Added: On January 7, 2023, Cobra and PREPA filed a joint status report with the Court, in which PREPA requested that the Court continue the stay through July 31, 2023 and Cobra requested that the stay be lifted.
+Added: On January 18, 2023, the Court entered an order extending the stay and directing the parties to file a further status report addressing (i) the status of any administrative appeals in connection with the November and December determination memorandums regarding the second contract, (ii) the status of the criminal proceeding against the former Cobra president and the FEMA official that concluded in December 2022, and (iii) a summary of the outstanding and unpaid amounts arising from the first and second contracts and whether PREPA disputes Cobra’s entitlement to these amounts with the Court by July 31, 2023.
+Added: On January 20, 2023, Cobra submitted a certified claim for approximately $379 million to FEMA pursuant to the federal Contract Disputes Act.
+Added: On February 1, 2023, FEMA notified Cobra that it had reviewed the claim and determined that no contract, expressed or implied, exists between FEMA and Cobra.
+Added: Therefore, no final decision will be issued in response to Cobra’s claim.
+Added: Cobra has 90 days from the February 1, 2023 decision to file a notice of appeal.
We believe all amounts charged to PREPA were properly in accordance with the terms of these contracts.
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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: Our ability to generate sufficient cash in the next nine months necessary to repay or refinance our existing revolving credit facility at or prior to maturity is subject to a number of risks and uncertainties.
+Added: Our existing revolving credit facility is currently scheduled to mature on October 19, 2023.
+Added: As of February 22, 2023, we had cash on hand of $9.5 million and outstanding borrowings under our revolving credit facility of $79.7 million, leaving an aggregate of $22.3 million of available borrowing capacity under this facility, after giving effect to $6.4 million of outstanding letters of credit and the requirement to maintain a $10.0 million reserve out of the available borrowing capacity.
+Added: Our ability to extend, refinance or repay our existing revolving credit facility at or prior to maturity will depend on our ability to generate significant operating cash flow in the future and collect our receivables, among other factors.
+Added: This ability is, to a significant extent, subject to general economic, financial, competitive and other factors, many of which are beyond our control.
+Added: We cannot assure you that our business will generate cash flow from operations in amounts sufficient to enable us fund these and our other liquidity needs.
+Added: As a result, we may need to seek additional debt or equity financing, sell existing assets or enter into other strategic transactions.
+Added: We cannot assure you that we will be able to do so on commercially reasonable terms or at all, or on terms that would be advantageous to our stockholders.
+Added: Considering the maturity date of our revolving credit facility, current macroeconomic conditions and recessionary pressures, we will likely be required to extend, refinance or repay our existing revolving credit facility in unfavorable credit markets.
+Added: If we are unable to generate sufficient cash flow, complete any sale transactions, repay or refinance our indebtedness or incur additional indebtedness on commercially reasonable terms or at all, our financial condition will be adversely impacted.
+Added: If we default under our existing revolving credit facility, the lenders could exercise their rights as described in this report under Note 10.
+Added: Debt to our consolidated financial statements included elsewhere in this report, and we could be forced into bankruptcy or liquidation.
Our customer base is concentrated and the loss of one or more of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue to decline substantially.
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however, our services with Gulfport ended in 2021.
−Removed: It is likely that we will continue to derive a significant portion of our revenue from a relatively small number of customers in the future.
+Added: It is likely that we will continue to derive a significant portion of our revenue from a relatively small number of
+Added: customers in the future.
See the risk factors below for additional information.
−Removed: In addition, we are subject to credit risk due to the
−Removed: concentration of our customer base.
−Removed: In particular, PREPA owed us approximately $337.8 million (including interest charged on overdue amounts) as of December 31, 2021, as discussed in more detail below.
+Added: In addition, we are subject to credit risk due to the concentration of our customer base.
+Added: In particular, PREPA owed us approximately $379.0 million (including interest charged on overdue amounts) as of December 31, 2022, as discussed in more detail above.
Any nonperformance by our counterparties, including their failure to pay the amounts they owe us on a timely basis or at all, either as a result of changes in financial and economic conditions or otherwise, could have a material adverse impact on our operating results and could adversely affect our liquidity.
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The COVID-19 pandemic has caused, and is continuing to cause, severe disruptions in the worldwide and U.S.
−Removed: economy, including the global and domestic demand for oil and natural gas, which has had and is expected to continue to have an adverse effect primarily on our oilfield services business and, as a result, our financial condition, results of operations, cash flows and stock price.
+Added: economy, including the global and domestic demand for oil and natural gas, which has had an adverse effect primarily on our oilfield services business and, as a result, our financial condition, results of operations, cash flows and stock price.
There continues to be many variables and uncertainties regarding the COVID-19 pandemic, including the emergence, contagiousness and threat of new and different strains of the virus and their severity;
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an increasingly competitive labor market due to a sustained labor shortage or increased turnover caused by the COVID-19 pandemic;
+Added: shortages of equipment and materials;
increased logistics costs;
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and other COVID-19-related challenges.
−Removed: Further, there remain increased risks of cyberattacks on information technology systems used in remote working environments;
+Added: Further, there remain increased risks of cyberattacks on information technology systems used in remote or hybrid working environments;
increased privacy-related risks due to processing health-related personal information;
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It is difficult to assess the ultimate impact of the COVID-19 pandemic on our business, financial condition and cash flows.
+Added: We cannot predict the impact of the ongoing war and the related humanitarian crisis in Ukraine on the global economy, energy markets, geopolitical stability, industries in which we operate and our business.
+Added: All of our infrastructure, well completion, natural sand proppant, drilling and other services are concentrated in North America.
+Added: However, the broader consequences of the Russian-Ukrainian conflict, which may include further sanctions, embargoes, regional instability and geopolitical shifts, may have adverse effects on global macroeconomic conditions, increase volatility in the price and demand for oil and natural gas, which would adversely impact the oilfield services industry, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity.
+Added: We cannot predict the extent of this war’s effect on our business and results of operations as well as on the global economy, energy markets and industries in which we operate.
The outcomes of investigations and litigation relating to our contracts with PREPA may have a material adverse effect on our business, financial condition, results of operations and cash flows.
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Neither we nor any of our subsidiaries were charged in the indictment.
+Added: On May 18, 2022, the former FEMA official and the former president of Cobra each pled guilty to one-count information charging gratuities related to a project that Cobra never bid upon and was never awarded or received any monies for.
+Added: On December 13, 2022, the Court sentenced the formed Cobra president to custody of the Bureau of Prisons for six months and one day, a term of supervised release of six months and one day and a fine of $25,000.
+Added: The Court sentenced the FEMA official to custody of the Bureau of Prisons for six months and one day, a term of supervised release of six months and a fine of $15,000.
+Added: The Court also dismissed the indictment against the two defendants.
+Added: We do not expect any additional activity in the criminal proceeding.
+Added: Given the uncertainty inherent in criminal litigation, however, it is not possible at this time to determine the potential impacts that the sentencing could have on us.
+Added: PREPA has stated in Court
+Added: filings that it may contend the alleged criminal activity affects Cobra's entitlement to payment under its contracts with PREPA.
+Added: It is unclear what PREPA's position will be going forward.
Subsequent to the indictment, we received (i) a preservation request letter from the SEC related to documents relevant to an ongoing investigation it is conducting and (ii) a civil investigative demand, or CID, from the United States Department of Justice, or DOJ, requesting certain documents and answers to interrogatories relevant to an ongoing investigation DOJ is conducting.
Both the SEC and DOJ investigations relate to the same subjects as those at issue in the criminal matter referenced above.
−Removed: We are cooperating with both the SEC and DOJ investigations.
−Removed: Given the uncertainty inherent in the criminal proceeding and the SEC and DOJ investigations, it is not possible at this time to determine the potential outcome or other potential impacts that they will have on us.
+Added: We are cooperating with the DOJ and are not able to predict the outcome of this investigation or if it will have a material impact on our business, financial condition, results of operations or cash flows.
+Added: With regard to the SEC investigation, on July 6, 2022, the SEC sent a letter saying that it had concluded its investigation as to the Company and that based on information the SEC has as of this date, it does not intend to recommend an enforcement action by the SEC against us.
Further, 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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Government contracts are also subject to renegotiation of profit and termination by the government prior to the expiration of the term.
−Removed: See the preceding risk factors for information regarding pending investigations and legal proceedings relating to our contracts with PREPA.
+Added: See the preceding risk factors for information regarding the investigations and legal proceedings relating to our contracts with PREPA.
Our revolving credit facility imposes, and any of our future credit facilities may impose, restrictions on us that may affect our ability to successfully operate our business.
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The lenders (i) would not be required to lend any additional amounts to us, (ii) could elect to declare all outstanding borrowings, together with accrued and unpaid interest and fees, to be due and payable, and (iii) may have the ability to require us to apply all of our available cash to repay our outstanding borrowings.
−Removed: Our failure to receive payment for contract change orders or adequately recover on claims brought by us against customers related to payment terms and costs could materially and adversely affect our financial position, results of operations and cash flows.
−Removed: We have in the past brought, and may in the future bring, claims against our customers related to, among other things, the payment terms of our contracts and change orders relating to such contracts.
−Removed: These types of claims can occur due to, among other things, customer-caused delays or changes in project scope, both of which may result in additional costs.
−Removed: In some instances, these claims can be the subject of lengthy legal proceedings, and it is difficult to predict the timing and outcome of such proceedings.
−Removed: Our failure to promptly and adequately recover on these types of claims could have an adverse impact on our financial condition, results of operations and cash flows.
−Removed: We may not accurately estimate the costs associated with infrastructure services provided under fixed price contracts, which could have an adverse effect on our financial condition, results of operations and cash flows.
−Removed: We derive a portion of our infrastructure services revenue from fixed-price master service and other service agreements.
−Removed: Under these contracts, we typically set the price of our services on a per unit or aggregate basis and assume the risk that costs associated with our performance may be greater than what we estimated.
−Removed: In addition to master service and other service agreements, we enter into contracts for specific projects or jobs that may require the installation or construction of an entire infrastructure system or specified units within an infrastructure system, which are priced on a per unit basis.
−Removed: Profitability will be reduced if actual costs to complete a project exceed our original estimates.
−Removed: Our profitability is dependent upon our ability to accurately estimate the costs associated with our services and our ability to execute in accordance with our plans.
−Removed: A variety of factors could negatively affect these costs, such as lower than anticipated productivity, conditions at work sites differing materially from those anticipated at the time we bid on the contract and higher than expected costs of materials and labor.
−Removed: These variations, along with other risks inherent in performing fixed price contracts, could cause actual project revenue and profits to differ from original estimates, which could result in lower margins than anticipated, or losses, which could reduce our profitability, cash flows and liquidity.
−Removed: We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for performance and surety bonds could reduce availability under our credit facility.
−Removed: Some of our infrastructure services contracts require performance and payment bonds.
−Removed: If we are not able to renew or obtain a sufficient level of bonding capacity in the future, we may be precluded from being able to bid for certain contracts or successfully contract with certain customers.
−Removed: In addition, even if we are able to successfully renew or obtain performance or payment bonds, we may be required to post letters of credit in connection with the bonds, which would reduce availability under our credit facility.
−Removed: Furthermore, under standard terms in the surety market, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing or renewing any bonds.
−Removed: If we were to experience an interruption or reduction in the availability of bonding capacity as a result of these or any other reasons, we may be unable to compete for or work on projects that require bonding.
−Removed: The nature of our infrastructure services business exposes us to potential liability for warranty claims and faulty engineering, which may reduce our profitability.
−Removed: Under some of our infrastructure services contracts with customers, we provide a warranty for the services we provide, guaranteeing the work performed against defects in workmanship and material.
−Removed: As much of the work we perform is inspected by our customers for any defects in construction prior to acceptance of the project, we have not historically incurred warranty claims.
−Removed: Additionally, materials used in construction are often provided by the customer or are warranted against defects from the supplier.
−Removed: However, certain projects may have longer warranty periods and include facility performance warranties that may be broader than the warranties we generally provide.
−Removed: In these circumstances, if warranty claims occurred, it could require us to re-perform the services or to repair or replace the warranted item, at a cost to us, and could also result in other damages if we are not able to adequately satisfy our warranty obligations.
−Removed: In addition, we may be required under contractual arrangements with our customers to warrant any defects or failures in materials we provide that we purchase from third parties.
−Removed: While we generally require suppliers to provide us warranties that are consistent with those we provide to the customers, if any of these suppliers default on their warranty obligations to us, we may incur costs to repair or replace the defective materials for which we are not reimbursed.
−Removed: Costs incurred as a result of warranty claims could adversely affect our financial condition, results of operations and cash flows.
−Removed: Our infrastructure services business involves professional judgments regarding the planning, design, development, construction, operations and management of electric power transmission and commercial construction.
−Removed: Because our projects are often technically complex, our failure to make judgments and recommendations in accordance with applicable professional standards, including engineering standards, could result in damages.
−Removed: While we do not generally accept liability for consequential damages, and although we have adopted a range of insurance, risk management and risk avoidance programs designed to reduce potential liabilities, a significantly adverse or catastrophic event at one of our project sites or completed projects resulting from the services we have performed could result in significant warranty, professional liability, or other claims against us as well as reputational harm, especially if public safety is impacted.
−Removed: These liabilities could exceed our insurance limits or could impact our ability to obtain insurance in the future.
−Removed: In addition, customers, subcontractors or suppliers who have agreed to indemnify us against any such liabilities or losses might refuse or be unable to pay us.
−Removed: An uninsured claim, either in part or in whole, if successful and of a material magnitude, could have a substantial impact on our business, financial condition, results of operations and cash flows.
−Removed: The timing of new contracts and termination of existing contracts may result in unpredictable fluctuations in our cash flows and financial results.
−Removed: A substantial portion of our continental United States-based infrastructure services revenue is derived from project-based work that is awarded through a competitive bid process.
−Removed: It is generally very difficult to predict the timing and geographic distribution of the projects that we will be awarded.
−Removed: The selection of, timing of, or failure to obtain projects, delays in awards of projects, the re-bidding or termination of projects due to budget overruns, cancellations of projects or delays in completion of contracts could result in the under-utilization of our assets, which could lower our overall profitability and reduce our cash flows.
−Removed: Even if we are awarded contracts, we face additional risks that could affect whether, or when, work will begin.
−Removed: This can present difficulty in matching workforce size and equipment location with contract needs.
−Removed: In some cases, we may be required to bear the cost of a ready workforce and equipment that is larger than necessary, which could impact our cash flow, expenses and profitability.
−Removed: If an expected contract award or the related work release is delayed or not received, we could incur substantial costs without receipt of any corresponding revenues.
−Removed: Moreover, construction projects for which our services are contracted may require significant expenditures by us prior to receipt of relevant payments from the customer.
−Removed: Finally, the winding down or completion of work on significant projects that were active in previous periods will reduce our revenue and earnings if such significant projects have not been replaced in the current period.
−Removed: Many of our contracts may be canceled upon short notice, typically 30 to 90 days, even if we are not in default under the contract, and we may be unsuccessful in replacing our contracts if they are canceled or as they are completed or expire.
−Removed: We could experience a decrease in our revenue, net income and liquidity if contracts are canceled and if we are unable to replace
−Removed: canceled, completed or expired contracts.
−Removed: Certain of our infrastructure services customers assign work to us on a project-by-project basis under MSAs.
−Removed: Under these agreements, our customers often have no obligation to assign a specific amount of work to us.
−Removed: Our operations could decline significantly if the anticipated volume of work is not assigned to us or is canceled.
−Removed: Many of our contracts, including our MSAs, are opened to competitive bid at the expiration of their terms.
−Removed: There can be no assurance that we will be the successful bidder on our existing contracts that come up for re-bid.
−Removed: Delays and reductions in government appropriations can negatively impact energy infrastructure engineering, design, construction, maintenance and repair projects and may impair the ability of our energy infrastructure customers to timely pay for products or services provided or result in their insolvency or bankruptcy, any of which exposes us to credit risk of our infrastructure customers.
−Removed: Many of our infrastructure customers derive funding from federal, state and local bodies.
−Removed: Delayed or reduced appropriations may cancel, curtail or delay projects and may have an adverse effect on our business, results of operations, cash flows and financial condition.
−Removed: A portion of our business depends on the oil and natural gas industry and particularly on the level of exploration and production activity within the United States and Canada, and the sharp decline in oil prices in 2020 and continued volatility in the oil and natural gas markets have negatively impacted, and are likely to continue to negatively impact, our oilfield services and, as a result, our business, financial condition, results of operations, cash flows and stock price.
+Added: See also " Our ability to generate sufficient cash in the next nine months necessary to repay or refinance our existing revolving credit facility at or prior to maturity is subject to a number of risks and uncertainties " above.
+Added: A portion of our business depends on the oil and natural gas industry and particularly on the level of exploration and production activity within the United States and Canada, and continued volatility in the oil and natural gas markets have impacted, and are likely to continue to impact, our oilfield services and, as a result, our business, financial condition, results of operations, cash flows and stock price.
Demand for our oil and natural gas products and services depends substantially on the level of capital expenditures by companies in the oil and natural gas industry.
−Removed: In early March 2020, oil prices dropped sharply and then continued to decline reaching levels below zero dollars per barrel.
−Removed: This was a result of multiple factors affecting global oil and natural gas markets, including the announcement of price reductions and production increases by OPEC members and other oil exporting nations and the ongoing COVID-19 pandemic.
−Removed: Although commodity prices have generally recovered, they are expected to continue to be volatile as a result of production levels, inventories and demand, and national and international economic performance.
+Added: The levels of capital expenditures of our customers are predominantly driven by the prices of oil and natural gas.
+Added: In March and April 2020, concurrent with the COVID-19 pandemic and quarantine orders in the U.S.
+Added: and worldwide, oil prices dropped sharply to below zero dollars per barrel for the first time in history due to factors including significantly reduced demand and a shortage of storage facilities.
+Added: Although commodity prices have strongly rebounded, with oil prices averaging $94.35 per barrel during 2022, they are expected to continue to be volatile as a result of production levels, inventories and demand, national and international economic performance and outlook.
Other significant factors that are likely to continue to affect commodity prices in current and future periods include, but are not limited to, the effect of U.S.
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and global political developments, the impact and duration of the ongoing COVID-19 pandemic and conditions in the U.S.
−Removed: oil and gas industry, actions of OPEC+ members, the impact of the current Russian/Ukrainian military conflict on the global energy and capital markets and global stability and other factors.
+Added: oil and gas industry, actions of OPEC+ members, the impact of the ongoing war in Ukraine on the global energy and capital markets and global stability and other factors.
We anticipate demand for our oil and natural gas services and products will continue to be dependent on the level of capital expenditures by companies in the oil and natural gas industry and, ultimately, commodity prices.
−Removed: While we still expect commodity prices to be the primary driver of capex spending and industry activity levels in the future, other factors, such as debt repayment obligations and access to the capital markets, may play a significant role in the ultimate level of capex spend by the companies that use our completion and production, natural sand proppant and contract land and directional drilling service lines.
+Added: While we still expect commodity prices to be the primary driver of capital spending and industry activity levels in the future, other factors, such as debt repayment obligations and access to the capital markets, may play a significant role in the ultimate level of capital expenditures by the companies that use our completion and production, natural sand proppant and contract land and directional drilling service lines.
Industry conditions are dynamic and the weakening of commodity prices from current levels may result in a material adverse impact on certain of our customers’ liquidity and financial position resulting in spending reductions, delays in the collection of amounts owing to us and similar impacts.
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• the price and quantity of foreign imports;
−Removed: • political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia, including the impact of the current Russian/Ukrainian military conflict on the global energy and capital markets and global stability;
+Added: • political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia, including the impact of the ongoing war in Ukraine on the global energy and capital markets and global stability;
• the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;
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If the energy industry transition changes faster than anticipated or in a manner that we do not anticipate, demand for oilfield services could be adversely affected.
−Removed: Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies in fossil fuel related industries, our business, access to capital and the market for our securities could be negatively impacted.
+Added: Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, comply with new and evolving regulatory requirements on climate change, or if investors or financial institutions shift funding away from companies in fossil fuel related industries, our business, access to capital and the market for our securities could be negatively impacted.
+Added: In addition, our inability to timely address these new and evolving regulatory requirements or pressures may result in regulatory enforcement actions or shareholder litigation and otherwise damage our reputation.
+Added: The Inflation Reduction Act of 2022 could accelerate the transition to a low carbon economy and could impose new costs on our operations.
+Added: In August 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law.
+Added: The IRA contains billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
+Added: In addition, the IRA imposes the first ever federal fee on the emission of GHGs through a methane emissions charge, which will be phased-in starting in 2024.
+Added: The IRA could accelerate the transition of the economy away from the use of fossil fuels
+Added: towards lower- or zero-carbon emissions alternatives, which could decrease demand for our services related to the oil and natural gas industry.
Deterioration of the commodity price environment can negatively impact oil and natural gas exploration and production companies and, in some cases, impair their ability to timely pay for products or services provided or result in their insolvency or bankruptcy, any of which exposes us to credit risk of our oil and natural gas exploration and production customers.
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Further, during any such bankruptcy proceeding, prior to assumption, rejection or renegotiation of such contracts, the bankruptcy court may temporarily authorize the payment of value for our services less than contractually required, which could also have a material adverse effect on our business, results of operations, cash flows and financial condition.
−Removed: Shortages, delays in delivery and interruptions in supply of drill pipe, replacement parts, other equipment, supplies and materials may adversely affect our drilling business or our pressure pumping business.
−Removed: During periods of increased demand for drilling and completion services, the industry has experienced shortages of drill pipe, replacement parts, other equipment, supplies and materials, including, in the case of our pressure pumping operations, replacement parts, other equipment, proppants, acid, gel and water.
+Added: Shortages, delays in delivery and interruptions in supply of major components, replacement parts or, other equipment, supplies or materials may adversely affect our pressure pumping business and our drilling business.
+Added: During periods of increased demand for drilling and completion services, such as those in the second half of 2022 and early 2023, the industry has experienced shortages of major components, replacement parts, other equipment, supplies and materials, including, in the case of our pressure pumping operations, replacement parts, engines and other equipment, proppants, acid, gel and water.
These shortages can cause the price of these items to increase significantly and require that orders for the items be placed well in advance of expected use.
−Removed: In addition, any interruption in supply could result in significant delays in delivery of equipment and materials or prevent operations.
+Added: In addition, any interruption in supply could result in significant delays in delivery of equipment and materials and delay or prevent operations.
Interruptions may be caused by, among other reasons:
−Removed: • weather issues, whether short-term such as a hurricane, or long-term such as a drought;
+Added: • weather issues, whether short-term such as a hurricane or winter storm, or long-term such as a drought;
• shortage in the number of vendors able or willing to provide the necessary equipment, supplies and materials, including as a result of commitments of vendors to other customers or third parties.
These price increases, delays in delivery and interruptions in supply may require us to increase capital and repair expenditures and incur higher operating costs.
−Removed: Severe shortages, delays in delivery and interruptions in supply could limit our ability to construct and operate our drilling rigs or pressure pumping fleets and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
+Added: Severe shortages, delays in delivery and interruptions in supply could limit our ability to construct and operate our pressure pumping fleets and hinder our ability to execute on our business plan, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Oilfield services equipment, refurbishment and new asset construction projects, as well as the reactivation of oilfield service assets that have been idle for six months or longer, are subject to risks which could cause delays or cost overruns and adversely affect our business, cash flows, results of operations and financial position.
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In addition, future price increases for this type of equipment and parts could negatively impact our ability to purchase new equipment to update or expand our existing fleet or to timely repair equipment in our existing fleet.
+Added: Our failure to receive payment for contract change orders or adequately recover on claims brought by us against customers related to payment terms and costs could materially and adversely affect our financial position, results of operations and cash flows.
+Added: We have in the past brought, and may in the future bring, claims against our customers related to, among other things, the payment terms of our contracts and change orders relating to such contracts.
+Added: These types of claims can occur due to, among other things, customer-caused delays or changes in project scope, both of which may result in additional costs.
+Added: In some instances, these claims can be the subject of lengthy legal proceedings, and it is difficult to predict the timing and outcome of such proceedings.
+Added: Our failure to promptly and adequately recover on these types of claims could have an adverse impact on our financial condition, results of operations and cash flows.
+Added: We may not accurately estimate the costs associated with infrastructure services provided under fixed price contracts, which could have an adverse effect on our financial condition, results of operations and cash flows.
+Added: We derive a portion of our infrastructure services revenue from fixed-price master service and other service agreements.
+Added: Under these contracts, we typically set the price of our services on a per unit or aggregate basis and assume the risk that costs associated with our performance may be greater than what we estimated.
+Added: In addition to master service and other service agreements, we enter into contracts for specific projects or jobs that may require the installation or construction of an
+Added: entire infrastructure system or specified units within an infrastructure system, which are priced on a per unit basis.
+Added: Profitability will be reduced if actual costs to complete a project exceed our original estimates.
+Added: Our profitability is dependent upon our ability to accurately estimate the costs associated with our services and our ability to execute in accordance with our plans.
+Added: A variety of factors could negatively affect these costs, such as lower than anticipated productivity, conditions at work sites differing materially from those anticipated at the time we bid on the contract and higher than expected costs of materials and labor.
+Added: These variations, along with other risks inherent in performing fixed price contracts, could cause actual project revenue and profits to differ from original estimates, which could result in lower margins than anticipated, or losses, which could reduce our profitability, cash flows and liquidity.
+Added: We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for performance and surety bonds could reduce availability under our credit facility.
+Added: Some of our infrastructure services contracts require performance and payment bonds.
+Added: If we are not able to renew or obtain a sufficient level of bonding capacity in the future, we may be precluded from being able to bid for certain contracts or successfully contract with certain customers.
+Added: In addition, even if we are able to successfully renew or obtain performance or payment bonds, we may be required to post letters of credit in connection with the bonds, which would reduce availability under our credit facility.
+Added: Furthermore, under standard terms in the surety market, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing or renewing any bonds.
+Added: If we were to experience an interruption or reduction in the availability of bonding capacity as a result of these or any other reasons, we may be unable to compete for or work on projects that require bonding.
+Added: The nature of our infrastructure services business exposes us to potential liability for warranty claims and faulty engineering, which may reduce our profitability.
+Added: Under some of our infrastructure services contracts with customers, we provide a warranty for the services we provide, guaranteeing the work performed against defects in workmanship and material.
+Added: As much of the work we perform is inspected by our customers for any defects in construction prior to acceptance of the project, we have not historically incurred warranty claims.
+Added: Additionally, materials used in construction are often provided by the customer or are warranted against defects from the supplier.
+Added: However, certain projects may have longer warranty periods and include facility performance warranties that may be broader than the warranties we generally provide.
+Added: In these circumstances, if warranty claims occurred, it could require us to re-perform the services or to repair or replace the warranted item, at a cost to us, and could also result in other damages if we are not able to adequately satisfy our warranty obligations.
+Added: In addition, we may be required under contractual arrangements with our customers to warrant any defects or failures in materials we provide that we purchase from third parties.
+Added: While we generally require suppliers to provide us warranties that are consistent with those we provide to the customers, if any of these suppliers default on their warranty obligations to us, we may incur costs to repair or replace the defective materials for which we are not reimbursed.
+Added: Costs incurred as a result of warranty claims could adversely affect our financial condition, results of operations and cash flows.
+Added: Our infrastructure services business involves professional judgments regarding the planning, design, development, construction, operations and management of electric power transmission and commercial construction.
+Added: Because our projects are often technically complex, our failure to make judgments and recommendations in accordance with applicable professional standards, including engineering standards, could result in damages.
+Added: While we do not generally accept liability for consequential damages, and although we have adopted a range of insurance, risk management and risk avoidance programs designed to reduce potential liabilities, a significantly adverse or catastrophic event at one of our project sites or completed projects resulting from the services we have performed could result in significant warranty, professional liability, or other claims against us as well as reputational harm, especially if public safety is impacted.
+Added: These liabilities could exceed our insurance limits or could impact our ability to obtain insurance in the future.
+Added: In addition, customers, subcontractors or suppliers who have agreed to indemnify us against any such liabilities or losses might refuse or be unable to pay us.
+Added: An uninsured claim, either in part or in whole, if successful and of a material magnitude, could have a substantial impact on our business, financial condition, results of operations and cash flows.
+Added: The timing of new contracts and termination of existing contracts may result in unpredictable fluctuations in our cash flows and financial results.
+Added: A portion of our continental United States-based infrastructure services revenue is derived from project-based work that is awarded through a competitive bid process.
+Added: It is generally very difficult to predict the timing and geographic distribution of the projects that we will be awarded.
+Added: The selection of, timing of, or failure to obtain projects, delays in awards of projects, the re-bidding or termination of projects due to budget overruns, cancellations of projects or delays in completion of contracts could result in the under-utilization of our assets, which could lower our overall profitability and reduce our cash flows.
+Added: we are awarded contracts, we face additional risks that could affect whether, or when, work will begin.
+Added: This can present difficulty in matching workforce size and equipment location with contract needs.
+Added: In some cases, we may be required to bear the cost of a ready workforce and equipment that is larger than necessary, which could impact our cash flow, expenses and profitability.
+Added: If an expected contract award or the related work release is delayed or not received, we could incur substantial costs without receipt of any corresponding revenues.
+Added: Moreover, construction projects for which our services are contracted may require significant expenditures by us prior to receipt of relevant payments from the customer.
+Added: Finally, the winding down or completion of work on significant projects that were active in previous periods will reduce our revenue and earnings if such significant projects have not been replaced in the current period.
+Added: Many of our contracts may be canceled upon short notice, typically 30 to 90 days, even if we are not in default under the contract, and we may be unsuccessful in replacing our contracts if they are canceled or as they are completed or expire.
+Added: We could experience a decrease in our revenue, net income and liquidity if contracts are canceled and if we are unable to replace canceled, completed or expired contracts.
+Added: Certain of our infrastructure services customers assign work to us on a project-by-project basis under MSAs.
+Added: Under these agreements, our customers often have no obligation to assign a specific amount of work to us.
+Added: Our operations could decline significantly if the anticipated volume of work is not assigned to us or is canceled.
+Added: Many of our contracts, including our MSAs, are opened to competitive bid at the expiration of their terms.
+Added: There can be no assurance that we will be the successful bidder on our existing contracts that come up for re-bid.
+Added: Delays and reductions in government appropriations can negatively impact energy infrastructure engineering, design, construction, maintenance and repair projects and may impair the ability of our energy infrastructure customers to timely pay for products or services provided or result in their insolvency or bankruptcy, any of which exposes us to credit risk of our infrastructure customers.
+Added: Many of our infrastructure customers derive funding from federal, state and local bodies.
+Added: Delayed or reduced appropriations may cancel, curtail or delay projects and may have an adverse effect on our business, results of operations, cash flows and financial condition.
+Added: Outcomes of rate cases may impact the capital expenditure budgets of our infrastructure customers and may result in lower demand for our services.
+Added: Many of our infrastructure customers are regulated by governing bodies and the prices they charge their customers are decided through a process called a rate case.
+Added: A rate case is a formal process, conducted by utility regulators, to determine if the utility’s proposed base rates are just and reasonable.
+Added: The outcome of rate cases may impact the capital expenditure budgets of our infrastructure customers and, in turn, could result in lower demand for our services and may have an adverse effect on our business, results of operations, cash flows and financial condition.
An increase in the prices of certain materials used in our businesses could adversely affect our business, financial condition, results of operation and cash flows.
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There are numerous uncertainties inherent in estimating quantities and qualities of sand reserves and costs to mine recoverable reserves, including many factors beyond our control.
−Removed: Estimates of economically
−Removed: recoverable sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as:
+Added: Estimates of economically recoverable sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as:
• geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience;
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As part of our natural sand proppant services business, we mine and process sand into premium monocrystalline sand, a specialized mineral that is used as a proppant (also known as frac sand) at our Barron County and Jackson County, Wisconsin plants.
−Removed: We also buy processed sand from suppliers on the spot market.
−Removed: In addition, we also buy raw or washed sand and process it at our indoor sand processing plant located in Pierce County, Wisconsin.
We sell natural sand proppant to our customers for use in their hydraulic fracturing operations to enhance the recovery rates of hydrocarbons from oil and natural gas wells.
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Competition in the industry is based on price, consistency and quality of product, site location, distribution and logistics capabilities, customer service, reliability of supply and breadth of product offering.
−Removed: The large, national producers with whom we compete include Badger Mining Corporation, Covia Holdings Corporation, Hi-Crush Partners LP, Smart Sand, Inc.
+Added: The large, national producers with whom we compete include Badger Mining Corporation, Covia Holdings Corporation, Hi-Crush Partners LP, Capital Sand Proppants LLC, Athabasca Minerals Inc., Source Energy Services Ltd., and U.S.
Silica Holdings Inc.
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A significant shift in demand from frac sand to other proppants, or the development of new processes to replace hydraulic fracturing altogether, could cause a decline in the demand for the frac sand we produce and result in a material adverse effect on our business, financial condition, results of operations and cash flows.
−Removed: Further, federal and state governments and agencies have adopted various laws and regulations or are evaluating proposed legislation and regulations that are focused on the extraction of shale gas or oil using hydraulic fracturing, a process which utilizes proppants such as those that we produce.
+Added: Further, federal and state governments and agencies have adopted various laws and regulations or are evaluating proposed legislation and regulations that are focused on the extraction of
+Added: shale gas or oil using hydraulic fracturing, a process which utilizes proppants such as those that we produce.
Future hydraulic fracturing-related legislation or regulations could restrict the ability of our customers to utilize, or increase the cost associated with, hydraulic fracturing, which could reduce demand for our proppants and adversely affect our business, financial condition, results of operations and cash flows.
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If implemented, these new regulations could also affect local municipalities and other industrial operations and could have a material adverse effect on costs involved in operating our processing plant.
−Removed: Such changes in laws, regulations or government policy and related interpretations pertaining to water rights may alter the environment in which we do business, which may have an adverse effect on our business, financial condition, results of
−Removed: operations and cash flows.
+Added: Such changes in laws, regulations or government policy and related interpretations pertaining to water rights may alter the environment in which we do business, which may have an adverse effect on our business, financial condition, results of operations and cash flows.
Additionally, a water discharge permit may be required to properly dispose of water at our processing sites when in operation.
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These transactions could be materially affected by currency fluctuations.
−Removed: Changes in currency exchange rates could
−Removed: adversely affect our combined results of operations or financial position.
+Added: Changes in currency exchange rates could adversely affect our combined results of operations or financial position.
We also maintain cash balances denominated in the Canadian dollar.
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A significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both.
−Removed: If either of these events were to occur, our capacity and profitability could be diminished and our growth potential could be impaired, particularly as our workforce has been significantly reduced over the past several years due to the lack of pyament from PREPA and the downturn in our business.
+Added: If either of these events were to occur, our capacity and profitability could be diminished and our growth potential could be impaired.
Unionization efforts could increase our costs or limit our flexibility.
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We provide well completion services and drilling services in the Utica, SCOOP, STACK, Permian Basin, Marcellus, Granite Wash, and Cana Woodford resource plays located in the continental U.S.
−Removed: We provide infrastructure services in the northeast, southwest and midwest portions of the United States.
−Removed: We provide remote accommodation services in the oil sands in Alberta, Canada.
−Removed: We serve these markets through our facilities and service centers located in Ohio, Oklahoma, Texas, Wisconsin, Minnesota, Kentucky, California and Alberta, Canada.
+Added: We provide infrastructure services in the northeastern, southwestern, midwestern and western portions of the United States.
+Added: We provide remote accommodation services
+Added: in the oil sands in Alberta, Canada.
+Added: We serve these markets through our facilities and service centers located in Ohio, Oklahoma, Texas, Wisconsin, Kentucky, California, Colorado, Oregon, Indiana and Alberta, Canada.
For the years ended December 31, 2022 and 2021, we generated approximately 45% and 48%, respectively, of our revenue from our operations in Ohio, Wisconsin, Minnesota, North Dakota, Pennsylvania, West Virginia and Canada where weather conditions may be severe, particularly during winter and spring months.
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We may be unable to generate sufficient cash from operations and other capital resources to meet our operating needs and/or maintain planned or future levels of capital expenditures which, among other things, may prevent us from acquiring new equipment, properly maintaining our existing equipment or restarting idled businesses or expanding existing operations as demand may warrant.
−Removed: Also, on February 28, 2022, our revolving credit facility was amended to, among other things, provide for a reduction in the maximum revolving advance amount in an amount equal to 50% of
−Removed: PREPA claims proceeds, subject to a floor equal to the sum of eligible billed and unbilled accounts receivables and, as a result, as of March 2, 2022, we had approximately $11 million of available borrowing capacity under our amended revolving credit facility.
+Added: Also, our existing revolving credit facility is currently scheduled to mature on October 19, 2023.
+Added: Our ability to extend, refinance or repay our existing revolving credit facility at or prior to maturity will depend on our ability to generate significant operating cash flow in the future and collect our receivables, among other factors.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Our Revolving Credit Facility.
−Removed: Further, any disruptions or continuing volatility in the global financial markets may lead to an increase in interest rates or a contraction in credit availability impacting our ability to finance our operations.
+Added: Further, any disruptions or continuing volatility in the global financial markets and rising interest rates due to efforts to curb persistent inflation may lead to a contraction in credit availability and an increase in our cost of capital, which will adversely impact our ability to finance our operations.
This could put us at a competitive disadvantage, impair our ability to meet our operating needs or interfere with our growth plans.
−Removed: Further, our actual capital expenditures for 2022 or future years could exceed our capital expenditure budget.
+Added: our actual capital expenditures for 2023 or future years could exceed our capital expenditure budget.
In the event our operating or capital expenditure requirements at any time are greater than the amount we have available, we could be required to seek additional sources of capital, which may include debt financing, joint venture partnerships, sales of assets, sale-leaseback transactions, offerings of debt or equity securities or other means.
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The growth of our business through acquisitions may expose us to various risks, including those relating to difficulties in identifying suitable, accretive acquisition opportunities and integrating businesses, assets and personnel, as well as difficulties in obtaining financing for targeted acquisitions and the potential for increased leverage or debt service requirements.
−Removed: As a component of our business strategy, we have pursued and intend to continue to pursue selected, accretive acquisitions of complementary assets, businesses and technologies.
+Added: As a component of our business strategy, we have pursued and, subject to our liquidity needs, intend to continue to pursue selected, accretive acquisitions of complementary assets, businesses and technologies.
Acquisitions involve numerous risks, including:
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As we expand the scope of our activities, lines of our businesses and our geographic coverage through both organic growth and acquisitions, there will be additional demands on our financial, technical, operational and management resources.
−Removed: The failure to continue to upgrade our technical, administrative, operating and financial control systems or the occurrences of unexpected expansion difficulties, including the failure to recruit and retain experienced
−Removed: managers, engineers and other professionals in the energy services industry, could have a material adverse effect on our business, financial condition, results of operations and our ability to successfully or timely execute our business plan.
+Added: The failure to continue to upgrade our technical, administrative, operating and financial control systems or the occurrences of unexpected expansion difficulties, including the failure to recruit and retain experienced managers, engineers and other professionals in the energy services industry, could have a material adverse effect on our business, financial condition, results of operations and our ability to successfully or timely execute our business plan.
If our intended expansion of our business is not successful, our financial condition, profitability and results of operations could be adversely affected, and we may not achieve increases in revenue and profitability that we hope to realize.
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Our revolving credit facility provides, and any future credit facilities may provide, for fluctuating interest rates, which may increase or decrease our interest expense.
−Removed: Our revolving credit facility provides for fluctuating interest rates, primarily based on the London interbank offered rate, or LIBOR, for deposits of U.S.
−Removed: LIBOR tends to fluctuate based on multiple facts, including general short-term interest rates, rates set by the U.S.
−Removed: Federal Reserve, which indicated plans for multiple interest rate increases in 2022, and other central banks, the supply of and demand for credit in the London interbank market and general economic conditions.
−Removed: At December 31, 2021, we had $83 million borrowings outstanding under our revolving credit facility and availability under our credit facility was approximately $17 million, after giving effect to $9 million of outstanding letters of credit and the requirement to maintain a $10 million reserve out of the available borrowing capacity during the limited waiver period.
−Removed: A 1% increase or decrease in the interest rate at that time would have increased or decreased our interest expense by approximately $1 million per year, based on $83 million outstanding and a weighted average interest rate of 4.17%.
+Added: Our revolving credit facility provides for fluctuating interest rates, primarily based on rates set by the U.S.
+Added: Federal Reserve.
+Added: Inflation in the U.S.
+Added: has been rising at its fastest rate in over 40 years, creating inflationary pressure on the cost of services, equipment and other goods in our industries and other sectors and contributing to labor and materials shortages across the supply-chain.
+Added: Throughout 2022 and 2023, the Federal Reserve increased its benchmark interest rates eight times for an aggregate increase of 4.5 percentage points and may continue increasing benchmark interest rates in the future.
+Added: At December 31, 2022, we had $83.5 million borrowings outstanding under our revolving credit facility and availability under our credit facility was approximately $19.7 million, after giving effect to $6.5 million of outstanding letters of credit and the requirement to maintain a $10.0 million reserve out of the available borrowing capacity.
+Added: A 1% increase or decrease in the interest rate at that time would have increased or decreased our interest expense by approximately $0.8 million per year, based on $83.5 million outstanding.
We have not hedged our interest rate exposure with respect to our floating rate debt.
−Removed: Accordingly, our interest expense for any particular period will fluctuate based on LIBOR and other variable interest rates.
+Added: Accordingly, our interest expense for any particular period will fluctuate based on the rates set by the U.S.
+Added: Federal Reserve and other variable interest rates.
To the extent the interest rates applicable to our floating rate debt increase, our interest expense will increase, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow may be adversely affected.
−Removed: Financial Conduct Authority (the authority that regulates LIBOR), which we refer to as FCA, has announced that it intends to stop one week and two month U.S.
−Removed: Dollar LIBOR rates after 2021.
−Removed: On March 5, 2021, the ICE Benchmark Administration, which administers LIBOR, and the FCA announced that all LIBOR settings will either cease to be provided by any administrator, or no longer be representative immediately after 2021, for all non-U.S.
−Removed: dollar LIBOR settings and one-week and two-month U.S.
−Removed: dollar LIBOR settings, and immediately after June 30, 2023 for the remaining U.S.
−Removed: dollar LIBOR settings.
−Removed: In light of these recent announcements, the future of LIBOR at this time is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phase-out could cause LIBOR to perform differently than in the past or cease to exist.
−Removed: Our current credit agreement provides for any changes away from LIBOR to a successor rate to be based on prevailing or equivalent standards, however, changes in the method of calculating LIBOR, or the discontinuation, reform or replacement of LIBOR or any other benchmark rates may adversely affect interest rates and result in higher borrowing costs.
−Removed: This could materially and adversely affect our results of operations, cash flow and liquidity.
We may not be able to provide services that meet the specific needs of oil and natural gas exploration and production companies or utilities at competitive prices.
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As part of our business, we handle, transport and dispose of a variety of fluids and substances, including hydraulic fracturing fluids which can contain hydrochloric acid and certain petrochemicals.
−Removed: This activity poses some risks of environmental liability, including leakage of hazardous substances from the wells to surface and subsurface soils, surface water or groundwater.
+Added: This activity poses some risks of
+Added: environmental liability, including leakage of hazardous substances from the wells to surface and subsurface soils, surface water or groundwater.
We also handle, transport and store these substances.
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cash flows and liquidity.
−Removed: Changes in environmental laws could increase costs and harm our business, financial condition and results of operations.
−Removed: President Biden has issued several executive orders promoting various programs and initiatives designed to, among other things, curtail climate change, control the release of methane from new and existing oil and gas operations, and pause new oil and gas leasing on public lands.
−Removed: It remains unclear what additional actions President Biden will take and what support he will have for any potential legislative changes from Congress.
−Removed: Further, it is uncertain to what extent any new environmental laws or regulations, or any repeal of existing environmental laws or regulations, may affect our oilfield services operations.
−Removed: However, such actions could materially increase our costs or impair our ability to explore and develop other projects, which could materially harm our business, financial condition and results of operations.
+Added: Legislation or regulatory initiatives intended to address seismic activity could restrict our drilling and production activities, as well as our ability to dispose of produced water gathered from such activities, which could have a material adverse effect on our business.
+Added: State and federal regulatory agencies have recently focused on a possible connection between hydraulic fracturing-related activities, particularly the underground injection of wastewater into disposal wells, and the increased occurrence of seismic activity, and regulatory agencies at all levels are continuing to study the possible linkage between oil and gas activity and induced seismicity.
+Added: In addition, a number of lawsuits have been filed in some states alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal.
+Added: In response to these concerns, regulators in some states are seeking to impose additional requirements related to underground injection activities.
+Added: For example, the Oklahoma Corporations Commission has implemented a variety of measures, including the adoption of the National Academy of Science’s “traffic light system,” pursuant to which the agency reviews new disposal well applications and may restrict operations at existing wells.
+Added: The Texas Railroad Commission has also implemented measures to assess the potential for seismic activity in the vicinity of disposal wells, and it has restricted and indefinitely suspended disposal well activities in some cases.
+Added: These restrictions on the disposal of produced water and a moratorium on new produced water disposal wells could result in increased operating costs, requiring us to truck produced water, recycle it or dispose of it by other means, all of which could be costly and could adversely impact our results of operations, cash flows and liquidity.
Our operations in our natural sand proppant services business are dependent on our rights and ability to mine our properties and on our having renewed or received the required permits and approvals from governmental authorities and other third parties.
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If wetlands are implicated, a U.S.
−Removed: Army Corps of Engineers Wetland Permit is required.
+Added: Army Corps of Engineers wetland permit may be required.
At the state level, a series of permits are required related to air quality, wetlands, water quality (waste water and storm water), grading, endangered species and archaeological assessments in addition to other permits depending upon site specific factors and operational detail.
1 unchanged sentence
A non-metallic mining reclamation permit is required.
−Removed: A decision by a
−Removed: governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to continue operations.
+Added: A decision by a governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to continue operations.
Title to, and the area of, mineral properties and water rights may also be disputed.
Mineral properties sometimes contain claims or transfer histories that examiners cannot verify.
−Removed: A successful claim that we do not have title to our property or lack appropriate water rights could cause us to lose any rights to explore, develop and extract minerals, without compensation for our prior expenditures relating to such property.
+Added: A successful claim that we do not have title to our property or lack appropriate water rights could cause us to lose any rights to explore, develop and extract minerals, without compensation
+Added: for our prior expenditures relating to such property.
Our business may suffer a material adverse effect in the event we have title deficiencies.
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In addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period.
−Removed: Our systems and insurance coverage for protecting against cyber security risks may not be sufficient.
+Added: Our systems and insurance coverage for
+Added: protecting against cyber security risks may not be sufficient.
As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.
+Added: Laws and regulations governing cybersecurity, data privacy, and the unauthorized disclosure of confidential or protected information pose increasingly complex compliance challenges, and failure to comply with these laws could result in penalties and legal liability.
Our insurance coverage for cyberattacks may not be sufficient to cover all the losses we may experience as a result of such cyberattacks.
1 unchanged sentence
Our largest stockholder controls a significant percentage of our common stock, and its interests may conflict with those of our other stockholders.
−Removed: Wexford, through its affiliate MEH Sub LLC, beneficially own approximately 47.6% of our outstanding common stock.
+Added: Wexford, through its affiliate MEH Sub LLC, beneficially owns approximately 47.5% of our outstanding common stock.
As a result, Wexford can exercise significant influence over matters requiring stockholder approval, including the election of directors, changes to our organizational documents and significant corporate transactions.
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If we are unable to continue comply with Section 404 or if the costs related to compliance are significant, our profitability, stock price, results of operations and financial condition could be materially adversely affected.
−Removed: As a smaller reporting company and an accelerated filer, we are required to document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting under Section 404 of the Sarbanes Act of 2002.
+Added: As a smaller reporting company and, as of December 31, 2022, a non-accelerated filer, we are required to document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting under Section 404 of the Sarbanes Act of 2002.
As we perform the required testing of our internal control over financial reporting, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through this review.
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If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we or our auditors identify material weaknesses in internal control over financial reporting, the accuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
−Removed: In addition, a material weakness in
−Removed: the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.
+Added: In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.
The corporate opportunity provisions in our certificate of incorporation could enable Wexford or other affiliates of ours to benefit from corporate opportunities that might otherwise be available to us.
7 unchanged sentences
We have engaged in transactions and expect to continue to engage in transactions with affiliated companies.
−Removed: As described elsewhere in this report, including in the notes to our consolidated financial statements, these transactions include, among others, a joint venture, agreements to provide our services and frac sand products to our affiliates and agreements pursuant to which our affiliates provide or will provide us with certain services, including administrative and advisory services and office space.
+Added: As described elsewhere in this report, including in the notes to our consolidated financial statements, these transactions include, among others, a joint venture, agreements to provide our services and frac sand products to our affiliates and agreements pursuant to which our affiliates provide us with facilities.
Each of these entities is either controlled by or affiliated with Wexford, as the case may be, and the resolution of any conflicts that may arise in connection with such related party transactions, including pricing, duration or other terms of service, may not always be in our or our stockholders’ best interests because Wexford may have the ability to influence the outcome of these conflicts.
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Sales of these shares of common stock or sales of substantial amounts of our common stock by other stockholders, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock.
−Removed: As of December 31, 2021, Wexford beneficially owned 47.6% shares of our common stock, respectively.
+Added: As of December 31, 2022, Wexford beneficially owned 47.5% shares of our common stock.
Sales of these shares of common stock or sales of substantial amounts of our common stock by other stockholders, or the perception that such sales may occur, could cause the price of our common stock to decline.
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These provisions also could discourage proxy contests and make it more difficult for you and other stockholders to elect directors and take other corporate actions.
−Removed: As a result, these provisions could make it more difficult for a third party to
−Removed: acquire us, even if doing so would benefit our stockholders, which may limit the price that investors are willing to pay in the future for shares of our common stock.
+Added: As a result, these provisions could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders, which may limit the price that investors are willing to pay in the future for shares of our common stock.
Our certificate of incorporation designates courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
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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.