24 unchanged sentences
and drilling services.
−Removed: Since the dates presented below, we have conducted our operations through the following entities:
+Added: Prior to 2023, we included Bison Trucking LLC, or Bison Trucking, in our drilling segment.
+Added: Based on our assessment of FASB ASC 280, Segment Reporting , guidance at December 31, 2023, we changed our presentation in 2023 to move Bison Trucking to the reconciling column titled “All Other”.
+Added: The results for the year ended December 31, 2022 have been retroactively adjusted to reflect this change.
Well Completion Services Segment
25 unchanged sentences
• Panther Drilling Systems LLC—December 2012
−Removed: • Bison Trucking LLC—August 2013
• Great White Sand Tiger Lodging Ltd.—October 2007
1 unchanged sentence
• Redback Coil Tubing, LLC—May 2012
+Added: • Bison Trucking—August 2013
• Anaconda Rentals LLC, formerly White Wing Tubular Services LLC—September 2014
11 unchanged sentences
• IFX Transport LLC—December 2018
−Removed: • Air Rescue Systems LLC—December 2018
+Added: • Air Rescue Systems LLC (“ARS”)—December 2018 through July 13, 2023
• Leopard Aviation LLC—April 2019
• Anaconda Manufacturing LLC—September 2019
−Removed: Our Response to COVID-19 and Related Market Conditions
−Removed: 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 continuing to monitor the 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.
−Removed: 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 adverse conditions recur.
−Removed: 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, inflationary pressures, rising interest rates, any changes in the near-term or long-term outlook for our industries or overall macroeconomic conditions on our business, financial condition, results of operations, cash flows and stock price or the pace or extent of any subsequent recovery.
−Removed: Although demand across our three largest segments has improved during 2022 and remained strong in the fourth quarter of 2022, we continue to address the external challenges in today’s economic environment as we remain disciplined with our spending and are focused on continuing to improve our operational efficiencies and cost structure and on enhancing value for our stockholders.
−Removed: 2022 Highlights
+Added: On July 13, 2023, the Company sold its equity interests in ARS.
+Added: Activity for ARS through the date of sale is included in the accompanying results of operations.
+Added: 2023 Financial Overview and Highlights
• Net loss of $3.2 million, or $0.07 per diluted share, for the year ended December 31, 2023 as compared to net loss of $0.6 million, or $0.01 per diluted share, for the year ended December 31, 2022.
−Removed: • Adjusted EBITDA of $86.1 million for the year ended December 31, 2022, a $97.7 million increase compared to ($11.6) million for the year ended December 31, 2021.
−Removed: See “Non-GAAP Financial Measures” below for a reconciliation of net income (loss) to Adjusted EBITDA.
−Removed: • Doubled our active frac fleet count from two at the beginning of 2022 to four active fleets to close out the year and have added an additional fleet subsequent to December 31, 2022 for a total of five of our six fleets active currently
−Removed: • Executed two sand supply agreements with third-party service providers with terms of 12 months and 21 months, respectively, beginning on January 1, 2023.
−Removed: Under the terms of the agreements, we have agreed to supply, in aggregate, approximately 1.75 million tons of sand over the contract periods.
−Removed: • As part of our environmental and social responsibility initiatives, we previously converted one of our pressure pumping fleets to a dual fuel spread and, subject to market conditions, supply chain constraints and liquidity requirements, have plans to convert our sixth pressure pumping fleet to Tier 4, dual fuel, which we expect will be put into operation in the second half of 2023, as well as upgrade two of our existing fleets to Tier 2, dual fuel, giving us a total of four dual fuel fleets by year-end 2023.
+Added: • Adjusted EBITDA of $71.0 million for the year ended December 31, 2023 as compared to $86.1 million for the year ended December 31, 2022.
+Added: See “Non-GAAP Financial Measures” below for a reconciliation of net loss to Adjusted EBITDA.
+Added: • Reduced debt by $40.7 million from $83.5 million as of December 31, 2022 to $42.8 million as of December 31, 2023.
+Added: • Net cash flow provided by operating activities was $31.4 million for the year ended December 31, 2023 as compared to $15.3 million for the year ended December 31, 2022.
+Added: • On August 10, 2023, our board of directors approved a stock repurchase program pursuant to which we are authorized to repurchase up to the lesser of $55 million or 10 million shares of our common stock, subject to liquidity considerations and other factors.
+Added: No shares have yet been repurchased under this stock repurchase program.
+Added: See “—Repurchase Program Authorization” below.
+Added: • On October 16, 2023, we entered into the new revolving credit facility and the new term credit facility, in each case maturing on the specified date in 2028, subject to the terms and conditions thereof, which facilities refinanced in full
+Added: our indebtedness outstanding under the then existing credit facility.
+Added: See “—Liquidity and Capital Resources—New Revolving Credit Facility and New Term Credit Facility” for additional information regarding the new revolving credit facility and the new term loan.
+Added: • On December 1, 2023, Cobra, as seller, and Mammoth, as guarantor, entered into an assignment agreement (the “Assignment Agreement”) with SPCP Group, LLC (“SPCP Group”).
+Added: Under the terms and conditions of the Assignment Agreement, Cobra transferred to SPCP Group all of its rights, title and interest in $54.4 million of outstanding accounts receivable with PREPA and received net proceeds of $46.1 million.
+Added: Subsequent to December 31, 2023, PREPA paid $64.0 million with respect to the outstanding PREPA receivable.
+Added: Of the $64.0 million, $54.4 million was paid to SPCP Group, as Cobra’s assignee under the Assignment Agreement, which fully extinguished Cobra’s and Mammoth’s obligations to SPCP Group, and the Assignment Agreement was terminated.
+Added: The remaining $9.6 million was paid to Cobra.
Overview of Our Industries
3 unchanged sentences
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.
−Removed: The levels of capital expenditures of our customers are predominantly driven by the prices of oil and natural gas.
+Added: The levels of capital expenditures of our customers are driven by many factors, including the prices of oil and natural gas.
In March and April 2020, concurrent with the COVID-19 pandemic and quarantine orders in the U.S.
2 unchanged sentences
oil production stabilized as commodity prices increased and demand for crude oil rebounded.
−Removed: We saw improvements in the oilfield services industry and in both pricing and utilization of our well completion and drilling services during 2022 and we expect both pricing and utilization to remain at these levels throughout 2023 as a result of an increase in budgets for publicly traded exploration and production companies and elevated activity levels, driven by improved energy demand and strong commodity prices.
−Removed: The ongoing war and related humanitarian crisis in Ukraine, however, could have an adverse impact on the global energy markets and volatility of commodity prices.
−Removed: 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.
+Added: We saw improvements in the oilfield services industry and in both pricing and utilization of our well completion and drilling services during 2022.
+Added: Throughout 2023, pricing for crude oil and natural gas declined from levels seen in 2022, which slowed down completion activities for our customers, in particular, in the Utica and Marcellus Shale natural gas plays, and, as a result, reduced demand for our well completion services.
+Added: These factors have continued into the first quarter of 2024.
+Added: Despite this near-term softness, however, we are seeing indications that activity levels will begin to ramp back up in mid-2024, creating the opportunity to reactivate additional fleets, if appropriate.
+Added: The ongoing war in Ukraine and the recent Israel-Hamas war, however, could continue to have an adverse impact on the global energy markets and volatility of commodity prices, which could further adversely impact demand for our well completion services.
+Added: 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 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: During 2022, our well completion services division exhibited strong performance, fueled by the increase in demand in the pressure pumping industry.
−Removed: We are currently operating five of our six pressure pumping fleets.
−Removed: Subject to market conditions, supply chain constraints and liquidity requirements, we have plans to upgrade our sixth spread to Tier 4, dual fuel to be put into operation in the second half of 2023, as well as upgrade two of our existing fleets to Tier 2, dual fuel, giving us a total of four dual fuel fleets by year-end 2023.
−Removed: However, strong demand in the pressure pumping industry and continuing supply chain disruptions have resulted in backlogs of equipment and replacement parts for our and our competitors’ pressure pumping fleets, which we expect to persist through at least the first half of 2023.
−Removed: Any of these factors may result in the delay of our plans to convert or activate our sixth pressure pumping fleet, or upgrade two of our existing fleets, in the second half of 2023, which may adversely impact our business, financial condition and cash flow.
−Removed: We continue to closely monitor our cost structure in response to market conditions and intend to pursue additional cost savings where possible.
−Removed: Further, a significant portion of our revenue from our pressure pumping business had historically been derived from Gulfport.
−Removed: 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.
−Removed: Gulfport did not make the payments owed to us under this contract for any periods subsequent to its alleged December 28, 2019
−Removed: termination date.
−Removed: Further, on November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
−Removed: 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 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.
−Removed: We have not been able to obtain long-term contracts with other customers to replace our contract with Gulfport.
−Removed: Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information.
Natural Sand Proppant Industry
−Removed: In our natural sand proppant services business, we experienced a significant decline in demand of our sand proppant in the second half of 2019 and throughout 2020 as a result of completion activity falling due to lower oil demand and pricing, increased capital discipline by our customers, budget exhaustion and the COVID-19 pandemic.
+Added: We experienced a significant decline in demand of our sand proppant in the second half of 2019 and throughout 2020 as a result of completion activity falling due to lower oil demand and pricing, increased capital discipline by our customers, budget exhaustion and the COVID-19 pandemic.
Activity rebounded modestly in 2021 and continued to increase throughout 2022 as we saw an increase in the volume of sand sold.
−Removed: Supply constraints from labor shortages have negatively affected West Texas in-basin mine operations and increased demand for Northern White frac sand for the region in 2022.
−Removed: Demand from oil and gas companies in Western Canada and the Marcellus Shale has also being strong in 2022.
−Removed: The increase in activity in 2022 resulted in an increase in demand and pricing for our sand and we expect that prices will remain at these levels throughout 2023.
+Added: Supply constraints from labor shortages negatively affected West Texas in-basin mine operations and increased demand for Northern White frac sand for the region in 2022.
+Added: Demand from oil and gas companies in Western Canada and the Marcellus Shale was also strong in 2022.
+Added: The increase in activity in 2022 resulted in an increase in demand and pricing for our sand, which continued throughout the first quarter of 2023.
+Added: Demand for our natural sand proppant was adversely impacted in the second quarter of 2023 by the wildfires in Canada, which hindered our ability to transport sand.
+Added: Notwithstanding the foregoing, our sand business remained resilient during the second quarter of 2023.
+Added: As discussed above, pricing for crude oil and natural gas declined from levels seen in 2022, which slowed down completion
+Added: activities and adversely impacted demand for our sand proppant services in the second half of 2023.
+Added: We are beginning to see an uptick in orders for our sand in the first quarter of 2024 and anticipate higher demand in 2024, partially driven by western Canada, which we expect to be accretive to current pricing.
As a result of adverse market conditions, production at our Muskie sand facility in Pierce County, Wisconsin has been temporarily idled since September 2018.
Our contracted capacity has provided a baseline of business, which has kept our Taylor and Piranha plants operating and our costs competitive.
−Removed: A portion of our revenue from our natural sand proppant business historically had been derived from Gulfport pursuant to a long-term contract.
−Removed: Gulfport did not made the payments owed to us under this contract for any periods subsequent to May 2020.
−Removed: In September 2020, we filed a lawsuit seeking to recover delinquent payments owed to us under this contract.
−Removed: On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.
−Removed: 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.
−Removed: Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information.
Energy Infrastructure Industry
10 unchanged sentences
Our work under each of the contracts with PREPA ended on March 31, 2019.
−Removed: As of December 31, 2022, PREPA owed us approximately $227 million for services we performed, excluding $152.0 million of interest charged on these delinquent balances as of December 31, 2022.
+Added: As of December 31, 2023, PREPA owed us approximately $204.8 million for services we performed, excluding $197.5 million of interest charged on delinquent balances as of December 31, 2023.
Summary of Significant Accounting Policies—Accounts Receivable to our consolidated financial statements included elsewhere in this report.
2 unchanged sentences
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.
−Removed: On September 30, 2019, we filed a motion with the U.S.
−Removed: District Court for the District of Puerto Rico seeking recovery of the amounts owed to us by PREPA, which motion was stayed by the Court.
−Removed: On March 25, 2020, we filed an urgent motion to modify the stay order and
−Removed: allow our recovery of approximately $62 million in claims related to a tax gross-up provision contained in the first contract.
−Removed: 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 report by June 7, 2021.
−Removed: On April 6, 2021, we filed a motion to lift the stay order.
−Removed: 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.
−Removed: The joint motion was granted by the Court on April 14, 2021.
−Removed: 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.
−Removed: 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.
−Removed: The parties were further directed to file an additional status report, which was filed on July 20, 2021.
−Removed: 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: FEMA approved the appeal in part and denied the appeal in part.
−Removed: FEMA found that staffing costs of $24.4 million are eligible for funding.
−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.
−Removed: On January 26, 2022, the Court extended the stay and directed the parties to file a further status report by July 25, 2022.
−Removed: On June 7, 2022, Cobra filed a motion to lift the stay order.
−Removed: On June 29, 2022 the Court denied Cobra’s motion and extended the stay to January 2023.
−Removed: 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.
−Removed: 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.
−Removed: 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 Memorandums and, to the extent they feel plausible, file a first-level administrative appeal of the unauthorized amounts.
−Removed: 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.
−Removed: 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 proceedings 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.
−Removed: On January 20, 2023, Cobra submitted a certified claim for approximately $379 million to FEMA pursuant to the federal Contract Disputes Act.
−Removed: 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.
−Removed: Therefore, no final decision will be issued in response to Cobra’s claim.
−Removed: Cobra has 90 days from the February 1, 2023 decision to file a notice of appeal.
+Added: Since September 30, 2019, we have been pursuing litigation in the U.S.
+Added: District Court for the District of Puerto Rico and other dispute resolution efforts seeking recovery of the amounts owed to Cobra by PREPA for restoration services in Puerto Rico, which proceedings are discussed in more detail in Note 20—“Commitments and Contingencies—Litigation” included elsewhere in this report.
+Added: In connection with these efforts, in 2023, an aggregate of $99 million was approved by FEMA for reimbursement to Cobra for services performed by Cobra, of which amount approximately $22.2 million was paid by PREPA to Cobra in 2023.
+Added: On December 1, 2023, Cobra, as seller, and Mammoth, as guarantor, entered into an assignment agreement (the “Assignment Agreement”) with SPCP Group, LLC (“SPCP Group”), pursuant to which Cobra transferred to SPCP Group all of its rights, title and interest in $54.4 million of outstanding accounts receivable with PREPA and received net proceeds of $46.1 million.
+Added: See “—Liquidity and Capital Resources—Cobra Assignment Agreement” for additional information.
+Added: On December 4, 2023, following submission of a joint status report by Cobra and FEMA on December 1, 2023, in which, among other things, PREPA reported that they submitted a request for reimbursement to COR3 on November 1, 2023 for $82.4 million and is disputing approximately $1.5 million of invoices from Cobra, the Court ordered PREPA to provide a detailed summary of each of their objections to the disputed amounts and directed the parties to report the status of any remaining unpaid approved invoices in connection with the status report due on January 16, 2024.
+Added: On January 16, 2024, the parties filed a joint status report in which, among other things, PREPA reported that on December 28, 2023, it received a disbursement from COR3 for the amount requested on November 1, 2023 and was in the process of paying approximately $13.4 million in approved but unpaid invoices for reimbursements for services performed by Cobra to SPCP Group as Cobra’s assignee, which amount was paid by PREPA on January 18, 2024.
+Added: PREPA, however, also informed the Court that it will withhold the release of any further funds to Cobra approved by FEMA for reimbursement to Cobra due to the municipal and construction excise tax claims against Cobra allegedly aggregating to $70.4 million.
+Added: Cobra believes it is exempt from the construction excise taxes and strongly disagrees with PREPA’s decision to withhold funds.
+Added: On January 17, 2024, Cobra filed a Writ of Certiorari requesting the Court of Appeals to reverse the order from the Humacao Superior Court.
+Added: On February 15, 2024, Cobra’s request was granted by the Court of Appeals and the order instructing PREPA to withhold the $9.0 million payment from Cobra was revoked.
+Added: The case was remanded to the lower Court for continuation of the proceedings in accordance with the Court of Appeals’ order.
+Added: The municipality has 15 days to request reconsideration.
+Added: On January 19, 2024, the Court extended the previously ordered stay in the proceedings through April 5, 2024, and directed the parties to file a joint status report addressing (i) the status of any
+Added: administrative appeals in connection with the November 2022 and December 2022 determination memoranda regarding the second contract, (ii) the status of any remaining approved, but unpaid invoices, and (iii) whether the parties are actively engaged in mediation to resolve their outstanding issues by March 27, 2024.
+Added: Subsequent to December 31, 2023, PREPA paid $64.0 million with respect to the outstanding PREPA receivable, of which $9.6 million was paid to Cobra and $54.4 million was paid to SPCP Group, as Cobra’s assignee under the Assignment Agreement, which fully extinguished Cobra’s and Mammoth’s obligations to SPCP Group under the Assignment Agreement, and the Assignment Agreement was terminated.
We believe all amounts charged to PREPA were in accordance with the terms of the contracts.
16 unchanged sentences
Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information regarding these investigations and proceedings.
−Removed: Further, as noted above, our
−Removed: 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.
−Removed: 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 management changes throughout the year, which resulted in crew departures, and a decline in storm restoration activities.
−Removed: During the third quarter of 2021, we made leadership changes in our infrastructure group and have focused on cutting costs, improving margins and enhancing accountability across the division.
−Removed: During 2022, operational improvements combined with increased crew count drove enhanced results.
−Removed: Our average crew count increased from approximately 82 crews as of December 31, 2021 to approximately 91 crews as of December 31, 2022, and we continue to add crew capacity for a sector that has a healthy bidding environment.
+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: During 2022, operational improvements combined with increased crew count drove enhanced results in our infrastructure services division compared to 2021.
+Added: Although our average crew count declined slightly from approximately 91 crews throughout 2022 to approximately 83 crews throughout 2023, operational efficiencies drove comparable results.
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.
−Removed: We anticipate the federal spending to begin fueling additional projects in this sector beginning in late 2023.
+Added: We anticipate the federal spending to begin fueling additional projects in this sector and expect bidding activity to ramp up in 2024.
We continue to focus on operational execution and 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, especially in fiber maintenance and installation projects.
−Removed: In late 2021, we were awarded a fiber installation contract as well as an electric vehicle charging station engineering contract.
−Removed: Both of these projects are currently in process.
We work for multiple utilities primarily across the northeastern, southwestern, midwestern and western portions of the United States.
2 unchanged sentences
Results of Operations
−Removed: Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
+Added: The following discussion focuses on a comparison of the results of operations between the years ended December 31, 2023 and 2022.
+Added: For a discussion of the results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021, please refer to “Part II, Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 (filed with the SEC on February 24, 2023), which is incorporated in this report by reference from such prior report on Form 10-K.
December 31, 2023 December 31, 2022
19 unchanged sentences
Impairment of goodwill 1,810 —
−Removed: Impairment of other long-lived assets — 1,212
Operating loss (16,685) (16,418)
−Removed: Interest expense, net (11,506) (6,406)
+Added: Interest expense and financing charges, net (16,196) (11,506)
Other income, net 42,015 40,912
−Removed: Income (loss) before income taxes 12,988 (124,293)
−Removed: Provision (benefit) for income taxes 13,607 (22,863)
+Added: Income before income taxes 9,134 12,988
+Added: Provision for income taxes 12,297 13,607
Net loss $ (3,163) $ (619)
−Removed: Revenue for 2022 increased $133.1 million, or 58%, to $362.1 million from $229.0 million for 2021.
−Removed: The increase in total revenue is primarily attributable to increases in utilization across all operating divisions.
+Added: Revenue for 2023 decreased $52.6 million, or 15%, to $309.5 million from $362.1 million for 2022.
+Added: The decline in total revenue is primarily attributable to a decrease in utilization in our well completion services division as well as a decline in tons sold in our natural sand proppant services division.
Revenue derived from related parties was $1.0 million for 2023 compared to $1.1 million for 2022.
−Removed: Substantially all of our related party revenue for 2021 was derived from Gulfport under pressure pumping and sand contracts which have since ended.
Revenue by division was as follows:
Well Completion Services .
−Removed: Well completion services division revenue increased $86.4 million, or 102%, to $170.7 million for 2022 from $84.3 million for 2021.
−Removed: Revenue derived from related parties was $14.8 million, or 18% of total well completion revenue, for 2021.
−Removed: All of our related party revenue for 2021 was derived from Gulfport under a pressure pumping contract which has ended.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our other services and sand segment, totaled $0.8 million and $0.1 million, for 2022 and 2021, respectively.
−Removed: The increase in our well completion services revenue was primarily driven by an increase in both utilization and pricing.
−Removed: The number of stages completed increased 142% to 6,149 for 2022 from 2,544 for 2021.
+Added: Well completion services division revenue decreased $39.4 million, or 23%, to $131.3 million for 2023 from $170.7 million for 2022.
+Added: Intersegment revenue, consisting primarily of revenue derived from our other services and natural sand proppant segment, totaled $0.5 million and $0.8 million, for 2023 and 2022, respectively.
+Added: The decline in our well completion services revenue was primarily driven by decreased utilization.
+Added: The number of stages completed declined 31% to 4,220 for 2023 from 6,149 for 2022.
An average of 1.8 of our six fleets were active throughout 2023 compared to 3.0 fleets for 2022.
Infrastructure Services.
−Removed: Infrastructure services division revenue increased $18.1 million, or 19%, to $111.5 million for 2022 from $93.4 million for 2021 primarily due to an increase in average crew count from 82 crews during the year ended December 31, 2021 to an average of 91 crews during the year ended December 31, 2022 as well as improved operational efficiency.
−Removed: This was partially offset by a decline in storm restoration activity during the year ended December 31, 2022 compared to the year ended December 31, 2021, resulting in an $11.0 million decrease in storm restoration revenue.
+Added: Infrastructure services division revenue decreased $1.0 million, or 1%, to $110.5 million for 2023 from $111.5 million for 2022 primarily due to a decline in average crew count from 91 crews during the year ended December 31, 2022 to an average of 83 crews during the year ended December 31, 2023.
+Added: This was partially offset by an increase in storm restoration activity of $4.5 million during the year ended December 31, 2023 compared to the year ended December 31, 2022.
Natural Sand Proppant Services.
−Removed: Natural sand proppant services division revenue increased $16.5 million, or 47%, to $51.4 million for 2022, from $34.9 million for 2021.
−Removed: Revenue derived from related parties was $2.1 million, or 6% of total sand revenue, for 2021.
−Removed: All of our related party revenue for 2021 was derived from Gulfport under a sand supply contract which has ended.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was $2.5 million, or 5% of total sand revenue, for 2022 and $4.0 million, or 11% of total sand revenue, for 2021.
−Removed: The increase in our natural sand proppant services revenue was primarily attributable to a 62% increase in average price per ton of sand sold from $16.76 in 2021 to $27.11 in 2022 coupled with a 40% increase in tons of sand sold from approximately 1.0 million tons in 2021 to 1.4 million tons in 2022.
−Removed: Included in natural sand proppant services revenue is shortfall revenue of $3.1 million and $12.0 million, for 2022 and 2021, respectively.
+Added: Natural sand proppant services division revenue decreased $12.3 million, or 24%, to $39.1 million for 2023, from $51.4 million for 2022.
+Added: Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was a nominal amount for 2023 and $2.5 million, or 5% of total sand revenue, for 2022.
+Added: The decrease in our natural sand proppant services revenue was primarily attributable to declines in freight and shortfall revenue of $7.7 million and $1.1 million, respectively, coupled with a 14% decline in tons of sand sold from approximately 1.4 million tons in 2022 to 1.2 million tons in 2023.
+Added: This was partially offset by a 10% increase in average price per ton of sand sold from $27.11 in 2022 to $29.86 in 2023.
Drilling Services .
−Removed: Drilling services division revenue increased $6.1 million, or 142%, to $10.4 million for 2022, from $4.3 million for 2021.
+Added: Drilling services division revenue decreased $1.3 million, or 15%, to $7.1 million for 2023, from $8.4 million for 2022.
Revenue derived from related parties, consisting primarily of directional drilling revenue from El Toro Resources LLC, was $0.5 million for 2023 and $0.8 million for 2022.
−Removed: The increase in our drilling services revenue was primarily attributable to increased utilization for our directional drilling business from 21% for 2021 to 44% for 2022 as well as a 44% increase in the average day rate from 2021 to 2022.
+Added: The decrease in our drilling services revenue was primarily attributable to decreased utilization for our directional drilling business from 44% for 2022 to 36% for 2023, which was partially offset by an increase in the average dayrate.
Other Services.
−Removed: Revenue from other services, consisting of revenue derived from our aviation, equipment rental, remote accommodation and equipment manufacturing, increased $4.6 million, or 25%, to $23.1 million for 2022 from $18.5 million for 2021.
−Removed: Revenue derived from related parties, consisting primarily of aviation revenue from Brim Equipment Leasing, Inc., or Brim, was $0.3 million, or 1% of total other services revenue, for 2022 and $0.4 million, or 2% of total other services revenue, for 2021.
+Added: Revenue from other services, including our aviation, equipment rental, remote accommodation and equipment manufacturing businesses decreased $1.1 million, or 4%, to $24.1 million for 2023 from $25.2 million for 2022.
+Added: Revenue derived from related parties, consisting primarily of aviation revenue from Brim Equipment Leasing, Inc., or Brim, was $0.4 million for 2023 and $0.3 million for 2022.
Intersegment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, totaled $2.1 million and $1.7 million, for 2023 and 2022, respectively.
−Removed: The increase in our other services revenue was primarily due to improved utilization for our equipment rental business.
−Removed: We rented an average of 249 pieces of equipment to customers during 2022, an increase of 84% from an average of 135 pieces of equipment rented to customers during 2021.
−Removed: Additionally, utilization for remote accommodations business increased.
+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 241 pieces of equipment to customers during 2023, a decrease of 3% from an average of 249 pieces of equipment rented to customers during 2022.
+Added: This was offset by an increase in utilization for remote accommodations business.
On average, 178 rooms were utilized per night during 2023, a 3% increase from an average of 172 rooms utilized per night in 2022.
Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense) .
−Removed: Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, increased $80.3 million from $198.3 million, or 87% of total revenue, for 2021 to $278.6 million, or 77% of total revenue, for 2022.
−Removed: The increase was primarily due to an increase in cost of revenue across all divisions as a result of improved utilization.
+Added: Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $30.8 million from $278.6 million, or 77% of total revenue, for 2022 to $247.8 million, or 80% of total revenue, for 2023.
Cost of revenue by operating division was as follows:
Well Completion Services .
−Removed: Well completion services division cost of revenue, exclusive of depreciation and amortization expense, increased $64.1 million, or 99%, from $64.6 million for 2021 to $128.7 million for 2022 primarily due to an increase in cost of goods sold as a result of providing sand and chemicals with our service package to customers during 2022 as well as an increase in labor costs as a result of additional fleets in service.
+Added: Well completion services division cost of revenue, exclusive of depreciation and amortization expense, decreased $20.0 million, or 16%, from $128.7 million for 2022 to $108.7 million for 2023 primarily due to a decline in utilization.
As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $16.8 million in 2023 and $22.1 million in 2022, was 83% and 75%, for 2023 and 2022, respectively.
+Added: The increase as a percentage of revenue is primarily due to a decrease in utilization of our pressure pumping services, resulting in a higher ratio of fixed costs to variable costs.
Infrastructure Services.
−Removed: Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, increased $1.0 million from $90.6 million for 2021 to $91.6 million for 2022.
−Removed: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $16.2 million in 2022 and $21.9 million in 2021, was 82% and 97%, for 2022 and 2021, respectively.
−Removed: The decline as a percentage of revenue is
−Removed: primarily due to improved pricing as well as a decline in labor related costs as a result of improved efficiency of our crews.
+Added: Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, decreased $1.0 million from $91.6 million for 2022 to $90.6 million for 2023.
+Added: As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $8.4 million in 2023 and $16.2 million in 2022, was 82% for each of 2023 and 2022, respectively.
Natural Sand Proppant Services.
−Removed: Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, increased $9.6 million, or 35%, from $27.2 million for 2021 to $36.8 million for 2022.
+Added: Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $10.5 million, or 29%, from $36.8 million for 2022 to $26.3
+Added: million for 2023.
As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $7.7 million in 2023 and $8.7 million in 2022, was 67% and 72%, for 2023 and 2022, respectively.
−Removed: The decrease in cost as a percentage of revenue is primarily due to a 62% increase in average sales price and a 37% increase in tons sold.
+Added: The decrease in cost as a percentage of revenue is primarily due to a 10% increase in average sales price.
Drilling Services.
−Removed: Drilling services division cost of revenue, exclusive of depreciation and amortization expense, increased $3.7 million, or 61%, from $6.1 million for 2021 to $9.8 million for 2022, as a result of increased activity.
+Added: Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $0.5 million, or 7%, from $7.6 million for 2022 to $7.1 million for 2023.
As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $4.5 million in 2023 and $5.8 million in 2022, was 100% and 90%, for 2023 and 2022, respectively.
−Removed: The decline in 2022 is primarily due to increases in utilization and pricing.
+Added: The increase as a percentage of revenue in 2023 is primarily due to a decrease in utilization, resulting in a higher ratio of fixed costs to variable costs.
Other Services .
−Removed: Other services cost of revenue, exclusive of depreciation and amortization expense, increased $0.2 million, or 1%, from $16.3 million for 2021 to $16.5 million for 2022.
+Added: Other services cost of revenue, exclusive of depreciation and amortization expense, decreased $1.0 million, or 5%, from $18.8 million for 2022 to $17.8 million for 2023.
As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $7.7 million in 2023 and $11.5 million in 2022, was 74% and 75%, for 2023 and 2022, respectively.
−Removed: The decrease as a percentage of revenue in 2022 is primarily due to an increase in utilization.
Selling, General and Administrative Expenses .
Selling, general and administrative expenses, or SG&A, represent the costs associated with managing and supporting our operations.
+Added: SG&A expense decreased $2.1 million, or 5%, to $37.5 million for the year ended December 31, 2023 from $39.6 million for the year ended December 31, 2022 primarily due to a decrease in the provision for expected credit losses.
The following is a breakout of SG&A expenses for the periods indicated (in thousands):
5 unchanged sentences
Non-cash expenses:
−Removed: Bad debt provision (b)
+Added: Change in provision for expected credit losses (591) 3,389
Stock based compensation 1,345 923
2 unchanged sentences
Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
−Removed: 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.
Depreciation, Depletion, Amortization and Accretion .
2 unchanged sentences
Gains on Disposal of Assets, Net.
−Removed: Gains on the disposal of assets decreased $1.2 million, or 24%, to $3.9 million for 2022 from $5.1 million in 2021.
−Removed: Gains on the disposal of assets is primarily related to the sale of trucks, land and buildings for the year ended December 31, 2022 and trucking assets for the year ended December 31, 2021.
+Added: Gains on the disposal of assets increased $2.1 million, or 54%, to $6.0 million for 2023 from $3.9 million in 2022.
+Added: Gains on the disposal of assets is primarily related to the sale of a drilling rig, trucks, and field equipment for the years ended December 31, 2023 and trucks, land and buildings for the year ended December 31, 2022.
Impairment of Goodwill .
−Removed: We recorded impairment of goodwill of $0.9 million in 2021.
−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, 2021, resulting in impairment expense of $0.9 million.
+Added: As a result of the sale of ARS, we performed an impairment assessment of our goodwill for the Aviation reporting unit.
+Added: We determined that the carrying value of goodwill for our Aviation reporting unit exceeded the fair value, resulting in impairment expense of $1.8 million for the year ended December 31, 2023.
We did not recognize any impairment of goodwill in 2022.
−Removed: Impairment of Other Long-lived Assets .
−Removed: We recorded impairments of other long-lived assets of $1.2 million for 2021.
−Removed: Beginning in 2021, we temporarily shut down our crude oil hauling operations, resulting in impairment of trade names of $0.5 million.
−Removed: 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.
−Removed: We did not recognize any impairment of other long-lived assets in 2022.
Operating Loss.
−Removed: We reported an operating loss of $16.4 million for 2022 compared to an operating loss $123.0 million for 2021.
−Removed: The reduced operating loss in 2022 was primarily due to a decline in costs as a percentage of revenue as well as increased activity across all operating divisions as described above.
−Removed: Interest Expense, net .
−Removed: Interest expense, net increased $5.1 million to $11.5 million for 2022 from $6.4 million for 2021, primarily due to an increase in the interest rate and average borrowings outstanding under our revolving credit facility.
+Added: We reported an operating loss of $16.7 million for 2023 compared to $16.4 million for 2022.
+Added: The increased operating loss in 2023 was primarily due to reduced utilization across our well completions and natural sand proppant divisions, partially offset by a decline in depreciation, depletion, amortization and accretion expense.
+Added: Interest Expense and financing charges, net .
+Added: Interest expense and financing charges, net increased $4.7 million to $16.2 million for 2023 from $11.5 million for 2022, primarily due to a $2.8 million financing charge incurred in relation to the
+Added: Assignment Agreement with SPCP Group.
+Added: See “—Liquidity and Capital Resources—Cobra Assignment Agreement” for additional information.
Other Income, net.
Other income, net increased $1.1 million during 2023 compared to 2022.
−Removed: 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.
We recognized interest on trade accounts receivable of $45.4 million in 2023 compared to $41.3 million in 2022.
−Removed: Income Taxes .
−Removed: During 2022, we recorded an income tax expense of $13.6 million on pre-tax income of $13.0 million compared to an income tax benefit of $22.9 million on pre-tax loss of $124.3 million for 2021.
−Removed: Our effective tax rate was 104.8% for 2022 compared to 18.4% for 2021.
−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 changes in the valuation allowance that may not be consistent from year to year.
−Removed: See Note 13 to our consolidated financial statements for additional detail regarding our change in tax expense.
−Removed: Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
−Removed: December 31, 2021 December 31, 2020
−Removed: (in thousands)
−Removed: Well completion services $ 84,334 $ 88,325
−Removed: Infrastructure services 93,403 157,751
−Removed: Natural sand proppant services 34,860 34,360
−Removed: Drilling services 4,321 7,785
−Removed: Other services 18,510 28,829
−Removed: Eliminations (6,466) (3,974)
−Removed: Total revenue 228,962 313,076
−Removed: Cost of Revenue:
−Removed: Well completion services (exclusive of depreciation and amortization of $26,356 and $30,395, respectively, for 2021 and 2020) 64,552 47,483
−Removed: Infrastructure services (exclusive of depreciation and amortization of $21,841 and $29,337, respectively, for 2021 and 2020) 90,559 124,555
−Removed: Natural sand proppant services (exclusive of depreciation, depletion and accretion of $8,993 and $9,758, respectively, for 2021 and 2020) 27,232 25,955
−Removed: Drilling services (exclusive of depreciation and amortization of $7,995 and $10,036, respectively, for 2021 and 2020) 6,102 10,909
−Removed: Other services (exclusive of depreciation and amortization of $13,209 and $15,713, respectively, for 2021 and 2020) 16,347 27,093
−Removed: Eliminations (6,466) (3,974)
−Removed: Total cost of revenue 198,326 232,021
−Removed: Selling, general and administrative expenses 78,246 67,185
−Removed: Depreciation, depletion, amortization and accretion 78,475 95,317
−Removed: Gains on disposal of assets, net (5,147) (638)
−Removed: Impairment of goodwill 891 54,973
−Removed: Impairment of other long-lived assets 1,212 12,897
−Removed: Operating loss (123,041) (148,679)
−Removed: Interest expense, net (6,406) (5,397)
−Removed: Other income, net 5,154 34,300
−Removed: Loss before income taxes (124,293) (119,776)
−Removed: Benefit for income taxes (22,863) (12,169)
−Removed: Net loss $ (101,430) $ (107,607)
−Removed: 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 other than our natural sand proppant services division.
−Removed: 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 was derived from Gulfport under pressure pumping and sand contracts.
−Removed: Revenue by division was as follows:
−Removed: Well Completion Services .
−Removed: Well completion services division revenue decreased $4.0 million, or 5%, to $84.3 million for 2021 from $88.3 million for 2020.
−Removed: 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 was derived from Gulfport under a pressure pumping contract which has ended.
−Removed: In 2021, we recognized revenue totaling $15 million related to the modification of our pressure pumping contract with Gulfport.
−Removed: 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.
−Removed: The decrease in our well completion services revenue was primarily driven by a decline in utilization.
−Removed: The number of stages completed decreased 12% to 2,544 for 2021 from 2,880 for 2020.
−Removed: An average of 1.1 of our six fleets were active throughout 2021 compared to 1.5 fleets for 2020.
−Removed: Infrastructure Services .
−Removed: 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 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.
−Removed: Additionally, infrastructure services revenue was negatively impacted by the decrease in crew count from approximately 100 crews as of December 31, 2020 to 82 crews as of December 31, 2021.
−Removed: These crew departures were driven by changes in division level management.
−Removed: Natural Sand Proppant Services.
−Removed: Natural sand proppant services division revenue increased $0.5 million, or 1%, to $34.9 million for 2021, from $34.4 million for 2020.
−Removed: 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 was derived from Gulfport under a sand supply contract which has ended.
−Removed: In 2021, we recognized revenue totaling $2 million related to the modification of our sand supply contract with Gulfport.
−Removed: Intersegment revenue, consisting primarily of revenue derived from our well completion segment, was $4 million, or 11% of total sand revenue, for 2021 and a nominal amount for 2020.
−Removed: 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.
−Removed: Included in natural sand proppant services
−Removed: revenue is shortfall revenue of $12.0 million and $24.8 million, for 2021 and 2020, respectively.
−Removed: Drilling Services.
−Removed: 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 $0.6 million for 2021 and a nominal amount for 2020.
−Removed: The decline in our drilling services revenue was primarily attributable to declines in utilization for our directional drilling and rig hauling businesses.
−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: 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 $10.3 million, or 36%, to $18.5 million for 2021 from $28.8 million for 2020.
−Removed: Revenue derived from related parties, consisting primarily of equipment rental revenue from Gulfport and aviation revenue from 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 $2.2 million and $2.7 million, respectively for 2021 and 2020.
−Removed: The decrease in our other services revenue was primarily due to a decline in utilization for our equipment rental business.
−Removed: We rented an average of 135 pieces of equipment to customers during 2021, a decrease of 34% from an average of 204 pieces of equipment rented to customers during 2020.
−Removed: Additionally, utilization for our crude oil hauling and aviation businesses declined.
−Removed: 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.
−Removed: Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense) .
−Removed: 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.
−Removed: The decrease was primarily due to a decline in activity across all business lines.
−Removed: Cost of revenue by operating division was as follows:
−Removed: Well Completion Services .
−Removed: 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.
−Removed: 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%, respectively, for 2021 and 2020, respectively.
−Removed: 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
−Removed: costs recognized compared to 2021.
−Removed: 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.
−Removed: Infrastructure Services .
−Removed: 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.
−Removed: 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.
−Removed: The increase as a percentage of revenue is primarily due to increased labor costs as a percentage of revenue.
−Removed: Natural Sand Proppant Services.
−Removed: 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.
−Removed: 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%, respectively, for 2021 and 2020, respectively.
−Removed: Drilling Services.
−Removed: 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 $8.0 million in 2021 and $10.0 million in 2020, was 141% and 116%, respectively, for 2021 and 2020, respectively.
−Removed: The increase as a percentage of revenue was primarily due to a decline in utilization.
−Removed: Other Services .
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The decrease as a percentage of revenue is primarily due to a decline in equipment rental costs as a percentage of revenue.
−Removed: Selling, General and Administrative Expenses .
−Removed: Selling, general and administrative expenses, or SG&A, represent the costs associated with managing and supporting our operations.
−Removed: Following is a breakout of SG&A expenses for the periods indicated (in thousands):
−Removed: December 31, 2021 December 31, 2020
−Removed: Cash expenses:
−Removed: Compensation and benefits $ 15,064 $ 14,876
−Removed: Professional services 11,400 19,905
−Removed: Total cash SG&A expense 35,516 43,609
−Removed: Non-cash expenses:
−Removed: Bad debt provision (b)
−Removed: 41,662 21,958
−Removed: Stock based compensation 1,068 1,618
−Removed: Total non-cash SG&A expense 42,730 23,576
−Removed: Total SG&A expense $ 78,246 $ 67,185
−Removed: Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
−Removed: 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.
−Removed: 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.
−Removed: See Notes 2 and 19 of the Notes to the Consolidated Financial Statements.
−Removed: Depreciation, Depletion, Amortization and Accretion .
−Removed: Depreciation, depletion, accretion and amortization 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 a result of lower capital expenditures.
−Removed: Gains on Disposal of Assets, Net.
−Removed: Gains on the disposal of assets increased by $4.5 million, or 707%, to $5.1 million for 2021 from $0.6 million in 2020, primarily due to an increase in sales of trucking assets in 2021.
−Removed: Impairment of Goodwill .
−Removed: We recorded impairment of goodwill of $0.9 million and $55.0 million, respectively, in 2021 and 2020.
−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, 2021, resulting in impairment expense of $0.9 million.
−Removed: As a result of market conditions, we performed an impairment assessment of our goodwill as of March 31, 2020.
−Removed: 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: Impairment of Other Long-lived Assets .
−Removed: We recorded impairments of other long-lived assets of $1.2 million and $12.9 million, respectively, in 2021 and 2020.
−Removed: Beginning in 2021, we temporarily shut down our crude oil hauling operations, resulting in impairment of trade names of $0.5 million.
−Removed: 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.
−Removed: 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: Operating Loss.
−Removed: We reported an operating loss of $123.0 million for 2021 compared to operating loss of $148.7 million for 2020.
−Removed: 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.
−Removed: Interest Expense, net .
−Removed: Interest expense, net increased $1.0 million to $6.4 million and $5.4 million for 2021 and 2020, primarily due to an increase in expense recognized on sale-leaseback transactions.
−Removed: Other Income (Expense), net.
−Removed: Other income, net decreased $29.1 million during 2021 compared to 2020.
−Removed: 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.
−Removed: This expense was partially offset by a $4.4 million increase in interest on delinquent account receivables.
+Added: Additionally, on July 13, 2023, we sold all of our equity interests in ARS resulting in a $2.1 million gain on the sale.
Income Taxes .
−Removed: During 2021, we recorded an income tax benefit of $22.9 million on pre-tax loss of $124.3 million compared to income tax benefit of $12.2 million on pre-tax loss of $119.8 million for 2020.
+Added: During 2023, we recorded income tax expense of $12.3 million on pre-tax income of $9.1 million compared to income tax expense of $13.6 million on pre-tax income of $13.0 million for 2022.
Our effective tax rate was 134.6% for 2023 compared to 104.8% for 2022.
−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 changes in the valuation allowance 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 changes in the valuation allowance and interest and penalties that may not be consistent from year to year.
See Note 14 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, gains on disposal of assets, net, impairment of goodwill, impairment of other long-lived assets, public offering costs, stock based compensation, interest expense, net, other income, net (which is comprised of interest on trade accounts receivable and certain legal expenses) and provision (benefit) 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, gains on disposal of assets, net, impairment of goodwill, impairment of other long-lived assets, public offering costs, stock based compensation, interest expense and financing charges, net, other income, net (which is comprised of interest on trade accounts receivable and certain legal expenses) and provision (benefit) 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:
+Added: Reconciliation of net loss to Adjusted EBITDA:
2023 2022 2021
6 unchanged sentences
Stock based compensation 1,345 923 1,191
−Removed: Interest expense, net 11,506 6,406 5,397
+Added: Interest expense and financing charges, net 16,196 11,506 6,406
Other income, net (42,015) (40,912) (5,154)
4 unchanged sentences
Years Ended December 31,
−Removed: Reconciliation of Adjusted EBITDA to net income (loss):
+Added: Reconciliation of net (loss) income to Adjusted EBITDA:
2023 2022 2021
−Removed: Net income (loss) $ 10,194 $ (58,051) $ (69,073)
+Added: Net (loss) income $ (3,782) $ 10,194 $ (58,051)
Depreciation, depletion, amortization and accretion 16,794 22,103 26,377
Gains on disposal of assets, net (2,091) (615) (770)
−Removed: Impairment of goodwill — — 53,406
−Removed: Impairment of other long-lived assets — — 4,203
Public offering costs — — 31
Stock based compensation 508 380 333
−Removed: Interest expense 1,940 1,107 1,130
−Removed: Other (income) expense, net (343) 1,843 (1,886)
+Added: Interest expense and financing charges, net 4,502 1,940 1,107
+Added: Other expense (income), net 2 (343) 1,843
Interest on trade accounts receivable — — (1,841)
2 unchanged sentences
Years Ended December 31,
−Removed: Reconciliation of Adjusted EBITDA to net income (loss):
+Added: Reconciliation of net income (loss) to Adjusted EBITDA:
2023 2022 2021
6 unchanged sentences
Stock based compensation 538 349 500
−Removed: Interest expense 7,390 3,925 2,794
+Added: Interest expense and financing charges, net 9,753 7,390 3,925
Other income, net (39,252) (40,470) (6,499)
4 unchanged sentences
Years Ended December 31,
−Removed: Reconciliation of Adjusted EBITDA to net loss:
+Added: Reconciliation of net income (loss) to Adjusted EBITDA:
2023 2022 2021
−Removed: Net loss $ (1,945) $ (6,328) $ (11,324)
+Added: Net income (loss) $ 906 $ (1,945) $ (6,328)
Depreciation, depletion, amortization and accretion 7,737 8,732 9,005
2 unchanged sentences
Stock based compensation 187 119 202
−Removed: Interest expense 753 474 312
−Removed: Other (income) expense, net (14) (844) 10
+Added: Interest expense and financing charges, net 540 753 474
+Added: Other income, net (18) (14) (844)
Interest on trade accounts receivable — — (1)
2 unchanged sentences
Years Ended December 31,
−Removed: Reconciliation of Adjusted EBITDA to net loss:
+Added: Reconciliation of net loss to Adjusted EBITDA:
2023 2022 2021
2 unchanged sentences
Gains on disposal of assets, net (1,577) — (205)
−Removed: Impairment of other long-lived assets — — 326
Public offering costs — — 1
Stock based compensation 23 11 66
−Removed: Interest expense 545 293 454
−Removed: Other income, net — 25 126
+Added: Interest expense and financing charges, net 489 435 237
+Added: Other (income) expense, net (33) — 25
Adjusted EBITDA $ (718) $ 186 $ (2,275)
1 unchanged sentence
Years Ended December 31,
−Removed: Reconciliation of Adjusted EBITDA to net (loss) income:
+Added: Reconciliation of net (loss) income to Adjusted EBITDA:
2023 2022 2021
6 unchanged sentences
Stock based compensation 89 64 90
−Removed: Interest expense, net 878 607 707
−Removed: Other income, net (85) 321 (556)
+Added: Interest expense and financing charges, net 912 988 663
+Added: Other (income) expense, net (2,714) (85) 321
Provision (benefit) for income taxes 1,083 180 (23,575)
1 unchanged sentence
Adjusted EBITDA $ 2,615 $ 2,462 $ (2,530)
−Removed: Includes results for our aviation, coil tubing, pressure control, equipment rentals, crude oil hauling, full service transportation, remote accommodations and equipment manufacturing and corporate related activities.
+Added: Includes results for our aviation, equipment rentals, remote accommodations and equipment manufacturing and corporate related activities.
Our corporate related activities do not generate revenue.
21 unchanged sentences
We require capital to fund ongoing operations including maintenance expenditures on our existing fleet of equipment, organic growth initiatives, investments and acquisitions, and the litigation settlement obligations described in Note 20 “Commitments and Contingencies” of the Notes to the Consolidated Financial Statements and under “Capital Requirements and Sources of Liquidity” below.
−Removed: Our primary sources of liquidity have been cash on hand, borrowings under our revolving credit facility and cash flows from operations.
+Added: Our primary sources of liquidity have been cash on hand, borrowings under our revolving credit facility and term credit facility and cash flows from operations, as well as the net proceeds received by Cobra under the assignment agreement with SPCP Group relating to the PREPA receivable.
Our primary uses of capital have been for investing in property and equipment used to provide our services and to acquire complementary businesses.
1 unchanged sentence
Cash and cash equivalents $ 16,556 $ 17,282
−Removed: Revolving credit facility availability 119,756 118,948
+Added: Revolving credit facility borrowing base 27,016 119,756
Less current and long-term debt — (83,520)
+Added: Less current and long-term debt - related parties (45,000) —
Less available borrowing capacity reserve — (10,000)
1 unchanged sentence
Less letter of credit facilities (insurance programs) (2,500) (2,800)
−Removed: Less letter of credit facilities (bonding program) — (1,000)
−Removed: Less letter of credit facilities (rail car commitments) — (455)
Net working capital (less cash and current portion of long-term debt) (a)
1 unchanged sentence
Total $ 290,106 $ 362,743
−Removed: Net working capital (less cash and current portion of long-term debt) is a non-GAAP measure and, as of December 31, 2022, is calculated by subtracting total current liabilities of $237.2 million and cash and cash equivalents of $17.3 million from total current assets of $496.7 million, further adjusted to add current portion of long-term debt of $83.5 million.
+Added: Net working capital (less cash and current portion of long-term debt) is a non-GAAP measure and, as of December 31, 2023, is calculated by subtracting total current liabilities of $182.6 million and cash and cash equivalents of $16.6 million from total current assets of $496.9 million.
As of December 31, 2022, net working capital (less cash) is calculated by subtracting total current liabilities of $237.2 million and cash and cash equivalents of $17.3 million from total current assets of $496.7 million, further adjusted to add current portion of long-term debt of $83.5 million.
Amounts include receivables due from PREPA of $402.3 million and $379.0 million and corresponding liabilities of $60.6 million and $47.6 million at December 31, 2023 and 2022, respectively.
−Removed: As of February 22, 2023, we had $79.7 million in borrowings outstanding under our revolving credit facility, 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.
−Removed: Our revolving credit facility is currently scheduled to mature on October 19, 2023.
−Removed: See “Our Revolving Credit Facility” below for additional detail.
−Removed: Continued prolonged volatility in the capital, financial and/or credit markets due to the COVID-19 pandemic, inflationary pressures or otherwise and 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.
−Removed: In addition, if we are unable to comply with the financial covenants under our amended revolving credit facility, or obtain a waiver of forecasted or actual non-compliance with any such financial covenants from our lenders, 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.
−Removed: Further, we may not be able to extend, repay or refinance our existing revolving credit facility at or prior to maturity on the terms acceptable to us or at all.
+Added: As of February 28, 2024, we had cash on hand of $10.5 million, no outstanding borrowings under our new revolving credit facility and a borrowing base of $23.3 million, leaving an aggregate of $17.0 million of available borrowing capacity under this facility, after giving effect to $6.3 million of outstanding letters of credit.
+Added: As of February 28, 2024, we had total liquidity of $27.5 million consisting of cash on hand and available borrowing capacity under our new revolving credit facility.
+Added: These amounts do not include $9.6 million in cash received on February 29, 2024.
Liquidity and Cash Flows
9 unchanged sentences
Net cash provided by (used in) operating activities was $31.4 million, $15.3 million and ($18.9) million, respectively, for the years ended December 31, 2023, 2022 and 2021.
−Removed: The change in operating cash flows from 2021 to 2022 was primarily due to an increase in activity and utilization across all of our operating divisions as described in Results of Operations above.
+Added: The change in operating cash flows from 2022 to 2023 was primarily due to increased receipts on accounts receivable, including the receipt of $22.2 million from PREPA, which was partially offset by an increase in payments on accounts payable and other liabilities as well as a decline in depreciation expense.
+Added: The change in operating cash flows from 2021 to 2022 was primarily due to an increase in activity and utilization across all of our operating divisions.
Investing Activities
Net cash (used in) provided by investing activities was ($8.8) million, ($2.1) million and $5.5 million, respectively, for the years ended December 31, 2023, 2022 and 2021.
−Removed: 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.
+Added: Cash (used in) provided by investing activities is primarily comprised of purchases of property and equipment and proceeds from the disposal of property and equipment and business divestitures.
The following table summarizes our capital expenditures by operating division for the periods indicated (in thousands):
5 unchanged sentences
Natural sand proppant services (c)
−Removed: Drilling services (d)
+Added: Drilling services (c)
Eliminations 103 (153) —
3 unchanged sentences
Capital expenditures primarily for maintenance for the years ended December 31, 2023, 2022 and 2021.
−Removed: Capital expenditures primarily for maintenance for the years ended December 31, 2022 and 2021, and for directional drilling equipment for the year ended December 31, 2020.
Capital expenditures primarily for equipment for our remote accommodations and equipment rental businesses for the years ended December 31, 2023, 2022 and 2021.
1 unchanged sentence
Net cash (used in) provided by financing activities was ($15.6) million, ($5.6) million and $8.4 million, respectively, for the years ended December 31, 2023, 2022 and 2021.
+Added: Net cash used in financing activities for the year ended December 31, 2023 was primarily attributable to net repayments under our revolving credit facility of $83.5 million, principal payments on financing leases and equipment financing notes of $12.2 million, principal payments on sale leaseback arrangements of $5.0 million, debt issuance costs of $4.0 million and share repurchases used to satisfy tax withholding obligations of $0.9 million in connection with the vesting and settlement of certain executive restricted stock unit awards, partially offset by net proceeds from financing transactions of $46.1 million and borrowings with related parties of $43.9 million in relation to our term loan.
Net cash used in financing activities for the year ended December 31, 2022 was primarily attributable to net repayments under our revolving credit facility of $1.5 million and principal payments on financing leases and equipment notes of $4.3 million, partially offset by net proceeds received from sale-leaseback transactions of $0.2 million.
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.
−Removed: Net cash provided by financing activities for the year ended December 31, 2020 was primarily attributable to net proceeds of $4.7 million received
−Removed: 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 $1.1 million.
Effect of Foreign Exchange Rate on Cash
−Removed: The effect of foreign exchange rate on cash was ($0.2) million for the year ended December 31, 2022 and was a nominal amount for both of the years ended December 31, 2021, and 2020.
−Removed: The year-over-year effect was driven primarily by an unfavorable shift in the strength of the Canadian dollar relative to the U.S.
+Added: The effect of foreign exchange rate on cash was a nominal amount for the year ended December 31, 2023, ($0.2) million for the year ended December 31, 2022, and was a nominal amount for the year ended December 31, 2021.
+Added: 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.
dollar for the cash held in Canadian accounts.
1 unchanged sentence
Our working capital totaled $314.4 million and $259.5 million, respectively, at December 31, 2023 and 2022.
−Removed: Our cash balances totaled $17.3 million and $9.9 million, respectively, at December 31, 2022 and 2021.
+Added: Our unrestricted cash balances totaled $16.6 million and $17.3 million, respectively, at December 31, 2023 and 2022.
Included in working capital are receivables due from PREPA totaling $402.3 million and $379.0 million and corresponding liabilities of $60.6 million and $47.6 million at December 31, 2023 and 2022, respectively.
−Removed: Our Revolving Credit Facility
−Removed: 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, 2022, we had outstanding borrowings under our revolving credit facility of $83.5 million and $19.7 million of available borrowing capacity, 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.
−Removed: 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 required $20.0 million of availability both before and after making such payments.
−Removed: The financial covenants under our revolving credit facility were amended as follows:
−Removed: • the leverage ratio was eliminated;
−Removed: • 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;
−Removed: • 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;
−Removed: • the minimum excess availability covenant was reduced to $7.5 million through March 31, 2022, after which the minimum excess availability covenant increased to $10.0 million.
+Added: New Revolving Credit Facility and New Term Credit Facility
+Added: On October 16, 2023, we entered into the new revolving credit facility and the new term credit facility (each as defined below), which refinanced in full our indebtedness outstanding under, and terminated, the amended and restated revolving credit facility, dated as of October 19, 2018, as amended (the “previous revolving credit facility”), with us and certain of our direct and indirect subsidiaries, as borrowers, the lenders party thereto from time to time, and PNC Bank, National Association, as a lender and as administrative agent for the lenders.
+Added: On October 16, 2023, we, as borrower, and certain of our direct and indirect subsidiaries, as guarantors, entered into a revolving credit agreement with the lenders party thereto and Fifth Third Bank, National Association, as a lender and as
+Added: administrative agent for the lenders (“Fifth Third”), as may be subsequently amended (the “new revolving credit facility”).
+Added: The new revolving credit facility provides for revolving commitments in an aggregate amount of up to $75 million.
+Added: Borrowings under the new revolving credit facility are secured by our assets, inclusive of the subsidiary companies, and are subject to a borrowing base calculation prepared monthly which includes a requirement to maintain certain reserves as specified in the new revolving credit facility.
+Added: The new revolving credit facility also contains various affirmative and restrictive covenants.
+Added: Interest under the new revolving credit facility equals the Tranche Rate (as defined in the new revolving credit facility) plus (i) 1.75%, if the Average Excess Availability Percentage (as defined in the new revolving credit facility) is greater than 66 2/3%, (ii) 2.00% if the Average Excess Availability Percentage is greater than 33 1/3% and less than or equal to 66 2/3%, and (iii) 2.25% if the Average Excess Availability Percentage is less than or equal to 33 1/3%.
+Added: As of October 16, 2023, the financial covenant under the new revolving credit facility was the fixed charge coverage ratio of 1.0 to 1.0 which applies only during a Financing Covenant Period (as defined in the new revolving credit facility).
+Added: On October 16, 2023, we, as borrower, and certain of our direct and indirect subsidiaries, as guarantors, also entered into a loan and security agreement with the lenders party thereto and Wexford Capital LP, an affiliate of the Company, as administrative agent for the lenders “Wexford”), as may be subsequently amended (the “new term credit facility”).
+Added: The new term credit facility was approved by the audit committee of our board of directors, consisting entirely of independent directors, as a transaction with a related party.
+Added: The new term credit facility provides for term commitments in an aggregate amount equal to $45 million.
+Added: Borrowings under the new term credit facility are secured by our assets, inclusive of the subsidiary companies.
+Added: The new term credit facility also contains various affirmative and restrictive covenants.
+Added: Interest under the new term credit facility equals the SOFR Interest Rate (as defined in the new term credit facility) plus 7.50%, as such margin may be increased pursuant to the terms of the new term credit facility;
+Added: provided that we may elect to pay all or a portion of the accrued interest due with respect to any Interest Period (as defined in the new term credit facility) ending on or before April 16, 2025, in kind by adding such accrued interest to the principal amount of the outstanding loans thereunder.
+Added: In particular, under the new term credit facility, we are required, among other things, to mandatorily remit to Wexford up to 50% of all amounts that constitute PREPA Claim Proceeds, as such term is defined in the new term credit facility, which will be used to reduce outstanding borrowings under the new term credit facility, as required under the terms thereof.
+Added: If an event of default occurs under the new revolving credit facility or the new term credit facility, as applicable, and remains uncured, it could have a material adverse effect on our business, financial condition, liquidity and results of operations.
+Added: The lenders, as applicable, (i) would not be required to lend any additional amounts to us under the new revolving credit facility, (ii) could elect to increase the interest rate by (x) 200 basis points in connection with an event of default under the new revolving credit facility or (y) 300 basis points with respect to an event of default under the new term credit facility, (iii) could elect to declare all outstanding borrowings, together with accrued and unpaid interest and fees, to be due and payable, (iv) may have the ability to require us to apply all of our available cash to repay outstanding borrowings, and (v) may foreclose on substantially all of our assets.
+Added: The exercise of remedies under the new revolving credit facility and the new term credit facility are subject to the terms of an intercreditor agreement (the “intercreditor agreement”) between Fifth Third and Wexford and acknowledged by us and certain of our subsidiaries.
+Added: The new revolving credit facility is currently scheduled to mature on the earliest of (x) July 17, 2028, unless the indebtedness under the new term credit facility is refinanced in accordance with terms of the intercreditor agreement, (y) October 16, 2028.
+Added: The new term credit facility is currently scheduled to mature on October 16, 2028.
We were in compliance with the applicable financial covenants under our amended revolving credit facility in effect as of December 31, 2023.
1 unchanged sentence
Debt to our consolidated financial statements included elsewhere in this report.
−Removed: As of February 22, 2023, our outstanding borrowings under our amended revolving credit facility were $79.7 million, leaving an aggregate of $22.3 million of available borrowing capacity, 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.
−Removed: If we fail to comply with the financial covenants contemplated by our amended revolving credit facility, or obtain a waiver of forecasted or actual non-compliance with any such financial covenants from our lenders, and an event of default occurs and remains uncured, it will have a material adverse effect on our business, financial condition, liquidity and results of operations.
−Removed: In addition, our revolving credit facility is currently scheduled to mature on October 19, 2023.
−Removed: We continue to explore various strategic alternatives to extend, refinance, or repay our revolving credit facility on or before the scheduled maturity date.
−Removed: There is no guarantee that such extension, refinancing or repayment will be secured.
−Removed: 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.
−Removed: As a result, any such extended or new
−Removed: credit facility could have terms that are less favorable to us than the terms of our existing revolving credit facility, which may significantly increase our cost of capital and may have a material adverse effect on our liquidity and financial condition.
−Removed: For additional information regarding our amended revolving credit facility and financial covenants thereunder, see Note 10.
−Removed: Debt to our consolidated financial statements included elsewhere in this report.
+Added: Cobra Assignment Agreement
+Added: On December 1, 2023, Cobra, as seller, and Mammoth, as guarantor, entered into an assignment agreement (the “Assignment Agreement”) with SPCP Group, LLC (“SPCP Group”), as purchaser.
+Added: Under the terms and conditions of the Assignment Agreement, Cobra transferred to SPCP Group, at the purchase rate of 88.0% and free and clear of any liens and claims, all of its rights, title and interest in the first $63.0 million (the “Transferred Amount”) of the total outstanding accounts receivable that remained unpaid by PREPA as of October 6, 2023 (the “PREPA Claim”), received or to be received by Cobra on or after October 6, 2023.
+Added: Between October 6, 2023 and December 1, 2023, Cobra received payments from PREPA with respect to the PREPA Claim totaling $8.6 million (the “Interim Payment Amount”), resulting in the net Transferred Amount of $54.4 million.
+Added: Under the terms and conditions of the Assignment Agreement, any portion of the Transferred Amount that remains outstanding from PREPA from and after March 31, 2024 will thereafter increase monthly at a rate of 1% per month, compounded.
+Added: Any amount received with respect to the PREPA Claim in excess of the Transferred Amount will be for the benefit of Cobra.
+Added: If (i) it is determined by a final order of any court of competent jurisdiction that the PREPA Claim is subject to any defense, claim or right of setoff, reduction, avoidance, disallowance, subordination, disgorgement, recharacterization, adversary proceeding or other impairment, whether on contractual, legal or equitable grounds, resulting in the PREPA Claim being disallowed or allowed in an amount less than the Transferred Amount, or (ii) Cobra consents to, or enters into a settlement agreement with PREPA for, the payment that is, in an aggregate amount, less than the Transferred Amount or is otherwise adversely impacting SPCP Group’s rights transferred under the Assignment Agreement, Cobra has agreed to repurchase within 18 months and one day from the receipt of SPCP Group’s written demand, the unpaid portion of the Transferred Amount subject to such disallowance or impairment, multiplied by the purchase rate, plus interest accruing, subject to certain tolling provisions, at a rate of 6% per annum from December 1, 2023 through and including the date of such repurchase.
+Added: In connection with the entry into the Assignment Agreement, Mammoth and Cobra obtained the required consents from lenders under the Company’s revolving credit facility with Fifth Third Bank and the Company’s term loan and security agreement with Wexford.
+Added: Further, under the term loan and security agreement with Wexford, Mammoth is required, among other things, to mandatorily remit to Wexford up to 50% of all amounts that constitute PREPA Claim proceeds, to reduce outstanding borrowings under such term loan and security agreement.
+Added: In connection with the Assignment Agreement, Wexford waived this requirement until the Assignment Agreement is terminated.
+Added: The net proceeds received by Cobra in connection with the Assignment Agreement were $46.1 million.
+Added: Subsequent to December 31, 2023, PREPA paid $64.0 million with respect to the outstanding PREPA receivable.
+Added: Of the $64.0 million, $54.4 million was paid to SPCP Group, as Cobra’s assignee under the Assignment Agreement, which fully extinguished Cobra’s and Mammoth’s obligations to SPCP Group, and the Assignment Agreement was terminated.
+Added: The remaining $9.6 million was paid to Cobra.
+Added: Repurchase Program Authorization
+Added: On August 10, 2023, our board of directors approved a stock repurchase program pursuant to which we would be authorized to repurchase up to the lesser of $55 million or 10 million shares of its common stock, subject to the factors discussed below.
+Added: Following the completion of the refinancing transactions discussed in this report, any stock repurchases under this program may be made opportunistically from time to time in open market or privately negotiated transactions in compliance with Rule 10b-18 under the Securities Act of 1934, as amended, including any 10b5-1 plan, and will be subject to market conditions, applicable legal and contractual restrictions, liquidity requirements and other factors.
+Added: The repurchase program has no time limit, does not require us to repurchase any specific number of shares and may be suspended from time to time, modified or discontinued by our board of directors at any time.
+Added: Any common stock repurchased as part of such stock repurchase program will be cancelled and retired.
+Added: We have not repurchased any shares of our common stock under the stock repurchase program as of December 31, 2023 or to date.
+Added: See also Item 1.A.
+Added: “Risk Factors--Our ability to repurchase stock may be limited and no assurance can be given that we will be able to effectuate our stock repurchase program in the future at indicated levels or at all.”
Sale-Leaseback Transactions
12 unchanged sentences
In December 2022, we entered into a 42-month financing arrangement with FNC for the purchase of seven new pressure pumping units for an aggregate value of $9.7 million.
−Removed: Under this arrangement, we have agreed to make monthly principal and interest payments totaling $0.3 million over the term of the agreement.
−Removed: This note is secured by the seven pressure pumping units and bears interest at an imputed rate of approximately 14.3%.
+Added: Under this arrangement, we agreed to make monthly principal and interest payments totaling $0.3 million over the term of the agreement.
+Added: This note was secured by the seven pressure pumping units and bore interest at an imputed rate of approximately 15.0%.
+Added: This equipment note was paid off on December 22, 2023.
Capital Requirements and Sources of Liquidity
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.
−Removed: 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 and known contingencies.
−Removed: Our liquidity and future cash flows, however, are subject to a number of variables, including receipt of payments from our customers, including PREPA, and our ability to extend, refinance or repay our revolving credit facility at or prior to its scheduled maturity date of October 19, 2023.
+Added: We believe that our cash on hand, operating cash flow and available borrowings under our credit facility and term loan 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 and known contingencies.
+Added: However, our liquidity and future cash flows are subject to a number of variables, including receipt of payments from our customers, including PREPA.
+Added: During the year ended December 31, 2023, PREPA paid our subsidiary Cobra approximately $22.2 million.
+Added: See also “—Cobra Assignment Agreement” regarding Cobra’s December 1, 2023 assignment of the Transferred Amount of PREPA receivable to SPCP Group and Cobra’s receipt of $46.1 million in net proceeds in connection therewith.
As of December 31, 2023, PREPA owed Cobra approximately $402.3 million for services performed, including $197.5 million of interest charges.
+Added: Subsequent to December 31, 2023, PREPA paid $64.0 million with respect to the outstanding PREPA receivable.
+Added: Of the $64.0 million, $54.4 million was paid to SPCP Group, as Cobra’s assignee under the Assignment Agreement, which fully extinguished Cobra’s and Mammoth’s obligations to SPCP Group, and the Assignment Agreement was terminated.
+Added: The remaining $9.6 million was paid to Cobra.
Throughout 2021 and 2022, we have released significant data that we obtained through Freedom of Information Act requests along with reviews of both our work and our contracts by the Federal Emergency Management Agency that, we believe, affirm the work performed by Cobra in Puerto Rico.
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.
−Removed: 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.
−Removed: During 2022, our capital expenditures totaled $12.7 million, included $11.4 million in our well completion segment primarily related to upgrades to our pressure pumping fleet and water transfer equipment, $0.9 million in our infrastructure segment primarily related to truck, tooling and equipment purchases for new crews and $0.4 million for our other divisions primarily related to equipment additions for our remote accommodations and equipment rental businesses.
−Removed: During 2023, we currently estimate that our aggregate capital expenditures will be $64 million, depending upon industry conditions and our financial results.
−Removed: These capital expenditures include $42 million for our well completions segment,
−Removed: $12 million for our infrastructure segment, $3 million for our natural sand proppant segment, $1 million for our drilling segment and $6 million for our other businesses.
+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, the receivable may not be collectible, which may adversely impact our liquidity.
+Added: During 2023, our capital expenditures totaled $19.4 million, including $17.9 million in our well completion segment primarily related to upgrades to our pressure pumping fleet, $0.7 million in our infrastructure segment primarily related to truck, tooling and equipment purchases for new crews, $0.2 million in our natural sand proppant services segment for equipment maintenance and $0.6 million for our other divisions primarily related to equipment additions for our remote accommodations and equipment rental businesses.
+Added: During 2024, we currently estimate that our aggregate capital expenditures will be approximately $15 million, depending upon industry conditions and our financial results.
+Added: These capital expenditures include $13 million for our well completions segment, $1 million for our infrastructure segment and $1 million for our other businesses.
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.
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In addition, while we regularly evaluate acquisition opportunities, we do not have a specific acquisition budget for 2024 since the timing and size of acquisitions cannot be accurately forecasted.
−Removed: We continue to evaluate acquisition opportunities, including those in the renewable energy sector as well as transactions involving entities controlled by Wexford.
+Added: We intend to continue to evaluate acquisition opportunities, including those in the renewable energy sector as well as transactions involving entities controlled by Wexford.
Our acquisitions may be undertaken with cash, our common stock or a combination of cash, common stock and/or other consideration.
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 any of the above or other reasons, we may do so through borrowings under a revolving credit facility, joint venture partnerships, sale-leaseback transactions, asset sales, offerings of debt or equity securities or other means.
+Added: If we seek additional capital for any of the above or other reasons, we may do so through borrowings under a revolving credit facility, joint venture partnerships, sale-leaseback transactions, asset sales, including potential sales of accounts receivable, offerings of debt or equity securities or other means.
Although we expect that our sources of capital will be adequate to fund our short-term and long-term liquidity requirements, we cannot assure you that this additional capital will be available on acceptable terms or at all.
If we are unable to obtain funds we need, our ability to conduct operations, make capital expenditures, satisfy debt services obligations, pay 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.
−Removed: See also Item 1A.
−Removed: Risk Factors included elsewhere in this report.
Contractual and Commercial Commitments
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Contractual obligations:
−Removed: Revolving credit facility (a)
+Added: Term credit facility principal (a)
$ 45,000 $ — $ 6,380 $ 38,620 $ —
−Removed: Interest and commitment fees on revolving credit facility (b)
+Added: Commitment fees on revolving credit facility (b)
852 188 375 289 —
−Removed: Sale-leaseback arrangements (c)
+Added: Interest on term credit facility (c)
25,411 5,899 11,441 8,071 —
−Removed: Operating lease obligations (d)
+Added: Financing arrangement (d)
54,407 54,407 — — —
−Removed: Financing lease obligations (e)
+Added: Sale-leaseback arrangements (e)
5,281 3,972 1,309 — —
−Removed: Equipment financing obligations (f)
+Added: Operating lease obligations (f)
10,371 6,298 3,450 188 435
+Added: Financing lease obligations (g)
4,151 1,872 2,279 — —
+Added: $ 145,473 $ 72,636 $ 25,234 $ 47,168 $ 435
Excludes interest payments.
−Removed: Assumption of revolving credit facility balance outstanding as of December 31, 2022 of $83.5 million using the weighted average interest rate as of December 31, 2022 of 11.5%.
+Added: Assumes no outstanding borrowings on the revolving credit facility.
+Added: Assumption of term credit facility principal outstanding as of December 31, 2023 of $45.0 million using the interest rate as of December 31, 2023 of 12.9%.
+Added: Financing arrangement between Cobra and SPCP Group.
+Added: See “Cobra Assignment Agreement” above.
Obligations under a sale-leaseback arrangement for a portion of our infrastructure segment assets.
Operating lease obligations primarily relate to rail cars, real estate and other equipment.
−Removed: Financing lease obligations primarily relate to equipment for our well completions and infrastructure segments.
−Removed: Equipment financing obligations relate to equipment for our well completion segment.
+Added: Financing lease obligations primarily relate to equipment for our infrastructure and natural sand proppant segments.
Critical Accounting Estimates
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We identified our most critical accounting estimates to be:
−Removed: – allowance for doubtful accounts;
+Added: – allowance for expected credit losses;
– valuations of long-lived assets, including goodwill and intangible assets;
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This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in this report.
−Removed: Allowance for Doubtful Accounts
−Removed: We regularly review receivables and provide for estimated losses through an allowance for doubtful accounts.
+Added: Allowance for Expected Credit Losses
+Added: We regularly review receivables and provide for estimated losses through an allowance for expected credit losses.
In evaluating the level of established reserves, we make judgments regarding our customers’ ability to make required payments, economic events and other factors.
−Removed: As the financial condition of customers changes, circumstances develop, or additional information becomes available, adjustments to the allowance for doubtful accounts may be required.
+Added: As the financial condition of customers changes, circumstances develop, or additional information becomes available, adjustments to the allowance for expected credit losses may be required.
This process involves judgment and estimation.
Accordingly, our results of operations can be affected by adjustments to the allowance due to actual write-offs that differ from estimated amounts.
−Removed: As of December 31, 2022 and 2021, our allowance for doubtful accounts totaled $3.6 million and $18.1 million, respectively.
−Removed: During 2022, we wrote-off accounts receivable totaling $17.9 million, substantially most of which related to Gulfport.
−Removed: See Notes 2, 3 and 19 to the consolidated financial statements for further information related to Gulfport.
+Added: As of December 31, 2023 and 2022, our allowance for expected credit losses totaled $0.2 million and $3.6 million, respectively.
+Added: During 2023, we wrote-off accounts receivable totaling $2.8 million, substantially most of which related to an insurance receivable.
Our accounts receivable balance included $402.3 million and $379.0 million related to PREPA as of December 31, 2023 and 2022, respectively, which includes interest charged on delinquent balances.
−Removed: PREPA has not made any payments to us on their outstanding receivable since 2019.
+Added: During the year ended December 31, 2023, PREPA paid our subsidiary Cobra approximately $22.2 million.
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.
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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.
−Removed: See Note 2 to our consolidated financial statements for additional detail regarding our allowance for doubtful accounts.
+Added: See Note 2 to our consolidated financial statements for additional detail regarding our allowance for expected credit losses.
Valuation of Long-Lived Assets
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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: During the years ended December 31, 2021, and 2020, we recorded impairment charges of other long-lived assets totaling, $1.2 million and $12.9 million, respectively.
−Removed: We did not recognize any impairment of other long-lived assets for the year ended December 31, 2022.
+Added: During the year ended December 31, 2021, we recorded impairment charges of other long-lived assets totaling $1.2 million.
+Added: We did not recognize any impairment of other long-lived assets for the years ended December 31, 2023 or 2022.
See Note 7 to our consolidated financial statements for additional details.
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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.