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Item 1A. Risk Factors

2025-03-07 compared with 2024-03-01 · 103 added, 146 removed, 630 unchanged (28% of the section changed)

Described below are certain risks that we believe apply to our business and the industries in which we operate.

You should carefully consider each of the risks described below in conjunction with other information including the financial statements and related notes provided in this Annual Report and in our other public disclosures.

The risks described below highlight potential events, trends or other circumstances that could adversely affect our business, financial condition, results of operations, cash flows, liquidity, and consequently, the market value of our common stock.

These risks could cause our future results to differ materially from historical results and from guidance we may provide regarding our expectations of future financial performance.

The risks described below are those that we have identified as material and is not an exhaustive list of all the risks we face.

There may be other risks and uncertainties not currently known to us or that we currently deem to be immaterial which may also materially and adversely affect our business operations in the future.

Please refer to the explanation of the qualifications and limitation on forward-looking statements set forth on page iv hereof.

Risks Related to Our Business and the Industries We Serve

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

Due to PREPA’s bankruptcy proceedings, PREPA ’ s ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources.

In the event that PREPA does not pay amounts owed to us for services performed, our financial condition, results of operations and cash flows would be materially and adversely affected.

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

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

On May 26, 2018, Cobra and PREPA entered into a second one-year,

$900 million master services agreement to provide additional repair services and begin the initial phase of reconstruction of the electrical power system in Puerto Rico (the “second contract”).

As of December 31, 2023, PREPA owed us approximately $204.8 million for services performed excluding $197.5 million of interest charged on delinquent balances.

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

District Court for the District of Puerto Rico.

As a result, PREPA’s ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources.

Since September 30, 2019, we have been pursuing litigation in the U.S.

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.

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.

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.

See “—Liquidity and Capital Resources—Cobra Assignment Agreement” for additional information.

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 the Government of Puerto Rico’s Central Recovery and Reconstruction Office (“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.

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.

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.

Cobra believes it is exempt from the construction excise taxes and strongly disagrees with PREPA’s decision to withhold funds.

On January 17, 2024, Cobra filed a Writ of Certiorari requesting the Court of Appeals to reverse the order from the Humacao Superior Court.

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.

The case was remanded to the lower Court for continuation of the proceedings in accordance with the Court of Appeals’ order.

The municipality has 15 days to request reconsideration.

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 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.

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 properly in accordance with the terms of these contracts.

Further, we believe these receivables are collectible.

However, in the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to us or (iii) otherwise does not pay amounts owed to us for services performed, the receivable may not be collected and our financial condition, results of operations and cash flows would be materially and adversely affected.

Further, as noted above, our contracts with PREPA have concluded and we have not obtained, and there can be no assurance that we will be able to obtain, one or more contracts with other customers to replace the level of services that we provided to PREPA.

Our customer base is concentrated and the loss of one or more of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue to decline substantially.

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

In particular, PREPA owed us approximately $402.3 million (including interest charged on overdue amounts) as of December 31, 2023, as discussed in more detail above.

Any nonperformance by our counterparties, including their failure to pay the amounts they owe us on a timely basis or at all, either as a result of changes in financial and economic conditions or otherwise, could have a material adverse impact on our operating results and could adversely affect our liquidity.

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An unexpected change in customer financial condition or future economic uncertainty could result in additional requirements for specific reserves, which could have a material effect on our business, financial condition, results of operations and cash flows.

We cannot predict the impact of the ongoing war in Ukraine and the recent Israel-Hamas war on the global economy, energy markets, geopolitical stability, industries in which we operate and our business.

All of our infrastructure, well completion, natural sand proppant, drilling and other services are concentrated in North America.

However, the broader consequences of the Russian-Ukrainian conflict, and the Israel-Hamas war may increase volatility in the price and demand for oil and natural gas, which would adversely impact the oilfield services industry, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity.

We cannot predict the impact of the ongoing war in Ukraine and the instability in the Middle East on the global economy, energy markets, geopolitical stability, industries in which we operate and our business.

All of our infrastructure, well completion, natural sand proppant, and other services are concentrated in North America.

However, the broader consequences of the Russian-Ukrainian conflict, and the instability in the Middle East may increase volatility in the price and demand for oil and natural gas, which would adversely impact the oilfield services industry, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity.

We cannot predict the extent of these wars’ effect on our business and results of operations as well as on the global economy, energy markets and industries in which we operate.

The outcomes of investigations and litigation relating to our contracts with PREPA may have a material adverse effect on our business, financial condition, results of operations and cash flows.

On September 10, 2019, the U.S.

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

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

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

On May 18, 2022, the former FEMA official and the former president of Cobra each pled guilty to one-count information charging gratuities related to a project that Cobra never bid upon and was never awarded or received any monies for.

On December 13, 2022, the Court sentenced the formed Cobra president to custody of the Bureau of Prisons for six months and one day, a term of supervised release of six months and one day and a fine of $25,000.

The Court sentenced the FEMA official to custody of the Bureau of Prisons for six months and one day, a term of supervised release of six months and a fine of $15,000.

The Court also dismissed the indictment against the two defendants.

We do not expect any additional activity in the criminal proceeding.

Given the uncertainty inherent in criminal litigation, however, it is not possible at this time to determine the potential impacts that the sentencing could have on us.

PREPA has stated in Court filings that it may contend the alleged criminal activity affects Cobra’s entitlement to payment under its contracts with PREPA.

It is unclear what PREPA’s position will be going forward.

Subsequent to the indictment, we received (i) a preservation request letter from the SEC related to documents relevant to an ongoing investigation it is conducting and (ii) a civil investigative demand, or CID, from the United States Department of Justice, or DOJ, requesting certain documents and answers to interrogatories relevant to an ongoing investigation DOJ is conducting.

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

We have cooperated with the DOJ and are not able to predict the outcome of this investigation or if it will have a material impact on our business, financial condition, results of operations or cash flows.

With regard to the SEC investigation, on July 6, 2022, the SEC sent a letter saying that it had concluded its investigation as to the Company and that based on information the SEC has as of this date, it does not intend to recommend an enforcement action by the SEC against us.

Further, government contracts are subject to various uncertainties, restrictions and regulations, including oversight audits and compliance reviews by government agencies and representatives.

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

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

Due to PREPA’s bankruptcy proceedings, PREPA ’ s ability to meet its payment obligations under the contracts is largely dependent upon funding from the FEMA or other sources.

In the event that PREPA does not pay the remaining amount owed to us under the Settlement Agreement, our financial condition, results of operations and cash flows may be materially and adversely affected.

On October 19, 2017, Cobra Acquisitions LLC, or Cobra, and PREPA entered into an emergency master services agreement for repairs to PREPA’s electrical grid.

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

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

Our work under each of the contracts with PREPA ended on March 31, 2019.

As of December 31, 2024, $20.0 million remained outstanding from PREPA.

PREPA is currently subject to bankruptcy proceedings, which were filed in July 2017 and are currently pending in the United States District Court for the District of Puerto Rico (the “Title III Court”).

PREPA’s ability to meet its payment obligations under the above-referenced agreements was largely dependent upon funding from the Federal Emergency Management Agency (“FEMA”) or other sources.

Since September 30, 2019, Cobra has been pursuing litigation in the Title III Court 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 the Company’s prior reports filed with the SEC.

On July 22, 2024, Cobra entered into a release and settlement agreement with PREPA and the FOMB, in its capacity as Title III representative for PREPA, to settle all outstanding matters between Cobra and PREPA.

Under the terms of the Settlement Agreement, Cobra was allowed an administrative expense claim against PREPA of $170.0 million, plus the $18.4 million in the Withheld FEMA Funds, as defined herein.

During October 2024, Cobra received the first installment payment of $150.0 million from the Commonwealth of Puerto Rico and the $18.4 million in the Withheld FEMA Funds.

As of December 31, 2024, $20.0 million remained outstanding from PREPA.

Under the terms of the Settlement Agreement, this amount is required to be paid to Cobra within seven days following the effective date of PREPA’s plan of adjustment.

In the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the Settlement Agreement, (ii) obtains the necessary funds but refuses to pay the amounts owed to us or (iii) otherwise does not pay amounts owed to us under the Settlement Agreement, the receivable may not be collected and our financial condition, results of operations and cash flows may be materially and adversely affected.

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

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Government contracts are also subject to renegotiation of profit and termination by the government prior to the expiration of the term.

See the preceding risk factors for information regarding the investigations and legal proceedings relating to our contracts with PREPA.

Our revolving credit facility and term credit facility impose restrictions on us that may affect our ability to successfully operate our business.

Our revolving credit facility and term credit facility limit, our ability to take various actions, such as:

Our revolving credit facility impose restrictions on us that may affect our ability to successfully operate our business.

Our revolving credit facility limits our ability to take various actions, such as:

• incurring additional indebtedness;

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oil production stabilized as commodity prices increased and demand for crude oil rebounded throughout 2022.

During 2023, pricing for crude oil and natural gas declined from levels seen in 2022 and are expected to continue to be volatile as a result of production levels, inventories and demand, national and international economic performance and outlook.

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.

Throughout 2024, we continued to experience persistent challenges in our well completion business and other oilfield services associated with lower U.S.

onshore activity and sustained weakness in the natural gas basins in which we operate.

Other significant factors that are likely to continue to affect commodity prices in current and future periods include, but are not limited to, the effect of U.S.

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and global political developments, conditions in the U.S.

oil and gas industry, actions of OPEC+ members, the impact of the ongoing war in Ukraine and the recent Israel-Hamas war on the global energy and capital markets and global stability and other factors.

oil and gas industry, actions of OPEC+ members, the impact of the ongoing war in Ukraine and the instability in the Middle East on the global energy and capital markets and global stability and other factors.

We anticipate demand for our oil and natural gas services and products will continue to be dependent on the level of capital expenditures by companies in the oil and natural gas industry and, ultimately, commodity prices.

While we still expect commodity prices to be the primary driver of capital spending and industry activity levels in the future, other factors, such as debt repayment obligations and access to the capital markets, may play a significant role in the ultimate level of capital expenditures by the companies that use our completion and production, natural sand proppant and contract land and directional drilling service lines.

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

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

These conditions, and others, have had and may continue to have an adverse impact on our financial condition, results of operations and cash flows, and it is difficult to predict how long the current commodity price environment will continue.

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• the price and quantity of foreign imports;

• political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia, including the impact of the ongoing war in Ukraine and the recent Israel-Hamas war on the global energy and capital markets and global stability;

• political and economic conditions in oil producing countries, including the Middle East, Africa, South America and Russia, including the impact of the war in Ukraine and the instability in the Middle East on the global energy and capital markets and global stability;

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

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• domestic and foreign tax policy;

• domestic and foreign tariffs;

• domestic and foreign governmental approvals and regulatory requirements and conditions;

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Any of the above factors could impact the level of oil and natural gas exploration and production activity and could ultimately have a material adverse effect on our business, financial condition, results of operations and cash flows.

Further, future weakness in commodity prices could impact our business going forward, and we could encounter difficulties such as an inability to access needed capital on attractive terms or at all, recognizing asset impairment charges, an inability to meet financial ratios contained in our debt agreements, a need to reduce our capital spending and other similar impacts.

Further, future weakness in commodity prices could impact our business going forward, and we could

encounter difficulties such as an inability to access needed capital on attractive terms or at all, recognizing asset impairment charges, an inability to meet financial ratios contained in our debt agreements, a need to reduce our capital spending and other similar impacts.

The cyclicality of the oil and natural gas industry may cause our operating results to fluctuate.

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We have, and may in the future, experience significant fluctuations in operating results as a result of the reactions of our customers to changes in oil and natural gas prices.

For example, prolonged low commodity prices experienced by the oil and natural gas industry during the first half of 2020, combined with the ongoing COVID-19 pandemic, adverse changes in demand for our services and volatility in the capital and credit markets, caused many exploration and production companies to reduce their capital budgets and drilling activity.

This resulted in a significant decline in demand for oilfield services and adversely impacted the prices oilfield services companies could charge for their services.

In addition, a majority of the service revenue we earn is based upon a charge for a relatively short period of time (e.g., an hour, a day, a week) for the actual period of time the service is provided to our customers.

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Prices for oil and natural gas historically have been extremely volatile and are expected to continue to be volatile in the years to come.

During 2023, West Texas Intermediate posted prices ranged from $66.74 to $93.68 per barrel and the New York Mercantile Exchange natural

gas futures prices ranged from $1.99 to $4.48 per MMBtu.

During 2024, West Texas Intermediate posted prices ranged from $65.75 to $86.91 per barrel and the New York Mercantile Exchange natural gas futures prices ranged from $1.58 to $3.95 per MMBtu.

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

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Investor and regulatory focus on environmental, social and governance (“ESG”) matters continues to increase.

In addition to climate change, there is increasing attention on topics such as diversity and inclusion, human rights, and human and natural capital, in companies’ own operations as well as their supply chains.

In addition to climate change, there remains attention on topics such as diversity and inclusion, human rights, and human and natural capital, in companies’ own operations as well as their supply chains.

In addition, perspectives on the efficacy of ESG considerations continue to evolve, and we cannot currently predict how regulators’, investors’ and other stakeholders’ views on ESG matters may affect the regulatory and investment landscape and affect our business, financial condition, and results of operations.

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Enhanced climate disclosure requirements could also accelerate any trend by certain stakeholders and capital providers to restrict or seek more stringent conditions with respect to their financing of certain carbon intensive sectors.

However, President Trump has indicated his support for rescission of these climate-related disclosure rules.

Increasing attention to global climate change has resulted in increased investor attention and an increased risk of public and private litigation, which could increase our costs or otherwise adversely affect us.

For example, shareholder activism has recently been increasing in our industry, and shareholders may attempt to effect changes to our business or governance to deal with climate change-related issues, whether by shareholder proposals, public campaigns, proxy solicitations or otherwise, which may result in significant management distraction and potentially significant expense.

may result in significant management distraction and potentially significant expense.

Additionally, cities, counties, and other governmental entities in several states in the U.S.

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The IRA could accelerate the transition of the economy away from the use of fossil fuels towards lower- or zero-carbon emissions alternatives, which could decrease demand for our services related to the oil and natural gas industry.

Deterioration of the commodity price environment can negatively impact oil and natural gas exploration and production companies and, in some cases, impair their ability to timely pay for products or services provided or result in their insolvency or bankruptcy, any of which exposes us to credit risk of our oil and natural gas exploration and production customers.

In certain economic and commodity price environments, we may experience increased difficulties, delays or failures in collecting outstanding receivables from our customers, due to, among other reasons, a reduction in their cash flow from

operations, their inability to access the credit markets and, in certain cases, their insolvencies.

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

We cannot assure you that the reserves we have established for potential credit losses will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.

To the extent one or more of our key customers commences bankruptcy proceedings, as was the case with Gulfport Energy Corporation, our contracts with these customers may be subject to rejection under applicable provisions of the United States Bankruptcy Code, or may be renegotiated.

Further, during any such bankruptcy proceeding, prior to assumption, rejection or renegotiation of such contracts, the bankruptcy court may temporarily authorize the payment of value for our services less than contractually required, which could also have a material adverse effect on our business, results of operations, cash flows and financial condition.

Shortages, delays in delivery and interruptions in supply of major components, replacement parts or, other equipment, supplies or materials may adversely affect our pressure pumping business.

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• shortage in the number of vendors able or willing to provide the necessary equipment, supplies and materials, including as a result of commitments of vendors to other customers or third parties.

Additionally, changes in U.S.

and foreign trade regulations and tariffs, including potential increases of tariffs on goods imported into the U.S.

may cause a rise in the cost of replacement parts for our pressure pumping operations.

These price increases, delays in delivery and interruptions in supply may require us to increase capital and repair expenditures and incur higher operating costs.

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Oilfield services equipment or assets being upgraded, converted or re-activated following a period of inactivity may experience significant start-up costs and complications and may encounter other operational problems that could result in significant delays, uncompensated downtime, reduced day rates or the cancellation, termination or non-renewal of contracts.

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

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

Further, construction and upgrade projects are subject to risks of delay or significant cost overruns inherent in any large construction project from numerous factors, including the following:

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The oilfield services industry is characterized by rapid and significant technological advancements and introductions of new products and services using new technologies.

As new horizontal and directional drilling, pressure pumping, pressure control and well service technologies develop, we may be placed at a competitive disadvantage, and competitive pressure may force us to implement new technologies at a substantial cost.

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

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

There can be no assurance that we will:

• have sufficient capital resources to build new, technologically advanced equipment and other assets;

• successfully integrate additional oilfield service equipment and other assets;

• effectively manage the growth and increased size of our organization, equipment and other assets;

• successfully deploy idle, stacked or additional oilfield service assets;

• maintain crews necessary to operate additional drilling rigs or pressure pumping service equipment;

• successfully improve our financial condition, results of operations, business or prospects.

If we are not successful in building or acquiring new oilfield service equipment and other assets or upgrading our existing rigs and equipment in a timely and cost-effective manner, we could lose market share.

New technologies, services or standards could render some of our services, equipment and other assets obsolete, which could have a material adverse impact on our business, cash flows, results of operations and financial condition.

As competitors and others use or develop new technologies or technologies comparable to ours in the future, we may lose market share or be placed at a competitive disadvantage.

Further, we may face competitive pressure to implement or acquire certain new technologies at a substantial cost.

Some of our competitors may have greater financial, technical and personnel resources than we do, which may allow them to gain technological advantages or implement new technologies before we can.

Additionally, we may be unable to implement new technologies or services at all, on a timely basis or at an acceptable cost.

New technology could also make it easier for our customers to vertically integrate their operations, thereby reducing or eliminating the need for our services.

Limits on our ability to effectively use or implement new technologies may have a material adverse effect on our business, results of operations, cash flows and financial condition.

Our business depends upon our ability to obtain specialized equipment and parts from third-party suppliers, and we may be vulnerable to delayed deliveries and future price increases.

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Our profitability is dependent upon our ability to accurately estimate the costs associated with our services and our ability to execute in accordance with our plans.

A variety of factors could negatively affect these costs, such as lower than anticipated productivity, conditions at work sites differing materially from those anticipated at the time we bid on the contract and higher than expected costs of materials and labor.

These variations, along with other risks inherent in performing fixed price contracts, could cause actual project revenue

and profits to differ from original estimates, which could result in lower margins than anticipated, or losses, which could reduce our profitability, cash flows and liquidity.

We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for performance and surety bonds could reduce availability under our credit facility.

A variety of factors could negatively affect these costs, such as lower than anticipated productivity, conditions at work sites

differing materially from those anticipated at the time we bid on the contract and higher than expected costs of materials and labor.

These variations, along with other risks inherent in performing fixed price contracts, could cause actual project revenue and profits to differ from original estimates, which could result in lower margins than anticipated, or losses, which could reduce our profitability, cash flows and liquidity.

We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for performance and surety bonds could reduce availability under our revolving credit facility.

Some of our infrastructure services contracts require performance and payment bonds.

If we are not able to renew or obtain a sufficient level of bonding capacity in the future, we may be precluded from being able to bid for certain contracts or successfully contract with certain customers.

In addition, even if we are able to successfully renew or obtain performance or payment bonds, we may be required to post letters of credit in connection with the bonds, which would reduce availability under our credit facility.

Furthermore, under standard terms in the surety market, sureties issue bonds on a project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral as a condition to issuing or renewing any bonds.

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The timing of new contracts and termination of existing contracts may result in unpredictable fluctuations in our cash flows and financial results.

A portion of our continental United States-based infrastructure services revenue is derived from project-based work that is awarded through a competitive bid process.

A portion of our infrastructure services revenue is derived from project-based work that is awarded through a competitive bid process.

It is generally very difficult to predict the timing and geographic distribution of the projects that we will be awarded.

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In some cases, we may be required to bear the cost of a ready workforce and equipment that is larger than necessary, which could impact our cash flow, expenses and profitability.

If an expected contract award or the related work release is delayed or not received, we could incur substantial costs without receipt of any corresponding revenues.

If an expected contract award or the related work release is delayed or not received, we could incur substantial costs without receipt

of any corresponding revenues.

Moreover, construction projects for which our services are contracted may require significant expenditures by us prior to receipt of relevant payments from the customer.

Finally, the winding down or

completion of work on significant projects that were active in previous periods will reduce our revenue and earnings if such significant projects have not been replaced in the current period.

Finally, the winding down or completion of work on significant projects that were active in previous periods will reduce our revenue and earnings if such significant projects have not been replaced in the current period.

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

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For example, these estimates assume that our revenue and cost structure will remain relatively constant over the life of our reserves.

If these assumptions prove to be inaccurate, some or all of our reserves may not be economically mineable, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

If these assumptions prove to be inaccurate, some or all of our reserves may not be economically mineable,

which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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

If the estimates of the

quality of our sand reserves, including the volumes of the various specifications of those reserves, prove to be inaccurate, we may incur significantly higher excavation costs without corresponding increases in revenues, we may not be able to meet our contractual obligations, or our facilities may have a shorter than expected reserve life, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

If the estimates of the quality of our sand reserves, including the volumes of the various specifications of those reserves, prove to be inaccurate, we may incur significantly higher excavation costs without corresponding increases in revenues, we may not be able to meet our contractual obligations, or our facilities may have a shorter than expected reserve life, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

As part of our natural sand proppant services business, we rely on third parties for raw materials and transportation, and the suspension or termination of our relationship with one or more of these third parties could adversely affect our business, financial conditions, results of operations and cash flows.

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Further, federal and state governments and agencies have adopted various laws and regulations or are evaluating proposed legislation and regulations that are focused on the extraction of shale gas or oil using hydraulic fracturing, a process which utilizes proppants such as those that we produce.

Future hydraulic fracturing-related legislation or regulations could restrict the ability of our customers to utilize, or increase the cost associated with, hydraulic fracturing, which could reduce demand for our proppants and adversely affect our business, financial condition, results of operations and cash flows.

results of operations and cash flows.

For additional information regarding the regulation of hydraulic fracturing, see Item 1.

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The relatively high transportation expenses and related costs tend to favor frac sand producers located in close proximity to their customers.

If and when we expand our frac sand production, our need for additional transportation services and transload network access will increase.

We contract with truck and rail services to move frac sand from our production facilities to transload sites and our customers, and increased costs under these contracts could adversely affect our results of operations.

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As a result, some local water districts have begun restricting the use of water subject to their jurisdiction for hydraulic fracturing to protect local water supply.

For example, in 2021, the Texas Legislature directed the Texas Railroad Commission to adopt rules encouraging fluid oil and gas waste recycling.

In October 2023, the Commission announced draft amendments to its water protection rules to, among other things, encourage waste recycling.

Our inability, or

customers’ inability, to obtain water to use in our operations from local sources or to effectively utilize flowback water could have an adverse effect on our business, financial condition, results of operations and cash flows.

For example, in 2021, the Texas Legislature directed the

Texas Railroad Commission to adopt rules encouraging fluid oil and gas waste recycling.

In January 2025, the Commission adopted the first overhaul of oilfield waste rules in over 40 years, to, among other things, encourage waste recycling.

Our inability, or customers’ inability, to obtain water to use in our operations from local sources or to effectively utilize flowback water could have an adverse effect on our business, financial condition, results of operations and cash flows.

The customized nature, and remote location, of the modular camps that we provide and service present unique challenges that could adversely affect our ability to successfully operate our remote accommodations business.

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In addition to the investigations and legal proceedings referenced in the risk factors above, from time to time, we are subject to various claims, lawsuits and other legal proceedings brought or threatened against us in the course of our business.

These actions and proceedings may seek, among other things, compensation for alleged personal injury, workers’ compensation, employment discrimination and other employment-related damages, breach of contract, indemnity claims, property damage and violation of federal or state securities laws.

property damage and violation of federal or state securities laws.

We may also be subject to litigation in the normal course of business involving allegations of violations of the Fair Labor Standards Act and state wage and hour laws.

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Please see Note 20.

Commitments and Contingencies to our consolidated financial statements elsewhere in this annual report.

“Commitments and Contingencies” to our consolidated financial statements included elsewhere in this annual report.

We rely on a few key employees whose absence or loss could adversely affect our business.

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Costs for insurance and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.

Our operations require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could limit our ability to grow.

Our operations require substantial capital and we may be unable to obtain needed capital or financing on satisfactory terms or at all, which could limit our ability to grow or conduct our business.

Our capital budget for 2025 is estimated to be $12 million, depending upon industry conditions and our financial results.

We fund our capital expenditures primarily with cash generated by operations and borrowings under our revolving credit facility and term loan facility.

We may be unable to generate sufficient cash from operations and other capital resources to meet our operating needs and/or maintain planned or future levels of capital expenditures which, among other things, may prevent us from acquiring new equipment, properly maintaining our existing equipment or restarting idled businesses or expanding existing operations as demand may warrant.

increase in our cost of capital, which will adversely impact our ability to finance our operations.

We fund our capital expenditures primarily with cash generated by operations and borrowings under our revolving credit facility.

operations as demand may warrant.

Further, any disruptions or continuing volatility in the global financial markets and rising interest rates due to efforts to curb persistent inflation may lead to a contraction in credit availability and an increase in our cost of capital, which will adversely impact our ability to finance our operations.

This could put us at a competitive disadvantage, impair our ability to meet our operating needs or interfere with our growth plans.

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The growth of our business through acquisitions may expose us to various risks, including those relating to difficulties in identifying suitable, accretive acquisition opportunities and integrating businesses, assets and personnel, as well as difficulties in obtaining financing for targeted acquisitions and the potential for increased leverage or debt service requirements.

As a component of our business strategy, we have pursued and, subject to our liquidity needs, intend to continue to pursue selected, accretive acquisitions of complementary assets, businesses and technologies.

As a component of our business strategy, we have pursued and intend to continue to pursue selected, accretive acquisitions of complementary assets, businesses and technologies.

Acquisitions involve numerous risks, including:

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Encountering any of these or any unforeseen problems in implementing our planned expansion could have a material adverse impact on our business, financial condition, results of operations and cash flows, and could prevent us from achieving the increases in revenues and profitability that we hope to realize.

Our liquidity needs could restrict our operations and make us more vulnerable to adverse economic conditions.

Our indebtedness may adversely affect our operations and limit our growth, and we may have difficulty making debt service payments on such indebtedness as payments become due.

Our level of indebtedness may affect our operations in several ways, including the following:

• increasing our vulnerability to general adverse economic and industry conditions;

• the covenants that are contained in the agreements governing our indebtedness could limit our ability to borrow funds, dispose of assets, pay dividends and make certain investments;

• our debt covenants could also affect our flexibility in planning for, and reacting to, changes in the economy and in our industries;

• any failure to comply with the financial or other covenants of our debt, including covenants that impose requirements to maintain certain financial ratios, could result in an event of default, which could result in some or all of our indebtedness becoming immediately due and payable;

• our level of debt could impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes;

• our business may not generate sufficient cash flow from operations to enable us to meet our obligations under our indebtedness.

Our revolving credit facility and term credit facility provide for fluctuating interest rates, which may increase or decrease our interest expense.

Our revolving credit facility and term credit facility provide for fluctuating interest rates, primarily based on rates set by the U.S.

Our revolving credit facility provides for fluctuating interest rates, which may increase or decrease our interest expense.

Our revolving credit facility provides for fluctuating interest rates, primarily based on rates set by the U.S.

Federal Reserve.

Inflation in the U.S.

has been rising at its fastest rate in over 40 years, creating inflationary pressure on the cost of services, equipment and other goods in our industries and other sectors and contributing to labor and materials shortages across the supply-chain.

Throughout 2022 and 2023, the Federal Reserve increased its benchmark interest rates eight times for an aggregate increase of 4.75 percentage points and may continue increasing benchmark interest rates in the future.

During the last two years, inflation in the U.S.

reached some of the highest levels in over 40 years, creating inflationary pressure on the cost of services, equipment and other goods in our industries and other sectors and contributing to labor and materials shortages across the supply-chain.

Although inflation has recently moderated and the Federal Reserve has begun lowering interest rates, there can be no assurance regarding the timing of any such interest rate cuts or their impact on inflation or any future price changes.

We have not hedged our interest rate exposure with respect to our floating rate debt.

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

The principal competitive factors in our markets are price, product and service quality and availability, responsiveness, experience,

technology, equipment quality and reputation for safety.

The principal competitive factors in our markets are price, product and service quality and availability, responsiveness, experience, technology, equipment quality and reputation for safety.

We compete with large national and multi-national companies that have longer operating histories, greater financial, technical and other resources and greater name recognition than we do.

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the Resource Conservation and Recovery Act;

the Comprehensive

Environmental Response, Compensation, and Liability Act;

the Comprehensive Environmental Response, Compensation, and Liability Act;

the Clean Water Act;

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In response to these concerns, regulators in some states are seeking to impose additional requirements related to underground injection activities.

For example, the Oklahoma Corporations Commission has implemented a variety of measures, including the adoption of the National Academy of Science’s “traffic light system,” pursuant to which the agency reviews new disposal well applications and may restrict operations at existing wells.

For example, the Oklahoma Corporation Commission has implemented a variety of measures, including the adoption of the National Academy of Science’s “traffic light system,” pursuant to which the agency reviews new disposal well applications and may restrict operations at existing wells.

The Texas Railroad Commission has also implemented measures to assess the potential for seismic activity in the vicinity of disposal wells, and it has restricted and indefinitely suspended disposal well activities in some cases.

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We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for income taxes.

We do not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon

challenge by a tax authority.

We do not recognize the benefit of income tax positions we believe are more likely than not to be disallowed upon challenge by a tax authority.

Although we believe our tax provisions are adequate, the final determination of tax audits and any related disputes could be materially different from our historical income tax provisions and accruals.

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Our security programs and measures, as well as security programs of our customers, suppliers, or other third parties, may not prevent all intrusions and our systems and insurance coverage for protecting against cyber security risks may not be sufficient.

As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our

protective measures or to investigate and remediate any vulnerability to cyber incidents.

Additionally, as artificial intelligence technologies become increasingly sophisticated, the security risks associated with their use and the potential for misuse also increase.

Hackers and malicious actors can harness the power of artificial intelligence to develop more advanced cyberattacks, bypass security measures, and exploit vulnerabilities in systems.

As cyber incidents continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.

Laws and regulations governing cybersecurity, data privacy, and the unauthorized disclosure of confidential or protected information pose increasingly complex compliance challenges, and failure to comply with these laws could result in penalties and legal liability.

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

Wexford, through its affiliate MEH Sub LLC, beneficially owns approximately 47.1% of our outstanding common stock.

Wexford, through its affiliates, beneficially owns approximately 45.9% of our outstanding common stock.

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

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We are subject to certain requirements of Section 404 of the Sarbanes-Oxley Act.

If we are unable to continue comply with Section 404 or if the costs related to compliance are significant, our profitability, stock price, results of operations and financial condition could be materially adversely affected.

If we are unable to continue to comply with Section 404 or if the costs related to compliance are significant, our profitability, stock price, results of operations and financial condition could be materially adversely affected.

We are required to document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting under Section 404 of the Sarbanes Act of 2002.

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• permits any of our stockholders, officers or directors to conduct business that competes with us and to make investments in any kind of property in which we may make investments;

• provides that if any director or officer of one of our affiliates who is also one of our officers or directors becomes aware of a potential business opportunity, transaction or other matter (other than one expressly offered to that director or officer in writing solely in his or her capacity as our director or officer), that director or officer will have no duty to communicate or offer that opportunity to us, and will be permitted to communicate or offer that opportunity to such affiliates and that director or officer will not be deemed to have (i) acted in a manner inconsistent with his or her fiduciary or other duties to us regarding the opportunity or (ii) acted in bad faith or in a manner inconsistent with our best interests.

opportunity to such affiliates and that director or officer will not be deemed to have (i) acted in a manner inconsistent with his or her fiduciary or other duties to us regarding the opportunity or (ii) acted in bad faith or in a manner inconsistent with our best interests.

These provisions create the possibility that a corporate opportunity that would otherwise be available to us may be used for the benefit of one of our affiliates.

We have engaged in transactions with our affiliates and expect to do so in the future.

We have engaged and expect to continue to engage in transactions with our affiliates and expect to do so in the future.

The terms of such transactions and the resolution of any conflicts that may arise may not always be in our or our common stockholders’ best interests.

We have engaged in transactions and expect to continue to engage in transactions with affiliated companies.

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

As described elsewhere in this report, including in the notes to our consolidated financial statements, these transactions include, among others, a joint venture and agreements pursuant to which our affiliates provide us with facilities.

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

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

Sales of these shares of common stock or sales of substantial amounts of our common stock by other

stockholders, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock.

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

As of December 31, 2024, Wexford beneficially owned 45.9% shares of our common stock.

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• Any other action asserting a claim against us that is governed by the internal affairs doctrine.

In addition, our certificate of incorporation provides that if any action specified above (each is referred to herein as a covered proceeding), is filed in a court other than the specified Delaware courts without the approval of our board of directors (each is referred to herein as a foreign action), the claiming party will be deemed to have consented to (i) the personal jurisdiction of the specified Delaware courts in connection with any action brought in any such courts to enforce the exclusive forum provision described above and (ii) having service of process made upon such claiming party in any such enforcement action by service upon such claiming party’s counsel in the foreign action as agent for such claiming party.

jurisdiction of the specified Delaware courts in connection with any action brought in any such courts to enforce the exclusive forum provision described above and (ii) having service of process made upon such claiming party in any such enforcement action by service upon such claiming party’s counsel in the foreign action as agent for such claiming party.

These provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees.

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The declaration of dividends on our common stock is within the discretion of our board of directors based upon a review of relevant considerations, and there is no guarantee that we will pay any dividends in the future or at levels anticipated by our stockholders.

On July 16, 2018, our board of directors initiated a quarterly dividend policy on shares of our common stock payable quarterly beginning with the second quarter of 2018.

In July 2019, as a result of oilfield market conditions and other factors, which included the status of collections from PREPA, our board of directors suspended the quarterly cash dividend.

The decision to pay dividends is solely within the discretion of, and subject to approval by, our board of directors.

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

What changed 10-K

Item 1A. Risk Factors