Forum Energy Technologies Inc (FET) 2022年年度報告「NYSE」.pdf

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1、Table of ContentsUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549_FORM 10-K_ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31,2022ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE A

2、CT OF 1934For the transition period from _ to _Commission File Number 001-35504FORUM ENERGY TECHNOLOGIES,INC.(Exact name of registrant as specified in its charter)Delaware61-1488595(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)10344 Sam Houston Park

3、 DriveSuite 300HoustonTexas77064(Address of Principal Executive Offices)(Zip Code)Registrants telephone number,including area code:(713)351-7900Securities registered pursuant to Section 12(b)of the Act:Common stock,$0.01 par valueFETNew York Stock Exchange(Title of Each Class)(Trading Symbol)(Name o

4、f Each Exchange on Which Registered)Securities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports purs

5、uant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding12 months(or for such shorter period that the registrant was required to fi

6、le such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-Tduring the preceding 12 months(or for

7、such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company or an emerging growthcompany.See the definitions of“large accelerated

8、filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the ExchangeAct:Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has e

9、lected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiv

10、eness of its internal control over financialreporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Excha

11、nge Act).Yes No The aggregate market value of Common Stock held by non-affiliates on June 30,2022,determined using the per share closing price on the New York Stock ExchangeComposite tape of$19.62 on June 30,2022,was approximately$90.9 million.For this purpose,our executive officers and directors an

12、d SCF Partners L.P.and its affiliatesare considered affiliates.As of February 24,2023,there were 10,297,809 common shares outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of our Proxy Statement for the 2023 Annual Meeting of Stockholders are incorporated by reference into Part III of this rep

13、ort.1Table of ContentsForum Energy Technologies,Inc.Index to Form 10-KPART IItem 1.Business3Item 1A.Risk Factors10Item 1B.Unresolved Staff Comments27Item 2.Properties28Item 3.Legal Proceedings29Item 4.Mine Safety Disclosures29PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Mat

14、ters and Issuer Purchases of EquitySecurities31Item 6.Reserved31Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations32Item 7A.Quantitative and Qualitative Disclosures About Market Risk42Item 8.Financial Statements and Supplementary Data43Item 9.Changes in and D

15、isagreements with Accountants on Accounting and Financial Disclosure73Item 9A.Controls and Procedures73Item 9B.Other Information74PART IIIItem 10.Directors,Executive Officers and Corporate Governance74Item 11.Executive Compensation74Item 12.Security Ownership of Certain Beneficial Owners and Managem

16、ent and Related Stockholder Matters74Item 13.Certain Relationships and Related Transactions,and Director Independence74Item 14.Principal Accounting Fees and Services75PART IVItem 15.Exhibits,Financial Statement Schedules75Item 16.Form 10-K Summary78SIGNATURES792Table of ContentsPART IItem 1.Business

17、Forum Energy Technologies,Inc.,a Delaware corporation(the“Company,”“FET,”“Forum,”“we,”“our”or“us”),is a global company servingthe oil,natural gas,industrial and renewable energy industries.Our common shares are listed on the New York Stock Exchange(“NYSE”)under the symbol“FET.”Our principal executiv

18、e offices are located at 10344 Sam Houston Park Drive,Houston,Texas 77064,our telephonenumber is(713)351-7900,and our website is www.f-e-.Our Annual Reports on Form 10-K,quarterly reports on Form 10-Q and currentreports on Form 8-K,and all amendments thereto,are available free of charge in the“Inves

19、tors”section of our website as soon asreasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission(“SEC”).These reports are also available on the SECs website at www.sec.gov.Information contained on or accessible from our website is n

20、otincorporated by reference into this Annual Report on Form 10-K and should not be considered part of this report or any other filing that wemake with the SEC.OverviewWe are a global company serving the oil,natural gas,industrial and renewable energy industries.FET provides value added solutions aim

21、edat improving the safety,efficiency,and environmental impact of our customers operations.We are an environmentally and sociallyresponsible company headquartered in Houston,Texas with manufacturing,distribution and service facilities strategically located throughoutthe world.Our products include hig

22、hly engineered capital equipment as well as consumable products.These consumable products are usedin drilling,well construction and completions activities and at processing centers and refineries.Our engineered capital products are directedat drilling rig equipment for constructing new or upgrading

23、existing rigs,subsea construction and development projects,pressure pumpingequipment,the placement of production equipment on new producing wells,downstream capital projects and capital equipment forrenewable energy projects.In 2022,over 68%of our revenue was derived from consumable products and act

24、ivity-based equipment,whilethe balance was primarily derived from capital products with a small amount from rental and other services.We design,manufacture and supply high quality reliable products that create value for our diverse customer base,which includes,amongothers,oil and natural gas operato

25、rs,land and offshore drilling contractors,oilfield service companies,subsea construction and servicecompanies,and pipeline and refinery operators.In addition,we offer some of our products to renewable energy and new energy companies.We expect that the worlds long-term energy demand will continue to

26、rise.We also expect hydrocarbons will continue to play a vital role inmeeting the worlds long-term energy needs while renewable energy sources continue to develop.As such,we remain focused on servingour customers in both oil and natural gas as well as renewable energy applications.We are also contin

27、uing to develop products to help oiland natural gas operators lower their emissions while also deploying our existing product technologies in renewable energy applications andseeking to develop innovative equipment.Our reporting segments align with business activity drivers and the manner in which m

28、anagement reviews and evaluates operatingperformance.FET operates in the following three reporting segments:Drilling&Downhole,Completions and Production.We believe that thereporting segment structure is aligned with the key phases of the well cycle and provides operating efficiencies.We incorporate

29、by reference the segment and geographic information for the last two years set forth in Note 17 Business Segments,and theinformation with respect to an acquisition set forth in Note 4 Acquisition.DRILLING AND DOWNHOLE SEGMENTOur Drilling&Downhole segment designs,manufactures and supplies products an

30、d provides related services to the drilling,wellconstruction,artificial lift and subsea energy construction markets,including applications in oil and natural gas,renewable energy,defense,and communications.The products and related services consist primarily of(i)capital equipment and a broad line of

31、 expendable productsconsumed in the drilling process;(ii)well construction casing and cementing equipment and protection products for artificial lift equipmentand cables;and(iii)subsea remotely operated vehicles and trenchers,submarine rescue vehicles,specialty components and tooling,andcomplementar

32、y subsea technical services.3Table of ContentsThere are several factors that drive demand for our Drilling&Downhole segment.Our Drilling Technologies product line is influenced byglobal drilling activity,the level of capital investment in drilling rigs and equipment replacement as drilling contracto

33、rs modify or replaceexisting rigs to improve capability,efficiency or safety,and the number of rigs in use,and the severity of operating conditions.Our DownholeTechnologies product line is impacted by the level of well completion activity and complexity of well construction and completion.Our Subsea

34、Technologies product line is affected by global offshore activity,defense spending,subsea equipment and pipeline installation,repair andmaintenance expenditures,and growth in offshore windfarm development.Drilling Technologies.We provide both drilling capital equipment and consumables,with a focus o

35、n products that enhance our customershandling of tubulars and drilling fluids on the drilling rig.Our product offering includes powered and manual tubular handling equipment;customized offline crane systems;drilling data acquisition management systems;pumps,pump parts,valves,and manifolds;drilling f

36、luid endcomponents;and,a broad line of items consumed in the drilling process.Drilling capital equipment.We design and manufacture a range of powered and manual tubular handling tools used on onshore and offshoredrilling rigs.Our Forum B+V Oil Tools and Wrangler branded tools reduce direct human inv

37、olvement in the handling of pipe during drillingoperations,improving safety,speed and efficiency of operations.Our tubular handling tools include elevators,clamps,rotary slips,rotarytongs,powered slips,spiders and kelly spinners.Our make-up and break-out tools,called Forum Roughneck,automate a dange

38、rous rigfloor task and improve rig drilling speed and safety.Our hydraulic catwalks mechanize the lifting and lowering of tubulars to and from the drillfloor,eliminating or reducing the need for traditional drill pipe and casing“pick-up and lay-down”operations with associated personnel.Wealso design

39、 and manufacture a range of rig-based offline activity cranes and multi-purpose cranes.In addition to powered tubular handling equipment,we design and manufacture drilling manifold systems and high-pressure piping packages.Finally,we repair and service drilling equipment for both land and offshore r

40、igs.Many of our service employees work in the field to addressproblems at the rig site.Consumable products.We manufacture a range of consumable products used on drilling rigs,well servicing rigs,and hydraulic fracturingsystems.Our consumable products include valves,centrifugal pumps,mud pump fluid e

41、nd components,including P-Quip mud pumpmodules,Forumlok,rig sensors,inserts,and dies.We are also a supplier of oilfield bearings,including FracMax,to original equipmentmanufacturers and repair businesses for use in drilling and well stimulation equipment.Our primary customers in this product line in

42、clude domestic and international drilling rig contractors operating land and offshore based drillingrigs.Downhole Technologies.We manufacture a broad line of downhole products that are consumed during the construction,completion andproduction phases of a wells lifecycle.Downhole protection systems.W

43、e offer a full selection of downhole protection solutions and artificial lift accessories through our variousbrands such as Cannon Services and Multilift.Our Cannon Services protectors are used to shield downhole control lines,cables andgauges during installation and to provide protection during pro

44、duction enhancement operations.We design and manufacture a variety ofdownhole protection solutions for electrical submersible pump(“ESP”)cabling,encapsulated control lines,sub-surface safety valves andpermanent downhole gauges.We provide both standard and customized protection systems,and we utilize

45、 a range of materials in ourproducts for various downhole environments.SandGuard and Cyclone branded completion tools extend the useful life of an ESP byprotecting it against sand and other solids during shutdown and startup.Forums GasGuard branded product also extends the useful life ofan ESP by br

46、eaking down gas slugs,creating an uninterrupted flow of liquid.Casing and cementing tools.Through our Davis-Lynch branded downhole well construction operations,we design and manufactureproducts used in the construction of oil,natural gas and geothermal wells.We supply a full portfolio of centralizer

47、s,float equipment,stagecementing tools,inflatable packers,flotation collars,cementing plugs and surge reduction equipment.Our products are used globally in theconstruction of onshore and offshore wells.Our primary customers in this product line are oil and natural gas producers,and service companies

48、 providing completions,artificial lift andother intervention services to producers.Subsea Technologies.We design and manufacture capital equipment and specialty components used in the subsea sector and provide abroad suite of complementary technical services.We have a core focus on the design4Table

49、of Contentsand manufacture of remotely operated vehicle(“ROV”)systems,other specialty subsea vehicles,and rescue submarines,as well as criticalcomponents of these vehicles.Many of our related technical services complement our vehicle offerings.Subsea vehicles.We are a leading designer and manufactur

50、er of a wide range of ROVs that we supply to the offshore subsea construction,observation and related service markets.The market for ROVs can be segmented into three broad classes of vehicles based on size andcategory of operations:(1)large work-class vehicles and trenchers for construction and inst

51、allation activities,(2)drilling-class vehiclesdeployed from and for use around an offshore rig and(3)observation-class vehicles for inspection and light manipulation.We are a leadingprovider of work-class and observation class vehicles.We design and manufacture large work-class ROVs through our high

52、ly respected Perry brand.These vehicles are principally used indeepwater construction applications.In addition to work-class ROVs,we design and manufacture large trenchers that travel along the seafloor for trenching,installation and burial operations.The largest of these trenchers is able to cut ov

53、er three meters deep into the seafloor tolay pipelines,power cables or communications cables for customers in the pipeline,offshore wind power and telecom markets.Our Forum Sub-Atlantic branded observation-class vehicles are electrically powered and are principally used for inspection,survey and lig

54、htmanipulation,and serve a wide range of industries.In addition to ROVs,we design and manufacture subsea rescue vehicles capable of a range of tasks,including submarine rescue operations,diver support,seabed survey,port security,under hull search and a variety of other tasks.Our subsea vehicle custo

55、mers are primarily large offshore service companies that serve the oil and natural gas,telecommunications,offshore wind power,and other industries operating in marine environments.In addition,we sell products to a range of governmentalorganizations including naval,maritime science and geoscience res

56、earch organizations.Subsea products and technical services.We are also a leading designer and manufacturer of subsea products and components utilized inconjunction with ROVs for the oil and natural gas,renewables,telecommunications and defense markets.We manufacture Dynaconbranded ROV launch and rec

57、overy systems,linear cable engines,Sub-Atlantic branded ROV thrusters,and a wide range of hydraulic powerunits and valve packs.We design and manufacture these ROV components for incorporation into our own vehicles as well as for sale toother ROV manufacturers.We also provide a broad suite of subsea

58、tooling and technical services.COMPLETIONS SEGMENTOur Completions segment designs,manufactures and supplies products and provides related services to the coiled tubing,well stimulationand intervention markets.The products and related services consist primarily of:(i)capital and consumable products s

59、old to the pressurepumping,hydraulic fracturing and flowback services markets,including hydraulic fracturing pumps,cooling systems,high-pressure flexiblehoses and flow iron as well as wireline cable and pressure control equipment used in the well completion and intervention service markets;and(ii)co

60、iled tubing strings and coiled line pipe and related services.Demand for our Stimulation&Intervention and Coiled Tubing product lines is impacted by the level of shale or tight sand basin hydraulicfracturing activity and the level of workover and intervention activity.Stimulation and Intervention.We

61、 provide a broad range of high-pressure pumps and flow equipment used by pressure pumpingcompanies during stimulation,intervention(principally plug and perforation activity)and flowback processes.We sell power end assemblies,industrial heat exchanger and cooling systems,manifolds and manifold traile

62、rs,high-pressure flexible hoses and flow iron.Frequentrefurbishment and recertification of flow equipment is critical to ensuring the reliable and safe operation of a pressure pumping companysfleet.We perform these services and position inventory in strategic locations in North America.We also manuf

63、acture pressure control products that are used for well intervention operations that are sold domestically and internationally tooilfield service companies and equipment rental companies.Products we supply include blowout preventers for coiled tubing and wirelineunits and our Hydraulic Latch Assembl

64、y,which is used to facilitate efficient zipper fracturing operations.We also manufacture electro-mechanical wireline cables as well as innovative EnviroLite branded(greaseless)cables.We also conduct aftermarket refurbishment andrecertification services for pressure control equipment.5Table of Conten

65、tsOur primary customers in the Stimulation and Intervention product line are pressure pumping,wireline and flowback service companies.Inaddition,we sell directly to pressure pumping unit original equipment manufacturers.Coiled Tubing.We manufacture Global Tubing branded coiled tubing strings,includi

66、ng DURACOIL(quench and temper),and coiled linepipe,and provide related services.Coiled tubing strings are consumable components utilized to perform well completion and interventionactivities.Our coiled line pipe offering serves as an alternative to conventional line pipe and composite flexibles in o

67、nshore and offshoreapplications.In addition,our coiled line pipe offering can be utilized for carbon capture projects to transport carbon for injection intounderground storage.The product lines primary customers are domestic and international service companies that provide coiled tubing services and

68、 oil and gasoperators.PRODUCTION SEGMENTOur Production segment designs,manufactures and supplies products and provides related equipment and services for production andinfrastructure markets.The products and related services consist primarily of:(i)engineered process systems,production equipment,as

69、wellas specialty separation equipment;and(ii)a wide range of industrial valves focused on serving oil and natural gas customers as well aspower generation,renewable energy and other general industrial applications.The segments primary market driver is the level of spending associated with new produc

70、ing wells as well as spending on midstream anddownstream projects.In addition,demand for our Valve Solutions products is affected by activity levels in the power generation,process,petrochemical and mining industries.Production Equipment.Our Production Equipment product line provides engineered proc

71、ess systems for capital equipment used at thewellsite and for production processing in the U.S.Once a well has been drilled,completed and brought on stream,we provide the welloperator with process equipment necessary to make the oil or natural gas ready for transmission.We engineer,fabricate and ins

72、tallseparators,packaged production systems and pressure vessels,skidded vessels with gas measurement,modular process plants,headerand manifold skids,process and flow control equipment and separators to help clean and process oil or natural gas as it travels from thewellhead and along the transmissio

73、n line to the refinery.Our customers are principally U.S.oil and natural gas operators or producers.We also design and provide process oil treatment equipment,including EDGE and NU-STATICbranded desalters and dehydratortechnologies,used in refineries and other process applications worldwide.We have

74、a team of highly trained technicians and field serviceengineers for repair and installation,and we supply a broad range of replacement parts for our equipment and other manufacturers.Thisequipment removes sand,water and suspended solids from hydrocarbons prior to their transmission or refining.Valve

75、 Solutions.We provide a wide range of industrial valves that principally serve the upstream,midstream and downstream markets ofthe oil and natural gas industry.Our valves also serve general industrial,power generation and process industry customers as well as themining industry.In addition,our Canad

76、ian operations provide significant exposure to heavy oil projects.We provide ball,gate,globe andcheck valves across a range of sizes and applications.We market our valves to our customers and end users through our recognized brands:PBV,DSI and Accuseal.Much of our production issold through distribut

77、ion supply companies,with our marketing efforts targeting end users for pull through of our valve products.Our supply chain systems enable us to design and sell high-quality engineered valves,as well as provide standardized products,whilemaintaining competitive pricing and minimizing capital require

78、ments.We utilize our international manufacturing partners to producecompleted products and components for the majority of our valve products.Depending on the product,our valves are manufactured to conform to the standards of one or more of the API,American National StandardsInstitute,American Bureau

79、 of Shipping,and International Organization for Standardization and/or other relevant standards governing thedesign and manufacture of industrial valves.6Table of ContentsBusiness historyForum was incorporated in 2005 and formed through a series of acquisitions.In August 2010,Forum Oilfield Technolo

80、gies,Inc.was renamedForum Energy Technologies,Inc.,when four other companies were merged into Forum.On April 17,2012,we completed our initial publicoffering.BacklogAs we provide a mix of consumable products,capital goods,and repair parts and services,the majority of orders and commitments includedin

81、 our backlog as of December 31,2022 are scheduled to be delivered within six months.Our backlog was approximately$264.8 million atDecember 31,2022 and approximately$196.5 million at December 31,2021.Substantially all of the projects currently in our backlog aresubject to change and our customers may

82、 seek to terminate these orders.However,customers are generally required to pay us for workperformed as well as other costs and fees as a result of such changes or termination.It is difficult to predict how much of our current backlogmay be delayed or terminated,or subject to changes,as well as our

83、ability to collect termination or change fees.Our consumable and repair products are predominantly off-the-shelf items requiring short lead-times,generally less than six months,and ourrelated refurbishment or other services are also not contracted with significant lead time.The composition of our ba

84、cklog is reflective of ourmix of capital equipment,consumable products,aftermarket and other related items.Our bookings,which consist of written orders orcommitments for our products or related services,during the years ended December 31,2022 and 2021 were approximately$780.7 millionand$632.3 millio

85、n,respectively.CustomersNo customer represented more than 10%of consolidated revenue in any of the last two years.SeasonalityOur business is not significantly impacted by seasonality.However,our customers are susceptible to exhausting their capital and operatingbudgets in the fourth quarter.As a res

86、ult,we may experience decreased demand for our products in the fourth quarter.In addition,given thegeographic proximity of a number of our facilities to the Gulf Coast,we are subject to business interruptions caused by hurricanes andtropical storms.Furthermore,a small portion of the revenue we gener

87、ate from select Canadian operations often benefits from higher firstquarter activity levels,as operators take advantage of the winter freeze to gain access to remote drilling and production areas.CompetitionThe markets in which we operate are highly competitive.We compete with a number of companies

88、of varying sizes.There are several largenational and multinational companies that have longer operating histories,greater financial,technical and other resources and greater namerecognition.In addition,we have several smaller competitors who compete with us on a regional or local basis.These competi

89、tors are oftentimes very quick to respond to new or emerging technologies and services,and changes in customer requirements.The principal competitivefactors in our markets are product quality and performance,price,breadth of product offering,availability of products and services,performance,distribu

90、tion capabilities,technical expertise,responsiveness to customer needs,reputation for service and intellectual propertyrights.We believe our products and services in each segment are comparable in price,quality,performance and dependability with ourcompetitors offerings.We seek to differentiate ours

91、elves from our competitors by providing a rapid response to the needs of our customers,expert knowledge,a high level of customer service,and innovative product development initiatives.Some of our competitors expend greateramounts of money than us on formal research and engineering efforts.We believe

92、,however,that our product development efforts areenhanced by the investment of management time that we make to improve our customer service and to work with our customers on theirspecific product needs and challenges.Although we have no single competitor across all of our product lines,the companies

93、 we compete with across the greatest number of ourproduct lines include National Oilwell Varco,Inc.,Cameron International Corporation(a subsidiary of Schlumberger),TechnipFMC plc,Tenaris S.A.,and Caterpillar,Inc.7Table of ContentsPatents,trademarks and other intellectual propertyWe currently hold mu

94、ltiple U.S.and international patents and trademarks,have a number of pending patent and trademark applications andhave developed a significant amount of trade secrets or other know how in the areas where we compete.Although our patents,trademarks,licenses,trade secrets and know how are material to u

95、s in the aggregate,we do not regard any single piece of intellectual property to bematerial to our business as a whole.Raw materialsWe acquire component parts,products and raw materials from suppliers,including foundries,forge shops,and original equipmentmanufacturers.The prices we pay for our raw m

96、aterials may be affected by,among other things,energy,steel and other commodity prices,inflationary pressures,tariffs and duties on imported materials and foreign currency exchange rates.Certain of our component parts,products or raw materials,such as bearings,are only available from a limited numbe

97、r of suppliers.Please see“Risk factorsRisks related toour businessWe rely on relationships with key suppliers to operate and maintain our business.”Timely receipt of raw materials is critical to our business.In 2021,we were negatively impacted by various transportation and other supplychain constrai

98、nts,which caused manufacturing delays for some of our products.During 2022,supply chain constraints eased;however,rawmaterial prices for many of our product lines were negatively impacted by inflationary pressures.In the future,while we anticipate inflationarypressures will improve,and supply chain

99、constraints will continue to ease,the timing of any reduction in inflation is unknown,and it is unclearwhether we will be able to continue purchasing raw materials on a timely basis or at acceptable prices.We generally try to purchase rawmaterials from multiple suppliers so that we are not dependent

100、 on any one supplier,but this is not always possible.Working CapitalAn important consideration for many of our customers in selecting a vendor is timely availability of the product.Customers may pay apremium for earlier or immediate availability because of the cost of delays in critical operations.W

101、e stock our consumable products inregional warehouses or on consignment around the world so that these products are available for our customers when needed.Thisavailability is especially critical for certain consumable products,causing us to carry substantial inventories for these products.For criti

102、calcapital items in which demand is expected to be strong,we often build certain items before we have a firm order.Our having such goodsavailable on short notice can be of great value to our customers.We also stock raw materials and components in order to be in a position tobuild products in respons

103、e to market demand.We typically offer our customers standard payment terms of 30 days,although during downturns in activity,customers often take 65 days ormore to settle accounts.For sales into certain countries or for select customers,we might require payment upfront or credit support through alett

104、er of credit.For longer term projects,we typically require progress payments as important milestones are reached.On average,we collectour receivables in about 60 days from shipment resulting in a substantial investment in accounts receivable.Standard terms with our vendorsare 90 days.For critical it

105、ems sourced from significant vendors,we have settled accounts more quickly,sometimes in exchange for earlypayment discounts.Governmental regulationOur operations are subject to numerous stringent and complex laws and regulations governing the discharge of materials into theenvironment,health and saf

106、ety aspects of our operations,or otherwise relating to human health and environmental protection.In addition toenvironmental and worker safety regulations,we are subject to regulation by numerous other governmental regulatory agencies,includingthe U.S.Department of Labor and other state,local and in

107、ternational bodies regulating worker rights and labor conditions.In addition,we aresubject to certain requirements to contribute to retirement funds or other benefit plans and laws in some jurisdictions in which we operaterestrict our ability to dismiss employees.Failure to comply with these laws or

108、 regulations or to obtain or comply with permits may result in theassessment of administrative,civil and criminal penalties,imposition of remedial or corrective action requirements,and the imposition ofinjunctions to prohibit certain activities or force future compliance.The trend in environmental r

109、egulation has been to impose increasingly stringent restrictions and limitations on activities that may impact theenvironment,and thus,any changes in environmental laws and regulations or in enforcement policies that result in more stringent and costlywaste handling,storage,transport,disposal,or rem

110、ediation requirements could have a material adverse effect on our operations andfinancial position.Moreover,8Table of Contentsaccidental releases or spills of regulated substances may occur in the course of our operations,and if so,we may incur significant costs andliabilities as a result of such re

111、leases or spills,including any third-party claims for damage to property,natural resources or persons.The following is a summary of the more significant existing environmental,health and safety laws and regulations to which our businessoperations are subject and for which compliance may have a mater

112、ial adverse impact on our capital expenditures,results of operations orfinancial position.Hazardous substances and wasteThe Resource Conservation and Recovery Act(“RCRA”)and comparable state statutes,regulate the generation,transportation,treatment,storage,disposal and cleanup of hazardous and non-h

113、azardous wastes.Under the auspices of the Environmental Protection Agency(“EPA”),the individual states administer some or all of the provisions of the RCRA,sometimes in conjunction with their own,more stringentrequirements.We are required to manage the transportation,storage and disposal of hazardou

114、s and non-hazardous wastes in compliancewith the RCRA.The Comprehensive Environmental Response,Compensation,and Liability Act(“CERCLA”),also known as the Superfund law,imposes jointand several liability,without regard to fault or legality of conduct,on classes of persons who are considered to be res

115、ponsible for the releaseof a hazardous substance into the environment.These persons include the owner or operator of the site where the release occurred,andanyone who disposed or arranged for the disposal of a hazardous substance released at the site.We currently own,lease,or operatenumerous propert

116、ies that have been used for manufacturing and other operations for many years.We also contract with waste removalservices and landfills.These properties and the substances disposed or released on them may be subject to the CERCLA,RCRA andanalogous state laws.Under such laws,we could be required to r

117、emove previously disposed substances and wastes,remediatecontaminated property,or perform remedial operations to prevent future contamination.In addition,it is not uncommon for neighboringlandowners and other third-parties to file claims for personal injury and property damage allegedly caused by ha

118、zardous substances releasedinto the environment.Hydraulic fracturingA significant percentage of our customers oil and natural gas production is being developed from unconventional sources,such ashydrocarbon shales.These formations require hydraulic fracturing completion processes to release the oil

119、or natural gas from the rock sothat it can flow through the formations.Hydraulic fracturing involves the injection of water,sand and chemicals under pressure into theformation to stimulate production.A number of federal agencies,including the EPA and the U.S.Department of Energy,are analyzing,orhave

120、 been requested to review,a variety of environmental issues associated with shale development,including hydraulic fracturing.Moreover,various political groups and officials are requesting or have discussed implementing a ban on hydraulic fracturing,or oil&gasextraction generally,on federal lands.For

121、 more information,please read“Risk Factors-Potential legislation or regulations restricting the useof hydraulic fracturing could reduce demand for our products.”Operating risk and insuranceWe maintain insurance coverage of types and amounts that we believe to be customary and reasonable for companie

122、s of our size and withsimilar operations.In accordance with industry practice,however,we do not maintain insurance coverage against all of the operating risks towhich our business is exposed.Therefore,there is a risk our insurance program may not be sufficient to cover any particular loss or allloss

123、es.Currently,our insurance program includes coverage for,among other things,general liability,umbrella liability,sudden and accidentalpollution,personal property,vehicles,workers compensation,and employers liability coverage.EmployeesAs of December 31,2022,we had approximately 1,500 employees.Of our

124、 total employees,approximately 1,100 were in the U.S.,150 werein the United Kingdom,100 were in Germany,100 were in Canada and 50 were in other locations.We are not a party to any collectivebargaining agreements,other than in our Hamburg,Germany facility.We consider our relations with our employees

125、to be satisfactory.9Table of ContentsItem 1A.Risk FactorsThe following summarizes the principal factors that make an investment in our company speculative or risky,all of which are more fullydescribed in the Risk Factors section below.This summary should be read in conjunction with the Risk Factors

126、section and should not berelied upon as an exhaustive summary of the material risks facing our business.Risks Related to our Business and Operations:The success of our business largely depends on activity levels in the oil and natural gas industry,which can be affected by theamount and volatility of

127、 oil and natural gas prices.The markets in which we operate are highly competitive,including some companies that hold substantial market share and havesubstantially greater resources than we do,as well as a number of regional or local competitors for certain of our product lines.Wemay not be able to

128、 compete successfully in this environment.Given the uncertainty related to long-term commodity prices and associated customer demand,we may hold excess or obsoleteinventory,and as a result,may experience a reduction in gross margins and financial results.We may not realize revenue on our current bac

129、klog due to customer order reductions,cancellations or acceptance delays,whichmay negatively impact our financial results.The industry in which we operate is undergoing continuing consolidation and seeking opportunities to participate in the energytransition,which may impact our results of operation

130、s.A greater focus on budgetary discipline and technological advances have caused a decline in customer spending that may remain ata low level despite an increase in commodity prices.We may be unable to employ a sufficient number of skilled and qualified workers.We rely on relationships with key supp

131、liers to operate and maintain our business.Our business depends upon our ability to obtain key raw materials and specialized equipment from suppliers.Increased costs of rawmaterials and other components,and inflationary pressure,may result in increased operating expenses.A deterioration of global ec

132、onomic conditions could adversely affect our financial condition and results of operations.We may not be able to satisfy technical requirements,testing requirements,code requirements or other specifications undercontracts and contract tenders.A failure or breach of our information technology infrast

133、ructure,including as a result of cyber attacks or failures of data protectionmeasures,could adversely impact our business and results of operations and expose us to potential liabilities.Our success depends on our ability to implement new technologies and services more efficiently and quickly than o

134、ur competitors.Our success will be affected by the use and protection of our proprietary technology.Due to the limitations of our intellectual propertyrights,our ability to exclude others from the use of our proprietary technology may be reduced.Furthermore,we may be adverselyaffected by disputes re

135、garding intellectual property rights.We may incur liabilities,fines,penalties or additional costs,or we may be unable to sell to certain customers if we do not maintain safeoperations.If we fail to maintain an effective system of internal controls,we may not be able to accurately report our financia

136、l results or preventfraud.The impact and effects of public health crises,pandemics and epidemics,such as the COVID-19 pandemic,could have a materialadverse effect on our business,financial condition and results of operations.Facility consolidations or expansions may subject us to risks of operating

137、inefficiencies,construction delays and cost overruns.Our acquisitions and dispositions may not result in anticipated benefits and may present risks not originally contemplated,which mayhave a material adverse effect on our business,consolidated results of operations and consolidated financial condit

138、ion.A natural disaster,catastrophe or other event could result in severe property damage,which could curtail our operations.Legal and Regulatory Risks:Our operations and our customers operations are subject to a variety of governmental laws and regulations that affect our and ourcustomers costs,proh

139、ibit or curtail our customers operations in certain areas,limit the demand for our products and services orrestrict our operations.10Table of ContentsPotential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products.Our financial results could be a

140、dversely impacted by changes in regulation of oil and natural gas exploration and developmentactivity in response to significant environmental incidents or climate change actions.Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant

141、 costs andliabilities.Tariffs imposed by the U.S.government could have a further severe adverse effect on our results of operations.We are subject to litigation risks that may not be covered by insurance.The number and cost of our current and future asbestos claims could be substantially higher than

142、 we have estimated and the timingof payment of claims could be sooner than we have estimated.Our products are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and,as a result,we are exposed to potential liabilities that could affect our financial

143、condition and reputation.Climate change legislation or regulations restricting emissions of greenhouse gases and related divestment and other efforts couldincrease our operating costs or reduce demand for our products.Risks Related to our International OperationsOur business operations worldwide are

144、 subject to a number of U.S.federal laws and regulations,including restrictions imposed bythe U.S.Foreign Corrupt Practices Act as well as trade sanctions administered by the Office of Foreign Assets Control and theCommerce Department,as well as similar laws in non-U.S.jurisdictions that govern our

145、operations by virtue of our presence oractivities there.Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows and could have an adverse effect onour results of operations.Risks Related to our Common Stock,Indebtedness and Financial Condition:Our common stoc

146、k price has been volatile,and we expect it to continue to remain volatile in the future.The indenture governing our 2025 Notes and our Credit Facility contain operating and financial restrictions that restrict our businessand financing activities.Our ability to access the capital and credit markets

147、to raise capital on favorable terms is limited by our debt level,industry conditionsand credit rating.Provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company,which could adversely affect the price of our common stock.We have incurre

148、d impairment charges and we may incur additional impairment charges in the future.11Table of ContentsRisks Related to our Business and Operations:The success of our business largely depends on activity levels in the oil and natural gas industry,which can be affected by theamount and volatility of oi

149、l and natural gas prices.We have experienced,and will continue to experience,fluctuations in revenues and operating results due to economic and business cycles.The willingness of oil and natural gas operators to make capital expenditures to explore for and produce oil and natural gas,the need ofoilf

150、ield services companies to replenish consumable parts and the willingness of these customers to invest in capital equipment dependslargely upon prevailing industry conditions that are influenced by numerous factors over which we have no control.Such factors include:domestic and foreign supply of and

151、 demand for oil and natural gas;prices,and expectations about future prices,of oil and natural gas;ability or willingness of the Organization of Petroleum Exporting Countries(“OPEC”)and other major producers to set and maintainproduction limits;cost of exploring for,developing,producing and deliveri

152、ng oil and natural gas;levels of drilling and completions activity;expected decline in rates of current and future production,or faster than anticipated declines in production;discovery rates of new oil and natural gas reserves;COVID-19 and related public health measures implemented by governments w

153、orldwide and the occurrence or threat of other epidemic orpandemic diseases,including variants of COVID-19,and any government response to such occurrence or threat;ability of our customers to access new markets or areas of production or to continue to access current markets,including as a result oft

154、rade restrictions;weather conditions,including hurricanes and tornadoes,that can affect oil and natural gas operations;natural disasters,catastrophes or other events resulting in severe property damage;governmental regulations,including those instituted in connection with a response to climate chang

155、e;prohibitions,moratoriums or similar limitations on drilling or hydraulic fracturing activity resulting in a cessation or disruption ofoperations;domestic and worldwide economic and political conditions,including inflationary pressures,further increases in interest rates and thecost of capital,a ge

156、neral economic slowdown or recession,political tensions and war(including future developments in the ongoingRussia-Ukraine conflict);financial stability of our customers and other industry participants;political instability in oil and natural gas producing countries;increased pressures to invest in

157、sustainable energy sources,shareholder activism or activities by non-governmental organizations torestrict the exploration,development and production of oil and natural gas;investors reducing,or ceasing to provide,funding to the oil and natural gas industry in response to initiatives to limit climat

158、e change;conservation measures and technological advances affecting energy consumption;price and availability of alternative energy resources and fuels;uncertainty in capital and commodities markets,and the ability of oil and natural gas companies to raise equity capital and debt financing;andmerger

159、 and divestiture activity among oil and natural gas producers,drilling contractors and oilfield service companies.The oil and natural gas industry has historically experienced periodic reductions in the overall level of exploration and development activitiesin connection with declines in commodity p

160、rices.As a result,there are periodic reductions in the demand for our products and services,downward pressure on the prices that we charge and ultimately an adverse impact on our business.During the year ended December 31,2022,ongoing COVID-19 outbreaks and related work restrictions impacted demand

161、for oil and natural gas and caused disruptions in global12Table of Contentssupply chains,which have contributed to price volatility and inflationary pressures for certain goods and services.Although,during the yearoil and gas prices and demand increased significantly from the historic lows seen in t

162、he first half of 2020,it is uncertain whether prices willmaintain current levels,decline or increase.Furthermore,there can be no assurance that the demand or pricing for oil and natural gas willfollow historic patterns,including as a result of increased availability of alternative energy sources.Dec

163、lines in oil and natural gas prices,decreased levels of exploration,development,and production activity,use of alternative sources of energy,and the willingness of customersto invest in their equipment relative to historical norms may negatively affect:revenues,cash flows,and profitability;the abili

164、ty to maintain or increase borrowing capacity;the ability to obtain additional capital to finance our business and the cost of that capital;the ability to collect outstanding amounts from our customers;andthe ability to attract and retain skilled personnel to maintain our business or that will be ne

165、eded in the event of an upturn in the demandfor our products.The markets in which we operate are highly competitive,including some companies that hold substantial market share and havesubstantially greater resources than we do,as well as a number of regional or local competitors for certain of our p

166、roduct lines.We may not be able to compete successfully in this environment.The markets in which we operate are highly competitive and our products and services are subject to competition from significantly largerbusinesses.We have several competitors that are large national and multinational compan

167、ies that have longer operating histories,andgreater financial,technical and other resources than we do.In addition,we compete with many small companies on a regional or localbasis.Our competitors may be able to respond more quickly to new or emerging technologies and services and changes in customer

168、requirements.In addition,several of our competitors provide a much broader array of services,and have a stronger presence in moregeographic markets and,as such,may be better positioned to withstand an extended downturn.Our larger competitors are able to use theirsize and purchasing power to seek eco

169、nomies of scale and pricing concessions.Furthermore,some of our customers are our competitorsand have in the past ceased buying from us,and may do the same in the future.We also have competitors outside of the U.S.with lowerstructural costs due to labor and raw material cost in and around their manu

170、facturing centers,and prices based on foreign currencies.Accordingly,currency fluctuations may cause U.S.dollar-priced products to be less competitive than our competitors products that are pricedin other currencies.Moreover,our competitors may utilize available capacity during a period of depressed

171、 energy prices to gain marketshare.New competitors have also entered the markets in which we compete.We consider product quality,price,breadth of product offering,availability of products and services,performance,distribution capabilities,technical expertise,responsiveness to customer needs,reputati

172、onfor service and intellectual property rights to be the primary competitive factors.Competitors may be able to offer more attractive pricing,duplicate strategies,or develop enhancements to products that offer performance features that are superior to our products.In addition,wemay not be able to re

173、tain key employees of entities that we acquire in the future and those employees may choose to compete against usfollowing a contractually agreed period of non-competition that is permitted under the law.Competitive pressures,including those describedabove,and other factors could adversely affect ou

174、r competitive position,resulting in a loss of market share or decreases in prices.For moreinformation about our competitors,please read“BusinessCompetition.”Given the uncertainty related to long-term commodity prices and associated customer demand,we may hold excess or obsoleteinventory,and as a res

175、ult,may experience a reduction in gross margins and financial results.We cannot accurately predict what or how many products our customers will need in the future.Orders are placed with our suppliers basedon forecasts of customer demand and,in some instances,we may establish buffer inventories to ac

176、commodate anticipated demand.Atcertain times,we have built capital equipment before receiving customer orders.Our forecasts of customer demand are based on multipleassumptions,which have introduced errors into the estimates.These forecasts have been particularly challenging to develop as a result of

177、uncertainty created by COVID-19 outbreaks and related work restrictions,and U.S.recessionary pressures and supply chain inefficienciespreventing our customers from receiving finished goods.In addition,many of our suppliers,such as those for certain of our standardizedvalves,require a longer lead tim

178、e to provide products than our customers demand for delivery of our finished products.If we underestimatecustomer demand or if insufficient manufacturing capacity is available,we would miss revenue opportunities and potentially lose marketshare and damage our13Table of Contentscustomer relationships

179、.Conversely,if we overestimate customer demand,we would allocate resources to the purchase of material ormanufactured products that we are not be able to sell when we expect to,if at all.As a result,we would hold excess or obsolete inventory,which would reduce gross margin and adversely affect finan

180、cial results upon writing down the value of inventory.In addition,any futuresignificant cancellations or deferrals of product orders or the return of previously sold products could materially and adversely affect profitmargins,increase product obsolescence and restrict our ability to fund our operat

181、ions.We may not realize revenue on our current backlog due to customer order reductions,cancellations or acceptance delays,whichmay negatively impact our financial results.Uncertainty regarding demand for our customers services has resulted in order reductions,cancellations and acceptance delays,and

182、 wemay experience more of these in the future.We may be unable to collect revenue for all of the orders reflected in our backlog,or we may beunable to collect cancellation penalties,to the extent we have the right to impose them,or the revenues may be pushed into future periods.In addition,customers

183、 who are more highly leveraged or otherwise unable to pay their creditors in the ordinary course of business maybecome insolvent or be unable to operate as a going concern.We may be unable to collect amounts due or damages we are awarded fromthese customers,and our efforts to collect such amounts ma

184、y damage our customer relationships.Our results of operations and overallfinancial condition may be negatively impacted by a reduction in revenue as a result of these circumstances.The industry in which we operate is undergoing continuing consolidation and seeking opportunities to participate in the

185、 energytransition,which may impact our results of operations.Some of our customers have consolidated and are seeking to achieve economies of scale and pricing concessions.In addition,they aremaking investments in non-traditional oil and gas markets as part of the energy transition.As a result,we may

186、 be unable to supply ourtraditional oil and gas products to these customers if we do not develop new technology that meets their changing needs.In addition,theconsolidation of customers and focus on non-traditional energy investments could result in reduced spending by such companies ordecreased dem

187、and for our existing products and services.Therefore,to counteract these pressures,any reduced spending or decreaseddemand for traditional energy products will need to be offset at the same or greater pace by sales to other customers or increased sales ofrenewable energy technologies that we develop

188、.If we are not successful in offsetting such sales,there could be a significant negative impacton our results of operations or financial condition.We are unable to predict what effect consolidations and the energy transition in theindustry may have on prices,spending by customers,selling strategies,

189、competitive position,customer retention or our ability to negotiatefavorable agreements with customers.A greater focus on budgetary discipline and technological advances have caused a decline in customer spending that may remainat a low level despite an increase in commodity prices.A portion of our

190、business is driven by our customers spending on capital equipment such as drilling rigs.Our customers and their investorshave adopted business strategies placing significant emphasis on capital discipline that has limited the level of their spending.In addition,new techniques and technological advan

191、ces have reduced the number of days required to drill wells.The number of days required for adrilling rig to be on a site to drill a well has in many areas been reduced by at least half over the last several years.Given these factors,wecannot provide any assurance that our capital equipment sales wi

192、ll increase if there is an increase in commodity prices.We may be unable to employ a sufficient number of skilled and qualified workers.The delivery of our products and services requires personnel with specialized skills and experience.Our ability to be productive andprofitable depends upon our abil

193、ity to employ and retain skilled workers.During periods of increasing activity in our industry,our ability toexpand our operations depends in part on our ability to increase the size of our skilled labor force.In addition,during those periods,thedemand for skilled workers is high,the supply is limit

194、ed and the cost to attract and retain qualified personnel increases,especially for skilledworkers.For example,we have recently experienced shortages of engineers,mechanical assemblers,machinists and welders,which insome instances slowed the productivity of certain of our operations.Furthermore,a sig

195、nificant increase in the wages paid by competingemployers could result in a reduction of our skilled labor force,increases in the wage rates that we must pay,or both.During periods of lowactivity in our industry,we have reduced the size of our labor force to match declining revenue levels,and other

196、employees have chosen toleave in order to find more stable employment.This causes us to lose skilled personnel,the absence of which could cause us to incur quality,efficiency and deliverability issues in our operations,or delay our response to an upturn in the market.We are also exposed to the impac

197、t oflabor cost increases resulting from other factors such as high employment levels,increased wages offered14Table of Contentsby employers in other industries,and government regulations.If any of these events were to occur,our ability to respond quickly to customerdemands may be inhibited and our g

198、rowth potential could be impaired.We rely on relationships with key suppliers to operate and maintain our business.Certain of our product lines depend on a limited number of third-party suppliers.In some cases,the suppliers own the intellectual propertyrights to the products we sell,or possess the t

199、echnology or specialized tooling required to manufacture them.As a result of this concentrationin part of our supply chain,our business and operations may be negatively affected if our key suppliers were to experience significantdisruptions affecting the price,quality,availability or timely delivery

200、 of their products,such as from COVID-19,or if they were to decide toterminate their relationships with us.For example,we have a limited number of suppliers for our bearings product lines and certain of ourvalve product lines.The limited number of these suppliers can restrict the quantity and timeli

201、ness of customer deliveries.In addition,some ofour suppliers have imposed more stringent payment terms and conditions on us based on our perceived risk as a counterparty.The partial orcomplete loss of any one of our key suppliers,a significant adverse change in the relationship with any of these sup

202、pliers,throughconsolidation or otherwise,would limit our ability to manufacture and sell certain of our products.Our business depends upon our ability to obtain key raw materials and specialized equipment from suppliers.Increased costs ofraw materials and other components,and inflationary pressure,m

203、ay result in increased operating expenses.Should our suppliers be unable to provide the necessary raw materials or finished products or otherwise fail to deliver such materials andproducts timely and in the quantities required,resulting delays in the provision of products or services to customers co

204、uld have a materialadverse effect on our business.In particular,because many of our products are manufactured out of steel,we are particularly susceptible tofluctuations in steel prices and tariffs.Our results of operations may be adversely affected by our inability to manage the rising costs andava

205、ilability of raw materials and components used in our products.For example,our Coiled Tubing product line was unable to source asufficient amount of steel during the third and fourth quarters of 2021 to satisfy customer orders on a timely basis.In addition to the impact ofCOVID-19 and related supply

206、 chain and operational disruptions,the availability and cost of necessary raw materials and finished productsmay be impacted by macroeconomic demand,various national,regional,local,economic and political factors,and inflationary pressures.Some of our contracts require us to compensate customers if w

207、e do not meet specified delivery obligations.We rely on suppliers to providerequired materials and in many instances these materials must meet certain specifications.Managing a geographically diverse supply baseposes inherently significant logistical challenges.Furthermore,the ability of third-party

208、 suppliers to deliver materials to our specifications maybe affected by events beyond our control.As a result,there is a risk that we could experience diminished supplier performance resulting inlonger than expected lead times and/or product quality issues.For example,in the past,we have experienced

209、 issues with the quality ofcertain forgings used to produce materials utilized in our products.As a result,we were required to seek alternative suppliers for thoseforgings,which resulted in increased costs and a disruption in our supply chain.We have also been required in certain circumstances topro

210、vide better economic terms to some of our suppliers in exchange for their agreement to increase their capacity to satisfy our supplyneeds.The occurrence of any of the foregoing factors would have a negative impact on our ability to deliver products to customers withincommitted time frames.A deterior

211、ation of global economic conditions could adversely affect our financial condition and results of operations.A deterioration in global economic conditions,including an economic slowdown or recession in the United States or in any other country thatsignificantly affects the supply of or demand for oi

212、l or natural gas,inflation,geopolitical issues such as the continuing conflict between Russiaand Ukraine,the availability and cost of credit and supply chain disruptions,could adversely affect our financial condition and results ofoperations.Global economic conditions have a significant impact on oi

213、l and natural gas prices,and any stagnation or deterioration in theseconditions could result in less demand for our products and services and could cause our customers to reduce their planned capitalspending.Adverse global economic conditions also may cause our customers,vendors and/or suppliers to

214、lose access to the financingnecessary to sustain or increase their current level of operations,fulfill their commitments and/or fund future operations and obligations.Additionally,if inflation increases,we may be unable to raise pricing for our products and services at or above the rate of inflation

215、,whichcould reduce our profit margins.In the past,global economic conditions,and expectations for future global economic conditions,havesometimes experienced significant deterioration in a relatively short period of time and there can be no assurance that global economicconditions or expectations fo

216、r future global economic conditions will recover in the near term or not quickly deteriorate again due to one ormore factors.15Table of ContentsWe may not be able to satisfy technical requirements,testing requirements,code requirements or other specifications undercontracts and contract tenders.Many

217、 of our products are used in harsh environments and severe service applications.Our contracts with customers and customer requestsfor bids often set forth detailed specifications or technical requirements(including that they meet certain industrial code requirements,suchas API,ASME or similar codes,

218、or that our processes and facilities maintain ISO or similar certifications)for our products and services,whichmay also include extensive testing requirements.We anticipate that such code testing requirements will become more common in ourcontracts.We cannot assure that our products or facilities wi

219、ll be able to satisfy the specifications or requirements,or that we will be able toperform the full-scale testing necessary to prove that the product specifications are satisfied in future contract bids or under existingcontracts,or that the costs of modifications to our products or facilities to sa

220、tisfy the specifications and testing will not adversely affect ourresults of operations.If our products or facilities are unable to satisfy such requirements,or we are unable to perform or satisfy any requiredfull-scale testing,we may suffer reputational harm and our customers may cancel their contr

221、acts and/or seek new suppliers,and ourbusiness,results of operations or financial position may be adversely affected.A failure or breach of our information technology infrastructure,including as a result of cyber attacks or failures of data protectionmeasures,could adversely impact our business and

222、results of operations and expose us to potential liabilities.The efficient operation of our business is dependent on our information technology(“IT”)systems.Accordingly,we rely upon the capacity,reliability and security of our IT hardware and software infrastructure and our ability to expand and upd

223、ate this infrastructure in response toour changing needs,including remote connectivity.Despite our implementation of security measures,our IT systems are vulnerable tocomputer viruses,natural disasters,incursions by intruders or hackers,failures in hardware or software,power fluctuations,cyber terro

224、ristsand other similar disruptions.Geopolitical tensions or conflicts,such as Russias invasion of Ukraine,may further heighten the risk of cyberattacks.In certain instances,our IT systems have failed to perform as anticipated,resulting in disruptions in operations and other adverseconsequences.Shoul

225、d our IT systems materially fail in the future,it may result in numerous other adverse consequences,including reducedeffectiveness and efficiency of our operations,inappropriate disclosure or loss of confidential or sensitive information,increased overheadcosts,and loss of intellectual property,whic

226、h could lead to liability to third parties or otherwise and have a material adverse effect on ourbusiness and results of operations.While we carry cyber insurance,we cannot be certain that our coverage will be adequate for liabilitiesactually incurred,that insurance will continue to be available to

227、us on economically reasonable terms,or at all,or that any insurer will notdeny coverage as to any future claim.In addition,we may be required to incur significant costs to prevent damage caused by thesedisruptions or security breaches in the future.Further,cyber attacks on a communications network o

228、r power grid could cause operationaldisruption resulting in loss of revenues.In addition,recent laws and regulations governing data privacy and the unauthorized disclosure of confidential information,including theEuropean Union General Data Protection Regulation and laws enacted in certain U.S.juris

229、dictions,pose increasingly complex compliancechallenges and potentially elevate our costs.Any failure by us to comply with these laws and regulations,including as a result of a security orprivacy breach,could result in significant penalties and liabilities for us.Additionally,if we acquire a company

230、 that has violated or is not incompliance with applicable data protection laws,we may incur significant liabilities and penalties as a result.Our success depends on our ability to implement new technologies and services more efficiently and quickly than ourcompetitors.Our success depends on our abil

231、ity to develop and implement new product designs and improvements that meet our customers needs in amanner equal to or more effective than those offered by our competitors.If we are not able to continue to provide new and innovativeservices and technologies in a manner that allows us to meet evolvin

232、g industry requirements,including the focus on renewable energyopportunities,at prices acceptable to our customers,our financial results would be negatively affected.In addition,some of our competitorsare large national and multinational companies that we believe are able to devote greater financial

233、,technical,manufacturing and marketingresources to research and develop more or better systems,services and technologies than we are able to do.Moreover,as a result of thecurrently depressed levels of customer activity,we may be unable to allocate sufficient amounts of capital to research and new pr

234、oductdevelopment activities,which may limit our ability to compete in the market and generate revenue.16Table of ContentsOur success will be affected by the use and protection of our proprietary technology.Due to the limitations of our intellectualproperty rights,our ability to exclude others from t

235、he use of our proprietary technology may be reduced.Furthermore,we may beadversely affected by disputes regarding intellectual property rights.Our success will be affected by our development and implementation of new product designs and improvements and by our ability to protectand maintain intellec

236、tual property assets related to these developments.Although in many cases our products are not protected by anyregistered intellectual property rights,in some cases we rely on a combination of patents and trade secret laws to establish and protect thisproprietary technology.We currently hold multipl

237、e U.S.and international patents and have several pending patent applications associated with our products andprocesses.Some work is conducted in international waters and,therefore,does not fall within the scope of any countrys patent jurisdiction.As a result,we would be limited in the degree to whic

238、h we can enforce our patents against infringement occurring in international waters andother“non-covered”territories.Also,we do not have patents in every jurisdiction in which we conduct business and our patent portfolio willnot protect all aspects of our business and may relate to obsolete or unusu

239、al methods,which would not prevent third parties from enteringthe same market.From time to time,our competitors have infringed upon,misappropriated,circumvented,violated or challenged the validity or enforceability ofour intellectual property.In the future,we may not be able to adequately protect or

240、 enforce our intellectual property rights.Our failure orinability to protect our proprietary information or successfully oppose intellectual property challenges against us could materially andadversely affect our competitive position.Moreover,third parties from time to time may initiate litigation a

241、gainst us by asserting that theconduct of our business infringes,misappropriates or otherwise violates their intellectual property rights.For example,in 2017,one of oursubsidiaries filed an action seeking a declaratory judgment action of non-infringement against Tenaris Coiled Tubes,LLC.Tenarissubse

242、quently filed counterclaims against our subsidiary and us alleging infringement on certain of its patents.We may not prevail in any suchlegal proceedings,and our products and services may be found to infringe,impair,misappropriate,dilute or otherwise violate the intellectualproperty rights of others

243、.Any legal proceeding concerning intellectual property is likely to be protracted and costly and is inherentlyunpredictable,and could have a material adverse effect on our business,regardless of its outcome.Further,our intellectual property rightsmay not have the value expected and such value is exp

244、ected to change over time as new products are designed and improved.We may incur liabilities,fines,penalties or additional costs,or we may be unable to sell to certain customers if we do not maintainsafe operations.If we fail to comply with safety regulations or maintain an acceptable level of safet

245、y at our facilities,we may incur fines,penalties or otherliabilities,or we may be held criminally liable.In addition,a portion of our work force is made up of newer employees who are lessexperienced and therefore more prone to injury.As a result,new employees require ongoing training and a higher de

246、gree of oversight.Weincur additional costs to encourage training and ensure proper oversight of these shorter service employees.Moreover,we incur costs inconnection with equipment upgrades,or other costs to facilitate our compliance with safety regulations.Failure to maintain safe operations orachie

247、ve certain safety performance metrics could disqualify us from doing business with certain customers,particularly major oil companies.If we fail to maintain an effective system of internal controls,we may not be able to accurately report our financial results orprevent fraud.Effective internal contr

248、ols over financial processes and reporting are necessary for us to provide reliable financial reports that effectivelyprevent fraud and operate successfully.Our efforts to maintain internal control systems have not been successful in the past.The existenceof a material weakness in the future or a fa

249、ilure of our internal controls could affect our ability to obtain financing or increase the cost of anysuch financing.The identification of a material weakness in the future could also cause investors to lose confidence in the reliability of ourfinancial statements and could result in a decrease in

250、the value of our common stock.In addition,the entities that we acquire in the futuremay not maintain effective systems of internal control or we may encounter difficulties integrating our system of internal controls with those ofacquired entities.If we are unable to maintain effective internal contr

251、ols and,as a result,fail to provide reliable financial reports andeffectively prevent fraud,our reputation and operating results would be harmed.17Table of ContentsThe impact and effects of public health crises,pandemics and epidemics,such as the COVID-19 pandemic,could have a materialadverse effect

252、 on our business,financial condition and results of operations.Public health crises,pandemics and epidemics,such as the COVID-19 pandemic,and fear of such events have adversely impacted and maycontinue to adversely impact our operations,the operations of our customers and the global economy,includin

253、g the worldwide demand for oiland natural gas and the level of demand for our products and services.Other effects of such public health crises,pandemics and epidemics,including the COVID-19 pandemic,have included and may continue to include significant volatility and disruption of the global financi

254、almarkets;continued volatility of oil and natural gas prices and related uncertainties around OPEC+production;disruption of our operations;impact to costs;loss of workers;labor shortages;operational and supply chain disruptions;material or equipment shortages;logisticsconstraints;customer demand for

255、 our products and services and industry demand generally;capital spending by oil and natural gascompanies;our liquidity;the price of our securities and trading markets with respect thereto;our ability to access capital markets;assetimpairments and other accounting changes;certain of our customers ex

256、periencing bankruptcy or otherwise becoming unable to pay vendors,including us;and employee impacts from illness,travel restrictions,including border closures and other community response measures.Such public health crises,pandemics and epidemics are continuously evolving and the extent to which our

257、 business operations and financialresults continue to be affected depends on various factors beyond our control,such as the duration,severity and sustained geographicresurgence of the COVID-19 virus;the emergence,severity and spread of new variants of the COVID-19 virus;the impact and effectivenesso

258、f governmental actions to contain and treat such outbreaks,including government policies and restrictions;vaccine hesitancy,vaccinemandates,and voluntary or mandatory quarantines;and the global response surrounding such uncertainties.Given the dynamic nature of these events,we cannot reasonably esti

259、mate the period of time that COVID-19 and related market conditionswill persist,the full extent of the impact they will have on our business,financial condition,results of operations or cash flows or the pace orextent of any subsequent recovery.The ultimate extent of the impact of COVID-19 will depe

260、nd largely on future developments,including thespread of the virus within communities,the success of programs designed to prevent the virus and its spread and the related impact onoverall economic activity,all of which are uncertain and cannot be predicted with certainty at this time.For more inform

261、ation,see“Managements Discussion and Analysis of Financial Condition and Results of OperationsMarket Conditions.”Facility consolidations or expansions may subject us to risks of operating inefficiencies,construction delays and cost overruns.We have consolidated and may continue to consolidate facili

262、ties to achieve operating efficiencies and reduce costs.These facilityconsolidations may be delayed and cause us to incur increased costs,product or service delivery delays,decreased responsiveness tocustomer needs,liabilities under terms and conditions of sale or other operational inefficiencies,or

263、 may not provide the benefits weanticipate.We may lose key personnel and operational knowledge that might lead to quality issues,delays in production or other competitivedisadvantages.In the future,we may grow our businesses through the construction of new facilities and expansions of our existing f

264、acilities.These projects,and any other capital asset construction projects that we may commence,are subject to similar risks of delay or cost overruns inherent in anyconstruction project resulting from numerous factors,including the following:difficulties or delays in obtaining land;shortages of key

265、 equipment,materials or skilled labor;unscheduled delays in the delivery of ordered materials and equipment;unanticipated cost increases;weather interferences;anddifficulties in obtaining necessary permits or in meeting permit conditions.18Table of ContentsOur acquisitions and dispositions may not r

266、esult in anticipated benefits and may present risks not originally contemplated,whichmay have a material adverse effect on our business,consolidated results of operations and consolidated financial condition.We continually seek opportunities to maximize efficiency and value through various transacti

267、ons,including purchases or sales of assets,businesses,investments,or joint venture interests.These transactions are intended to(but may not)result in the realization of savings,thecreation of efficiencies,the offering of new products or services,the generation of cash or income,or the reduction of r

268、isk.Acquisitiontransactions may use cash on hand or be financed by additional borrowings or by the issuance of our common stock.These transactionsmay also affect our business,consolidated results of operations and consolidated financial condition.These transactions also involve risks,and we cannot e

269、nsure that:any acquisitions we attempt will be completed on the terms announced,or at all;any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated benefits;any acquisitions would be successfully integrated into our operations and internal c

270、ontrols;the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal exposure,includingunder the U.S.Foreign Corrupt Practices Act(“FCPA”),or that we will appropriately quantify the exposure from known risks;any disposition would not result in

271、decreased earnings,revenue,or cash flow;use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses;orany dispositions,investments,or acquisitions,including integration efforts,would not divert management resources.A natural disaster,catastrophe

272、 or other event could result in severe property damage,which could curtail our operations.Adverse weather conditions,such as hurricanes,tornadoes,ice or snow may damage or destroy our facilities,interrupt or curtail ouroperations,or our customers operations,cause supply disruptions and result in a l

273、oss of revenue,which may or may not be insured.Forexample,certain of our facilities located in Oklahoma and Pennsylvania have experienced suspensions in operations due to tornado activityor extreme cold weather conditions.Some of our operations involve risks of,among other things,property damage,whi

274、ch could curtail our operations.Disruptions in operationsor damage to a manufacturing plant could reduce our ability to produce products and satisfy customer demand.In particular,we have officesand manufacturing facilities in Houston,Texas,and in various places throughout the U.S.Gulf Coast region.T

275、hese offices and facilities areparticularly susceptible to severe tropical storms and hurricanes,which may disrupt our operations.Damage to one or more of ourmanufacturing facilities by severe weather or any other disaster,accident,catastrophe or event,could significantly interrupt our operations.Si

276、milar interruptions could result from damage to production or other facilities that provide supplies or other raw materials to our plants orother stoppages arising from factors beyond our control.These interruptions might involve significant damage to property,among otherthings,and repairs might tak

277、e a significant amount of time.For example,in the third quarter 2017,we were impacted by idled facilities andoperations directly related to Hurricane Harveys widespread damage in Texas and Louisiana.As a result,our financial results werenegatively impacted by foregone revenue and under-absorption of

278、 manufacturing costs,and,indirectly,due to supplier and logistical delays.Legal and Regulatory Risks:Our operations and our customers operations are subject to a variety of governmental laws and regulations that affect our and ourcustomers costs,prohibit or curtail our customers operations in certai

279、n areas,limit the demand for our products and services orrestrict our operations.Our business and our customers businesses may be significantly affected by:federal,state and local U.S.and non-U.S.laws and other regulations relating to oilfield operations,worker safety and protection of theenvironmen

280、t;changes in these laws and regulations;19Table of Contentsthe level of enforcement of these laws and regulations;andinterpretation of existing laws and regulations.In addition,we depend on the demand for our products and services from the oil and natural gas industry.This demand is affected bychang

281、ing taxes,price controls and other laws and regulations relating to the oil and natural gas industry in general.For example,theadoption of laws and regulations curtailing exploration and development drilling for oil and natural gas for economic or other policy reasonscould adversely affect our opera

282、tions by limiting demand for our products.In addition,some non-U.S.countries adopt regulations or practicesthat provide an advantage to local oil companies in bidding for oil leases,or require local companies to perform oilfield services currentlysupplied by international service companies.To the ex

283、tent that such companies are not our customers,or we are unable to developrelationships with them,our business may suffer.We cannot determine the extent to which our future operations and earnings may beaffected by new legislation,new regulations or changes in existing regulations.Because of our non

284、-U.S.operations and sales,we are also subject to changes in non-U.S.laws and regulations that encourage or requirehiring of local contractors or require non-U.S.contractors to employ citizens of,or purchase supplies from,a particular jurisdiction.If we fail tocomply with any applicable law or regula

285、tion,our business,results of operations or financial condition may be adversely affected.Potential legislation or regulations restricting the use of hydraulic fracturing could reduce demand for our products.Certain environmental advocacy groups and politicians have suggested that additional federal,

286、state and local laws and regulations may beneeded to more closely regulate the hydraulic fracturing process,and have made claims that hydraulic fracturing techniques are harmful tosurface water and drinking water resources.Various governmental entities(within and outside the U.S.)are in the process

287、of studying,restricting,regulating or preparing to regulate hydraulic fracturing,directly or indirectly.The EPA has asserted federal authority over hydraulic fracturing using fluids that contain“diesel fuel”under the federal Safe Drinking WaterAct(“SDWA”)Underground Injection Control Program and has

288、 issued permitting guidance for hydraulic fracturing operations involving theuse of diesel fuel in fracturing fluids in those states where the EPA is the permitting authority.Additionally,in March 2015,the Department ofthe Interiors Bureau of Land Management(“BLM”)issued final rules,including new re

289、quirements relating to public disclosure,wellboreintegrity and handling of flowback water,to regulate hydraulic fracturing on federal and Indian lands.These rules were rescinded by rule inDecember 2017;however,in January 2018,California and a coalition of environmental groups filed a lawsuit in the

290、Northern District ofCalifornia to challenge the BLMs rescission of the rules.The Northern District of California upheld the rescission in 2020,but this decisionwas then appealed to the Ninth Circuit Court of Appeals.This litigation is ongoing and future implementation of the BLM rules is uncertain a

291、tthis time.In past sessions,Congress has considered,but not passed,the adoption of legislation to provide for federal regulation of hydraulic fracturingunder the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process.Some states have adopted,and otherstates are cons

292、idering adopting,legal requirements that could impose more stringent permitting,public disclosure or well constructionrequirements on hydraulic fracturing activities or impose bans or moratoria on these activities altogether.Local governments also may seekto adopt ordinances within their jurisdictio

293、ns regulating the time,place and manner of drilling activities in general or hydraulic fracturingactivities in particular,in some cases banning hydraulic fracturing entirely.For example,the Colorado state legislature passed a package ofhydraulic fracturing regulations in April 2019.Under the new law

294、,the state oil and natural gas agency must review well locations forenvironmental protection criteria.In addition,the legislation broadened the authority for local governments to further regulate or restricthydraulic fracturing.In April 2021,the California governors office directed state regulators

295、to end the issuance of new permits for hydraulicfracturing by January 2024.In February 2018,the Oklahoma Corporation Commission released a protocol that requires operators to suspendhydraulic fracturing well completion operations in response to certain levels of seismic activity.If new or more strin

296、gent federal,state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where our oiland natural gas exploration and production customers operate,they could incur potentially significant added costs to comply with suchrequirements,experience delays or curtail

297、ment in the pursuit of exploration,development,and production activities,and perhaps even beprecluded from drilling wells,some or all of which could adversely affect demand for our products and services from those customers.20Table of ContentsOur financial results could be adversely impacted by chan

298、ges in regulation of oil and natural gas exploration and developmentactivity in response to significant environmental incidents or climate change actions.Environmental incidents such as the Macondo well incident could result in drilling moratoria,and could result in increased federal,state,andintern

299、ational regulation of our and our customers operations that could negatively impact our earnings,prospects and the availability andcost of insurance coverage.Any additional regulation of the exploration and production industry as a whole could result in fewer companiesbeing financially qualified to

300、operate offshore or onshore in the U.S.or in non-U.S.jurisdictions,resulting in higher operating costs for ourcustomers and reduced demand for our products and services.In January 2021,President Biden signed an executive order that,among other things,instructed the Secretary of the Interior to pause

301、 new oiland natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of federal oiland natural gas permitting and leasing practices.Following that executive order,the acting Secretary of the Interior issued an order imposinga 60 day pa

302、use on the issuance of new leases,permits and right-of-way grants for oil and gas drilling on federal lands,unless approved bysenior officials at the Department of the Interior.In March 2021,prior to the expiration of the Secretary of the Interiors order,President Bidenannounced that career staff at

303、 the Department of the Interior would resume processing oil and gas drilling permits.In August 2022,a federaljudge for the U.S.District Court of the Western District of Louisiana issued a permanent injunction against the pause of oil and natural gasleasing on public lands or in offshore waters of th

304、e thirteen plaintiff states that brought the lawsuit,which followed a June 2021 nationwidepreliminary injunction by the district court that was subsequently vacated by the U.S.Court of Appeals for the Fifth Circuit.The full impact ofthese federal actions remains unclear,and if other restrictions or

305、prohibitions become effective in the future,they could have an adverseimpact on our business,financial condition,results of operations and cash flows.Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costsand liabilities.Our ope

306、rations are subject to numerous stringent and complex laws and regulations governing the discharge of materials into theenvironment,health and safety aspects of our operations,or otherwise relating to human health and environmental protection.These lawsand regulations may,among other things,regulate

307、 the management and disposal of hazardous and nonhazardous wastes;requireacquisition of environmental permits related to our operations;restrict the types,quantities,and concentrations of various materials that canbe released into the environment;limit or prohibit operational activities in certain e

308、cologically sensitive and other protected areas;regulatespecific health and safety criteria addressing worker protection;require compliance with operational and equipment standards;imposetesting,reporting and record keeping requirements;and require remedial measures to mitigate pollution from former

309、 and ongoing operations.Failure to comply with these laws and regulations or to obtain or comply with permits may result in the inability to conduct certain operationalactivities,assessment of administrative,civil and criminal penalties,imposition of remedial or corrective action requirements and th

310、eimposition of injunctions to prohibit certain activities or force future compliance.Certain environmental laws may impose joint and severalliability,without regard to fault or legality of conduct,on classes of persons who are considered to be responsible for the release of ahazardous substance into

311、 the environment.In addition,these risks may be greater for us because the companies we acquire or haveacquired may not have allocated sufficient resources and management focus to environmental compliance,potentially requiring rehabilitativeefforts during the integration process or exposing us to li

312、ability before such rehabilitation occurs.The trend in environmental regulation has been to impose increasingly stringent restrictions and limitations on activities that may impact theenvironment.The implementation of new laws and regulations could result in materially increased costs,stricter stand

313、ards and enforcement,larger fines and liability and increased capital expenditures and operating costs,particularly for our customers.Tariffs imposed by the U.S.government could have a further severe adverse effect on our results of operations.The U.S.government imposed global tariffs on certain imp

314、orted steel and aluminum products pursuant to Section 232 of the TradeExpansion Act of 1962,as well as tariffs on imports of various Chinese product(including steel)pursuant to Section 301 of the Trade Act of1974.In response,China and other countries have imposed retaliatory tariffs on a wide range

315、of U.S.products,including those containingsteel and aluminum.The U.S.government recently entered into tariff agreements with the European Union,Japan,and the United Kingdomto ease Section 232 tariffs on the close allies and trade partners,but Section 232 tariffs still remain in effect with respect t

316、o the other nations.In addition,the U.S.government issued a final determination pursuant to an anti-dumping duty order on21Table of Contentscertain hot-rolled steel products from Japan,in which it found imports of the subject merchandise were sold in the United States at pricesbelow normal value dur

317、ing the October 2019 to September 2020 time period.As a result,the U.S.government assessed a dumping marginof 24.07%for imports from Japan of the subject steel products.Further,the U.S.government conducted a sunset review on its existing anti-dumping duty on certain hot-rolled steel products from Au

318、stralia,Brazil,Japan,the Republic of Korea,the Netherlands,the Republic ofTurkey,and the United Kingdom that was issued in 2016,and determined to continue the anti-dumping duty order on all subject steelproducts except for those from Brazil.Our efforts to mitigate the impact of tariffs on raw materi

319、als through the diversification of our supplychain,exemption requests and other measures may not be sufficiently successful.Furthermore,a prolonged imposition of tariffs on ourgoods could have a significant adverse effect on our results of operations.We are subject to litigation risks that may not b

320、e covered by insurance.In the ordinary course of business,we become the subject of claims,lawsuits and administrative proceedings seeking damages or otherremedies concerning our commercial operations,products,employees and other matters,including occasional claims by individuals allegingexposure to

321、hazardous materials as a result of our products or operations.Some of these claims relate to the activities of businesses that wehave acquired,even though these activities may have occurred prior to our acquisition of such businesses.Our insurance does not cover allof our potential losses,and we are

322、 subject to various self-insured retentions and deductibles under our insurance.A judgment may berendered against us in cases in which we could be uninsured or which exceed the amounts that we currently have reserved or anticipateincurring for such matters.The number and cost of our current and futu

323、re asbestos claims could be substantially higher than we have estimated and thetiming of payment of claims could be sooner than we have estimated.One of our subsidiaries has been and continues to be named as a defendant in asbestos related product liability actions.The actual amountsexpended on asbe

324、stos-related claims in any year may be impacted by the number of claims filed,the nature of the allegations asserted in theclaims,the jurisdictions in which claims are filed,and the number of settlements.As of December 31,2022,our subsidiary has a net liabilityof$0.3 million for the estimated indemn

325、ity cost associated with the resolution of its current open claims and future claims anticipated to befiled during the next five years.Due to a number of uncertainties,the actual costs of resolving these pending claims could be substantially higher than the current estimate.Among these are uncertain

326、ties as to the ultimate number and type of lawsuits filed,the amounts of claim costs,the impact of bankruptcies ofother companies with asbestos suits or of our insurers,and potential legislative changes and uncertainties surrounding the litigation processfrom jurisdiction to jurisdiction and from ca

327、se to case.In addition,future claims beyond the five-year forecast period are possible,but theaccrual does not cover losses that may arise from such additional future claims.Therefore,any such future claims could result in a loss.Significant costs are incurred in defending asbestos claims and these

328、costs are recorded at the time incurred.Receipt of reimbursement fromour insurers may be delayed for a variety of reasons.In particular,if our primary insurers claim that certain policy limits have been exhausted,we may be delayed in receiving reimbursement due to the transition from one set of insu

329、rers to another.Our excess insurers may alsodispute the claims of exhaustion,or may rely on certain policy requirements to delay or deny claims.Furthermore,the various per occurrenceand aggregate limits in different insurance policies may result in extended negotiations or the denial of reimbursemen

330、t for particular claims.For more information on the cost sharing agreements related to this risk,refer to Note 12 Commitments and Contingencies.Our products are used in operations that are subject to potential hazards inherent in the oil and natural gas industry and,as aresult,we are exposed to pote

331、ntial liabilities that could affect our financial condition and reputation.Our products are used in potentially hazardous completion,production and drilling applications in the oil and natural gas industry where anaccident or a failure of a product can potentially have catastrophic consequences.Risk

332、s inherent to these applications,such as equipmentmalfunctions;failures;explosions;blowouts or uncontrollable flows of oil,natural gas or well fluids;and natural disasters on land or indeepwater or shallow-water environments,can cause personal injury;loss of life;suspension of operations;damage to f

333、ormations;damageto facilities;business interruption and damage to or destruction of property,surface water and drinking water resources,equipment and theenvironment.These risks can be caused or contributed to by failure of,defects in or misuse of our products.In addition,we provide certainservices that could cause,contribute to or be implicated in these events.If our products or services fail to m