FTS International Inc (FTSI) 2019年年度報告「NYSE」.pdf

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1、TableofContentsErmUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2019ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EX

2、CHANGE ACT OF 1934For the transition period from to Commission File Number 001-38382FTS INTERNATIONAL,INC.(ExactNameofRegistrantasSpecifiedinItsCharter)Delaware30-0780081(StateorotherJurisdictionofIncorporationorOrganization)(I.R.S.EmployerIdentificationNo.)777 Main Street,Suite 2900,Fort Worth,Texa

3、s76102(AddressofPrincipalExecutiveOffices)(ZipCode)(817)862-2000(TelephoneNumber,IncludingAreaCode)SecuritiesregisteredpursuanttoSection12(b)oftheSecuritiesExchangeActof1934:Title of each classTrading SymbolName of each exchange on which registeredCommon Stock,par value$0.01 per shareFTSINew York St

4、ock ExchangeSecuritiesregisteredpursuanttoSection12(g)oftheSecuritiesExchangeActof1934:NoneIndicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesNoIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.Yes

5、NoIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNoIndicateb

6、ycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YesNoIndicatebycheckmarkwhethertheregistrantisala

7、rgeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”and“emerginggrowthcompany”inRule12b-2oftheExchangeAct.LargeAcceleratedFilerAcceleratedFilerNon-Accel

8、eratedFilerSmallerreportingcompanyEmerginggrowthcompanyIfanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.Indicatebycheckmarkwhethertheregis

9、trantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).YesNoAsofJune28,2019,thelasttradingdayoftheregistrantsmostrecentlycompletedsecondfiscalquarter,theaggregatemarketvalueofthecommonstockheldbynon-affiliatesoftheregistrantwasapproximately$182.4million,basedontheclosingpriceoftheregistrantscomm

10、onstockonthatdate.AsofFebruary21,2020,theregistranthad107,110,919sharesofcommonstock,$0.01parvalue,outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortionsoftheproxystatementfortheregistrants2020annualmeetingofstockholdersareincorporatedbyreferenceinPartIIIofthisForm10-K.TableofContentsFTS INTERNATIO

11、NAL,INC.Form 10 KYear Ended December 31,2019INDEXPageCautionaryStatementRegardingForward-LookingStatementsiiPARTI1Item1.Business1Item1A.RiskFactors11Item1B.UnresolvedStaffComments29Item2.Properties29Item3.LegalProceedings30Item4.MineSafetyDisclosures30PARTII31Item5.MarketforRegistrantsCommonEquity,R

12、elatedStockholderMattersandIssuerPurchasesofEquitySecurities31Item6.SelectedFinancialData32Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations35Item7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk45Item8.FinancialStatementsandSupplementaryData45Item9.ChangesinandD

13、isagreementsWithAccountantsonAccountingandFinancialDisclosure45Item9A.ControlsandProcedures45Item9B.OtherInformation48PARTIII48Item10.Directors,ExecutiveOfficersandCorporateGovernance48Item11.ExecutiveCompensation48Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMa

14、tters48Item13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence48Item14.PrincipalAccountantFeesandServices48PARTIV48Item15.ExhibitsandFinancialStatementSchedules48IndextoConsolidatedFinancialStatements53iTableofContentsCautionary Statement Regarding Forward-Looking StatementsThisann

15、ualreportcontains“forward-lookingstatements”thataresubjecttorisksanduncertainties.Allstatementsotherthanstatementsofhistoricalorcurrentfactincludedinthisannualreportareforward-lookingstatements.Forward-lookingstatementsrefertoourcurrentexpectationsandprojectionsrelatingtoourfinancialcondition,result

16、sofoperations,plans,objectives,strategies,futureperformanceandbusiness.Forward-lookingstatementsmaybeidentifiedbythefactthattheydonotrelatestrictlytohistoricalorcurrentfacts.Thesestatementsmayincludewordssuchas“anticipate,”“assume,”“believe,”“canhave,”“contemplate,”“continue,”“could,”“design,”“due,”

17、“estimate,”“expect,”“goal,”“intend,”“likely,”“may,”“might,”“objective,”“plan,”“predict,”“project,”“potential,”“seek,”“should,”“target,”“will,”“would”andotherwordsandtermsofsimilarmeaninginconnectionwithanydiscussionofthetimingornatureoffutureoperationalperformanceorotherevents.Forexample,allstatemen

18、tswemakerelatingtoourestimatedandprojectedcosts,expendituresandgrowthrates,ourplansandobjectivesforfutureoperations,growthorinitiativesorstrategiesareforward-lookingstatements.Allforward-lookingstatementsaresubjecttorisksanduncertaintiesthatmaycauseactualresultstodiffermateriallyfromthosethatweexpec

19、tand,therefore,investorsshouldnotundulyrelyonsuchstatements.Therisksthatcouldcausetheseforward-lookingstatementstobeinaccurateincludebutarenotlimitedto:afurtherdeclineorfuturedeclineindomesticspendingbytheonshoreoilandnaturalgasindustry;continuedvolatilityorfuturevolatilityinoilandnaturalgasprices;c

20、ustomersinabilitytomaintainorincreasetheirreservesgoingforward;deteriorationingeneraleconomicconditionsoracontinuedweakeningorfutureweakeningofthebroaderenergyindustry;thecompetitivenatureoftheindustryinwhichweconductourbusiness;theeffectofalossof,orfinancialdistressof,oneormoresignificantcustomers;

21、nonpaymentbycustomersweextendcreditto;demandforservicesinourindustry;actionsofOPEC,itsmembersandotherstate-controlledoilcompaniesrelatingtooilpriceandproductioncontrols;adeclineindemandforproppant;ourinabilitytoemployasufficientnumberofkeyemployees,technicalpersonnelandotherskilledorqualifiedworkers

22、;theoccurrenceofasignificanteventoradverseclaiminexcessoftheinsurancecoveragewemaintain;finesorpenalties(administrative,civilorcriminal),revocationsofpermits,orissuanceofcorrectiveactionordersfornoncompliancewithhealth,safetyandenvironmentallawsandregulations;changesinlawsandregulationswhichimposead

23、ditionalrequirementsorrestrictionsonbusinessoperations;federal,stateandlocalregulationofhydraulicfracturingandotheroilfieldserviceactivities,aswellasexplorationandproduction(“E&P”)activities,includingpublicpressureongovernmentalbodiesandregulatoryagenciestoregulateourindustry;existingorfuturelawsand

24、regulationsrelatedtogreenhousegasesandclimatechange;ourabilitytoobtainpermits,approvalsandauthorizationsfromgovernmentalandthirdparties,andtheeffectsoforchangestoU.S.andforeigngovernmentregulation;restrictionsondrillingactivitiesintendedtoprotectcertainspeciesofwildlife;conservationmeasuresandtechno

25、logicaladvanceswhichreducedemandforoilandnaturalgas;thelevelofglobalanddomesticoilandnaturalgasinventories;thepriceandavailabilityofalternativefuelsandenergysources;iiTableofContentsthediscoveryratesofnewoilandnaturalgasreserves;limitationsonconstructionofnewnaturalgaspipelinesorincreasesinfederalor

26、stateregulationofnaturalgaspipelines;theavailabilityofwaterresources,suitableproppantandchemicalsinsufficientquantitiesforuseinhydraulicfracturingfluids;thecostofexploringfor,developing,producinganddeliveringoilandnaturalgas;thirdpartyclaimsforpossibleinfringementofintellectualpropertyrights;introdu

27、ctionofnewdrillingorcompletiontechniques,orservicesusingnewtechnologiessubjecttopatentorotherintellectualpropertyprotections;leadtimesassociatedwithacquiringequipmentandproductsandavailabilityofqualifiedpersonnel;lossorcorruptionofourinformationoracyberattackonourcomputersystems;oneormoreofourdirect

28、orsmaynotresideintheUnitedStateslimitingtheabilityofinvestorsfromobtainingorenforcingjudgmentsagainstthem;adverseweatherconditionscausingstoppageordelayinoperations;aterroristattack,armedconflictorhealththreatdisruptingoperations;additionaleconomic,politicalandregulatoryrisksrelatedtointernationalop

29、erations;geopoliticaldevelopmentsandpoliticalinstabilityinoilandnaturalgasproducingcountries;ourabilitytoutilizeournetoperatinglosses;ourinabilitytoserviceourdebtobligations;adverseeffectsonourfinancialstrategyandliquidity;increasesininterestrates;anduncertaintyincapitalandcommoditiesmarketsandtheab

30、ilityofoilandnaturalgasproducerstoraiseequitycapitalanddebtfinancing.Wemakemanyofourforward-lookingstatementsbasedonouroperatingbudgetsandforecasts,whicharebasedupondetailedassumptions.Whilewebelievethatourassumptionsarereasonable,wecautionthatitisverydifficulttopredicttheimpactofknownfactors,anditi

31、simpossibleforustoanticipateallfactorsthatcouldaffectouractualresults.Seethe“RiskFactors”includedinItem1Aofthisannualreportforamorecompletediscussionoftherisksanduncertaintiesmentionedaboveandfordiscussionofotherrisksanduncertaintieswefacethatcouldcauseourforward-lookingstatementstobeinaccurate.Allf

32、orward-lookingstatementsattributabletousareexpresslyqualifiedintheirentiretybythesecautionarystatementsaswellasothersmadeinthisannualreportandhereafterinourotherSECfilingsandpubliccommunications.Allforward-lookingstatementsmadebyusshouldbeevaluatedinthecontextoftheserisksanduncertainties.Wecautionth

33、attherisksanduncertaintiesidentifiedbyusmaynotbeallofthefactorsthatareimportanttoinvestors.Furthermore,theforward-lookingstatementsincludedinthisannualreportaremadeonlyasofthedatehereof.Weundertakenoobligationtopubliclyupdateorreviseanyforward-lookingstatementasaresultofnewinformation,futureeventsor

34、otherwise,exceptasrequiredbylaw.iiiTableofContentsPART IITEM 1.BUSINESSGeneralFTSInternational,Inc.(the“Company”,“we”,“our”)wasoriginallyformedin2000.WeareoneofthelargestprovidersofhydraulicfracturingservicesinNorthAmerica.Wehave1.4milliontotalhydraulichorsepoweracross28fleets,with16fleetsactiveasof

35、December31,2019.OursignificantcustomershaveincludedAnadarkoPetroleumCorporation,AscentResourcesUticaHoldings,LLC,CentennialResourceDevelopment,Inc.,COGOperatingLLC,DevonEnergyCorporation,DiamondbackEnergy,Inc.,EOGResources,Inc.,EQTCorporation,andotherleadingoilandnaturalgasexplorationandproduction(“

36、E&P”)companiesinNorthAmerica.WeoperateinfiveofthemostactivebasinsintheUnitedStates:thePermianBasin,theSCOOP/STACKFormation,theMarcellus/UticaShale,theEagleFordShaleandtheHaynesvilleShale.Wemanufacturemanyofthecomponentsusedbyourfleets,includingfabricationofpumpsandconsumablesusedinpumps,suchasfluid-

37、ends,valves,andseats.Weperformsubstantiallyallthemaintenance,repairandrefurbishmentofourfleets,includingtherebuildingofenginesandtransmissions.Webelievethecosttomanufacturecomponentsandrefurbishfleetsissignificantlylessthanthecostofutilizingthird-partysuppliers.Inaddition,webelieveourin-housemanufac

38、turingcapabilitiesallowustoreactivateequipmentquickerandatalowercostthanutilizingthird-partysuppliers.Wehaveauniformfleetofhigh-horsepowerhydraulicfracturingequipment,designedforcompletionsworkinareasrequiringhighlevelsofpressure,flowrateandsandintensity.Wedesignedandassembledallofourexistingfleetsu

39、singinternalresources.Thestandardized,“plugandplay”natureofourfleetprovidesuswithseveraladvantages,including:reducedrepairandmaintenancecosts;reducedinventorycosts;theabilitytoredeployequipmentamongoperatingbasins;andreducedcomplexityinouroperations,whichimprovesoursafetyandoperationalperformance.Ou

40、r ServicesHydraulic FracturingOurprimarybusinessisprovidinghydraulicfracturingservices,alsoknownaspressurepumping,toE&Pcompanies.Theseservicesenhancehydrocarbonflowinoilandnaturalgaswells,thusincreasingtheamountofhydrocarbonsrecovered.Oilandnaturalgaswellsaretypicallydividedintooneormore“stages,”whi

41、chareisolatedzonesthatfocusthehigh-pressurefluidandproppantfromthehydraulicfracturingfleetintodistinctportionsofthewellandsurroundingreservoir.Thenumberofstagesthatwilldivideawellisdeterminedbythecustomersproposedjobdesign.Ourcustomerstypicallymeasureouroperationalperformanceintermsofthenumberofstag

42、esfracturedandhowwellweminimizenon-productivetimeonourjobs.Asaresult,webelievetheaveragenumberofstagescompletedperactivefleetinagivenperiodoftimeisanimportantoperatingmetric.Duringthelastthreeyears,wehavebeenabletoincreaseouraveragestagesperactivefleettoachieverecordlevelsin2017,2018,andagainin2019.

43、Ourability,withthehelpandfocusofourcustomers,hasallowedustoreducethenon-productivetimeofourequipment,whichhasallowedustocompletemorestagesperfleet.Hydraulicfracturingrepresentsthelargestcostofcompletinganoilornaturalgaswell.Theprocessconsistsofpumpingafracturingfluidintoawellcasingortubingatsufficie

44、ntpressuretofracture,orpropopen,theformation.Thefracturingfluidconsistsofwaterandsand,alsoknownasproppant,mixedwithasmallamountofchemicals.Oncethepressureopensthefractures,theproppantsactasawedgethatkeepthefracturesopen,allowingthetrappedhydrocarbonstoflowmorefreely.Ourcustomersareresponsibleforthed

45、isposalofthefracturingfluidthatflowsbackoutofthewell,andwearenotinvolvedinthatprocessorinthedisposalofthefluid.Asaresultofasuccessfulfracturingprocess,hydrocarbonrecoveryratesaresubstantiallyenhanced,increasingthereturnoninvestmentforour1TableofContentscustomer.Theamountofhydrocarbonsproducedfromaty

46、picaloilornaturalgaswellgenerallydeclinesquickly.Asaresult,E&Pcompaniesmustcontinuallycompletenewwellstomaintainproductionlevels.Eachofourfleetstypicallyconsistsofapproximately20hydraulicfracturingunitsalongwithancillaryequipment.Ourhydraulicfracturingunitsconsistprimarilyofahigh-pressurepump,adiese

47、lorcombineddieselandnaturalgasengine,atransmissionandvariousothersupportingequipmentmountedonatrailer.Thehighpressurepumpconsistsoftwokeyassemblies:thefluid-endandthepower-end.Althoughthepower-endofourpumpsgenerallylastsseveralyears,thefluid-end,whichisthepartofthepumpthroughwhichthefracturingfluidi

48、sexpelledunderhighpressure,isashorter-lastingconsumable,typicallylastinglessthanoneyear.Werefertothegroupofhydraulicfracturingunits,auxiliaryequipmentandvehiclesnecessarytoperformatypicalfracturingjobasa“fleet”andthepersonnelassignedtoeachfleetasa“crew.”Ourfleetsoperateprimarilyona24-hour-per-daybas

49、is,inwhichwetypicallystaffthreecrewsperfleet,includingonecrewwiththedayoff.Eachhydraulicfracturingfleetincludesamobile,on-sitecontrolcenterthatmonitorsjobdataincludingpressures,ratesandvolumes.Eachcontrolcenterisequippedwithhighbandwidthsatellitehardwarethatprovidescontinuousuploadanddownloadofdata.

50、Thedataisdeliveredonareal-timebasistoon-sitejobpersonnel,thecustomerandourNationalOperationsCenter.Weprefertoenterintoserviceagreementswithourcustomersforoneormore“dedicated”fleets,ratherthanprovidingourfleetsfor“spotwork.”Underatypicaldedicatedfleetagreement,wedeployoneormoreofourhydraulicfracturin

51、gfleetsexclusivelytothecustomertofollowthecustomerscompletionscheduleuntiltheagreementexpiresoristerminatedinaccordancewithitsterms.Bycontrast,underatypicalspotworkagreement,thefleetmovesbetweencustomersasworkbecomesavailable.Webelievethatourstrategyofpursuingdedicatedfleetagreementsleadstohigherfle

52、etutilization,asmeasuredbythenumberofdayseachfleetisworkingpermonth,whichwebelievereducesourmonth-to-monthrevenuevolatilityandimprovesourrevenueandprofitability.SeeNote2“SummaryofSignificantAccountingPolicies”inNotestoourConsolidatedFinancialStatementsfordiscussionofourrevenuerecognitionandpricingun

53、derourserviceagreements.Wireline ServicesInMay2019,wediscontinuedourwirelineoperationsduetofinancialunderperformanceresultingfrommarketconditions.Ourwirelineservicesprimarilyconsistedofsettingplugsbetweenhydraulicfracturingstages,creatingperforationswithinhydraulicfracturingstagesandloggingthecharac

54、teristicsofresourceformations.OtherWepreviouslyowneda45%interestinSinoFTS,whichisaChinesejointventurethatweformedinJune2014withSinopecOilfieldServiceCorporation(“Sinopec”)toprovidehydraulicfracturingservicesinChina.InAugust2019,FTSIclosedonthesaleofourownershipinterestinSinoFTStoSinopec.Inexchange,w

55、ereceivedconsiderationof$26.9millionforthesaleofourequityinterestandreceivedaroyaltyfeeof$5.8millionforalicenseforourintellectualpropertyandforfuturelimitedtechnicalsupportofthejointventuresoperations.Our Strategy Ourprimarybusinessobjectiveistodeliverbestinclasspressurepumpingservicestoourcustomers

56、whileprovidingasafeworkingenvironmentforouremployeesandmaintainingacompetitivecoststructure.Weintendtoachievethisobjectivethroughthefollowingstrategies:Deepen and expand relationships with customers that value our completions efficiencyWeprefertodedicateoneormoreofourfleetsexclusivelytothecustomerfo

57、raperiodoftime,allowingforthosefleetstobeintegratedintothecustomersdrillingandcompletionschedule.Asaresult,weareabletoachievehigherlevelsofutilization,asmeasuredbythenumberofdayseachfleetisworkingpermonth,whichincreasesourprofitability.Accordingly,weseektopartnerwithcustomersthathavealargenumberofwe

58、llsneedingcompletionand2TableofContentsthatvalueefficiencyintheperformanceofourservice.Specifically,wetargetcustomerswhosecompletionsactivitytypicallyinvolvesminimaltimebetweenstages,ahighnumberofstagesperwell,multiplewellsperpadandashortdistancefromonewellpadsitetothenext.Thisstrategyalignswiththes

59、trategyofmanyofourcustomers,whoaretryingtoachieveamanufacturing-stylemodelofdrillingandcompletingwellsatacompetitivecost.Weplantoleveragethisstrategytoexpandourrelationshipswithourexistingandprospectivecustomers.Capitalize on our uniform fleet and in-house manufacturing to provide superior performan

60、ce with reduced operating costsOuruniformfleetallowsustocost-effectivelyredeployfleetstocapturethebestpricingandactivitytrends.Theuniformfleetiseasiertooperateandmaintain,resultinginreducednon-productivetimeaswellaslowertrainingcostsandinventorystockingrequirements.Ourin-housemanufacturingallowsusto

61、maintainandrefurbishourfleets,withloweroperatingexpensesandcapitalexpenditurescomparedtoutilizingthird-partysuppliers.Wealsobelievethiscapabilityallowsustoreactivateequipmentquickerandatalowercostthancompetitors,whichwebelieveattimesisacompetitiveadvantage.Maintain high safety standardsSafetyisatthe

62、coreofouroperationsanddefineswhoweareandhowweoperateasacompany.Oursafetyrecordfor2019wasthebestinourhistoryandwebelievesignificantlybetterthanourpeergroup,basedondataprovidedbytheU.S.BureauofLaborStatisticsfrom2011through2018.Forthepastthreeyears,webelieveourtotalrecordableincidentratewaslessthanone

63、thirdoftheindustryaverage.Webelievecontinuallysearchingforwaystomakeouroperationssaferistherightthingtodoforouremployees,ourcustomers,oursuppliers,andourCompany.Rapidly adopt new technologies in a capital efficient mannerOurlargescaleandcultureofinnovationallowustotakeadvantageofleadingtechnological

64、solutions.Wehavebeenafastadopterofnewtechnologiesfocusedon:increasingfracturingeffectivenessforourcustomers,reducingnon-productivetimeonourequipment,reducingtheoperatingcostsofourequipment,andenhancingthehealth,safetyandenvironmental(“HSE”)conditionsatourwellsites.Recentexamplesofinitiativesaimedatr

65、educingouroperatingcostsinclude:vibrationsensorswithpredictivemaintenanceanalyticsonourequipment;automatedgreasingsystems;remotestartcapabilities;theabilitytoautomatecertainportionsofouroperations;andadoptionofhardenedalloysforourconsumables.RecentexamplesofinitiativesaimedatimprovingourHSEcondition

66、sinclude:dualfuelenginesthatcanrunonbothnaturalgasanddieselfuel;electronicpressurereliefsystems;spillpreventionandcontainmentsolutions;electronicloggingdevices;containerizedproppantdeliverysolutions;andadvancedfiresuppressionsystems.Maintain a focus on cost effectiveness and capital efficiencyAlllev

67、elsofourorganizationfocusonprovidingthesafestworkenvironmentforouremployeesandongeneratingthehighestlevelofcashgenerationaspossible,withinthelimitationsofindustryconditions.Wefocusonoperatingourequipmentatthehighestlevelofefficiencytomaximizebillingactivityforeachofourfleets,whichisoftenmeasuredinte

68、rmsofstagescompletedperactivefleet.Inturn,westrivetochargeacompetitiveratetoourcustomersandtobecompensatedforthehighlevelofefficiencythatweprovide.Thisultimatelyleadstolowercostsforourcustomers.Inaddition,weembraceinnovationtocontinuallyfindwaystolowerthecostsofdoingbusiness.Thisisenabledbyourcultur

69、eandourin-housemanufacturingcapabilities,whichallowustocontinuouslyidentifyandexecuteimprovementsinthedesignandoperationofourequipment.3TableofContentsReduce debt and achieve a more conservative capital structureToimproveourfinancialflexibility,wehavebeenfocusedonreducingourdebtandmaintainingmoretha

70、nsufficientliquidity.Webelievethatweareabletonotonlymaketheinvestmentsnecessarytoremainamarketleaderinhydraulicfracturing,butalsotocontinuetostrengthenourbalancesheet.CustomersThecustomersweserveareprimarilylarge,independentE&PcompaniesinNorthAmerica.Thefollowingtableshowsthecustomersthatrepresented

71、morethan10%ofourtotalrevenueduringtheyearsendedDecember31,2019,2018and2017.Thelossofanyofourlargestexistingcustomerscouldhaveamaterialadverseeffectonourresultsofoperations.Whileweviewrevenueasanimportantmetricinassessingcustomerconcentration,wealsocompareandmanageourcustomerportfoliobasedonthenumber

72、offleetsweplacewitheachcustomer.Year Ended December 31,201920182017DiamondbackE&PLLC16%*%*%AscentResources10%*%*%EQTProductionCompany*%12%*%DevonEnergyCorporation*%12%*%*Lessthan10%.SuppliersWepurchasepartsusedintherefurbishment,repairandmanufacturingofmajorfleetcomponentssuchasfluid-ends,power-ends

73、,engines,transmissions,radiatorsandtrailers.Wedonotexpectsignificantinterruptionsinthesupplyofanyofthesematerials.Whilewebelievethatwewillbeabletomakealternativearrangementsintheeventofanyinterruptioninthesupplyoftheseitems,therecanbenoassurancethattherewillbenoassociatedpriceorsupplyissues.Whenrequ

74、estedbythecustomer,wealsopurchasetheproppantsandchemicalsweuseinouroperationsandthedieselfuelforourequipmentfromavarietyofsuppliersthroughouttheUnitedStates.Todate,wehavegenerallybeenabletoobtainthesuppliesnecessarytosupportouroperationsonatimelybasisatcompetitiveprices.Inthepast,wehaveexperiencedso

75、medelaysinobtainingthesematerialsduringperiodsofhighdemand.Wehavealong-termsupplyagreementwithonevendortosupplyasignificantportionoftheproppantweprocureuntil2024.Thisagreementcontainsafixedvolumeofpurchasesatmarket-basedvariablepricingwithminimumunconditionalpurchaseobligations.CompetitionThemarketi

76、nwhichweoperateishighlycompetitiveandhighlyfragmented.Ourcompetitionincludesmulti-nationaloilfieldservicecompaniesaswellasnationalandregionalcompetitors.Ourmajormulti-nationalcompetitorsareHalliburtonCompanyandSchlumbergerLimited,eachofwhichhassignificantlygreaterfinancialresourcesthanwedo.Ourmajord

77、omesticcompetitorsareNextTierOilfieldSolutions,Inc.,ProPetroHoldingCorp,LibertyOilfieldServices,Inc.,RPC,Inc.,Patterson-UTIEnergy,Inc.,andBJServices,Inc.Certainofthesecompetitorsprovideanumberofoilfieldservicesandproductsinadditiontohydraulicfracturing.Wealsofacecompetitionfromsmallerregionalservice

78、providersinsomeofthegeographiesinwhichweoperate.Competitioninourindustryisbasedonanumberoffactors,includingprice,servicequality,safety,andinsomecases,breadthofproducts.Webelieveweconsistentlydeliverexceptionalservicequality,basedinpartonthedurabilityofourequipment.Ourdurableequipmentreducesnon-produ

79、ctivetimeduetoequipmentfailureandallowsourcustomerstoavoidcostsassociatedwithdelaysincompletingtheirwells.Bybeingabletomeetthemostdemandingpressureandflowraterequirements,ourequipmentalsoenablesustooperateefficientlyinchallenginggeologicalenvironmentsinwhichsomeofourcompetitorscannotoperateeffective

80、ly.4TableofContentsCyclical Nature of Industry WeoperateinahighlycyclicalindustrydrivenmainlybythelevelofhorizontaldrillingactivityintheUnitedStates,whichinturndependslargelyoncurrentandanticipatedfuturecrudeoilandnaturalgaspricesandproductiondeclinerates.Acriticalfactorinassessingtheoutlookforthein

81、dustryisthesupplyanddemandforbothoilandnaturalgas.Demandforoilandnaturalgasissubjecttolargeandrapidfluctuations.Thesefluctuationsaredrivenbycommoditydemandintheindustryandcorrespondingpriceincreases.Whenoilandnaturalgaspricesincrease,producersgenerallyincreasetheircapitalexpenditures,whichgenerallyr

82、esultsingreaterrevenuesandprofitsforoilfieldservicecompanies.However,increasedcapitalexpendituresalsoultimatelyresultingreaterproduction,whichhistorically,hasresultedinincreasedsuppliesandreducedpricesthat,inturn,tendtoreducedemandforoilfieldservicessuchashydraulicfracturingservices.Thepricingforour

83、servicesisalsodrivenbytheindustrycapacityofhydraulicfracturingequipment.Historically,theindustryhasbuiltadditionalequipmenttosupplytheincreaseddemand.Whenthedemanddeclines,theindustryhasmoreequipmentthanwhatisneededbycustomers.Thisoftenleadstoadeclineinthepriceforourservicesuntilequipmentisde-activa

84、tedandthesupplyanddemandfundamentalsareclosertobalanced.Forthesereasons,ourresultsofoperationsmayfluctuatefromquartertoquarterandfromyeartoyear,andthesefluctuationsmaydistortperiod-to-periodcomparisonsofourresultsofoperations.SeasonalitySeasonalityhasnotsignificantlyaffectedouroveralloperations.Howe

85、ver,towardtheendofsomeyears,weexperiencesloweractivityinourpressurepumpingoperationsinconnectionwiththeholidaysandascustomerscapitalexpenditurebudgetsaredepleted.Similarly,thebeginningofsomeyearshaveaslowstartascustomersarestartinganewcapitalbudgetcycleandouroperationsaremorepronetoexperiencewinterw

86、eather.Occasionally,ouroperationshavebeennegativelyimpactedbysevereweatherconditionsthatcausedisruptiontooursupplychainorourabilitytotransportmaterialsandequipmenttothejobsite.EmployeesAtDecember31,2019,wehadapproximately1,250totalemployees,allofwhomwerefull-time.Ouremployeesarenotcoveredbycollectiv

87、ebargainingagreements,noraretheymembersoflaborunions.Weconsiderourrelationshipwithouremployeestobegood.InsuranceOuroperationsaresubjecttohazardsinherentintheoilandnaturalgasindustry,includingaccidents,blowouts,explosions,fires,oilspillsandhazardousmaterialsspills.Theseconditionscancausepersonalinjur

88、yorlossoflife,damagetoordestructionofproperty,equipment,theenvironmentandwildlifeandinterruptionorsuspensionofoperations,amongotheradverseeffects.Ifaseriousaccidentweretooccuratalocationwhereourequipmentandservicesarebeingused,itcouldresultinourbeingnamedasadefendanttoalawsuitassertingsignificantcla

89、ims.Despiteourhighsafetystandards,wefromtimetotimehavesufferedaccidentsinthepastandweanticipatethatwecouldexperienceaccidentsinthefuture.Inadditiontothepropertyandpersonallossesfromtheseaccidents,thefrequencyandseverityoftheseincidentsaffectouroperatingcostsandinsurability,aswellasourrelationshipswi

90、thcustomers,employeesandregulatoryagencies.Anysignificantincreaseinthefrequencyorseverityoftheseincidents,orthegenerallevelofcompensationawards,couldadverselyaffectthecostof,orourabilitytoobtain,workerscompensationandotherformsofinsuranceandcouldhaveotheradverseeffectsonourfinancialconditionandresul

91、tsofoperations.Wecarryavarietyofinsurancecoveragesforouroperations,andwearepartiallyself-insuredforcertainclaims,intypesandamountsthatwebelievetobecustomaryandreasonableforourindustry.Thesecoveragesandretentionsaddresscertainrisksrelatingtocommercialgeneralliability,workerscompensation,businessauto,

92、property5TableofContentsandequipment,directorsandofficers,environment,pollutionandotherrisks.Althoughwemaintaininsurancecoverageoftypesandamountsthatwebelievetobecustomaryinourindustry,wearenotfullyinsuredagainstallrisks,eitherbecauseinsuranceisnotavailableorbecauseofthehighpremiumcostsrelativetoper

93、ceivedrisk.Safety and Health RegulationWearesubjecttotherequirementsofthefederalOccupationalSafetyandHealthAct,whichisadministeredandenforcedbyOSHA,andcomparablestatelawsthatregulatethehealthandsafetyofworkers.Inaddition,theOSHAhazardcommunicationstandardrequiresthatinformationabouttheidentitiesandh

94、azardsofthechemicalsusedorproducedinoperationsbemaintainedandprovidedtoemployees,stateandlocalgovernmentauthoritiesandthepublic.WebelievethatouroperationsareinsubstantialcompliancewiththeOSHArequirements,includinggeneralindustrystandards,recordkeepingrequirements,labelingrequirements,trainingrequire

95、mentsandmonitoringofoccupationalexposuretoregulatedsubstances.OSHAcontinuestoevaluateworkersafetyandtoproposenewregulations,suchasbutnotlimitedto,RespirableCrystallineSilicaStandard,whichrequireshydraulicfracturingoperationsintheoilandgasindustrytoimplementengineeringcontrolstolimitexposuretorespira

96、blesilicasandbyJune23,2021.Althoughitisnotpossibletoestimatethefinancialandcomplianceimpactofthisruleoranyotherproposedrule,theimpositionofmorestringentrequirementscouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Intellectual Property RightsOurresearchanddevelopm

97、enteffortsarefocusedonprovidingspecificsolutionstothechallengesourcustomersfacewhenfracturingandstimulatingwells.Inadditiontothedesignandmanufactureofinnovativeequipment,wehavealsodevelopedproprietaryblendsofchemicalsthatweuseinconnectionwithourhydraulicfracturingservices.WehavethreeU.S.patentsandtw

98、opatentsinCanadarelatingtofracturingmethods,thetechnologyusedinfluid-ends,hydraulicpumpsandotherequipment.Webelievetheinformationregardingourcustomerandsupplierrelationshipsarealsovaluableproprietaryassets.Wehaveregisteredtrademarksandpendingtrademarkapplicationsforvariousnamesunderwhichourentitiesd

99、oorintendtoconductbusinessandofferproducts.Exceptfortheforegoing,wedonotownorlicenseanypatents,trademarksorotherintellectualpropertythatwebelievetobematerialtothesuccessofourbusiness.Environmental RegulationOuroperationsaresubjecttostringentlawsandregulationsrelatingtoprotectionoftheenvironment,natu

100、ralresources,cleanair,drinkingwater,wetlandsandendangeredspecies,aswellaschemicaluseandstorage,wastemanagement,andtransportationofhazardousandnon-hazardousmaterials.Numerousfederal,stateandlocalgovernmentalagencies,suchastheU.S.EnvironmentalProtectionAgency(the“EPA”),issueregulationsthatoftenrequire

101、difficultandcostlycompliancemeasuresthatcarrysubstantialadministrative,civilandcriminalpenaltiesandmayresultininjunctiveobligationsfornon-compliance.Inaddition,somelawsandregulationsrelatingtoprotectionoftheenvironmentmayimposestrictliability,jointandseveralliabilityorbothforenvironmentalcontaminati

102、on.Strictliabilitymeanswecouldbeliableforenvironmentaldamagesandcleanupcostswithoutregardtonegligenceorfault.Strictadherencewiththeseregulatoryrequirementsincreasesourcostofdoingbusinessandconsequentlyaffectsourprofitability.However,environmentallawsandregulationshavebeensubjecttofrequentchangesover

103、theyears,andtheimpositionofmorestringentrequirementscouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Hydraulic Fracturing Activities.Certaingovernmentalreviewsareeitherunderwayorbeingproposedthatfocusonenvironmentalaspectsofhydraulicfracturingpractices.Forexample

104、,inDecember2016,theEPAreleaseditsfinalreport,entitled“HydraulicFracturingforOilandGas:ImpactsfromtheHydraulicFracturingWaterCycleonDrinkingWaterResourcesintheUnitedStates,”onthepotentialimpactsofhydraulicfracturingondrinkingwaterresources.ThereportstatesthattheEPAfoundscientificevidencethathydraulic

105、fracturingactivitiescanimpactdrinkingwaterresourcesundersomecircumstances,notingthatthefollowinghydraulicfracturingwatercycleactivitiesandlocal-orregional-scalefactorsaremorelikelythanotherstoresultinmorefrequentormoresevereimpacts:waterwithdrawalsforfracturingintimesorareasoflowwateravailability;su

106、rfacespillsduringthemanagementoffracturing6TableofContentsfluids,chemicalsorproducedwater;injectionoffracturingfluidsintowellswithinadequatemechanicalintegrity;injectionoffracturingfluidsdirectlyintogroundwaterresources;dischargeofinadequatelytreatedfracturingwastewatertosurfacewaters;anddisposalors

107、torageoffracturingwastewaterinunlinedpits.Thereportdoesnotmakeanypolicyrecommendations.OngoingorproposedstudieslikethesecouldspurinitiativestofurtherregulatehydraulicfracturingunderthefederalSafeDrinkingWaterAct(“SDWA”)orotherregulatorymechanisms.Forexample,onNovember29,2018,EPAandtheStateReviewofOi

108、landNaturalGasEnvironmentalRegulation(“STRONGER”)enteredintoaMemorandumofUnderstandingpursuanttowhichEPAandSTRONGERwillcollaborateonoilandnaturalgasexplorationanddevelopmentregulatoryprograms.Atthestatelevel,severalstateshaveadoptedorareconsideringlegalrequirementsthatcouldimposemorestringentpermitt

109、ing,disclosureandwellconstructionrequirementsonhydraulicfracturingactivities.Forexample,inMay2013,theRailroadCommissionofTexasissueda“wellintegrityrule,”whichupdatestherequirementsfordrilling,puttingpipedownandcementingwells.Therulealsoincludesnewtestingandreportingrequirements,suchas(i)therequireme

110、nttosubmitcementingreportsafterwellcompletionoraftercessationofdrilling,whicheverislater,and(ii)theimpositionofadditionaltestingonwellslessthan1,000feetbelowusablegroundwater.ThewellintegrityruletookeffectinJanuary2014.Localgovernmentsalsomayseektoadoptordinanceswithintheirjurisdictionsregulatingthe

111、time,placeandmannerofdrillingactivitiesingeneralorhydraulicfracturingactivitiesinparticular.Somestates,countiesandmunicipalitiesarecloselyexaminingwater-useissues,suchaspermitanddisposaloptionsforprocessedwater.Ifnewormorestringentstateorlocallegalrestrictionsrelatingtothehydraulicfracturingprocessa

112、readoptedinareaswhereweoperate,wecouldincurpotentiallysignificantaddedcoststocomplywithsuchrequirements,experiencedelaysorcurtailmentinthepursuitofdevelopmentactivitiesandperhapsevenbeprecludedfromdrillingwells.See“RiskFactorsFederalandstatelegislativeandregulatoryinitiativesrelatingtohydraulicfract

113、uringcouldresultinincreasedcostsandadditionaloperatingrestrictionsordelays”inItem1Aofthisannualreport.Remediation of Hazardous Substances.TheComprehensiveEnvironmentalResponse,CompensationandLiabilityAct,asamended,referredtoas“CERCLA”orthe“Superfundlaw,”andcomparablestatelawsgenerallyimposeliability

114、,withoutregardtofaultorlegalityoftheconductatthetimeitoccurred,oncertainclassesofpersonsthatareconsideredtoberesponsibleforthereleaseofhazardoussubstancesintotheenvironment.Thesepersonsincludethecurrentowneroroperatorofacontaminatedfacility,aformerowneroroperatorofthefacilityatthetimeareleaseofhazar

115、doussubstancesoccurredandthosepersonsthatdisposedorarrangedforthedisposalofthehazardoussubstancestoanoffsitefacility.UnderCERCLAandcomparablestatestatutes,personsdeemed“potentiallyresponsibleparties”aresubjecttostrict,jointandseveralliabilityforthecostsofinvestigating,monitoring,removingandremediati

116、ngpreviouslyreleasedhazardoussubstances(includinghazardoussubstancesdisposedoforreleasedbypriorownersoroperators)orpropertycontamination(includinggroundwatercontamination),fordamagestonaturalresourcesandforthecostsofcertainhealthstudies.Inaddition,itisnotuncommonforneighboringlandownersandotherthird

117、partiestofileclaimsforpersonalinjuryandpropertydamageallegedlycausedbyhazardoussubstancesreleasedintotheenvironment.Water Discharges.TheFederalWaterPollutionControlActof1972,asamended,alsoknownasthe“CleanWaterAct,”theSafeDrinkingWaterAct,theOilPollutionActandanalogousstatelawsandregulationsissuedthe

118、reunderimposerestrictionsandstrictcontrolsregardingtheunauthorizeddischargeofpollutants,includingproducedwatersandothernaturalgasandoilwastes,intonavigablewatersoftheUnitedStates,aswellasstatewaters.OnDecember13,2016,theEPAreleasedafinalreportwhichidentifieddischargeofinadequatelytreatedhydraulicfra

119、cturingwastewatertosurfacewaterresourcesashavingpotentialtoimpactdrinkingwaterresources.Thedischargeofpollutantsintoregulatedwatersisprohibited,exceptinaccordancewiththetermsofapermitissuedbytheEPAorthestate.UndertheCleanWaterAct,theEPAhasadoptedregulationsconcerningdischargesofstormwater,whichrequi

120、recoveredfacilitiestoobtainpermits,maintainstormwaterplansandimplementpracticestominimizerisksrelatedtostormwater.TheselawsandregulationsalsoprohibitcertainotheractivityinwetlandsunlessauthorizedbyapermitissuedbytheU.S.ArmyCorpsofEngineers,whichwerefertoasthe“Corps.”InSeptember2015,anewrulebecameeff

121、ectivewhichwasissuedbytheEPAandtheCorpsdefiningthescopeofthejurisdictionoftheEPAandtheCorpsoverwetlandsandotherwatersoftheUnitedStates.AfterbeingchallengedincourtonthegroundsthatitunlawfullyexpandedthereachofCleanWaterActsprograms,onDecember11,2018,EPAproposedarulethatwouldrevisethe7TableofContentsd

122、efinitionof“WatersoftheUnitedStates”andclarifythescopeoffederalauthorityundertheCleanWaterAct.OnSeptember12,2019,EPAandtheCorpsannouncedtherepealofthe2015ruleandtherecodificationoftheregulatorytextthatexistedpriortothe2015ruleuntiltheproposedrulewasfinalized(the“StepOneRule”).OnJanuary23,2020,theEPA

123、andCorpsdid,infact,finalizetheNavigableWatersProtectionRuletodefine“WatersoftheUnitedStates”,arulethatstreamlinesthedefinitionof“WatesoftheUnitedStates”thatarefederallyregulatedundertheCleanWaterActtofourcategories.ThisrulewillbecomeeffectiveandreplacetheStepOneRulesixtydaysafterpublicationintheFede

124、ralRegister.Therapidlychanginglandscapeoffederalregulationcreatesuncertaintyinourandourcustomersbusiness.UndertheCleanWaterAct,wearealsosubjecttoSpillPrevention,ControlandCountermeasureplanrequirementsthatrequireappropriatecontainmentbermsandsimilarstructurestohelppreventthecontaminationofnavigablew

125、aters.Noncompliancewiththeserequirementsmayresultinsubstantialadministrative,civilandcriminalpenalties,aswellasinjunctiveobligations.Waste Handling.Wastesfromcertainofouroperations(suchasequipmentmaintenanceandpastchemicaldevelopment,blending,anddistributionoperations)aresubjecttothefederalResourceC

126、onservationandRecoveryActof1976(“RCRA”),andcomparablestatestatutesandregulationspromulgatedthereunder,whichimposerequirementsregardingthegeneration,transportation,treatment,storage,disposalandcleanupofhazardousandnon-hazardouswastes.Withfederalapproval,theindividualstatesadministersomeoralloftheprov

127、isionsofRCRA,sometimesinconjunctionwiththeirown,morestringentrequirements.AlthoughcertainoilproductionwastesareexemptfromregulationashazardouswastesunderRCRA,suchwastesmayconstitute“solidwastes”thataresubjecttothelessstringentrequirementsofnon-hazardouswasteprovisions.IntheEPAs2016“HydraulicFracturi

128、ngforOilandGas:ImpactsfromtheHydraulicFracturingWaterCycleonDrinkingWaterResourcesintheUnitedStates”report,theEPAidentifieddisposalorstorageofhydraulicfracturingwastewaterinunlinedpitsasresultingincontaminationofgroundwaterresources.Administrative,civilandcriminalpenaltiescanbeimposedforfailuretocom

129、plywithwastehandlingrequirements.Moreover,theEPAorstateorlocalgovernmentsmayadoptmorestringentrequirementsforthehandlingofnon-hazardouswastesorcategorizesomenon-hazardouswastesashazardousforfutureregulation.LegislationhasbeenproposedfromtimetotimeinCongresstore-categorizecertainoilandnaturalgasexplo

130、ration,developmentandproductionwastesas“hazardouswastes.”SeveralenvironmentalorganizationshavealsopetitionedtheEPAtomodifyexistingregulationstorecategorizecertainoilandnaturalgasexploration,developmentandproductionwastesas“hazardous.”Anysuchchangesinthelawsandregulationscouldhaveamaterialadverseeffe

131、ctonourcapitalexpendituresandoperatingexpenses.Fromtimetotime,releasesofmaterialsorwasteshaveoccurredatlocationsweown,ownedpreviouslyoratwhichwehaveoperations.ThesepropertiesandthematerialsorwastesreleasedthereonmaybesubjecttoCERCLA,RCRA,theCleanWaterAct,andanalogousstatelaws.Undersuchlawsandrelated

132、regulations,wehavebeenandmayberequiredtoinvestigate,removeorremediatethesematerialsorwastesandmakeexpendituresassociatedwithpersonalinjuryorpropertydamage.Atthistime,withrespecttoanypropertieswherematerialsorwastesmayhavebeenreleased,butofwhichwehavenotbeenmadeaware,itisnotpossibletoestimatethepoten

133、tialcoststhatmayarisefromunknown,latentliabilityrisks.Air Emissions.ThefederalCleanAirAct,asamended,andcomparablestatelawsandregulations,regulateemissionsofvariousairpollutants,includingthroughtheissuanceofpermits.Inaddition,theEPAhasdeveloped,andcontinuestodevelop,stringentregulationsgoverningemiss

134、ionsoftoxicairpollutantsfromspecifiedsources.Federalandstateregulatoryagenciescanimposeadministrative,civilandcriminalpenaltiesfornon-compliancewithairpermitsorotherrequirementsoftheCleanAirActandassociatedstatelawsandregulations.Wearerequiredtoobtainairpermitsinconnectionwithsomeactivitiesunderappl

135、icablelaws.Thesepermitsimposecertainconditionsandrestrictionsonouroperations,someofwhichrequiresignificantexpendituresforcompliance.Changesintheserequirements,orinthepermitsweoperateunder,couldincreaseourcostsorlimitoperations.Additionally,theEPAsTierIVregulationsapplytocertainoff-roaddieselenginesu

136、sedbyustopowerequipmentinthefield.Undertheseregulations,wearerequiredtoretrofitorretirecertainenginesandwearelimitedinthenumberofnon-compliantoff-roaddieselengineswecanpurchase.TierIVenginesarecostlier,anduntilTierIV-8TableofContentscompliantenginesthatmeetourneedsaremorewidelyavailable,theseregulat

137、ionscouldlimitourabilitytoacquireasufficientnumberofdieselenginestoexpandourfleetandtoreplaceexistingenginesastheyaretakenoutofservice.Other Environmental Considerations.E&PactivitiesonfederallandsmaybesubjecttotheNationalEnvironmentalPolicyAct,alsoknownasNEPA.NEPArequiresfederalagencies,includingth

138、eDepartmentofInterior,toevaluatemajoragencyactionsthathavethepotentialtosignificantlyimpacttheenvironment.Inthecourseofsuchevaluations,anagencywillprepareanenvironmentalassessmentthatassessesthepotentialdirect,indirectandcumulativeimpactsofaproposedprojectand,ifnecessary,willprepareamoredetailedenvi

139、ronmentalimpactstatementthatmaybemadeavailableforpublicreviewandcomment.E&Pactivities,aswellasproposedexplorationanddevelopmentplans,onfederallandsrequiregovernmentalpermitsthataresubjecttotherequirementsofNEPA.Thisprocesshasthepotentialtodelaythedevelopmentofoilandnaturalgasprojects.Variousstateand

140、federalstatutesprohibitcertainactionsthatadverselyaffectendangeredorthreatenedspeciesandtheirhabitat,migratorybirds,wetlands,andnaturalresources.ThesestatutesincludetheEndangeredSpeciesAct,theMigratoryBirdTreatyAct,theBaldandGoldenEagleProtectionAct,theCleanWaterActandCERCLA.Wheretakingsoforharmtosp

141、eciesordamagestohabitat,jurisdictionalwatersornaturalresourcesoccurormayoccur,governmententitiesorprivatepartiesmayacttopreventoilandnaturalgasexplorationactivities.Permanentrestrictionsimposedtoprotectendangeredspeciescouldprohibitdrillingincertainareasorrequiretheimplementationofexpensivemitigatio

142、nmeasures.Governmententitiesmayrequirepermitsandmayalsoseekdamagesforharmtospecies,habitat,ornaturalresourcesorresultingfromfillingofjurisdictionalstreamsorwetlandsorreleasesofoil,wastes,hazardoussubstancesorotherregulatedmaterials.TheBureauofLandManagement(“BLM”)hasestablishedregulationstogovernhyd

143、raulicfracturingonfederalandIndianlands.In2016,BLMpublishedtheMethaneandWasteReductionRuletoreducethelossofnaturalgasthroughventing,flaringandleaksandreduceairpollution,includinggreenhousegases,foroilandnaturalgasproducedonfederalandIndianlands.Followingaseriesoflegalchallengestotheattemptstodelayim

144、plementationofportionsofthe2016rulethroughout2017and2018,onSeptember28,2018,BLMpublishedafinalrulerevisingtheMethaneandWasteReductionRule,whichbecameeffectiveonNovember27,2018.Theserevisionsrescindedanumberofthe2016wastepreventionrequirements.CaliforniaandNewMexico,alongwithacoalitionofenvironmental

145、groups,filedsuitschallengingthe2018finalrule,andsuchlitigationisongoing.Atthispoint,wecannotpredictthefinalregulatoryrequirementsorthecosttocomplywithsuchrequirementswithanycertainty.TheToxicSubstancesControlAct(“TSCA”),requiresmanufacturersofnewchemicalsubstancestoprovidespecificinformationtotheAge

146、ncyforreviewpriortomanufacturingchemicalsorintroducingthemintocommerce.EPAhaspermittedmanufactureofnewchemicalnanoscalematerialsthroughtheuseofconsentordersorSignificantNewUseRulesunderTSCA.TheAgencyhasalsoallowedthemanufactureofnewchemicalnanoscalematerialsunderthetermsofcertainregulatoryexemptions

147、whereexposureswerecontrolledtoprotectagainstunreasonablerisks.OnMay19,2014,theEPApublishedanAdvancedNoticeofProposedRulemakingtoobtaindataonhydraulicfracturingchemicalsubstancesandmixtures.TheEPAhasnotyetproceededwiththerulemakingbutmaydosointhefuture.AnychangesinTSCAregulationscouldincreaseourcapit

148、alexpendituresandoperatingexpenses.Climate Change.InDecember2009,theEPAissuedanEndangermentFindingthatdeterminedthatemissionsofcarbondioxide,methaneandothergreenhousegasespresentanendangermenttopublichealthandtheenvironmentbecause,accordingtotheEPA,emissionsofsuchgasescontributetowarmingoftheearthsa

149、tmosphereandotherclimaticchanges.TheEPAlateradoptedtwosetsofrelatedrules,oneofwhichregulatesemissionsofgreenhousegasesfrommotorvehiclesandtheotherofwhichregulatesemissionsfromcertainlargestationarysourcesofemissions.Themotorvehiclerule,whichbecameeffectiveinJuly2010,limitsemissionsfrommotorvehicles.

150、TheEPAadoptedthestationarysourcerule,whichwerefertoasthetailoringrule,inMay2010,anditbecameeffectiveJanuary2011.ThetailoringruleestablishednewemissionsthresholdsthatdeterminewhenstationarysourcesmustobtainpermitsunderthePreventionofSignificantDeterioration(“PSD”),andTitleVprogramsoftheCleanAirAct.On

151、June23,2014,inUtility Air Regulatory Group v.EPA,theSupremeCourtheldthatstationarysourcescouldnotbecomesubjecttoPSDorTitleVpermittingsolelybyreasonoftheirgreenhousegasemissionsandinvalidatedthetailoringrule.However,theCourtruledthattheEPAmayrequireinstallationofbestavailablecontroltechnologyforgreen

152、housegasemissionsatsourcesotherwisesubjecttothePSDandTitleVprograms.OnDecember19,2014,theEPAissuedtwomemorandaproviding9TableofContentsguidanceongreenhousegaspermittingrequirementsinresponsetotheSupremeCourtsdecision.Initspreliminaryguidance,theEPAstatedthatitwouldundertakearulemakingactiontorescind

153、anyPSDpermitsissuedundertheportionsofthetailoringrulethatwerevacatedbytheCourt.Intheinterim,theEPAissuedanarrowlycrafted“noactionassurance”indicatingitwillexerciseitsenforcementdiscretionnottopursueenforcementofthetermsandconditionsrelatingtogreenhousegasesinanEPA-issuedPSDpermit,andforrelatedtermsa

154、ndconditionsinaTitleVpermit.OnApril30,2015,theEPAissuedafinalruleallowingpermittingauthoritiestorescindPSDpermitsissuedundertheinvalidregulations.InOctober2015,theEPAamendedthegreenhousegasreportingruletoaddthereportingofemissionsfromoilwellsusinghydraulicfracturing.Becauseofthiscontinuedregulatoryf

155、ocus,futuregreenhousegasemissionregulationsoftheoilandnaturalgasindustryremainapossibility,whichcouldincreasethecostofouroperations.Inaddition,theU.S.Congressoccasionallyattemptstoadoptlegislationtoreduceemissionsofgreenhousegases,andmanystateshavetakenlegalmeasurestoreduceemissionsprimarilythrought

156、heplanneddevelopmentofgreenhousegasemissioninventories,carbonpricingpoliciesorregionalcapandtradeprograms.AlthoughtheU.S.Congresshasnotyetadoptedsuchlegislation,itmaydosointhefuture.Severalstatescontinuetopursuerelatedregulationsaswell.InDecember2015,theUnitedStatesjoinedtheinternationalcommunityatt

157、he21stConferenceofthePartiesoftheUnitedNationsFrameworkConventiononClimateChangeinParis,France.TheresultingParisAgreementcallsforthepartiestoundertake“ambitiousefforts”tolimittheaverageglobaltemperature,andtoconserveandenhancesinksandreservoirsofgreenhousegases.TheParisAgreement,whichcameintoforceon

158、November4,2016,establishesaframeworkforthepartiestocooperateandreportactionstoreducegreenhousegasemissions.AlthoughtheTrumpAdministrationhaswithdrawntheUnitedStatesfromtheParisAgreement,manystateandlocalofficialshavepubliclystatedtheyintendtoabidebythetermsoftheParisAgreement.Restrictionsonemissions

159、ofmethaneorcarbondioxidethatmaybeimposedinvariousstatescouldadverselyaffecttheoilandnaturalgasindustrywhichcouldhaveamaterialadverseeffectonfuturedemandforourservices.Atthistime,itisnotpossibletoaccuratelyestimatehowpotentialfuturelawsorregulationsaddressinggreenhousegasemissionswouldimpactourcustom

160、ersbusinessandconsequentlyourown.Inaddition,claimshavebeenmadeagainstcertainenergycompaniesallegingthatgreenhousegasemissionsfromoilandnaturalgasoperationsconstituteapublicnuisanceunderfederalorstatecommonlaw.Privateparties,aswellaslocalgovernments,havealsofiledlawsuitsagainstcertainenergycompaniess

161、eekingcompensationforclimatechangerelateddamages,includingpersonalinjuryorpropertydamages.Futureclimatechangelitigationcouldincreaseouroperatingcostsornegativelyimpactdemandforourservices.NORM.Inthecourseofouroperations,someofourequipmentmaybeexposedtonaturallyoccurringradioactivematerials(“NORM”)as

162、sociatedwithoilandnaturalgasdepositsand,accordinglymayresultinthegenerationofwastesandothermaterialscontainingNORM.NORMexhibitinglevelsofnaturallyoccurringradiationinexcessofestablishedstatestandardsaresubjecttospecialhandlinganddisposalrequirements,andanystoragevessels,pipingandworkareaaffectedbyNO

163、RMmaybesubjecttoremediationorrestorationrequirements.Becausecertainofthepropertiespresentlyorpreviouslyowned,operatedoroccupiedbyusmayhavebeenusedforoilandnaturalgasproductionoperations,itispossiblethatwemayincurcostsorliabilitiesassociatedwithNORM.Pollution Risk Management.Weseektominimizethepossib

164、ilityofapollutioneventthroughequipmentandjobdesign,aswellasthroughemployeetraining.Wealsomaintainapollutionriskmanagementprogramifapollutioneventoccurs.Thisprogramincludesaninternalemergencyresponseplanthatprovidesspecificproceduresforouremployeestofollowintheeventofachemicalorhazardoussubstancerele

165、aseorspill.Inaddition,wehavecontractedwithseveralthird-partyemergencyrespondersinourvariousoperatingareasthatareavailableona24-hourbasistohandletheremediationandclean-upofanychemicalorhazardoussubstancereleaseorspill.Wecarryinsurancedesignedtorespondtoforeseeableenvironmentalexposures.Thisinsurancep

166、ortfoliohasbeenstructuredinanefforttoaddressincidentsthatresultinbodilyinjuryorpropertydamageandanyensuinginvestigationandcleanupneededatourownedandleasedfacilitiesasaresultofthemobilizationandutilizationofourfleet,aswellasanyclaimsresultingfromouroperations.Wealsoseektomanageenvironmentalliabilityr

167、isksthroughprovisionsinourcontractswithourcustomersthatallocaterisksrelatingtosurfaceactivitiesassociatedwiththefracturingprocess,otherthanwaterdisposal,tousand10TableofContentsrisksrelatingto“downhole”liabilitiestoourcustomers.Ourcustomersareresponsibleforthedisposalofthefracturingfluidthatflowsbac

168、koutofthewellaswastewater.Thecustomersremovethewaterfromthewellusingacontrolledflow-backprocess,andwearenotinvolvedinthatprocessorthedisposalofthefluid.Ourcontractsgenerallyrequireourcustomerstoindemnifyusagainstpollutionandenvironmentaldamagesoriginatingbelowthesurfaceofthegroundorarisingoutofwater

169、disposal,orotherwisecausedbythecustomer,othercontractorsorotherthirdparties.Inturn,weindemnifyourcustomersforpollutionandenvironmentaldamagesoriginatingatorabovethesurfacecausedsolelybyus.Weseektomaintainconsistentrisk-allocationandindemnificationprovisionsinourcustomeragreementstothegreatestextentp

170、ossible.Someofourcontracts,however,containlessexplicitindemnificationprovisions,whichtypicallyprovidethateachpartywillindemnifytheotheragainstliabilitiestothirdpartiesresultingfromtheindemnifyingpartysactions,excepttotheextentsuchliabilityresultsfromtheindemnifiedpartysgrossnegligence,willfulmiscond

171、uctorintentionalact.Company InformationOurprincipalexecutiveofficeislocatedat777MainStreet,Suite2900,FortWorth,Texas,76102andourtelephonenumberis817-862-2000.O.Theinformationonourwebsiteisnotincorporatedbyreferenceintothisreport.OurannualreportsonForm10-K,quarterlyreportsonForm10-Q,currentreportsonF

172、orm8-K,andallamendmentstothosereportsareavailablefreeofchargeonourwebsiteassoonasreasonablypracticableaftersuchmaterialiselectronicallyfiledwith,orfurnishedto,theSEC.Inaddition,copiesofourannualreportwillbemadeavailable,freeofcharge,onwrittenrequest.Item 1A.Risk FactorsOur investors should carefully

173、 consider the following risks and other information in this annual report in evaluating us and our common stock.Any of thefollowing risks,as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial,could materially and adversely affect ourbusiness,fin

174、ancial condition or results of operations,and could,in turn,impact the trading price of our common stock.Risks Relating to Our BusinessOur business depends on domestic spending by the onshore oil and natural gas industry,which is cyclical and has significantly declined in past periods.Ourbusinessisc

175、yclicalanddependsonthewillingnessofourcustomerstomakeoperatingandcapitalexpenditurestoexplorefor,developandproduceoilandnaturalgasintheUnitedStates.Thewillingnessofourcustomerstoundertaketheseactivitiesdependslargelyuponprevailingindustryconditionsthatareinfluencedbynumerousfactorsoverwhichwehavenoc

176、ontrol,suchas:prices,andexpectationsaboutfutureprices,foroilandnaturalgas;domesticandforeignsupplyof,anddemandfor,oilandnaturalgasandrelatedproducts;thelevelofglobalanddomesticoilandnaturalgasinventories;thesupplyofanddemandforhydraulicfracturingandotheroilfieldservicesandequipmentintheUnitedStates;

177、thecostofexploringfor,developing,producinganddeliveringoilandnaturalgas;availablepipeline,storageandothertransportationcapacity;leadtimesassociatedwithacquiringequipmentandproductsandavailabilityofqualifiedpersonnel;thediscoveryratesofnewoilandnaturalgasreserves;11TableofContentsfederal,stateandloca

178、lregulationofhydraulicfracturingandotheroilfieldserviceactivities,aswellasE&Pactivities,includingpublicpressureongovernmentalbodiesandregulatoryagenciestoregulateourindustry;theavailabilityofwaterresources,suitableproppantandchemicalsinsufficientquantitiesforuseinhydraulicfracturingfluids;geopolitic

179、aldevelopmentsandpoliticalinstabilityinoilandnaturalgasproducingcountries;actionsofOPEC,itsmembersandotherstate-controlledoilcompaniesrelatingtooilpriceandproductioncontrols;advancesinexploration,developmentandproductiontechnologiesorintechnologiesaffectingenergyconsumption;thepriceandavailabilityof

180、alternativefuelsandenergysources;weatherconditionsandnaturaldisasters;uncertaintyincapitalandcommoditiesmarketsandtheabilityofoilandnaturalgasproducerstoraiseequitycapitalanddebtfinancing;andU.S.federal,stateandlocalandnon-U.S.governmentalregulationsandtaxes.Volatilityorweaknessinoilandnaturalgaspri

181、ces(ortheperceptionthatoilandnaturalgaspriceswilldecreaseorremaindepressed)generallyleadstodecreasedspendingbyourcustomers,whichinturnnegativelyimpactsdrilling,completionandproductionactivity.Inparticular,thedemandforneworexistingdrilling,completionandproductionworkisdrivenbyavailableinvestmentcapit

182、alforsuchwork.Whenthesecapitalinvestmentsdecline,ourcustomersdemandforourservicesdeclines.Becausethesetypesofservicescanbeeasily“started”and“stopped,”andoilandnaturalgasproducersgenerallytendtoberiskaversewhencommoditypricesareloworvolatile,wetypicallyexperienceamorerapiddeclineindemandforourservice

183、scomparedwithdemandforothertypesofenergyservices.Anynegativeimpactonthespendingpatternsofourcustomersmaycauselowerpricingandutilizationforourservices,whichcouldhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsandcashflows.Oil and natural gas prices are volatile and have

184、declined significantly in past periods,which has adversely affected,and may again adversely affect,ourfinancial condition,results of operations and cash flows.Thedemandforourservicesdependsonthelevelofspendingbyoilandnaturalgascompaniesfordrilling,completionandproductionactivities,whichareaffectedby

185、short-termandlong-termtrendsinoilandnaturalgasprices,includingcurrentandanticipatedoilandnaturalgasprices.Oilandnaturalgasprices,aswellasthelevelofdrilling,completionandproductionactivities,historicallyhavebeenextremelyvolatileandareexpectedtocontinuetobehighlyvolatile.Whenoilpriceshavedeclinedsigni

186、ficantlyinpastperiods,includingduringthesecondhalfof2018and2019,wehavecorrespondinglyexperiencedadeclineinpressurepumpingactivitylevelsacrossourcustomerbaseduringtheseperiods.Thevolatileoilandnaturalgaspricesadverselyaffected,andcouldcontinuetoadverselyaffect,ourfinancialcondition,resultsofoperation

187、sandcashflows.Our customers may not be able to maintain or increase their reserve levels going forward.Inadditiontotheimpactoffutureoilandnaturalgaspricesonourfinancialperformanceovertime,ourabilitytogrowfuturerevenuesandincreaseprofitabilitywilldependlargelyuponourcustomersabilitytofind,developorac

188、quireadditionalshaleoilandnaturalgasreservesthatareeconomicallyrecoverabletoreplacethereservestheyproduce.Hydraulicfracturedwellsaregenerallymoreshort-livedthanconventionalwells.OurcustomersownorhaveaccesstoafiniteamountofshaleoilandnaturalgasreservesintheUnitedStatesthatwillbedepletedovertime.Thepr

189、oductionratefromshaleoilandnaturalgaspropertiesgenerallydeclinesasreservesaredepleted,whilerelatedper-unitproductioncostsgenerallyincreaseasaresultofdecreasingreservoirpressuresandotherfactors.Ifourcustomersareunabletoreplacetheshaleoilreservestheyownorhaveaccesstoattheratetheyproducesuchreserves,th

190、eirprovedreservesandproductionwilldeclineovertime.Reductionsinproductionlevelsbyourcustomersovertimemayreduce12TableofContentsthefuturedemandforourservicesandadverselyaffectourbusiness,financialcondition,resultsofoperationsandcashflows.Our business has been and may continue to be adversely affected

191、by a deterioration in general economic conditions or a weakening of the broader energyindustry.OurresultsofoperationshavebeenadverselyaffectedbytheslowdownintheE&Pindustry.AcontinuedorprolongedslowdownintheE&Pindustrycouldcontinuetoadverselyaffectourresultsofoperations.Additionally,aprolongedeconomi

192、cslowdownorrecessionintheUnitedStatesoradverseeventsrelatingtotheenergyindustryorregional,nationalandglobaleconomicconditionsandfactorscouldnegativelyimpactouroperationsandthereforeadverselyaffectourresults.Therisksassociatedwithourbusinessaremoreacuteduringperiodsofeconomicslowdownorrecessionbecaus

193、esuchperiodsmaybeaccompaniedbydecreasedexplorationanddevelopmentspendingbyourcustomers,decreaseddemandforoilandnaturalgasanddecreasedpricesforoilandnaturalgas.Competition in our industry has intensified during the current industry downturn and may intensify during future industry downturns,and we ha

194、ve not andmay not be able to provide services that meet the specific needs of our customers at competitive prices.Themarketsinwhichweoperatearegenerallyhighlycompetitiveandhaverelativelyfewbarrierstoentry.Theprincipalcompetitivefactorsinourmarketsareprice,servicequality,safety,andinsomecases,breadth

195、ofproducts.Wecompetewithlargenationalandmulti-nationalcompaniesthathavelongeroperatinghistories,greaterfinancial,technicalandotherresourcesandgreaternamerecognitionthanwedo.Severalofourcompetitorsprovideabroaderarrayofservicesandhaveastrongerpresenceinmoregeographicmarkets.Inaddition,wecompetewithse

196、veralsmallercompaniescapableofcompetingeffectivelyonaregionalorlocalbasis.Ourcompetitorsmaybeabletorespondmorequicklytoneworemergingtechnologiesandservicesandchangesincustomerrequirements.Somecontractsareawardedonabidbasis,whichfurtherincreasescompetitionbasedonprice.Pricingisoftentheprimaryfactorin

197、determiningwhichqualifiedcontractorisawardedajob.Thecompetitiveenvironmentmaybefurtherintensifiedbymergersandacquisitionsamongoilandnaturalgascompaniesorothereventsthathavetheeffectofreducingthenumberofavailablecustomers.Asaresultofincreasedcompetitionduringthesecondhalfof2018and2019,wehadtolowerthe

198、pricesforourservices,whichadverselyaffectedourresultsofoperations.Ifcompetitionremainsthesameorincreasesasaresultofacontinuedindustrydownturnorfutureindustrydownturns,wemayberequiredtolowerourprices,whichwouldadverselyaffectourresultsofoperations.Inthefuture,wemaylosemarketshareorbeunabletomaintaino

199、rincreasepricesforourpresentservicesortoacquireadditionalbusinessopportunities,whichcouldhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsandcashflows.Pressureonpricingforourservicesresultingfromtheincreasedcompetitioninthesecondhalfof2018and2019impactedourabilitytomaint

200、ainutilizationandpricingforourservicesorimplementpriceincreases,whichmayalsobeimpactedinfuturedownturns.Duringanyfutureperiodsofdecliningpricingforourservices,wemaynotbeabletoreduceourcostsaccordingly,whichcouldfurtheradverselyaffectourresultsofoperations.Also,wemaynotbeabletosuccessfullyincreasepri

201、ceswithoutadverselyaffectingourutilizationlevels.Theinabilitytomaintainourutilizationandpricinglevels,ortoincreaseourpricesascostsincrease,couldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Inaddition,someE&Pcompanieshavebegunperforminghydraulicfracturingontheirwel

202、lsusingtheirownequipmentandpersonnel.Anyincreaseinthedevelopmentandutilizationofin-housefracturingcapabilitiesbyourcustomerscoulddecreasethedemandforourservicesandhaveamaterialadverseimpactonourbusiness.Strategic determinations,including the allocation of capital and other resources to strategic opp

203、ortunities,are challenging,and a failure to appropriatelyallocate capital and resources among our strategic opportunities may adversely affect our business,financial condition,results of operations or cash flows.Ourbusinessiscyclicalanddependsonthewillingnessofourcustomerstomakeoperatingandcapitalex

204、penditurestoexplorefor,developandproduceshaleoilandnaturalgasintheUnitedStates.Indevelopingourbusinessplan,weconsiderallocatingcapitalandotherresourcestovariousaspectsofourbusinessincluding13TableofContentsmaintenance,upgradesandrefurbishmentofourequipment,corporateitemsandotheralternatives.Wealsoco

205、nsiderourlikelysourcesofcapital,includingcashgeneratedfromoperationsandborrowingsunderourCreditAgreemententeredintoFebruary22,2018(the“CreditFacility”).Notwithstandingthedeterminationsmadeinthedevelopmentofourbusinessplan,newbusinessopportunitiesperiodicallycometoourattention,includingpossibleacquis

206、itionsanddispositions.Ifwefailtoidentifyoptimalbusinessstrategiesorfailtooptimizeourcapitalinvestmentandcapitalraisingopportunitiesandtheuseofourotherresourcesinfurtheranceofourbusinessstrategies,ourfinancialconditionandfuturegrowthmaybeadverselyaffected.Moreover,economicorothercircumstancesmaychang

207、efromthosecontemplatedbyourbusinessplanandourfailuretorecognizeorrespondtothosechangesmaylimitourabilitytoachieveourobjectives.A negative shift in investor sentiment of the oil and gas industry could have adverse effects on our operations and on our ability to raise debt and equitycapital.Certainseg

208、mentsoftheinvestorcommunityhavedevelopednegativesentimenttowardsinvestinginourindustry.Recentequityreturnsinthesectorversusotherindustrysectorshaveledtoloweroilandgasandrelatedservicesrepresentationincertainkeyequitymarketindices.Inaddition,someinvestors,includinginvestmentadvisorsandcertainsovereig

209、nwealthfunds,pensionfunds,universityendowmentsandfamilyfoundations,havestatedpoliciestodisinvestintheoilandgassectorbasedontheirsocialandenvironmentalconsiderations.Certainotherstakeholdershavealsopressuredcommercialandinvestmentbankstostopfinancingoilandgasproductionandrelatedinfrastructureprojects

210、,whichadverselyaffectsourcustomers.Suchdevelopments,includingenvironmentalactivismandinitiativesaimedatlimitingclimatechangeandreducingairpollution,couldresultindownwardpressureonthestockpricesofoilfieldservicecompanies,includingours.Thismayalsopotentiallyresultinareductionofavailablecapitalfundingf

211、orpotentialdevelopmentprojects,impactingourfuturefinancialresults.Additionally,negativepublicperceptionregardingourindustrymayleadtoincreasedregulatoryscrutiny,whichmay,inturn,leadtonewstateandfederalsafetyandenvironmentallaws,regulations,guidelinesandenforcementinterpretations.Additionally,environm

212、entalgroups,landowners,localgroupsandotheradvocatesmayopposeourcustomersoperationsthroughorganizedprotests,attemptstoblockorsabotageourcustomersoperations,interveneinregulatoryoradministrativeproceedingsinvolvingourcustomersassets,orfilelawsuitsorotheractionsdesignedtoprevent,disruptordelaythedevelo

213、pmentoroperationofourcustomersassets.Theseactionsmaycauseoperationaldelaysorrestrictions,increasedoperatingcosts,additionalregulatoryburdensandincreasedriskoflitigationforourcustomers,whichcouldreduceourcustomersproductionlevelsovertimeand,asaresult,mayreducedemandforourservices.Moreover,governmenta

214、lauthoritiesexerciseconsiderablediscretioninthetimingandscopeofpermitissuanceandthepublicmayengageinthepermittingprocess,includingthroughinterventioninthecourts.Negativepublicperceptioncouldcausethepermitsthatourcustomersrequiretoconducttheiroperationstobewithheld,delayedorburdenedbyrequirementsthat

215、restrictourcustomersabilitytoprofitablyconducttheirbusinesses,whichwouldalsoreducedemandforourservices.Recently,activistsconcernedaboutthepotentialeffectsofclimatechangehavedirectedtheirattentiontowardssourcesoffundingforfossil-fuelenergycompanies,whichhasresultedincertainfinancialinstitutions,funds

216、andothersourcesofcapitalrestrictingoreliminatingtheirinvestmentinenergy-relatedactivities.Ultimately,thiscouldmakeitmoredifficulttosecurefundingforouroperations.We are dependent on a few customers operating in a single industry.The loss of one or more significant customers could adversely affect our

217、 financialcondition and results of operations.OurcustomersareengagedintheE&PbusinessintheUnitedStates.Historically,wehavebeendependentuponafewcustomersforasignificantportionofourrevenues.Ourfourlargestcustomersgeneratedapproximately45%,40%and32%ofourtotalrevenuein2019,2018and2017,respectively.Foradi

218、scussionofourcustomersthatmakeup10%ormoreofourrevenues,see“BusinessCustomers”inItem1ofthisannualreport.Ourbusiness,financialconditionandresultsofoperationscouldbemateriallyadverselyaffectedifoneormoreofoursignificantcustomersceasestoengageusforourservicesonfavorabletermsoratallorfailstopayordelaysin

219、payingussignificantamountsofouroutstandingreceivables.Althoughwedohavecontractsformultipleprojectswithcertainofourcustomers,mostofourservicesareprovidedonaproject-by-projectbasis.14TableofContentsAdditionally,theE&Pindustryischaracterizedbyfrequentconsolidationactivity.Changesinownershipofourcustome

220、rsmayresultinthelossof,orreductionin,businessfromthosecustomers,whichcouldmateriallyandadverselyaffectourfinancialcondition.We extend credit to our customers,which presents a risk of nonpayment of our accounts receivable.Weextendcredittoallourcustomers.Duringindustrydownturnsinpastperiods,manyofourc

221、ustomersexperiencedfinancialandoperationalchallenges,andsomeofourcustomersfiledforbankruptcyprotectionordelayedpaymentforourservices.GiventhecyclicalnatureoftheE&Pindustry,ourcustomersmaycontinuetoexperiencesimilarchallengesinthefuture.Asaresult,wemayhavedifficultycollectingoutstandingaccountsreceiv

222、ablefrom,orexperiencelongercollectioncycleswith,someofourcustomers,whichcouldhaveanadverseeffectonourfinancialconditionandcashflows.Decreased demand for proppant has adversely affected,and could continue to adversely affect,our commitments under supply agreements.Wehavepurchasecommitmentswithcertain

223、vendorstosupplytheproppantusedinouroperations.Someoftheseagreementshaveminimumpurchaseobligations.Duringindustrydownturnsinpastperiods,ourminimumcontractualcommitmentshaveexceededandinthefuturemaycontinuetoexceedtheamountofproppantneededinouroperations.Asaresult,wemadeormayberequiredtocontinuetomake

224、minimumpaymentsforproppantthatwewereunabletouse.Furthermore,someofourcustomershaveboughtandinthefuturemaybuysandminesorproppantdirectlyfromvendors,reducingourneedforproppant.Ifmarketconditionsdonotimprove,orourcustomersbuytheirownsandminesorproppantdirectlyfromvendors,wemayberequiredtomakeminimumpay

225、mentsinfutureperiods,whichmayadverselyaffectourresultsofoperations,liquidityandcashflows.We may be unable to employ a sufficient number of key employees,technical personnel and other skilled or qualified workers.Thedeliveryofourservicesandproductsrequirespersonnelwithspecializedskillsandexperiencewh

226、ocanperformphysicallydemandingwork.Asaresultofthevolatilityintheenergyserviceindustryandthedemandingnatureofthework,workersmaychoosetopursueemploymentwithourcompetitorsorinfieldsthatofferamoredesirableworkenvironment.Ourabilitytobeproductiveandprofitablewilldependuponourabilitytoemployandretainskill

227、edworkers.Inaddition,ourabilitytofurtherexpandouroperationsaccordingtogeographicdemandforourservicesdependsinpartonourabilitytorelocateorincreasethesizeofourskilledlaborforce.Thedemandforskilledworkersinourareasofoperationscanbehigh,thesupplymaybelimitedandwemaybeunabletorelocateouremployeesfromarea

228、soflowerutilizationtoareasofhigherdemand.Asignificantincreaseinthewagespaidbycompetingemployerscouldresultinareductionofourskilledlaborforce,increasesinthewageratesthatwemustpay,orboth.Furthermore,asignificantdecreaseinthewagespaidbyusorourcompetitorsasaresultofreducedindustrydemandcouldresultinared

229、uctionoftheavailableskilledlaborforce,andthereisnoassurancethattheavailabilityofskilledlaborwillimprovefollowingasubsequentincreaseindemandforourservicesoranincreaseinwagerates.Ifanyoftheseeventsweretooccur,ourcapacityandprofitabilitycouldbediminishedandourgrowthpotentialcouldbeimpaired.Wedependheav

230、ilyontheeffortsofexecutiveofficers,managersandotherkeyemployeestomanageouroperations.Theunexpectedlossorunavailabilityofkeymembersofmanagementortechnicalpersonnelmayhaveamaterialadverseeffectonourbusiness,financialcondition,prospectsorresultsofoperations.Our operations are subject to inherent risks,

231、including operational hazards.These risks may not be fully covered under our insurance policies.Ouroperationsaresubjecttohazardsinherentintheoilandnaturalgasindustry,suchasaccidents,blowouts,explosions,craters,firesandoilspills.Thesehazardsmayleadtopropertydamage,personalinjury,deathorthedischargeof

232、hazardousmaterialsintotheenvironment.Theoccurrenceofasignificanteventoradverseclaiminexcessoftheinsurancecoveragethatwemaintainorthatisnotcoveredbyinsurancecouldhaveamaterialadverseeffectonourfinancialconditionandresultsofoperations.15TableofContentsAsiscustomaryinourindustry,ourservicecontractsgene

233、rallyprovidethatwewillindemnifyandholdharmlessourcustomersfromanyclaimsarisingfrompersonalinjuryordeathofouremployees,damagetoorlossofourequipment,andpollutionemanatingfromourequipmentandservices.Similarly,ourcustomersagreetoindemnifyandholdusharmlessfromanyclaimsarisingfrompersonalinjuryordeathofth

234、eiremployees,damagetoorlossoftheirequipment,andpollutioncausedfromtheirequipmentorthewellreservoir.Ourindemnificationarrangementsmaynotprotectusineverycase.Inaddition,ourindemnificationrightsmaynotfullyprotectusifthecustomerisinsolventorbecomesbankrupt,doesnotmaintainadequateinsuranceorotherwisedoes

235、notpossesssufficientresourcestoindemnifyus.Furthermore,ourindemnificationrightsmaybeheldunenforceableinsomejurisdictions.Ourinabilitytofullyrealizethebenefitsofourcontractualindemnificationprotectionscouldresultinsignificantliabilitiesandcouldadverselyaffectourfinancialcondition,resultsofoperationsa

236、ndcashflows.Wemaintaincustomaryinsurancecoverageagainstthesetypesofhazards.Weareself-insureduptoretentionlimitswithregardto,amongotherthings,workerscompensationandgeneralliability.Wemaintainaccrualsinourconsolidatedbalancesheetsrelatedtoself-insuranceretentionsbyusingthird-partydataandhistoricalclai

237、mshistory.Theoccurrenceofaneventnotfullyinsuredagainst,orthefailureofaninsurertomeetitsinsuranceobligations,couldresultinsubstantiallosses.Inaddition,wemaynotbeabletomaintainadequateinsuranceinthefutureatratesweconsiderreasonable.Insurancemaynotbeavailabletocoveranyoralloftheriskstowhichwearesubject

238、,or,evenifavailable,itmaybeinadequate.We are subject to laws and regulations regarding issues of health,safety,and protection of the environment,under which we may become liable forpenalties,damages,or costs of remediation.Ouroperationsaresubjecttostringentlawsandregulationsrelatingtoprotectionofthe

239、environment,naturalresources,cleanair,drinkingwater,wetlands,endangeredspeciesandworkerhealthandsafety,aswellaschemicaluseandstorage,wastemanagement,andtransportationofhazardousandnon-hazardousmaterials.Theselawsandregulationssubjectustorisksofenvironmentalliability,includingleakagefromanoperatorsca

240、singduringouroperationsoraccidentalspillsorreleasesontoorintosurfaceorsubsurfacesoils,surfacewater,groundwaterorambientair.Someenvironmentallawsandregulationsmayimposestrictliability,jointandseveralliabilityorboth.Strictliabilitymeansthatwecouldbeexposedtoliabilityasaresultofourconductthatwaslawfula

241、tthetimeitoccurred,ortheconductoforconditionscausedbythirdpartieswithoutregardtowhetherwecausedorcontributedtotheconditions.Additionally,environmentalconcerns,includingclimatechange,airanddrinkingwatercontaminationandseismicactivitycouldleadtotheenactmentofregulationsthatpotentiallycouldhaveamateria

242、ladverseimpactonourbusiness.Sanctionsfornoncompliancewithenvironmentallawsandregulationscouldresultinfinesandpenalties(administrative,civilorcriminal),revocationsofpermits,expendituresforinvestigationorremediation,andissuanceofcorrectiveactionorders,andactionsarisingundertheselawsandregulationsorthe

243、commonlawcouldresultinliabilityforpropertydamage,exposuretowasteandotherhazardousmaterials,nuisanceorpersonalinjuries.Suchclaimsorsanctionscouldcauseustoincursubstantialcostsorlossesandcouldhaveamaterialadverseeffectonourbusiness,financialcondition,andresultsofoperations.Changes in laws and regulati

244、ons could prohibit,restrict or limit our operations,increase our operating costs,adversely affect our results or result in thedisclosure of proprietary information resulting in competitive harm.Variouslegislativeandregulatoryinitiativeshavebeenundertakenorarebeingdiscussedthatcouldresultinadditional

245、requirementsorrestrictionsbeingimposedonouroperations,banhydraulicfracturingorendnewfossilfuelleasesand/orhydraulicfracturingonpubliclands.Ifanyoftheseinitiativesareimplementedourbusiness,financialconditionandresultsofoperationswouldbemateriallyadverselyaffected.Legislationand/orregulationsarebeingc

246、onsideredatthefederal,stateandlocallevelsthatcouldimposechemicaldisclosurerequirements(suchasrestrictionsontheuseofcertaintypesofchemicalsorprohibitionsonhydraulicfracturingoperationsincertainareas)andpriorapprovalrequirements.Iftheybecomeeffective,theseregulationswouldestablishadditionallevelsofreg

247、ulationthatcouldleadtooperationaldelaysandincreasedoperatingcosts.Disclosureofourproprietarychemicalinformationtothirdpartiesortothepublic,evenifinadvertent,coulddiminishthevalueofourtradesecretsandcouldresultincompetitiveharmtous,whichcouldhaveanadverseimpactonourfinancialconditionandresultsofopera

248、tions.16TableofContentsAdditionally,somejurisdictionsareorhaveconsideredzoningandotherordinancesthatcouldimposeadefactobanondrillingand/orhydraulicfracturingoperations,andarecloselyexaminingpermitanddisposaloptionsforprocessedwater,whichifimposedcouldhaveamaterialadverseimpactonouroperatingcosts.Mor

249、eover,anymoratoriumorincreasedregulationofourrawmaterialsvendors,suchasourproppantsuppliers,couldincreasethecostofthosematerialsandadverselyaffecttheresultsofouroperations.WearesubjecttotherequirementsoftheOccupationalSafetyandHealthAdministrations(“OSHA”)RespirableCrystallineSilicaStandard,whichreq

250、uiresemployerstolimitworkerexposurestorespirablecrystallinesilicaandtotakeotherstepstoprotectworkers,suchasmedicalsurveillance,providingemployeetraining,andimplementingawrittenexposurecontrolplan.TheserequirementsbecameapplicabletohydraulicfracturingoperationsintheoilandgasindustryonJune23,2018.Ther

251、ulealsorequireshydraulicfracturingoperationsintheoilandgasindustrytoimplementengineeringcontrolstolimitexposurestotherespirablesilicabyJune23,2021.TheRespirableCrystallineSilicaStandardhasandwillcontinuetoimposeincreasedoperatingcostsonourandourcustomersbusiness.Employeeexposuretosilicapresentsasour

252、ceofpotentialliabilitytoourandourcustomersbusiness,whichifrealizedcouldincreaseourcostsorotherwiseadverselyaffectourbusinessoroperations.Wearealsosubjecttovarioustransportationregulationsthatincludecertainpermitrequirementsofhighwayandvehicleandhazardousmaterialsafetyauthorities.Theseregulationsgove

253、rnsuchmattersastheauthorizationtoengageinmotorcarrieroperations,safety,equipmenttesting,driverrequirementsandspecificationsandinsurancerequirements.Astheseregulationsdevelopandanynewregulationsareproposed,wehaveexperiencedandmaycontinuetoexperienceanincreaseinrelatedcosts.Wereceiveaportionofthepropp

254、antusedinouroperationsbyrail.Anydelayorfailureinrailservicesduetochangesintransportationregulations,workstoppagesorlaborstrikes,couldadverselyaffecttheavailabilityofproppant.Wecannotpredictwhether,orinwhatform,anylegislativeorregulatorychangesormunicipalordinancesapplicabletoourlogisticsoperationswi

255、llbeenactedandtowhatextentanysuchlegislationorregulationscouldincreaseourcostsorotherwiseadverselyaffectourbusinessoroperations.Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions ordelays.Our

256、businessisdependentonourabilitytoconducthydraulicfracturingandhorizontaldrillingactivities.Hydraulicfracturingisusedtostimulateproductionofhydrocarbons,particularlynaturalgas,fromtightformations,includingshales.Theprocess,whichinvolvestheinjectionofwater,sandandchemicals,orproppants,underpressureint

257、oformationstofracturethesurroundingrockandstimulateproduction,istypicallyregulatedbystateoilandnaturalgascommissions.However,federalagencieshaveassertedregulatoryauthorityovercertainaspectsoftheprocess.Forexample,onMay9,2014,theEPAissuedanAdvancedNoticeofProposedRulemakingseekingcommentonthedevelopm

258、entofregulationsundertheToxicSubstancesControlActtorequirecompaniestodiscloseinformationregardingthechemicalsusedinhydraulicfracturing.TheEPAhasnotproceededfurtherwiththisrulemakingbutcoulddosointhefuture.OnJune28,2016,theEPApublishedafinalruleprohibitingthedischargeofwastewaterfromonshoreunconventi

259、onaloilandnaturalgasextractionfacilitiestopubliclyownedwastewatertreatmentplants.TheEPAalsoconductedastudyofprivatewastewatertreatmentfacilities(alsoknownascentralizedwastetreatment(“CWT”)facilities)acceptingoilandnaturalgasextractionwastewaterandinMay2018publisheddataandinformationrelatedtotheexten

260、ttowhichCWTfacilitiesacceptsuchwastewater,availabletreatmenttechnologies(andtheirassociatedcosts),dischargecharacteristics,financialcharacteristicsofCWTfacilitiesandtheenvironmentalimpactsofdischargesfromCWTfacilities.Furthermore,legislationtoamendtheSDWA,torepealtheexemptionforhydraulicfracturing(e

261、xceptwhendieselfuelsareused)fromthedefinitionof“undergroundinjection”andrequirefederalpermittingandregulatorycontrolofhydraulicfracturing,aswellaslegislativeproposalstorequiredisclosureofthechemicalconstituentsofthefluidsusedinthefracturingprocess,wereproposedinrecentsessionsofCongress.Additionally,

262、BLMhasestablishedregulationsimposingdrillingandconstructionrequirementsforoperationsonfederalorIndianlandsincludingmanagementrequirementsforsurfaceoperationsandpublicdisclosuresofchemicalsusedinthehydraulicfracturingfluids.However,onDecember29,2017,BLMpublishedarescissionoftheseregulations.Futureimp

263、ositionoftheseorotherregulationscouldcauseusorourcustomerstoincursubstantialcompliancecostsandanyfailuretocomplycouldhaveamaterialadverseeffectonourfinancialconditionorresultsofoperations.17TableofContentsOnMay12,2016,theEPAamendedtheNewSourcePerformanceStandards(“NSPS”)underthefederalCleanAirActtoi

264、mposenewstandardsformethaneandvolatileorganiccompounds,emissionsforcertainnew,modified,andreconstructedequipment,processes,andactivitiesacrosstheoilandnaturalgassector.Onthesameday,theEPAfinalizedaplantoimplementitsminornewsourcereviewprograminIndiancountryforoilandnaturalgasproduction.TheEPApropose

265、dchangestothe2016NSPSruleonSeptember11,2018,whichiffinalizedwouldstreamlineimplementationoftherule.TheEPAisexpectedtopublishafinalrevisedrulein2020.OnMay2,2019,theEPAsignedamendmentstothe2016federalimplementationplanfortheminornewsourcereviewprograminIndiancountrythatstreamlinedauthorizationfornewan

266、dmodifiedsourcesintheoilandnaturalgassector.Finally,inadditiontotheSeptember2018action,onAugust28,2019,theEPAproposedfurtheramendmentstotheNSPSfortheOilandGasIndustrythat,ifimplemented,wouldremoveregulatoryduplicationandrescindcertainmethanerequirementsinthe2016NSPSrule.InNovember2016,BLMpromulgated

267、regulationsaimedatcurbingairpollution,includinggreenhousegases,foroilandnaturalgasproducedonfederalandIndianlands.FollowingaseriesoflegalchallengestotheattemptstodelayimplementationofportionsoftheNovember2016rulethrough2017and2018,BLMfinalizedrevisionstoitsNovember2016ruleonSeptember28,2018.Theserev

268、isionsrescindedanumberofthe2016wastepreventionrequirements.CaliforniaandNewMexico,alongwithacoalitionofenvironmentalgroups,filedsuitschallengingthe2018finalrule,andsuchlitigationisongoing.Atthispoint,wecannotpredictthefinalregulatoryrequirementsorthecosttocomplywithsuchrequirementswithanycertainty.T

269、herearecertaingovernmentalreviewseitherunderwayorbeingproposedthatfocusontheenvironmentalaspectsofhydraulicfracturingpractices.Theseongoingorproposedstudies,dependingontheirdegreeofpursuitandwhetheranymeaningfulresultsareobtained,couldspurinitiativestofurtherregulatehydraulicfracturingundertheSDWAor

270、otherregulatoryauthorities.TheEPAcontinuestoevaluatethepotentialimpactsofhydraulicfracturingondrinkingwaterresourcesandtheinducedseismicactivityfromdisposalwellsandhasrecommendedstrategiesformanagingandminimizingthepotentialforsignificantinjection-inducedseismicevents.Forexample,inDecember2016,theEP

271、Areleaseditsfinalreport,entitled“HydraulicFracturingforOilandGas:ImpactsfromtheHydraulicFracturingWaterCycleonDrinkingWaterResourcesintheUnitedStates,”onthepotentialimpactsofhydraulicfracturingondrinkingwaterresources.ThereportstatesthattheEPAfoundscientificevidencethathydraulicfracturingactivitiesc

272、animpactdrinkingwaterresourcesundersomecircumstances,notingthatthefollowinghydraulicfracturingwatercycleactivitiesandlocal-orregional-scalefactorsaremorelikelythanotherstoresultinmorefrequentormoresevereimpacts:waterwithdrawalsforfracturingintimesorareasoflowwateravailability;surfacespillsduringthem

273、anagementoffracturingfluids,chemicalsorproducedwater;injectionoffracturingfluidsintowellswithinadequatemechanicalintegrity;injectionoffracturingfluidsdirectlyintogroundwaterresources;dischargeofinadequatelytreatedfracturingwastewatertosurfacewaters;anddisposalorstorageoffracturingwastewaterinunlined

274、pits.Othergovernmentalagencies,includingtheU.S.DepartmentofEnergy,theU.S.GeologicalSurveyandtheU.S.GovernmentAccountabilityOffice,haveevaluatedorareevaluatingvariousotheraspectsofhydraulicfracturing.Theseongoingorproposedstudiescouldspurinitiativestofurtherregulatehydraulicfracturing,andcouldultimat

275、elymakeitmoredifficultorcostlytoperformfracturingandincreasethecostsofcomplianceanddoingbusinessforourcustomers.Furthermore,theEPAplanstocontinueanenforcementinitiativetoensureenergyextractionactivitiescomplywithfederallaws.InadditiontobansonhydraulicfracturingactivitiesinMaryland,NewYorkandVermont,

276、severalstates,includingTexasandOhio,aswellasregionalauthoritiesliketheDelawareRiverBasinCommission,haveadoptedorareconsideringadoptingregulationsthatcouldrestrictorprohibithydraulicfracturingincertaincircumstances,imposemorestringentoperatingstandardsand/orrequirethedisclosureofthecompositionofhydra

277、ulicfracturingfluids.Anyincreasedregulationofhydraulicfracturing,intheseorotherstates,couldreducethedemandforourservicesandmateriallyandadverselyaffectourrevenuesandresultsofoperations.Therehasbeenincreasingpubliccontroversyregardinghydraulicfracturingwithregardtotheuseoffracturingfluids,inducedseis

278、micactivity,impactsondrinkingwatersupplies,useofwaterandthepotentialforimpactstosurfacewater,groundwaterandtheenvironmentgenerally.Anumberoflawsuitsandenforcementactionshavebeeninitiatedacrossthecountryimplicatinghydraulicfracturingpractices.Ifnewlawsorregulationsareadoptedthatsignificantlyrestricth

279、ydraulicfracturing,suchlawscouldmakeitmoredifficultorcostlyforustoperformfracturingtostimulate18TableofContentsproductionfromtightformationsaswellasmakeiteasierforthirdpartiesopposingthehydraulicfracturingprocesstoinitiatelegalproceedingsbasedonallegationsthatspecificchemicalsusedinthefracturingproc

280、esscouldadverselyaffectgroundwater.Inaddition,ifhydraulicfracturingisfurtherregulatedatthefederal,stateorlocallevel,ourcustomersfracturingactivitiescouldbecomesubjecttoadditionalpermittingandfinancialassurancerequirements,morestringentconstructionspecifications,increasedmonitoring,reportingandrecord

281、keepingobligations,pluggingandabandonmentrequirementsandalsotoattendantpermittingdelaysandpotentialincreasesincosts.Suchlegislativeorregulatorychangescouldcauseusorourcustomerstoincursubstantialcompliancecosts,andcomplianceortheconsequencesofanyfailuretocomplybyuscouldhaveamaterialadverseeffectonour

282、financialconditionandresultsofoperations.Atthistime,itisnotpossibletoestimatetheimpactonourbusinessofnewlyenactedorpotentialfederal,stateorlocallawsgoverninghydraulicfracturing.Existing or future laws and regulations related to greenhouse gases and climate change could have a negative impact on our

283、business and may result inadditional compliance obligations with respect to the release,capture,and use of carbon dioxide that could have a material adverse effect on our business,results ofoperations,and financial condition.Changesinenvironmentalrequirementsrelatedtogreenhousegasesandclimatechangem

284、aynegativelyimpactdemandforourservices.Forexample,oilandnaturalgasexplorationandproductionmaydeclineasaresultofenvironmentalrequirements,includinglandusepoliciesresponsivetoenvironmentalconcerns.Local,state,andfederalagencieshavebeenevaluatingclimate-relatedlegislationandotherregulatoryinitiativesth

285、atwouldrestrictemissionsofgreenhousegasesinareasinwhichweconductbusiness.Becauseourbusinessdependsonthelevelofactivityintheoilandnaturalgasindustry,existingorfuturelawsandregulationsrelatedtogreenhousegasesandclimatechange,includingincentivestoconserveenergyorusealternativeenergysources,couldhaveane

286、gativeimpactonourbusinessifsuchlawsorregulationsreducedemandforoilandnaturalgas.Likewise,suchrestrictionsmayresultinadditionalcomplianceobligationswithrespecttotherelease,capture,sequestration,anduseofcarbondioxideorothergasesthatcouldhaveamaterialadverseeffectonourbusiness,resultsofoperations,andfi

287、nancialcondition.Delays in obtaining,or inability to obtain or renew,permits or authorizations by our customers for their operations or by us for our operations could impairour business.Inmoststates,ourcustomersarerequiredtoobtainpermitsorauthorizationsfromoneormoregovernmentalagenciesorotherthirdpa

288、rtiestoperformdrillingandcompletionactivities,includinghydraulicfracturing.Suchpermitsorapprovalsaretypicallyrequiredbystateagencies,butcanalsoberequiredbyfederalandlocalgovernmentalagenciesorotherthirdparties.Therequirementsforsuchpermitsorauthorizationsvarydependingonthelocationwheresuchdrillingan

289、dcompletionactivitieswillbeconducted.Aswithmostpermittingandauthorizationprocesses,thereisadegreeofuncertaintyastowhetherapermitwillbegranted,thetimeitwilltakeforapermitorapprovaltobeissuedandtheconditionswhichmaybeimposedinconnectionwiththegrantingofthepermit.Insomejurisdictions,suchasNewYorkStatea

290、ndwithinthejurisdictionoftheDelawareRiverBasinCommission,certainregulatoryauthoritieshavedelayedorsuspendedtheissuanceofpermitsorauthorizationswhilethepotentialenvironmentalimpactsassociatedwithissuingsuchpermitscanbestudiedandappropriatemitigationmeasuresevaluated.InTexas,ruralwaterdistrictshaveimp

291、osedrestrictionsonwateruseandmayrequirepermitsforwaterusedindrillingandcompletionactivities.Additionally,inUtah,weworkonIndianlandsthatrequirepermitsfordrillingandcompletionactivities.Permitting,authorizationorrenewaldelays,theinabilitytoobtainnewpermitsortherevocationofcurrentpermitscouldcausealoss

292、ofrevenueandpotentiallyhaveamateriallyadverseeffectonourbusiness,financialcondition,prospectsorresultsofoperations.Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of theareas where we operate.

293、Oilandnaturalgasoperationsinouroperatingareascanbeadverselyaffectedbyseasonalorpermanentrestrictionsondrillingactivitiesdesignedtoprotectvariouswildlife,whichmaylimitourabilitytooperateinprotectedareas.Permanentrestrictionsimposedtoprotectendangeredspeciescouldprohibitdrillingincertainareasorrequire

294、theimplementationofexpensivemitigationmeasures.Additionally,thedesignationofpreviouslyunprotectedspeciesas19TableofContentsthreatenedorendangeredinareaswhereweoperatecouldresultinincreasedcostsarisingfromspeciesprotectionmeasures.Restrictionsonoilandnaturalgasoperationstoprotectwildlifecouldreducede

295、mandforourservices.Conservation measures and technological advances could reduce demand for oil and natural gas and our services.Fuelconservationmeasures,alternativefuelrequirements,increasingconsumerdemandforalternativestooilandnaturalgas,technologicaladvancesinfueleconomyandenergygenerationdevices

296、couldreducedemandforoilandnaturalgas,resultinginreduceddemandforoilfieldservices.Theimpactofthechangingdemandforoilandnaturalgasservicesandproductsmayhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsandcashflows.We have experienced a reduction in demand and there may be

297、a continued reduction in demand for our future services due to competition from alternativeenergy sources.Oilandnaturalgascompeteswithothersourcesofenergyforconsumerdemand.TherearesignificantgovernmentalincentivesandconsumerpressurestoincreasetheuseofalternativeenergysourcesintheUnitedStatesandabroa

298、d.Anumberofautomotive,industrialandpowergenerationmanufacturersaredevelopingmorefuelefficientengines,hybridenginesandalternativecleanpowersystemsusingfuelcells,cleanburningfuelsandbatteries.In2019,weexperiencedareductionindemandofourservicesasaresultofalternativeenergysources,includingnaturalgasande

299、lectricfleets.Greateruseofthesealternativesasaresultofgovernmentalincentivesorregulations,technologicaladvances,consumerdemand,improvedpricingorotherwiseovertimewillreducethedemandforourproductsandservicesandadverselyaffectourbusiness,financialcondition,resultsofoperationsandcashflowsgoingforward.Li

300、mitations on construction of new natural gas pipelines or increases in federal or state regulation of natural gas pipelines could decrease demand for ourservices.Therehasbeenincreasingpubliccontroversyregardingconstructionofnewnaturalgaspipelinesandthestringencyofcurrentregulationofnaturalgaspipelin

301、es.Delaysinconstructionofnewpipelinesorincreasedstringencyofregulationofexistingnaturalgaspipelinesateitherthestateorfederallevelcouldreducethedemandforourservicesandmateriallyandadverselyaffectourrevenuesandresultsofoperations.Our existing fleets require significant amounts of capital for maintenan

302、ce,upgrades and refurbishment and any new fleets we build or acquire may requiresignificant capital expenditures.Ourfleetsrequiresignificantcapitalinvestmentinmaintenance,upgradesandrefurbishmenttomaintaintheireffectiveness.Whilewemanufacturemanyofthecomponentsnecessarytomaintain,upgradeandrefurbish

303、ourfleets,laborcostshaveincreasedinthepastandmayincreaseinthefuturewithincreasesindemand,whichwillrequireustoincuradditionalcoststoupgradeanyofourexistingfleetsorbuildanynewfleets.Additionally,competitionoradvancesintechnologywithinourindustrymayrequireustoupdateorreplaceexistingfleetsorbuildoracqui

304、renewfleets.Suchdemandsonourcapitalorreductionsindemandforourexistingfleetsandtheincreaseincostoflabornecessaryforsuchmaintenanceandimprovement,ineachcase,couldhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsandcashflows.Our operations require substantial capital and we

305、 may be unable to obtain needed capital or financing on satisfactory terms or at all,which could limit ourability to grow.Theoilfieldservicesindustryiscapitalintensive.Inconductingourbusinessandoperations,wehavemade,andexpecttocontinuetomake,substantialcapitalexpenditures.Ourtotalcapitalexpenditures

306、were$54.4million,$100.5millionand$64.0million,respectively,in2019,2018and2017.Since2015,wehavefinancedcapitalexpendituresprimarilywithfundingfromcashonhand.Wemaybeunabletogeneratesufficientcashfromoperationsandothercapitalresourcestomaintainplannedorfuturelevelsofcapitalexpenditureswhich,amongothert

307、hings,maypreventusfromproperlymaintainingourexistingequipmentoracquiringnewequipment.Furthermore,anydisruptionsor20TableofContentscontinuingvolatilityintheglobalfinancialmarketsmayleadtoanincreaseininterestratesoracontractionincreditavailabilityimpactingourabilitytofinanceouroperations.Thiscircumsta

308、ncecouldputusatacompetitivedisadvantageorinterferewithourgrowthplans.Furthermore,ouractualcapitalexpendituresforfutureyearscouldexceedourcapitalexpenditurebudgets.Intheeventourcapitalexpenditurerequirementsatanytimearegreaterthantheamountwehaveavailable,wecouldberequiredtoseekadditionalsourcesofcapi

309、tal,whichmayincludedebtfinancing,jointventurepartnerships,salesofassets,offeringsofdebtorequitysecuritiesorothermeans.Wemaynotbeabletoobtainanysuchalternativesourceofcapital.Wemayberequiredtocurtailoreliminatecontemplatedactivities.Ifwecanobtainalternativesourcesofcapital,thetermsofsuchalternativema

310、ynotbefavorabletous.Inparticular,thetermsofanydebtfinancingmayincludecovenantsthatsignificantlyrestrictouroperations.Ourinabilitytogrowasplannedmayreduceourchancesofmaintainingandimprovingprofitability.A third party may claim we infringed upon its intellectual property rights,and we may be subjected

311、 to costly litigation.Ouroperations,includingequipment,manufacturingandfluidandchemicaloperationsmayunintentionallyinfringeuponthepatentsortradesecretsofacompetitororothercompanythatusesproprietarycomponentsorprocessesinitsoperations,andthatcompanymayhavelegalrecourseagainstouruseofitsprotectedinfor

312、mation.Ifthisweretohappen,theseclaimscouldresultinlegalandothercostsassociatedwithlitigation.Iffoundtohaveinfringeduponprotectedinformation,wemayhavetopaydamagesormakeroyaltypaymentsinordertocontinueusingthatinformation,whichcouldsubstantiallyincreasethecostspreviouslyassociatedwithcertainproductsor

313、services,orwemayhavetodiscontinueuseoftheinformationorproductaltogether.Anyofthesecouldmateriallyandadverselyaffectourbusiness,financialconditionorresultsofoperations.New technology may cause us to become less competitive.Theoilfieldservicesindustryissubjecttotheintroductionofnewdrillingandcompletio

314、ntechniquesandservicesusingnewtechnologies,someofwhichmaybesubjecttopatentorotherintellectualpropertyprotections.Althoughwebelieveourequipmentandprocessescurrentlygiveusacompetitiveadvantage,ascompetitorsandothersuseordevelopneworcomparabletechnologiesinthefuture,wemaylosemarketshareorbeplacedatacom

315、petitivedisadvantage.Furthermore,wemayfacecompetitivepressuretoimplementoracquirecertainnewtechnologiesatasubstantialcost.Someofourcompetitorshavegreaterfinancial,technicalandpersonnelresourcesthatmayallowthemtoenjoytechnologicaladvantagesandimplementnewtechnologiesbeforewecan.Wecannotbecertainthatw

316、ewillbeabletoimplementallnewtechnologiesorproductsonatimelybasisoratanacceptablecost.Thus,limitsonourabilitytoeffectivelyuseandimplementnewandemergingtechnologiesmayhaveamaterialadverseeffectonourbusiness,financialconditionorresultsofoperations.Loss or corruption of our information or a cyberattack

317、on our computer systems could adversely affect our business.Weareheavilydependentonourinformationsystemsandcomputer-basedprograms,includingourwelloperationsinformationandaccountingdata.Ifanyofsuchprogramsorsystemsweretofailorcreateerroneousinformationinourhardwareorsoftwarenetworkinfrastructure,whet

318、herduetocyberattackorotherwise,possibleconsequencesincludeourlossofcommunicationlinksandinabilitytoautomaticallyprocesscommercialtransactionsorengageinsimilarautomatedorcomputerizedbusinessactivities.Anysuchconsequencecouldhaveamaterialadverseeffectonourbusiness.Theoilandnaturalgasindustryhasbecomei

319、ncreasinglydependentondigitaltechnologiestoconductcertainactivities.Atthesametime,cyberattackshaveincreased.TheU.S.governmenthasissuedpublicwarningsthatindicatethatenergyassetsmightbespecifictargetsofcybersecuritythreats.Ourtechnologies,systemsandnetworksmaybecomethetargetofcyberattacksorinformation

320、securitybreaches.Thesecouldresultintheunauthorizedaccess,misuse,lossordestructionofourproprietaryandotherinformationorotherdisruptionofourbusinessoperations.Anyaccessorsurveillancecouldremainundetectedforanextendedperiod.Oursystemsforprotectingagainstcybersecurityrisksmaynotbesufficient.Ascyberincid

321、entscontinuetoevolve,wemayberequiredtoexpendadditionalresourcestocontinuetomodifyorenhanceourprotectivemeasuresortoinvestigateandremediateanyvulnerabilitytocyber21TableofContentsincidents.Additionally,ourinsurancecoverageforcyberattacksmaynotbesufficienttocoverallthelosseswemayexperienceasaresultofs

322、uchcyberattacks.Anyadditionalcostscouldmateriallyadverselyaffectourresultsofoperations.One or more of our directors may not reside in the United States,which may prevent investors from obtaining or enforcing judgments against them.BecauseoneormoreofourdirectorsmaynotresideintheUnitedStates,itmaynotb

323、epossibleforinvestorstoeffectserviceofprocesswithintheUnitedStatesonournon-U.S.residentdirectors,enforcejudgmentsobtainedinU.S.courtsbasedonthecivilliabilityprovisionsoftheU.S.federalsecuritieslawsagainstournon-U.S.residentdirectors,enforceinforeigncourtsU.S.courtjudgmentsbasedoncivilliabilityprovis

324、ionsoftheU.S.federalsecuritieslawsagainstournon-U.S.residentdirectors,orbringanoriginalactioninforeigncourtstoenforceliabilitiesbasedontheU.S.federalsecuritieslawsagainstournon-U.S.residentdirectors.Adverse weather conditions could impact demand for our services or impact our costs.Ourbusinesscouldb

325、eadverselyaffectedbyadverseweatherconditions.Forexample,unusuallywarmwinterscouldadverselyaffectthedemandforourservicesbydecreasingthedemandfornaturalgasorunusuallycoldwinterscouldadverselyaffectourcapabilitytoperformourservices,forexample,duetodelaysinthedeliveryofequipment,personnelandproductsthat

326、weneedinordertoprovideourservicesandweather-relateddamagetofacilitiesandequipment,resultingindelaysinoperations.Ouroperationsinaridregionscanbeaffectedbydroughtsandlimitedaccesstowaterusedinourhydraulicfracturingoperations.Theseconstraintscouldadverselyaffectthecostsandresultsofoperations.A terroris

327、t attack,armed conflict or health threat could harm our business.Terroristactivities,anti-terroristeffortsandotherarmedconflictsinvolvingtheUnitedStates,orglobalornationalhealthconcerns,includingtheoutbreakofpandemicorcontagiousdisease,suchastheongoingcoronavirusoutbreakemanatingfromChinaatthebeginn

328、ingof2020,couldadverselyaffecttheU.S.andglobaleconomiesandcouldpreventusfrommeetingfinancialandotherobligations.Wecouldexperiencelossofbusiness,delaysordefaultsinpaymentsfrompayorsordisruptionsoffuelsuppliesandmarketsifwells,operationssitesorotherrelatedfacilitiesaredirecttargetsorindirectcasualties

329、ofanactofterrororwarorifsuchfacilities,theirworkforceorsupplychainsareaffectedbyaglobalornationalhealthconcern.Suchactivitiesoreventscouldreducetheoveralldemandforoilandnaturalgas,which,inturn,couldalsoreducethedemandforourproductsandservices.Terroristactivities,thethreatofpotentialterroristactiviti

330、esandglobalornationalhealthconcernsandanyresultingeconomicdownturncouldadverselyaffectourresultsofoperations,impairourabilitytoraisecapitalorotherwiseadverselyimpactourabilitytorealizecertainbusinessstrategies.We and certain of our directors,executive officers and stockholders are currently subject

331、to securities class action litigation in connection with our IPO,and other litigation and legal proceedings that are expensive and time consuming,and if resolved adversely,could harm our business,financial condition or resultsor operation.Apurportedsecuritiesclassactionwasfiledagainstusandcertainofo

332、urdirectors,executiveofficersandstockholdersallegingviolationoffederalsecuritieslaws.Whilewebelievethislawsuitiswithoutmeritandintendtovigorouslydefendagainstit,therecanbenoassurancesthatafavorablefinaloutcomewillbeobtained.Inconnectionwiththislitigation,wecouldincursubstantialcostsandsuchcostsandan

333、yrelatedsettlementsorjudgmentsmaynotbecoveredbyinsurance,whichcouldadverselyaffectourbusiness,financialconditionandresultsofoperations.Additionally,severalofourco-defendantshaverequestedandwehaveagreedtoindemnifytheminconnectionwiththislawsuit.Thesecostsarenotcoveredbyinsuranceandcouldhaveanadverseeffectonourbusiness,financialconditionandresultsofoperations.Wecouldalsosufferanadverseimpactonourrep