FTS International Inc (FTSI) 2020年年度報告「NYSE」.pdf

1、Table of ContentsErmUNITED 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 31,2020OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES

2、 EXCHANGE ACT OF 1934For the transition period from to Commission File Number 001-38382FTS INTERNATIONAL,INC.(Exact Name of Registrant as Specified in Its Charter)Delaware30-0780081(State or other Jurisdiction ofIncorporation or Organization)(I.R.S.EmployerIdentification No.)777 Main Street,Suite 29

3、00,Fort Worth,Texas76102(Address of Principal Executive Offices)(Zip Code)(817)862-2000(Telephone Number,Including Area Code)Securities registered pursuant to Section 12(b)of the Securities Exchange Act of 1934:Title of each classTrading SymbolName of each exchange on which registeredClass A Common

4、Stock,par value$0.01 pershareFTSINYSE AmericanSeries A Preferred Purchase RightsNYSE AmericanSecurities registered pursuant to Section 12(g)of the Securities Exchange Act of 1934:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act

5、.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the

6、 preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be

7、submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accel

8、erated filer,a smaller reporting company,or anemerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”inRule 12b-2 of the Exchange Act.Large Accelerated FilerAccelerated FilerNon-Accelerated FilerSmaller repo

9、rting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check

10、 mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control overfinancial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its aud

11、itreport.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No As of June 30,2020,the last trading day of the registrants most recently completed second fiscal quarter,the aggregate market value of the common stock heldby non-affiliates

12、 of the registrant was approximately$10.8 million,based on the closing price of the registrants common stock on that date.As of February 26,2021,the registrant had 13,677,664 shares of Class A common stock,par value$0.01 per share,and 312,306 shares of Class B common stock,par value$0.01per share,ou

13、tstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the proxy statement for the registrants 2021 annual meeting of stockholders are incorporated by reference in Part III of this Form 10-K.Table of ContentsiFTS INTERNATIONAL,INC.Form 10-KYear Ended December 31,2020INDEXPageCautionary Statement R

14、egarding Forward-Looking StatementsiiPART I1Item 1.Business1Item 1A.Risk Factors12Item 1B.Unresolved Staff Comments30Item 2.Properties30Item 3.Legal Proceedings31Item 4.Mine Safety Disclosures31PART II32Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of E

15、quitySecurities32Item 6.Selected Financial Data33Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations35Item 7A.Quantitative and Qualitative Disclosures About Market Risk45Item 8.Financial Statements and Supplementary Data45Item 9.Changes in and Disagreements Wi

16、th Accountants on Accounting and Financial Disclosure45Item 9A.Controls and Procedures45Item 9B.Other Information46PART III46Item 10.Directors,Executive Officers and Corporate Governance46Item 11.Executive Compensation47Item 12.Security Ownership of Certain Beneficial Owners and Management and Relat

17、ed Stockholder Matters47Item 13.Certain Relationships and Related Transactions,and Director Independence47Item 14.Principal Accountant Fees and Services47PART IV47Item 15.Exhibits and Financial Statement Schedules47Item 16.Form 10-K Summary49Index to Consolidated Financial Statements51Table of Conte

18、ntsiiCautionary Statement Regarding Forward-Looking StatementsThis annual report contains“forward-looking statements”within the meaning of Section 21E of the Securities ExchangeAct of 1934,as amended(the“Exchange Act”)and the Private Securities Litigation Reform Act of 1995.All statements otherthan

19、statements of historical or current fact included in this annual report are forward-looking statements.Forward-lookingstatements refer to our current expectations and projections relating to our financial condition,results of operations,plans,objectives,strategies,future performance and business.For

20、ward-looking statements may be identified by the fact that they do notrelate strictly to historical or current facts.These statements may include words such as“anticipate,”“assume,”“believe,”“canhave,”“contemplate,”“continue,”“could,”“design,”“due,”“estimate,”“expect,”“goal,”“intend,”“likely,”“may,”

21、“might,”“objective,”“plan,”“predict,”“project,”“potential,”“seek,”“should,”“target,”“will,”“would”and other words and terms ofsimilar meaning in connection with any discussion of the timing or nature of future operational performance or other events.Forexample,all statements we make relating to our

22、estimated and projected costs,expenditures and growth rates,our plans andobjectives for future operations,growth or initiatives or strategies are forward-looking statements.All forward-lookingstatements are subject to risks and uncertainties that may cause actual results to differ materially from th

23、ose that we expect and,therefore,investors should not unduly rely on such statements.The risks that could cause these forward-looking statements to beinaccurate include but are not limited to:the effects of our bankruptcy proceedings on our business,liquidity,results of operations and prospects and

24、the interestsof various constituents;a further decline or future decline in domestic spending by the onshore oil and natural gas industry;continued volatility or future volatility in oil and natural gas prices;customers inability to maintain or increase their reserves going forward;deterioration in

25、general economic conditions or a continued weakening or future weakening of the broader energyindustry;the competitive nature of the industry in which we conduct our business;the effect of a loss of,or financial distress of,one or more significant customers;nonpayment by customers to whom we extend

26、credit;demand for services in our industry;actions of the Organization of the Petroleum Exporting Countries(“OPEC”),its members and other state-controlled oilcompanies relating to oil price and production controls;our inability to employ a sufficient number of key employees,technical personnel and o

27、ther skilled or qualified workers;the occurrence of a significant event or adverse claim in excess of the insurance coverage we maintain;fines or penalties(administrative,civil or criminal),revocations of permits,or issuance of corrective action orders fornoncompliance with health,safety and environ

28、mental laws and regulations;changes in laws and regulations which impose additional requirements or restrictions on business operations;federal,state and local regulation of hydraulic fracturing and other oilfield service activities,as well as exploration andproduction(“E&P”)activities,including pub

29、lic pressure on governmental bodies and regulatory agencies to regulate ourindustry;existing or future laws and regulations related to greenhouse gases and climate change;our ability to obtain permits,approvals and authorizations from governmental and third parties,and the effects of orchanges to U.

30、S.and foreign government regulation;restrictions on drilling activities intended to protect certain species of wildlife;conservation measures and technological advances which reduce demand for oil and natural gas;Table of Contentsiiithe level of global and domestic oil and natural gas inventories;th

31、e price and availability of alternative fuels and energy sources;the discovery rates of new oil and natural gas reserves;limitations on construction of new natural gas pipelines or increases in federal or state regulation of natural gaspipelines;the ability to successfully manage the economic and op

32、erational challenges associated with a disease outbreak,includingepidemics,pandemics,or similar widespread public health concerns,including the novel coronavirus(“COVID-19”)pandemic;the ultimate geographic spread,duration and severity of the COVID-19 outbreak,and the effectiveness of actions taken,o

33、r actions that may be taken,by governmental authorities to contain such outbreak or treat its impact;the availability of water resources,suitable proppant and chemicals in sufficient quantities for use in hydraulicfracturing fluids;the cost of exploring for,developing,producing and delivering oil an

34、d natural gas;third-party claims for possible infringement of intellectual property rights;introduction of new drilling or completion techniques,or services using new technologies subject to patent or otherintellectual property protections;lead times associated with acquiring equipment and products

35、and availability of qualified personnel;loss or corruption of our information or a cyberattack on our computer systems;adverse weather conditions causing stoppage or delay in operations;a terrorist attack,armed conflict or health threat disrupting operations;additional economic,political and regulat

36、ory risks related to international operations;geopolitical developments and political instability in oil and natural gas producing countries;our ability to utilize our net operating losses;adverse effects on our financial strategy and liquidity;changes in U.S.tax laws or the ability to utilize our n

37、et operating loss carryforwards and certain tax amortizationdeductions;anduncertainty in capital and commodities markets and the ability of oil and natural gas producers to raise equity capitaland debt financing.We make many of our forward-looking statements based on our operating budgets and foreca

38、sts,which are based upondetailed assumptions.While we believe that our assumptions are reasonable,we caution that it is very difficult to predict theimpact of known factors,and it is impossible for us to anticipate all factors that could affect our actual results.See“Risk Factors”included in Item 1A

39、 of this annual report for a more complete discussion of the risks anduncertainties mentioned above and for a discussion of other risks and uncertainties we face that could cause our forward-lookingstatements to be inaccurate.All forward-looking statements attributable to us are expressly qualified

40、in their entirety by thesecautionary statements as well as others made in this annual report and hereafter in our other filings with the Securities andExchange Commission(“SEC”)and our public communications.All forward-looking statements made by us should be evaluatedin the context of these risks an

41、d uncertainties.We caution that the risks and uncertainties identified by us may not be all of the factors that are important to investors.Furthermore,the forward-looking statements included in this annual report are made only as of the dateTable of Contentsivhereof.We undertake no obligation to pub

42、licly update or revise any forward-looking statement as a result of new information,future events or otherwise,except as required by law.In addition,statements that“we believe”and similar statements reflect our beliefs and opinions on the relevant subject.These statements are based upon information

43、available to us as of the date of this annual report,and while we believe suchinformation forms a reasonable basis for such statements,such information may be limited or incomplete,and our statementsshould not be read to indicate that we have conducted an exhaustive inquiry into,or review of,all pot

44、entially available relevantinformation.These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.Table of Contents1PART IITEM 1.BUSINESSGeneralCertain prior year financial statements are not comparable to our current year financial statements due

45、to the adoption offresh start accounting.References to“Successor”or“Successor Company”relate to the financial position and results ofoperations of the reorganized Company subsequent to November 19,2020.References to“Predecessor”or“PredecessorCompany”relate to the financial position and results of op

46、erations of the Company prior to,and including,November 19,2020.FTS International,Inc.(the“Company”,“we”,“our”)is one of the largest providers of hydraulic fracturing services inNorth America.We have 1.4 million total hydraulic horsepower across 28 fleets,with 13 fleets active as of January 1,2021.O

47、urcustomers include leading oil and natural gas E&P companies in North America.We operate in some of the most active oil andgas basins in the United States.We provide the equipment,personnel,expertise,and certain materials needed to stimulate our customers wells safely,effectively,and efficiently.In

48、 addition,we manufacture many of the components used by our fleets,including fabrication ofpumps and certain consumables used in pumps,such as fluid-ends.We also perform substantially all the maintenance,repair,andrefurbishment of our fleets,including the rebuilding of engines and transmissions.We b

49、elieve the cost to manufacturecomponents and refurbish fleets is significantly less than the cost of utilizing third-party suppliers.In addition,we believe our in-house manufacturing capabilities allow us to reactivate equipment quicker and at a lower cost than utilizing third-party suppliers.We hav

50、e a uniform fleet of high-horsepower hydraulic fracturing equipment,designed for completions work in areasrequiring high levels of pressure,flow rate and sand intensity.We designed and assembled all of our existing fleetsTable of Contents2using internal resources.The standardized,“plug and play”natu

51、re of our fleet provides us with several advantages,includingreduced repair and maintenance costs,reduced inventory costs,reduced training,the ability to redeploy equipment amongoperating basins and reduced complexity in our operations,which improves our safety and operational performance.Recent Dev

52、elopmentsBankruptcy UpdateOn September 22,2020,FTS International,Inc.,FTS International Services,LLC,and FTS InternationalManufacturing,LLC filed petitions for voluntary relief(the“Chapter 11 Cases”)under Chapter 11 of Title 11 of the UnitedStates Code(the“Bankruptcy Code”)in the United States Bankr

53、uptcy Court for the Southern District of Texas,Houston Division(the“Bankruptcy Court”).On September 22,2020,FTSI International,Inc.,FTS International Services,LLC,and FTSInternational Manufacturing,LLC filed the Joint Prepackaged Chapter 11 Plan of Reorganization of FTS International,Inc.andits Debt

54、or Affiliates(as amended,modified or supplemented,the“Plan”)and the related disclosure statement(the“DisclosureStatement”).On November 4,2020,the Bankruptcy Court entered an order(the“Confirmation Order”)confirming the Plan,asmodified by the Confirmation Order,and approving the Disclosure Statement.

55、On November 19,2020(the“Effective Date”),the Plan became effective in accordance with its terms and FTSInternational,Inc.,FTS International Services,LLC and FTS International Manufacturing,LLC emerged from Chapter 11.Pursuant to the Plan,on the Effective Date,all agreements,instruments,and other doc

56、uments evidencing,relating to or otherwisein connection with any of our common stock or other equity interests outstanding prior to the Effective Date(collectively,the“legacy equity interests”)were cancelled and such legacy equity interests have no further force or effect after the Effective Date.Ho

57、lders of our legacy equity interests received(i)a number of shares of Class A common stock equal to their proportionatedistribution of approximately 9.4%of our common stock under the Plan(subject to dilution by the warrants issued pursuant to thePlan and the Amended and Restated Equity and Incentive

58、 Compensation Plan(the“MIP”),(ii)their proportionate distribution of1,555,521 Tranche 1 Warrants to acquire Class A common stock and(iii)their proportionate distribution of 3,888,849 Tranche 2Warrants to acquire Class A common stock.In addition,pursuant to the Plan,on the Effective Date,all outstand

59、ing obligations under the 6.25%senior secured notesdue May 1,2022(the“Notes”)and were cancelled and the indenture governing such obligations was cancelled,and the creditagreement,dated as of April 16,2014,by and among FTS International,Inc.,the lenders party thereto,and Wilmington SavingsFund Societ

60、y,FSB,as successor administrative agent(the“Term Loan Agreement”),was cancelled,in each case except to thelimited extent expressly set forth in the Plan.On the Effective Date,all liens and security interests granted to secure suchobligations were automatically terminated and are of no further force

61、and effect.The holders of Notes and holders of the claimsunder the Term Loan Agreement received their proportionate distribution of approximately 90.1%of our common stock(subjectto dilution by the warrants issued pursuant to the Plan and the MIP)plus their pro rata share of$30.7 million cash distrib

62、ution.The holders of claims in connection with the termination of the supply agreement between the Predecessor and Covia HoldingCorporation received,in exchange for their claims,a$12.5 million cash distribution and 0.5%of our common stock(subject todilution by the warrants issued pursuant to the Pla

63、n and the MIP).Shares of Class A common stock were also issued to a holder of certain termination claims under the Plan.Our ServicesHydraulic FracturingOur primary business is providing hydraulic fracturing services,also known as pressure pumping,to E&P companies.These services enhance hydrocarbon f

64、low in oil and natural gas wells,thus increasing the amount of hydrocarbons recovered.Table of Contents3Oil and natural gas wells are typically divided into one or more“stages,”which are isolated zones that focus the high-pressure fluid and proppant from the hydraulic fracturing fleet into distinct

65、portions of the well and surrounding reservoir.Thenumber of stages that will divide a well is determined by the customers proposed job design.Our customers typically measureour operational performance in terms of the number of stages fractured or the number of hours pumped in a day,which is anindica

66、tor of how well we minimize non-productive time on our jobs.As a result,we believe the average number of stagescompleted per active fleet in a given period of time is an important operating metric.Hydraulic fracturing represents the largest cost of completing an oil or natural gas well.The process c

67、onsists ofpumping a fracturing fluid into a well casing or tubing at sufficient pressure to fracture,or prop open,the formation.Thefracturing fluid consists of water and sand,also known as proppant,mixed with a small amount of chemicals.Once the pressureopens the fractures,the proppants act as a wed

68、ge that keep the fractures open,allowing the trapped hydrocarbons to flow morefreely.As a result of a successful fracturing process,hydrocarbon recovery rates are substantially enhanced,increasing the returnon investment for our customer.The amount of hydrocarbons produced from a typical oil or natu

69、ral gas well generally declinesquickly.As a result,E&P companies must continually complete new wells to maintain production levels.Each of our fleets typically consists of approximately 20 hydraulic fracturing units along with ancillary equipment.Ourhydraulic fracturing units consist primarily of a

70、high-pressure pump,a diesel or combined diesel and natural gas engine,atransmission and various other supporting equipment mounted on a trailer.The high pressure pump consists of two keyassemblies:the fluid-end and the power-end.Although the power-end of our pumps generally lasts several years,the f

71、luid-end,which is the part of the pump where fluid is converted from low pressure to high pressure,is a shorter-lasting consumable,typically lasting less than one year.We refer to the group of hydraulic fracturing units,auxiliary equipment and vehiclesnecessary to perform a typical fracturing job as

72、 a“fleet”and the personnel assigned to each fleet as a“crew.”Our fleets operateon a 24-hour-per-day basis,in which we typically staff three crews per fleet,including one crew with the day off.Each hydraulic fracturing fleet includes a mobile,on-site control center that is used to control the equipme

73、nt andmonitor job data including pressures,rates and volumes.Each control center is equipped with high bandwidth communicationthat provides continuous upload and download of data.The data is delivered on a real-time basis to on-site job personnel,thecustomer and our National Operations Center.We pre

74、fer to enter into service agreements with our customers for one or more“dedicated”fleets,rather than providingour fleets for“spot work.”Under a typical dedicated fleet agreement,we deploy one or more of our hydraulic fracturing fleetsexclusively to the customer to follow the customers completion sch

75、edule until the agreement expires or is terminated inaccordance with its terms.By contrast,under a typical spot work agreement,the fleet moves between customers as work becomesavailable.We believe that our strategy of pursuing dedicated fleet agreements leads to higher fleet utilization,as measured

76、by thenumber of days each fleet is working per month,which we believe improves our revenue and profitability.Our StrategyOur primary business objective is to deliver best in class pressure pumping services to our customers while providing asafe working environment for our employees and maintaining a

77、 competitive cost structure.We intend to achieve this objectivethrough the following strategies:Deepen and expand relationships with customers that value our completions efficiencyWe prefer to dedicate one or more of our fleets exclusively to the customer for a period of time,allowing for those flee

78、tsto be integrated into the customers drilling and completion schedule.As a result,we are able to achieve higher levels ofutilization,as measured by the number of days each fleet is working per month and the number of hours each fleet is workingeach day,which increases our profitability.Accordingly,

79、we seek to partner with customers that have a large number of wellsneeding completion and that value efficiency in the performance of our service.Specifically,we target customers whosecompletions activity typically involves minimal time between stages,a highTable of Contents4number of stages per wel

80、l,multiple wells per pad and a short distance from one well pad site to the next.This strategy aligns withthe strategy of many of our customers,who are trying to achieve a manufacturing-style model of drilling and completing wells ata competitive cost.We plan to leverage this strategy to expand our

81、relationships with our existing and prospective customers.Capitalize on our uniform fleet and in-house manufacturing to provide superior performance with reduced operatingcostsOur uniform fleet allows us to cost-effectively redeploy fleets to capture the best pricing and activity trends.Theuniform f

82、leet is easier to operate and maintain,resulting in reduced non-productive time as well as lower training costs andinventory stocking requirements.Our in-house manufacturing allows us to maintain and refurbish our fleets,with lower operating expenses and capitalexpenditures compared to utilizing thi

83、rd-party suppliers.We also believe this capability allows us to reactivate equipment quickerand at a lower cost than competitors,which we believe at times is a competitive advantage.Maintain high safety standardsSafety is at the core of our operations and defines who we are and how we operate as a c

84、ompany.Our safety record for 2020 was the best in our history and we believe significantly better than our peer group,based on data provided by the U.S.Bureau of Labor Statistics from 2011 through 2018.Our 2020 Total Recordable Incident Rate(“TRIR”)was 0.20 and Lost Time Incident Rate(“LTIR”)was 0.0

85、0 for a total of 2,035,023 man hours worked.Our outstanding Experience Modification Rate for 2020 was 0.58.We believe that our TRIR is about one-fourth the industry average and our LTIR has averaged several times lower than the industry average for the past decade.We believe continually searching fo

86、r ways to make our operations safer is the right thing to do for our employees,our customers,our suppliers,and our Company.Rapidly adopt new technologies in a capital efficient mannerOur large scale and culture of innovation allow us to take advantage of leading technological solutions.We have been

87、afast adopter of new technologies focused on:increasing fracturing effectiveness for our customers,reducing non-productive timeon our equipment,reducing the operating costs of our equipment,and enhancing the health,safety and environmental(“HSE”)conditions at our well sites.Recent examples of initia

88、tives aimed at reducing our operating costs include:vibration sensors with predictivemaintenance analytics on our equipment;automated greasing systems;remote start capabilities;the ability to automate certainportions of our operations using technology;and adoption of hardened alloys for our consumab

89、les.Recent examples of initiativesaimed at improving our HSE conditions include:dual fuel engines that can run on both natural gas and diesel fuel;electronicpressure relief systems;spill prevention and containment solutions;electronic logging devices;containerized proppant deliverysolutions;and adva

90、nced fire suppression systems.Maintain a focus on cost effectiveness and capital efficiencyAll levels of our organization focus on providing the safest work environment for our employees and on generating thehighest level of cash generation as possible,within the limitations of industry conditions.W

91、e focus on operating our equipment at the highest level of efficiency to maximize billing activity for each of ourfleets,which is often measured in terms of stages completed per active fleet.In turn,we strive to charge a competitive rate to ourcustomers and to be compensated for the high level of ef

92、ficiency that we provide.This ultimately leads to lower costs for ourcustomers.In addition,we embrace innovation to continually find ways to lower the costs of doing business.This is enabled by ourculture and our in-house manufacturing capabilities,which allow us to continuously identify and execute

93、 improvements in thedesign and operation of our equipment.Table of Contents5CustomersThe customers we serve are primarily large,independent E&P companies in North America.For the Successor period ofNovember 20,2020 to December 31,2020 we had 6 customers make up over 10%of our consolidated revenue.Th

94、ese sixcustomers represented 81%of our consolidated revenue;this level of customer concentration is partially due to the short timeperiod included in the Successor period and may not be representative of customer concentration levels over a longer time period,such as a full fiscal year.For the Prede

95、cessor period of January 1,2020 through November 19,2020 we had one customer makeup over 10%of our consolidated revenue.This customer represented 12%of our consolidated revenue.For the year endedDecember 31,2019 we had two customers make up over 10%of our consolidated revenue.These two customers rep

96、resented26%of our consolidated revenue.For the year ended December 31,2018 we had two customers make up over 10%of ourconsolidated revenue.These two customers represented 24%of our consolidated revenue.The loss of any of our largest existingcustomers could have a material adverse effect on our resul

97、ts of operations.While we view revenue as an important metric inassessing customer concentration,we also compare and manage our customer portfolio based on the number of fleets we placewith each customer.SuppliersWe purchase parts used in the refurbishment,repair and manufacturing of major fleet com

98、ponents such as fluid-ends,power-ends,engines,transmissions,radiators and trailers.We do not expect significant interruptions in the supply of any of thesematerials.While we believe that we will be able to make alternative arrangements in the event of any interruption in the supply ofthese items,the

99、re can be no assurance that there will be no associated price or supply issues.When requested by the customer,we also purchase the proppants and chemicals we use in our operations and the dieselfuel for our equipment from a variety of suppliers throughout the United States.To date,we have generally

100、been able to obtainthe supplies necessary to support our operations on a timely basis at competitive prices.In the past,we have experienced somedelays in obtaining these materials during periods of high demand.CompetitionThe market in which we operate is highly competitive and highly fragmented.Our

101、competition includes multi-nationaloilfield service companies as well as national and regional competitors.Our major multi-national competitors is HalliburtonCompany,which has significantly greater financial resources than we do.Our major domestic competitors are NextTier OilfieldSolutions,Inc.,ProP

102、etro Holding Corp,Liberty Oilfield Services,Inc.,RPC,Inc.,Patterson-UTI Energy,Inc.,and Pro FracServices.Certain of these competitors provide a number of oilfield services and products in addition to hydraulic fracturing.Wealso face competition from smaller regional service providers in some of the

103、geographies in which we operate.Competition in our industry is based on a number of factors,including price,service quality,safety,and in some cases,breadth of products.We believe we consistently deliver exceptional service quality,based in part on the durability of ourequipment.Our durable equipmen

104、t reduces non-productive time due to equipment failure and allows our customers to avoid costsassociated with delays in completing their wells.By being able to meet the most demanding pressure and flow rate requirements,our equipment also enables us to operate efficiently in challenging geological e

105、nvironments in which some of our competitorscannot operate effectively.Cyclical Nature of IndustryWe operate in a highly cyclical industry driven mainly by the level of horizontal drilling activity in the United States,which in turn depends largely on current and anticipated future crude oil and nat

106、ural gas prices and production decline rates.Acritical factor in assessing the outlook for the industry is the supply and demand for both oil and natural gas.Demand for oil andnatural gas is subject to large and rapid fluctuations.These fluctuations are driven by commodity demand and correspondingpr

107、ice increases.When oil and natural gas prices increase,producers could increase their capital expenditures,which generallyresults in greater revenues and profits for oilfield service companies.However,increased capital expenditures also ultimatelyresult in greater production,which historically,has r

108、esulted inTable of Contents6increased supplies and reduced prices that,in turn,tend to reduce demand for oilfield services such as hydraulic fracturingservices.The pricing for our services is also driven by the industry capacity of hydraulic fracturing equipment.Historically,theindustry has built ad

109、ditional equipment to supply the increased demand.When the demand declines,the industry has moreequipment than what is needed by customers.This often leads to a decline in the price for our services until equipment is de-activated and the supply and demand fundamentals are closer to balanced.For the

110、se reasons,our results of operations may fluctuate from quarter to quarter and from year to year,and thesefluctuations may distort period-to-period comparisons of our results of operations.SeasonalitySeasonality has not significantly affected our overall operations.However,toward the end of some yea

111、rs,we experienceslower activity in our pressure pumping operations in connection with the holidays and as customers capital expenditure budgetsare depleted.Similarly,the beginning of some years has a slow start as customers are starting a new capital budget cycle and ouroperations are more prone to

112、experience winter weather.Occasionally,our operations have been negatively impacted by severeweather conditions that cause disruption to our supply chain or our ability to transport materials and equipment to the job site.EmployeesAt December 31,2020,we had approximately 890 total employees,primaril

113、y all were full-time.Our employees are notcovered by collective bargaining agreements,nor are they members of labor unions.We consider our relationship with ouremployees to be good.InsuranceOur operations are subject to hazards inherent in the oil and natural gas industry,including accidents,blowout

114、s,explosions,fires,oil spills and hazardous materials spills.These conditions can cause personal injury or loss of life,damage to ordestruction of property,equipment,the environment and wildlife and interruption or suspension of operations,among otheradverse effects.If a serious accident were to occ

115、ur at a location where our equipment and services are being used,it could resultin us being named as a defendant to a lawsuit asserting significant claims.Despite our high safety standards,we from time to time have suffered accidents in the past and we anticipate that wecould experience accidents in

116、 the future.In addition to the property and personal losses from these accidents,the frequency andseverity of these incidents affect our operating costs and insurability,as well as our relationships with customers,employees andregulatory agencies.Any significant increase in the frequency or severity

117、 of these incidents,or the general level of compensationawards,could adversely affect the cost of,and our ability to obtain,workers compensation and other forms of insurance andcould have other adverse effects on our financial condition and results of operations.We carry a variety of insurance cover

118、ages for our operations,and we are partially self-insured for certain claims,intypes and amounts that we believe to be customary and reasonable for our industry.These coverages and retentions addresscertain risks relating to commercial general liability,workers compensation,business auto,property an

119、d equipment,directorsand officers,environment,pollution and other risks.Although we maintain insurance coverage in types and amounts that webelieve to be customary in our industry,we are not fully insured against all risks,either because insurance is not available orbecause of the high premium or de

120、ductible costs relative to perceived risk.Safety and Health RegulationWe are subject to the requirements of the federal Occupational Safety and Health Act,which is administered andenforced by the Occupational Safety and Health Administration(“OSHA”),and comparable state laws that regulate the health

121、and safety of workers.In addition,the OSHA hazard communication standard requires that information aboutTable of Contents7the identities and hazards of the chemicals used or produced in operations be maintained and provided to employees,state andlocal government authorities and the public.We believe

122、 that our operations are in substantial compliance with the OSHArequirements,including general industry standards,record keeping requirements,labeling requirements,training requirementsand monitoring of occupational exposure to regulated substances.OSHA continues to evaluate worker safety and to pro

123、pose newregulations,such as but not limited to,Respirable Crystalline Silica Standard,which requires hydraulic fracturing operations inthe oil and gas industry to implement engineering controls to limit exposure to respirable silica sand by June 23,2021.Althoughit is not possible to estimate the fin

124、ancial and compliance impact of this rule or any other proposed rule,the imposition of morestringent requirements could have a material adverse effect on our business,financial condition and results of operations.Intellectual Property RightsOur research and development efforts are focused on providi

125、ng specific solutions to the challenges our customers facewhen fracturing and stimulating wells.In addition to the design and manufacture of innovative equipment,we have alsodeveloped proprietary blends of chemicals that we use in connection with our hydraulic fracturing services.We have three U.S.p

126、atents relating to fracturing methods,the technology used in fluid-ends,hydraulic pumps and other equipment.We believe theinformation regarding our customer and supplier relationships are also valuable proprietary assets.We have registered trademarksand pending trademark applications for various nam

127、es under which our entities do or intend to conduct business and offerproducts.Except for the foregoing,we do not own or license any patents,trademarks or other intellectual property that we believeto be material to the success of our business.Governmental RegulationOur operations are subject to str

128、ingent laws and regulations relating to protection of the environment,natural resources,clean air,drinking water,wetlands and endangered species,as well as chemical use and storage,waste management,andtransportation of hazardous and non-hazardous materials.Numerous federal,state and local government

129、al agencies,such as theU.S.Environmental Protection Agency(the“EPA”),issue regulations that often require difficult and costly compliance measuresthat carry substantial administrative,civil and criminal penalties and may result in injunctive obligations for non-compliance.Inaddition,some laws and re

130、gulations relating to protection of the environment may impose strict liability,joint and severalliability or both for environmental contamination.Strict liability means we could be liable for environmental damages andcleanup costs without regard to negligence or fault.Strict adherence with these re

131、gulatory requirements increases our cost ofdoing business and consequently affects our profitability.However,environmental laws and regulations have been subject tofrequent changes over the years,and the imposition of more stringent requirements,including as a result of the recent presidentialand co

132、ngressional elections,could have a material adverse effect on our business,financial condition and results of operations.Hydraulic Fracturing Activities.Environmental aspects of hydraulic fracturing practices,including its potential impacts on drinking water sources,have become the subject of increa

133、sing scrutiny by governmental authorities.This scrutiny,including ongoing or proposed studies of hydraulic fracturing like these could spur initiatives to further regulate the practice under the federal Safe Drinking Water Act(“SDWA”)or other regulatory mechanisms.For example,on November 29,2018,EPA

134、 and the State Review of Oil and Natural Gas Environmental Regulation(“STRONGER”)entered into a Memorandum of Understanding pursuant to which EPA and STRONGER will collaborate on oil and natural gas exploration and development regulatory programs.In addition,public concerns have been raised recently

135、 regarding the disposal of hydraulic fluid in injection wells.Partlyin response to public concerns,the Railroad Commission of Texas(“RRC”),amended its existing oil and gas disposal wellregulations to require seismic activity data in permit applications and provisions to authorize the imposition of c

136、ertain limitationson existing wells if seismic activity increases in the area of an injection well,including a temporary injection ban.Regulations inthe states in which we operate may require our customers to obtain a permit from the applicable regulatory agencies to operatesaltwater disposal wells.

137、These regulatory agencies have the general authority to suspend or modify one or more of these permitsif continued operation of an underground injection well is likely to result in pollution of freshwater,substantial violation ofpermit conditions or applicable rules,leaks to the environment or other

138、 conditions such as earthquakes.Although we are notinvolved in the injection process of wells thatTable of Contents8we provide services on for our customers,any leakage from the subsurface portions of the injection wells could causedegradation of fresh groundwater resources,potentially resulting in

139、cancellation of operations of a well,issuance of fines andpenalties from governmental agencies,incurrence of expenditures for remediation of the affected resource and imposition ofliability by third parties for property damages and personal injuries.Further,several states have adopted or are conside

140、ring legal requirements that could impose more stringent permitting,disclosure and well construction requirements on hydraulic fracturing activities.For example,in May 2013,the RRC issued a“well integrity rule,”which updates the requirements for drilling,putting pipe down and cementing wells.The wel

141、l integrity ruletook effect in January 2014.Other states,including Colorado,Pennsylvania and Ohio,as well as regional authorities such as theDelaware River Basin Commission and local governments,have adopted or are considering adopting regulations that couldrestrict or prohibit hydraulic fracturing

142、in certain circumstances,impose more stringent operating standards and/or require thedisclosure of the composition of hydraulic fracturing fluids,while certain other states have issued bans on the practice.If new ormore stringent state or local legal restrictions relating to the hydraulic fracturing

143、 process are adopted in areas where we operate,we could incur potentially significant added costs to comply with such requirements,experience delays or curtailment in thepursuit of development activities and perhaps even be precluded from drilling wells.See“Risk FactorsFederal and statelegislative a

144、nd regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operatingrestrictions or delays”in Item 1A of this annual reportRemediation of Hazardous Substances.The Comprehensive Environmental Response,Compensation and Liability Act,as amended,referred to

145、 as“CERCLA”or the“Superfund law,”and comparable state laws generally impose liability,withoutregard to fault or legality of the conduct at the time it occurred,on certain classes of persons that are considered to be responsiblefor the release of hazardous substances into the environment.These person

146、s include the current owner or operator of acontaminated facility,a former owner or operator of the facility at the time a release of hazardous substances occurred and thosepersons that disposed or arranged for the disposal of the hazardous substances to an offsite facility,and liability under these

147、 lawscan be imposed on a joint and several basis without regard to fault and can extend to damages to natural resources and for thecosts of certain health studies.In addition,it is not uncommon for neighboring landowners and other third parties to file claimsfor personal injury and property damage a

148、llegedly caused by hazardous substances released into the environment.Water Discharges.The Federal Water Pollution Control Act of 1972,as amended,also known as the“Clean Water Act,”the Safe Drinking Water Act,the Oil Pollution Act and analogous state laws and regulations issued thereunder impose res

149、trictions and strict controls regarding the unauthorized discharge of pollutants,including produced waters and other natural gas and oil wastes,into navigable waters of the United States,as well as state waters.The discharge of pollutants into regulated waters is prohibited,except in accordance with

150、 the terms of a permit issued by the EPA or the state.Under the Clean Water Act,the EPA has adopted regulations concerning discharges of storm water,which require covered facilities to obtain permits,maintain storm water plans and implement practices to minimize risks related to storm water.In June

151、2016,EPA published a final rule prohibiting the discharge of wastewater from onshore unconventional oil and natural gas extraction facilities to publicly owned wastewater treatment plants.These laws and regulations also prohibit certain other activity in wetlands unless authorized by a permit issued

152、 by theU.S.Army Corps of Engineers,which we refer to as the“Corps.”In September 2015,a new rule became effective which wasissued by the EPA and the Corps defining the scope of the jurisdiction of the EPA and the Corps over wetlands and other watersof the United States.After extensive litigation and

153、rulemaking,on January 23,2020,the EPA and Corps replaced this rule withthe Navigable Waters Protection Rule to define“Waters of the United States,”a rule that streamlines the definition of“Water ofthe United States”that are federally regulated under the Clean Water Act to four categories.Litigation

154、challenging the rule isongoing,which may also be subject to revision by the current Presidential administration.The rapidly changing landscape offederal regulation creates uncertainty in our and our customers business.Under the Clean Water Act,we are also subject to SpillPrevention,Control and Count

155、ermeasure plan requirements that require appropriate containment berms and similar structures tohelp prevent the contamination of navigable waters.Noncompliance with these requirements may result in substantialadministrative,civil and criminal penalties,as well as injunctive obligations.Table of Con

156、tents9Underground injection operations are also subject to SDWA as well as analogous state and local laws and regulationsincluding the Underground Injection Control(“UIC”)program,which includes requirements for permitting,testing,monitoring,record keeping and reporting of injection well activities.T

157、he federal Energy Policy Act of 2005 amended the UIC provisions toexclude certain hydraulic fracturing activities from the definition of“underground injection”under certain circumstances.However,the repeal of this exclusion has been advocated by certain advocacy organizations and others in the publi

158、c.Legislationregulating underground injection has been introduced at the state level.For example,at the state level,several states in which weoperate,including Wyoming,Texas,Colorado and Oklahoma,have adopted regulations requiring operators to disclose certaininformation regarding hydraulic fracturi

159、ng fluids.Waste Handling.Wastes from certain of our operations(such as equipment maintenance and past chemicaldevelopment,blending,and distribution operations)are subject to the federal Resource Conservation and Recovery Act of 1976(“RCRA”),and comparable state statutes and regulations promulgated t

160、hereunder,which impose requirements regarding thegeneration,transportation,treatment,storage,disposal and cleanup of hazardous and non-hazardous wastes.With federalapproval,the individual states administer some or all of the provisions of RCRA,sometimes in conjunction with their own,morestringent re

161、quirements.Although certain oil production wastes are exempt from regulation as hazardous wastes under RCRA,such wastes may constitute“solid wastes”that are subject to the less stringent requirements of non-hazardous waste provisions.However,legislation has been proposed from time to time in Congres

162、s to re-categorize certain oil and natural gasexploration,development and production wastes as“hazardous wastes.”Several environmental organizations have also petitionedthe EPA to modify existing regulations to recategorize certain oil and natural gas exploration,development and productionwastes as“

163、hazardous.”Any such changes in the laws and regulations could have a material adverse effect on our capitalexpenditures and operating expenses.From time to time,releases of materials or wastes have occurred at locations we own,owned previously or at which wehave operations.These properties and the m

164、aterials or wastes released thereon may be subject to CERCLA,RCRA,the CleanWater Act,and analogous state laws.Under such laws and related regulations,we have been and may be required to investigate,remove or remediate these materials or wastes and make expenditures associated with personal injury or

165、 property damage.At thistime,with respect to any properties where materials or wastes may have been released,but of which we have not been madeaware,it is not possible to estimate the potential costs that may arise from unknown,latent liability risks.Air Emissions.The federal Clean Air Act,as amende

166、d,and comparable state laws and regulations,regulate emissions ofvarious air pollutants,including through the issuance of permits.In addition,the EPA has developed,and continues to develop,stringent regulations governing emissions of toxic air pollutants from specified sources.Federal and state regu

167、latory agencies canimpose administrative,civil and criminal penalties for non-compliance with air permits or other requirements of the Clean AirAct and associated state laws and regulations.We are required to obtain air permits in connection with some activities underapplicable laws.These permits im

168、pose certain conditions and restrictions on our operations,some of which require significantexpenditures for compliance.Changes in these requirements,or in the permits we operate under,could increase our costs or limitoperations.Additionally,the EPAs Tier IV regulations apply to certain off-road die

169、sel engines used by us to power equipment inthe field.Under these regulations,we are required to retrofit or retire certain engines and we are limited in the number of non-compliant off-road diesel engines we can purchase.Tier IV engines are costlier,and until Tier IV-compliant engines that meetour

170、needs are more widely available,these regulations could limit our ability to acquire a sufficient number of diesel engines toexpand our fleet and to replace existing engines as they are taken out of service.Other Environmental Considerations.E&P activities on federal lands may be subject to the Nati

171、onal EnvironmentalPolicy Act,also known as NEPA.NEPA requires federal agencies,including the Department of Interior,to evaluate majoragency actions that have the potential to significantly impact the environment.In the course of such evaluations,an agency willprepare an environmental assessment that

172、 assesses the potential direct,indirect and cumulative impacts of a proposed project and,if necessary,will prepare a more detailed environmental impact statement that may be made available for public review andcomment.E&P activities,as well as proposed exploration andTable of Contents10development p

173、lans,on federal lands require governmental permits that are subject to the requirements of NEPA.This process hasthe potential to delay the development of oil and natural gas projects.Various state and federal statutes prohibit certain actions that adversely affect endangered or threatened species an

174、d theirhabitat,migratory birds,wetlands,and natural resources.These statutes include the Endangered Species Act,the Migratory BirdTreaty Act,the Bald and Golden Eagle Protection Act,the Clean Water Act and CERCLA.Where takings of or harm to speciesor damages to habitat,jurisdictional waters or natur

175、al resources occur or may occur,government entities or private parties mayact to prevent oil and natural gas exploration activities.Permanent restrictions imposed to protect endangered species couldprohibit drilling in certain areas or require the implementation of expensive mitigation measures.Gove

176、rnment entities mayrequire permits and may also seek damages for harm to species,habitat,or natural resources or resulting from filling ofjurisdictional streams or wetlands or releases of oil,wastes,hazardous substances or other regulated materials.In 2015,the Federal Bureau of Land Management(“BLM”

177、)enacted a new rule imposing a variety of regulatorymandates for hydraulic fracturing on federal land,which was rescinded by the U.S.Department of the Interior in December 2017.In 2016,BLM promulgated regulations aimed at curbing air pollution,including greenhouse gases,for oil and natural gasproduc

178、ed on federal and Indian lands,but a number of waste prevention requirements were rescinded in 2018.On July 15,2020,the U.S.District Court for the Northern District of California vacated the U.S.Department of the Interiors rescission of the 2015rule.The outcome of ongoing litigation relating to the

179、BLM rules,as well as any efforts to reissue them,or impose otherlimitations on oil and gas operations on federal lands,including any such efforts by the presidential administration,cannot bepredicted.In addition,the new Presidential administration has taken steps to restrict oil and gas exploration

180、on federal lands.On January 20,2021,the Department of the Interior placed a 60-day moratorium on new oil and gas leases and drilling permits on federal lands.President Biden issued executive order on January 27,2021,which,among other things,halts indefinitely new oil and natural gas leases on federa

181、l lands and offshore waters pending completion of a review by the Secretary of the Interior of federal oil and gas permitting and leasing practices in light of the administrations concerns regarding the impact of these activities on the environment and climate.These restrictions and similar restrict

182、ions that may be issued in the future may limit our operations and adversely impact our future financial results.Climate Change.Responding to scientific studies that emissions of gases,commonly referred to as“greenhouse gases,”including gases associated with the oil and gas sector such as carbon dio

183、xide,methane,and nitrous oxide among others,may becontributing to global warming and other environmental effects,the EPA has begun to adopt regulations to report and reduceemissions of greenhouse gases.Any such regulations could affect our business,customers or the energy sector generally.Inaddition

184、,the U.S.signed an international accord in December 2015,the so-called Paris Agreement,with the objective of limitinggreenhouse gas emissions from oil and gas exploration and production operation as well as the power sector.However,inNovember 2019,the U.S.submitted a formal notice of its withdrawal

185、to the United Nations.On January 20,2021,PresidentBiden issued a statement formally accepting the Paris Agreement on behalf of the U.S.,which triggers a 30 day process forrejoining the accord.In 2016,the EPA finalized new regulations in 2016 that would set volatile organic compound(“VOC”)and methane

186、 emission standards for new and modified oil and gas production and natural gas processing and transmission facilities.Those standards regulate GHGs through limitations on emissions of methane.However,in September 2020,the EPA published a final rule amending the 2016 regulations by removing sources

187、in the transmission and storage segment from the oil and natural gas source category and rescinding the new source performance standards(including VOC and methane requirements)applicable to these sources,and separately rescinding the methane-specific requirements applicable to sources in the product

188、ion and processing segments of the industry.These final rules have become subject legal challenges and the outcome of these challenges is uncertain.In addition,these standards may be subject to reconsideration pursuant to an executive order issued by President Biden on January 20,2021,which specific

189、ally calls for a proposal to suspend,revise or rescind the September 2020 final rule making technical amendments to the 2016 Standards by September 2021.The executive order also calls on EPA to consider new regulations governing methane and volatile organic compound emissions from existing onshore o

190、il and gas operations by September 2021.Table of Contents11Notwithstanding these federal standards,state regulations with respect to emissions of GHGs could continue to becomemore restrictive regardless of the decreased burdens under federal regulations.For example,in June 2018 the PennsylvaniaDepar

191、tment of Environmental Protection(“PDEP”)adopted heightened permitting conditions for all newly permitted or modifiednatural gas compressor stations,processing plants and transmission stations constructed,modified,or operated in Pennsylvania inan effort to regulate emissions of the GHG methane at su

192、ch sites.Then,in December 2019,the PDEP proposed a plan to regulateemissions of VOCs(including methane)at existing well sites and compressor stations.If these or any other actions to addressGHG emissions become implemented in the future,they could result in increased costs associated with our operat

193、ions,a declinein oil and natural gas exploration and production activities of our customers and affect the demand for natural gas.In addition,the U.S.Congress occasionally attempts to adopt legislation to reduce emissions of greenhouse gases,andmany states have taken legal measures to reduce emissio

194、ns primarily through the planned development of greenhouse gasemission inventories,carbon pricing policies or regional cap and trade programs.Although the U.S.Congress has not yet adoptedsuch legislation,it may do so in the future.Several states continue to pursue related regulations as well.At this

195、 time,it is notpossible to accurately estimate how potential future laws or regulations addressing greenhouse gas emissions would impact ourcustomers business and consequently our own.In addition,claims have been made against certain energy companies alleging that greenhouse gas emissions from oilan

196、d natural gas operations constitute a public nuisance under federal or state common law.Private parties,as well as localgovernments,have also filed lawsuits against certain energy companies seeking compensation for climate change relateddamages,including personal injury or property damages.Future cl

197、imate change litigation could increase our operating costs ornegatively impact demand for our services.NORM.In the course of our operations,some of our equipment may be exposed to naturally occurring radioactivematerials(“NORM”)associated with oil and natural gas deposits and,accordingly may result

198、in the generation of wastes andother materials containing NORM.NORM exhibiting levels of naturally occurring radiation in excess of established statestandards are subject to special handling and disposal requirements,and any storage vessels,piping and work area affected byNORM may be subject to reme

199、diation or restoration requirements.Because certain of the properties presently or previouslyowned,operated or occupied by us may have been used for oil and natural gas production operations,it is possible that we mayincur costs or liabilities associated with NORM.Pollution Risk Management.We seek t

200、o minimize the possibility of a pollution event through equipment and job design,as well as through employee training.We also maintain a pollution risk management program if a pollution event occurs.Thisprogram includes an internal emergency response plan that provides specific procedures for our em

201、ployees to follow in the eventof a chemical or hazardous substance release or spill.In addition,we have contracted with several third-party emergencyresponders in our various operating areas that are available on a 24-hour basis to handle the remediation and clean-up of anychemical or hazardous subs

202、tance release or spill.We carry insurance designed to respond to foreseeable environmentalexposures.This insurance portfolio has been structured in an effort to address incidents that result in bodily injury or propertydamage and any ensuing investigation and clean up needed at our owned and leased

203、facilities as a result of the mobilization andutilization of our fleet,as well as any claims resulting from our operations.We also seek to manage environmental liability risks through provisions in our contracts with our customers thatallocate risks relating to surface activities associated with the

204、 fracturing process,other than water disposal,to us and risks relatingto“downhole”liabilities to our customers.Our customers are responsible for the disposal of the fracturing fluid that flows backout of the well as waste water.The customers remove the water from the well using a controlled flow-bac

205、k process,and we arenot involved in that process or the disposal of the fluid.Our contracts generally require our customers to indemnify us againstpollution and environmental damages originating below the surface of the ground or arising out of water disposal,or otherwisecaused by the customer,other

206、 contractors or other third parties.In turn,we indemnify our customers for pollution andenvironmental damages originating at or above the surface caused solely by us.We seek to maintain consistent risk-allocationand indemnification provisions in our customer agreements to the greatest extent possibl

207、e.Some of our contracts,however,contain less explicit indemnification provisions,which typically provide that each party will indemnify the other againstliabilities to third parties resulting from theTable of Contents12indemnifying partys actions,except to the extent such liability results from the

208、indemnified partys gross negligence,willfulmisconduct or intentional act.Company InformationOur principal executive office is located at 777 Main Street,Suite 2900,Fort Worth,Texas,76102 and our telephonenumber is 817-862-2000.Our website address is .The information on our website is not incorporate

209、d by referenceinto this report.Our annual reports on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,and allamendments to those reports are available free of charge on our website as soon as reasonably practicable after such material iselectronically filed with,or furnished to,t

210、he SEC.In addition,copies of our annual report will be made available,free of charge,on written request.Item 1A.Risk FactorsThere are several risks related to our business.Among these important risks are the following:Our business depends on domestic spending by the onshore oil and natural gas indus

211、try,which is cyclical and hassignificantly declined in past periods;Oil and natural gas prices are volatile and have declined significantly in past periods,which has adversely affected,and may again adversely affect,our financial condition,results of operations and cash flows;Our customers may not b

212、e able to maintain or increase their reserve levels going forward;Competition in our industry has intensified during the current industry downturn and may intensify during futureindustry downturns,and we have not and may not be able to provide services that meet the specific needs of ourcustomers at

213、 competitive prices;We are dependent on a few customers operating in a single industry.The loss of one or more significant customerscould adversely affect our financial condition and results of operations;We have experienced a reduction in demand and there may be a continued reduction in demand for

214、our futureservices due to the ongoing COVID-19 pandemic and competition from alternative energy sources;Changes in laws and regulations could prohibit,restrict or limit our operations,increase our operating costs,adversely affect our results or result in the disclosure of proprietary information res

215、ulting in competitive harm;Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs,liabilities,fines,penalties and other sanctions and additional operating restrictions or delays and can adverselyimpact our customers;Existing or futur

216、e laws and regulations related to greenhouse gases and climate change could have a negativeimpact on our business and may result in additional compliance obligations with respect to the release,capture,anduse of carbon dioxide that could have a material adverse effect on our business,results of oper

217、ations,and financialcondition;andWe recently emerged from bankruptcy,which may adversely affect our business and relationships.The following are important factors that could affect our financial performance and could cause actual results forfuture periods to differ materially from our anticipated re

218、sults or other expectations.Any of the following risks,as well asadditional risks and uncertainties not currently known to us or that we currently deem immaterial,could materially andadversely affect our business,financial condition and results of operations.Table of Contents13Risks Relating to Our

219、Business and IndustryOur business depends on domestic spending by the onshore oil and natural gas industry,which is cyclical and hassignificantly declined in past periods.Our business is cyclical and depends on the willingness of our customers to make operating and capital expenditures toexplore for

220、,develop and produce oil and natural gas in the United States.The willingness of our customers to undertake theseactivities depends largely upon prevailing industry conditions that are influenced by numerous factors over which we have nocontrol,such as:prices,and expectations about future prices,for

221、 oil and natural gas;domestic and foreign supply of,and demand for,oil and natural gas and related products;the level of global and domestic oil and natural gas inventories;the supply of and demand for hydraulic fracturing and other oilfield services and equipment in the United States;the cost of ex

222、ploring for,developing,producing and delivering oil and natural gas;available pipeline,storage and other transportation capacity;lead times associated with acquiring equipment and products and availability of qualified personnel;the discovery rates of new oil and natural gas reserves;federal,state a

223、nd local regulation of hydraulic fracturing and other oilfield service activities,as well as E&Pactivities,including public pressure on governmental bodies and regulatory agencies to regulate our industry;the availability of water resources,suitable proppant and chemicals in sufficient quantities fo

224、r use in hydraulicfracturing fluids;geopolitical developments and political instability in oil and natural gas producing countries;actions of OPEC,its members and other state-controlled oil companies relating to oil price and production controls;advances in exploration,development and production tec

225、hnologies or in technologies affecting energyconsumption;the price and availability of alternative fuels and energy sources;weather conditions,natural disasters and global pandemics;uncertainty in capital and commodities markets and the ability of oil and natural gas producers to raise equitycapital

226、 and debt financing;andU.S.federal,state and local and non-U.S.governmental regulations and taxes.Volatility or weakness in oil and natural gas prices(or the perception that oil and natural gas prices will decrease orremain depressed)generally leads to decreased spending by our customers,which in tu

227、rn negatively impacts drilling,completionand production activity.In particular,the demand for new or existing drilling,completion and production work is driven byavailable investment capital for such work.When these capital investments decline,our customers demand for our servicesdeclines.Because th

228、ese types of services can be easily“started”and“stopped,”and oil and natural gas producers generally tendto be risk averse when commodity prices are low or volatile,we typically experience a more rapid decline in demand for ourservices compared with demand for other types of energy services.Any nega

229、tive impact on the spending patterns of ourcustomers may cause lower pricing and utilization for our services,which could have a material adverse effect on our business,financial condition,results of operations and cash flows.Table of Contents14Oil and natural gas prices are volatile and have declin

230、ed significantly in past periods,which has adversely affected,and may again adversely affect,our financial condition,results of operations and cash flows.The demand for our services depends on the level of spending by oil and natural gas companies for drilling,completionand production activities,whi

231、ch are affected by short-term and long-term trends in oil and natural gas prices,including currentand anticipated oil and natural gas prices.Oil and natural gas prices,as well as the level of drilling,completion and productionactivities,historically have been extremely volatile and are expected to c

232、ontinue to be highly volatile.When oil prices havedeclined significantly in past periods,we have correspondingly experienced a decline in pressure pumping activity levels acrossour customer base during these periods.The volatile oil and natural gas prices adversely affected,and could continue to adv

233、erselyaffect,our financial condition,results of operations and cash flows.Our customers may not be able to maintain or increase their reserve levels going forward.In addition to the impact of future oil and natural gas prices on our financial performance over time,our ability to growfuture revenues

234、and increase profitability will depend largely upon our customers ability to find,develop or acquire additionalshale oil and natural gas reserves that are economically recoverable to replace the reserves they produce.Hydraulic fracturedwells are generally more short-lived than conventional wells.Our

235、 customers own or have access to a finite amount of shale oiland natural gas reserves in the United States that will be depleted over time.The production rate from shale oil and natural gasproperties generally declines as reserves are depleted,while related per-unit production costs generally increa

236、se as a result ofdecreasing reservoir pressures and other factors.If our customers are unable to replace the shale oil reserves they own or haveaccess to at the rate they produce such reserves,their proved reserves and production will decline over time.Reductions inproduction levels by our customers

237、 over time may reduce the future demand for our services and adversely affect our business,financial condition,results of operations and cash flows.Our business has been and may continue to be adversely affected by a deterioration in general economic conditionsor a weakening of the broader energy in

238、dustry.Our results of operations have been adversely affected by the slowdown in the E&P industry.A continued or prolongedslowdown in the E&P industry could continue to adversely affect our results of operations.Additionally,a prolonged economicslowdown or recession in the United States or adverse e

239、vents relating to the energy industry or regional,national and globaleconomic conditions and factors could negatively impact our operations and therefore adversely affect our results.The risksassociated with our business are more acute during periods of economic slowdown or recession because such pe

240、riods may beaccompanied by decreased exploration and development spending by our customers,decreased demand for oil and natural gasand decreased prices for oil and natural gas.Competition in our industry has intensified during the current industry downturn and may intensify during futureindustry dow

241、nturns,and we have not and may not be able to provide services that meet the specific needs of our customers atcompetitive prices.The markets in which we operate are generally highly competitive and have relatively few barriers to entry.Theprincipal competitive factors in our markets are price,servi

242、ce quality,safety,and in some cases,breadth of products.We competewith large national and multi-national companies that have longer operating histories,greater financial,technical and otherresources and greater name recognition than we do.Several of our competitors provide a broader array of service

243、s and have astronger presence in more geographic markets.In addition,we compete with several smaller companies capable of competingeffectively on a regional or local basis.Our competitors may be able to respond more quickly to new or emerging technologiesand services and changes in customer requirem

244、ents.Some contracts are awarded on a bid basis,which further increasescompetition based on price.Pricing is often the primary factor in determining which qualified contractor is awarded a job.Thecompetitive environment may be further intensified by mergers and acquisitions among oil and natural gas

245、companies or otherevents that have the effect of reducing the number of available customers.As a result of a combination of continued pressurefrom increased competition which began during the second half of 2018 and 2019 and decreased demand for our services in 2020due to the COVID-19 pandemic,we ha

246、d to lower the prices for our services,which adversely affected our results of operations.Ifcompetition remains the same or increases as a result of a continued industry downturn or future industry downturns,we may beTable of Contents15required to lower our prices,which would adversely affect our re

247、sults of operations.In the future,we may lose market share or beunable to maintain or increase prices for our present services or to acquire additional business opportunities,which could have amaterial adverse effect on our business,financial condition,results of operations and cash flows.Pressure o

248、n pricing for our services resulting from increased competition and lack of demand for our services hasimpacted,and in the future may impact,our ability to maintain utilization and pricing for our services or implement priceincreases,which may also be impacted in future downturns.During any future p

249、eriods of declining pricing for our services,wemay not be able to reduce our costs accordingly,which could further adversely affect our results of operations.Also,we may notbe able to successfully increase prices without adversely affecting our utilization levels.The inability to maintain our utiliz

250、ationand pricing levels,or to increase our prices as costs increase,could have a material adverse effect on our business,financialcondition and results of operations.Strategic determinations,including the allocation of capital and other resources to strategic opportunities,arechallenging,and a failu

251、re to appropriately allocate capital and resources among our strategic opportunities may adverselyaffect our business,financial condition,results of operations or cash flows.In developing our business plan,we consider allocating capital and other resources to various aspects of our businessincluding

252、 maintenance,upgrades and refurbishment of our equipment,corporate items and other alternatives.We also considerour likely sources of capital,including cash generated from operations and borrowings and borrowing availability under ourCredit Agreement,dated as of November 19,2020(the“Credit Facility”

253、).Notwithstanding the determinations made in thedevelopment of our business plan,new business opportunities periodically come to our attention,including possible acquisitionsand dispositions.If we fail to identify optimal business strategies or fail to optimize our capital investment and capital rai

254、singopportunities and the use of our other resources in furtherance of our business strategies,our financial condition and futuregrowth may be adversely affected.Moreover,economic or other circumstances may change from those contemplated by ourbusiness plan and our failure to recognize or respond to

255、 those changes may limit our ability to achieve our objectives.A negative shift in investor sentiment of the oil and gas industry has had and will continue to have adverse effects onour customers operations and ability to raise debt and equity capital.Certain segments of the investor community have

256、developed negative sentiment towards investing in our industry.Recent equity returns in the sector versus other industry sectors have led to lower oil and gas and related services representationin certain key equity market indices.In addition,some investors,including investment advisors and certain

257、sovereign wealthfunds,pension funds,university endowments and family foundations,have stated policies to disinvest in the oil and gas sectorbased on their social and environmental considerations.Certain other stakeholders have also pressured commercial andinvestment banks and other lenders and inves

258、tors to stop financing oil and gas production and related infrastructure projects,which adversely affects our customers.Such developments,including environmental activism and initiatives aimed at limitingclimate change and reducing air pollution,could result in downward pressure on the stock prices

259、of oilfield service companies,including ours.This may also potentially result in a reduction of available capital funding for potential transactions,impactingour future financial results.Additionally,negative public perception regarding our industry may lead to increased regulatory scrutiny,which ma

260、y,inturn,lead to new state and federal safety and environmental laws,regulations,guidelines or enforcement interpretations.Additionally,environmental groups,landowners,local groups and other advocates may oppose our customers operationsthrough organized protests,attempts to block or sabotage our cus

261、tomers operations,intervene in regulatory or administrativeproceedings involving our customers assets,or file lawsuits or other actions designed to prevent,disrupt or delay thedevelopment or operation of our customers assets.These actions may cause operational delays or restrictions,increasedoperati

262、ng costs,additional regulatory burdens and increased risk of litigation for our customers,which could reduce ourcustomers production levels over time and,as a result,may reduce demand for our services.Moreover,governmental authoritiesexercise considerable discretion in the timing and scope of permit

263、 issuance and the public may engage in the permitting process,including through intervention in the courts.Negative public perception could cause the permits that our customers require toconduct their operations to be withheld,delayed or burdened by requirements that restrict our customers ability t

264、o profitablyconduct their businesses,which would also reduce demand for our services.Ultimately,this could make it more difficult tosecure funding for our operations.Table of Contents16We are dependent on a few customers operating in a single industry.The loss of one or more significant customerscou

265、ld adversely affect our financial condition and results of operations.Our customers are engaged in the E&P business in the United States.Historically,we have been dependent upon a fewcustomers for a significant portion of our revenues.Our four largest customers generated approximately 35%,45%and 40%

266、of our total revenue in 2020,2019 and 2018,respectively.For a discussion of our customers that make up10%or more of our revenues,see“BusinessCustomers”in Item 1 of this annual report.Our business,financial condition and results of operations could be materially adversely affected if one or more of o

267、ursignificant customers ceases to engage us for our services on favorable terms or at all or fails to pay or delays in paying ussignificant amounts of our outstanding receivables.Although we do have contracts for multiple projects with certain of ourcustomers,most of our services are provided on a p

268、roject-by-project basis.Additionally,the E&P industry is characterized by frequent consolidation activity.Changes in ownership of ourcustomers may result in the loss of,or reduction in,business from those customers,which could materially and adversely affectour financial condition.We extend credit t

269、o our customers,which presents a risk of nonpayment of our accounts receivable.We extend credit to all our customers.During industry downturns in past periods,many of our customers experiencedfinancial and operational challenges,and some of our customers filed for bankruptcy protection or delayed pa

270、yment for ourservices.Given the cyclical nature of the E&P industry,our customers may continue to experience similar challenges in thefuture.As a result,we may have difficulty collecting outstanding accounts receivable from,or experience longer collection cycleswith,some of our customers,which could

271、 have an adverse effect on our financial condition and cash flows.We may be unable to employ a sufficient number of key employees,technical personnel and other skilled or qualifiedworkers.The delivery of our services and products requires personnel with specialized skills and experience who can perf

272、ormphysically demanding work.As a result of the volatility in the energy service industry and the demanding nature of the work,workers may choose to pursue employment with our competitors or in fields that offer a more desirable work environment.Ourability to be productive and profitable will depend

273、 upon our ability to employ and retain skilled workers.In addition,our abilityto further expand our operations according to geographic demand for our services depends in part on our ability to relocate orincrease the size of our skilled labor force.The demand for skilled workers in our areas of oper

274、ations can be high,the supply maybe limited and we may be unable to relocate our employees from areas of lower utilization to areas of higher demand.Asignificant increase in the wages paid by competing employers could result in a reduction of our skilled labor force,increases inthe wage rates that w

275、e must pay,or both.Furthermore,a significant decrease in the wages paid by us or our competitors as aresult of reduced industry demand could result in a reduction of the available skilled labor force,and there is no assurance that theavailability of skilled labor will improve following a subsequent

276、increase in demand for our services or an increase in wage rates.If any of these events were to occur,our capacity and profitability could be diminished and our growth potential could beimpaired.We depend heavily on the efforts of executive officers,managers and other key employees to manage our ope

277、rations.The unexpected loss or unavailability of key members of management or technical personnel may have a material adverse effecton our business,financial condition,prospects or results of operations.Our operations are subject to inherent risks,including operational hazards.These risks may not be

278、 fully coveredunder our insurance policies.Our operations are subject to hazards inherent in the oil and natural gas industry,such as accidents,blowouts,explosions,craters,fires and oil spills.These hazards may lead to property damage,personal injury,death or the discharge ofhazardous materials into

279、 the environment.The occurrence of a significant event or adverse claim in excessTable of Contents17of the insurance coverage that we maintain or that is not covered by insurance could have a material adverse effect on ourfinancial condition and results of operations.As is customary in our industry,

280、our service contracts generally provide that we will indemnify and hold harmless ourcustomers from any claims arising from personal injury or death of our employees and employees of our vendors,damage to orloss of our equipment,and pollution emanating from our equipment and services.Similarly,our cu

281、stomers agree to indemnifyand hold us harmless from any claims arising from personal injury or death of their employees,damage to or loss of theirequipment,and pollution caused from their equipment or the well reservoir.Our indemnification arrangements may not protect usin every case.In addition,our

282、 indemnification rights may not fully protect us if the customer is insolvent or becomes bankrupt,does not maintain adequate insurance or otherwise does not possess sufficient resources to indemnify us.Furthermore,ourindemnification rights may be held unenforceable in some jurisdictions.Our inabilit

283、y to fully realize the benefits of ourcontractual indemnification protections could result in significant liabilities and could adversely affect our financial condition,results of operations and cash flows.We maintain customary insurance coverage against these types of hazards.We are self-insured up

284、 to retention limitswith regard to,among other things,workers compensation and general liability.We maintain accruals in our consolidatedbalance sheets related to self-insurance retentions by using third-party data and historical claims history.The occurrence of anevent not fully insured against,or

285、the failure of an insurer to meet its insurance obligations,could result in substantial losses.Inaddition,we may not be able to maintain adequate insurance in the future at rates we consider reasonable.Insurance may not beavailable to cover any or all of the risks to which we are subject,or,even if

286、available,it may be inadequate.Conservation measures and technological advances could reduce demand for oil and natural gas and our services.Fuel conservation measures,alternative fuel requirements,increasing consumer demand for alternatives to oil andnatural gas,technological advances in fuel econo

287、my and energy generation devices could reduce demand for oil and natural gas,resulting in reduced demand for oilfield services.The impact of the changing demand for oil and natural gas services andproducts may have a material adverse effect on our business,financial condition,results of operations a

288、nd cash flows.We have experienced a reduction in demand and there may be a continued reduction in demand for our futureservices due to the ongoing COVID-19 pandemic and competition from alternative energy sources.Oil and natural gas competes with other sources of energy for consumer demand.There are

289、 significant governmentalincentives and consumer pressures to increase the use of alternative energy sources in the United States and abroad.A number ofautomotive,industrial and power generation manufacturers are developing more fuel efficient engines,hybrid engines andalternative clean power system

290、s using fuel cells,clean burning fuels and batteries.In 2020,we continued to experience areduction in demand of our services as a result of alternative energy sources,including natural gas and electric fleets.Greater useof these alternatives as a result of governmental incentives or regulations,tech

291、nological advances,consumer demand,improvedpricing or otherwise over time will reduce the demand for our products and services and adversely affect our business,financialcondition,results of operations and cash flows going forward.Limitations on construction of new natural gas pipelines or increases

292、 in federal or state regulation of natural gaspipelines could decrease demand for our services.There has been increasing public controversy regarding construction of new natural gas pipelines and the stringency ofcurrent regulation of natural gas pipelines.Delays in construction of new pipelines,can

293、cellation of the pipeline construction bythe new administration or increased stringency of regulation of existing natural gas pipelines at either the state or federal levelcould reduce the demand for our services and materially and adversely affect our revenues and results of operations.Table of Con

294、tents18Our existing fleets require significant amounts of capital for maintenance,upgrades and refurbishment and any newfleets we build or acquire may require significant capital expenditures.Our fleets require significant capital investment in maintenance,upgrades and refurbishment to maintain thei

295、reffectiveness.While we manufacture many of the components necessary to maintain,upgrade and refurbish our fleets,labor costshave increased in the past and may increase in the future with increases in demand,which will require us to incur additional coststo upgrade any of our existing fleets or buil

296、d any new fleets.Additionally,competition or advances in technology within our industry may require us to update or replace existingfleets or build or acquire new fleets.Such demands on our capital or reductions in demand for our existing fleets and the increasein cost of labor necessary for such ma

297、intenance and improvement,in each case,could have a material adverse effect on ourbusiness,financial condition,results of operations and cash flows.Our operations require substantial capital and we may be unable to obtain needed capital or financing onsatisfactory terms or at all,which could limit o

298、ur ability to grow.The oilfield services industry is capital intensive.In conducting our business and operations,we have made,and expectto continue to make,substantial capital expenditures.Our total capital expenditures were$21.1 million,$54.4 million,and$100.5million,respectively,in 2020,2019 and 2

299、018.Since 2015,we have financed capital expenditures primarily with funding fromcash on hand.We may be unable to generate sufficient cash from operations and other capital resources to maintain planned orfuture levels of capital expenditures which,among other things,may prevent us from properly main

300、taining our existingequipment or acquiring new equipment.Furthermore,any disruptions or continuing volatility in the global financial markets maylead to an increase in interest rates or a contraction in credit availability impacting our ability to finance our operations.Thiscircumstance could put us

301、 at a competitive disadvantage or interfere with our growth plans.Furthermore,our actual capitalexpenditures for future years could exceed our capital expenditure budgets.In the event our capital expenditure requirements atany time are greater than the amount we have available,we could be required t

302、o seek additional sources of capital,which mayinclude debt financing,joint venture partnerships,sales of assets,offerings of debt or equity securities or other means.We maynot be able to obtain any such alternative source of capital.We may be required to curtail or eliminate contemplated activities.

303、Ifwe can obtain alternative sources of capital,the terms of such alternative may not be favorable to us.In particular,the terms ofany debt financing may include covenants that significantly restrict our operations.Our inability to grow as planned may reduceour chances of maintaining and improving pr

304、ofitability.A third party may claim we infringed upon its intellectual property rights,and we may be subjected to costlylitigation.Our operations,including equipment,manufacturing and fluid and chemical operations may unintentionally infringeupon the patents or trade secrets of a competitor or other

305、 company that uses proprietary components or processes in itsoperations,and that company may have legal recourse against our use of its protected information.If this were to happen,theseclaims could result in legal and other costs associated with litigation.If found to have infringed upon protected

306、information,wemay have to pay damages or make royalty payments in order to continue using that information,which could substantiallyincrease the costs previously associated with certain products or services,or we may have to discontinue use of the information orproduct altogether.Any of these could

307、materially and adversely affect our business,financial condition or results of operations.New technology may cause us to become less competitive.The oilfield services industry is subject to the introduction of new drilling and completion techniques and services usingnew technologies,some of which ma

308、y be subject to patent or other intellectual property protections.Although we believe ourequipment and processes currently give us a competitive advantage,as competitors and others use or develop new or comparabletechnologies in the future,we may lose market share or be placed at a competitive disad

309、vantage.Furthermore,we may facecompetitive pressure to implement or acquire certain new technologies at a substantial cost.Some of our competitors have greaterfinancial,technical and personnel resources that may allow them to enjoy technological advantages and implement newtechnologies before we can

310、.We cannot be certain that we will beTable of Contents19able to implement all new technologies or products on a timely basis or at an acceptable cost.Thus,limits on our ability toeffectively use and implement new and emerging technologies may have a material adverse effect on our business,financialc

311、ondition or results of operations.Loss or corruption of our information or a cyberattack on our computer systems could adversely affect our business.We are heavily dependent on our information systems and computer-based programs,including our well operationsinformation and accounting data.If any of

312、such programs or systems were to fail or create erroneous information in our hardwareor software network infrastructure,whether due to cyberattack or otherwise,possible consequences include our loss ofcommunication links and inability to automatically process commercial transactions or engage in sim

313、ilar automated orcomputerized business activities.Any such consequence could have a material adverse effect on our business.The oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain activities.At the same time,cyberattacks have increased.The U.S.go

314、vernment has issued public warnings that indicate that energy assetsmight be specific targets of cyber security threats.Our technologies,systems and networks may become the target of cyberattacksor information security breaches.These could result in the unauthorized access,misuse,loss or destruction

315、 of our proprietary andother information or other disruption of our business operations.Any access or surveillance could remain undetected for anextended period.Our systems for protecting against cyber security risks may not be sufficient.As cyber incidents continue toevolve,we may be required to ex

316、pend additional resources to continue to modify or enhance our protective measures or toinvestigate and remediate any vulnerability to cyber incidents.Additionally,our insurance coverage for cyberattacks may not besufficient to cover all the losses we may experience as a result of such cyberattacks.

317、Any additional costs could materiallyadversely affect our results of operations.Adverse weather conditions could impact demand for our services or impact our costs.Our business could be adversely affected by adverse weather conditions.For example,unusually warm winters couldadversely affect the dema

318、nd for our services by decreasing the demand for natural gas or unusually cold winters could adverselyaffect our capability to perform our services,for example,due to delays in the delivery of equipment,personnel and products thatwe need in order to provide our services and weather-related damage to

319、 facilities and equipment,resulting in delays in operations.Our operations in arid regions can be affected by droughts and limited access to water used in our hydraulic fracturing operations.These constraints could adversely affect the costs and results of operations.A terrorist attack,armed conflic

320、t or health threat could harm our business.Terrorist activities,anti-terrorist efforts and other armed conflicts involving the United States,or global or nationalhealth concerns,including the outbreak of a pandemic or contagious disease could adversely affect the U.S.and global economiesand could pr

321、event us from meeting financial and other obligations.We could experience loss of business,delays or defaults inpayments from payors or disruptions of fuel supplies and markets if wells,operations sites or other related facilities are directtargets or indirect casualties of an act of terror or war o

322、r if such facilities,their workforce or supply chains are affected by aglobal or national health concern.Such activities or events could reduce the overall demand for oil and natural gas,which,inturn,could also reduce the demand for our products and services.Terrorist activities,the threat of potent

323、ial terrorist activities andglobal or national health concerns and any resulting economic downturn could adversely affect our results of operations,impairour ability to raise capital or otherwise adversely impact our ability to realize certain business strategies.The global spread of COVID-19 and th

324、e ongoing efforts to contain it have created significant volatility,uncertainty andeconomic disruption.In an effort to contain or slow the spread of COVID-19,national and local governments around the worldinstituted certain containment measures.As a result,the demand for our services nearly diminish

325、ed in the second quarter of 2020.We were forced to alter certain aspects of our business and operations,whichTable of Contents20adversely affected our financial condition in 2020 and may continue to adversely affect our financial condition in future periods.The duration of these measures is unknown,

326、may be extended and additional measures may be imposed.The impact of the COVID-19 pandemic on our financial condition,results of operations and cash flows include,but arenot limited to,the following:Reduced customer demand and investor confidence,instability in the credit and financial markets,volat

327、ilecorporate profits,and reduced business and consumer spending,which adversely affected our financial condition,results of operations and cash flows by reducing our revenues,margins and net income due to a decline in thedemand and price for our services.In addition,volatility in the financial marke

328、ts has increased the cost of capitaland limited its availability.Economic uncertainty and disruption have made it difficult for us,our customers and suppliers to accuratelyforecast and plan future business activities.Deterioration in the financial position of our customers has impacted their ability

329、 or willingness to pay for ourservices and,as a result,negatively affected our operating results and,if it continues to a significant degree,couldhave a material adverse effect on our financial condition,results of operations and cash flows.Disruptions to our supply chain in connection with the sour

330、cing of materials from geographic areas that have beenimpacted by COVID-19 and by efforts to contain its spread.The full extent to which the COVID-19 pandemic and the various responses to it impacts our financial condition,resultsof operations and cash flows will depend on numerous evolving factors

331、that we may not be able to accurately predict,including:the duration and scope of the pandemic;the effectiveness of governmental,business and individuals actions that have been andcontinue to be taken in response to the pandemic;the availability and cost to access the capital markets;the effect on o

332、urcustomers and customer demand for and ability to pay for our services;and disruptions or restrictions on our employees abilityto work and travel.We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions thatalter our business operations as may be

333、required by federal,state,or local authorities,or that we determine are in the bestinterests of our employees,customers and stockholders.It is not clear what the potential effects any such actions may have on ourbusiness,including the effects on our customers or suppliers,or on our financial condition,results of operations and cash flows.To the extent the COVID-19 pandemic adversely affects our fi