MAMMOTH ENERGY SERVICES, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and related notes included elsewhere in this
Annual Report on Form 10-K. This discussion contains forward-looking statements
reflecting our current expectations, estimates and assumptions concerning events
and financial trends that may affect our future operating results or financial
position. Actual results and the timing of events may differ materially from
those contained in these forward-looking statements due to a number of factors,
including those discussed in Item 1A. "Risk Factors" and the section entitled
"Forward-Looking Statements" appearing elsewhere in this annual report.

Overview


  We are an integrated, growth-oriented energy services company focused on the
construction and repair of the electric grid for private utilities, public
investor-owned utilities and co-operative utilities through its infrastructure
services businesses. We also provide products and services to enable the
exploration and development of North American onshore unconventional oil and
natural gas reserves. Our primary business objective is to grow our operations
and create value for stockholders through organic growth opportunities and
accretive acquisitions. Our suite of services includes infrastructure services,
well completion services, natural sand proppant services, drilling services and
other services. Our infrastructure services division provides engineering,
design, construction, upgrade, maintenance and repair services to the electrical
infrastructure industry. Our well completion services division provides
hydraulic fracturing, sand hauling and water transfer services. Our natural sand
proppant services division mines, processes and sells natural sand proppant used
for hydraulic fracturing. Our drilling services division currently provides
rental equipment, such as mud motors and operational tools, for both vertical
and horizontal drilling. In addition to these service divisions, we also provide
aviation services, equipment rentals, crude oil hauling services, remote
accommodations and equipment manufacturing. We believe that the services we
offer play a critical role in maintaining and improving electrical
infrastructure as well as in increasing the ultimate recovery and present value
of production streams from unconventional resources. Our complementary suite of
services provides us with the opportunity to cross-sell our services and expand
our customer base and geographic positioning.

  Our transformation towards an industrial based company is ongoing. We offer
infrastructure engineering services focused on the transmission and distribution
industry and also have equipment manufacturing operations and offer fiber optic
services. Our equipment manufacturing operations provide us with the ability to
repair much of our existing equipment in-house, as well as the option to
manufacture certain new equipment we may need in the future. The equipment
manufacturing operations have initially served the internal needs for our water
transfer, equipment rental and infrastructure businesses, but we expect to
expand into third party sales in the future. Our fiber optic services include
the installation of both aerial and buried fiber. We are continuing to explore
other opportunities to expand our business lines as we shift to a broader
industrial focus.

Our revenues, operating (loss) income and identifiable assets are primarily
attributable to four reportable segments: infrastructure services; well
completion services; natural sand proppant services; and drilling services.
Since the dates presented below, we have conducted our operations through the
following entities:


Infrastructure Services Segment
•Cobra Acquisitions LLC, or Cobra-January 2017
•Lion Power Services LLC, formerly Cobra Energy LLC-January 2017
•Higher Power Electrical LLC-April 2017
•5 Star Electric LLC-July 2017
•Python Equipment LLC-December 2018
•Aquawolf LLC-September 2019
•Falcon Fiber Solutions LLC-May 2021

Well Completion Services Segment
•Stingray Pressure Pumping LLC-March 2012
•Silverback Energy LLC-November 2012
•Redback Pump Down Services LLC-January 2015
•Mr. Inspections LLC-January 2015
•Mammoth Equipment Leasing LLC-November 2016
•Bison Sand Logistics LLC-January 2018
•Aquahawk Energy LLC-June 2018

Natural Sand Proppant Services Segment
•Muskie Proppant LLC-September 2011
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•Barracuda Logistics LLC-October 2014
•Piranha Proppant LLC-May 2017
•Sturgeon Acquisitions LLC-June 2017
•Taylor Frac, LLC-June 2017
•Taylor Real Estate Investments, LLC-June 2017
•South River Road, LLC-June 2017

Drilling Services Segment
•Bison Drilling and Field Services, LLC-November 2010
•Panther Drilling Systems LLC-December 2012
•Bison Trucking LLC-August 2013

Other

•Great White Sand Tiger Lodging Ltd.-October 2007
•Redback Energy Services, LLC-October 2011
•Redback Coil Tubing, LLC-May 2012
•Anaconda Rentals LLC, formerly White Wing Tubular Services LLC-September 2014
•WTL Oil LLC, or WTL, formerly Silverback-June 2016
•Mammoth Energy Services Inc.-June 2016
•Mammoth Energy Partners, LLC-October 2016
•Mako Acquisitions LLC-March 2017
•Stingray Energy Services LLC, or Stingray Energy Services-June 2017
•Stingray Cementing LLC-June 2017
•Tiger Shark Logistics LLC-October 2017
•Cobra Aviation Services LLC-January 2018
•Black Mamba Energy LLC-March 2018
•Stingray Cementing and Acidizing LLC, formerly RTS Energy Services LLC-June
2018
•Ivory Freight Solutions LLC-July 2018
•IFX Transport LLC-December 2018
•Air Rescue Systems LLC-December 2018
•Leopard Aviation LLC-April 2019
•Anaconda Manufacturing LLC-September 2019


Impact of the Ongoing COVID-19 Pandemic and Volatility in Commodity Prices

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In March and April 2020, concurrent with the spread of COVID-19 and quarantine
orders in the U.S. and worldwide, oil prices dropped sharply to below zero for
the first time in history due to factors including significantly reduced demand
and a shortage of storage facilities. Beginning in March 2020, in response to
the COVID-19 pandemic and the depressed commodity prices, many exploration and
production companies, including our customers, substantially reduced their
capital expenditure budgets. As a result, demand for our oilfield services
declined at the end of the first quarter of 2020 and continued to decline
further throughout the remainder of 2020. Exploration and production companies
set their 2021 budgets based on the prevailing prices for oil and gas at the
time. Although demand for oil and natural gas and commodity prices increased
during the fourth quarter of 2021, these budgets for the publicly traded
exploration and production companies remained relatively unchanged throughout
2021 with any excess cash flows used for debt repayment or shareholder returns
rather than to increase production, as has been the case in the past. Although
activity levels for many exploration and production companies increased during
the fourth quarter of 2021 and early 2022 due to the recent improvement in the
U.S. and global economic activity, easing of the COVID-19 pandemic related
restrictions, availability of vaccines and treatments and rising energy use and
commodity prices, the emergence of the Delta COVID-19 variant in the latter part
of 2021 and the subsequent surge of the highly transmissible Omicron variant
continued to contribute to the economic and pricing volatility and a cautious
production outlook for 2022. On July 18, 2021, the OPEC+ reached an agreement to
phase out 5.8 million barrels per day of oil production cuts by September 2022
as prices of crude oil reached their highest levels in more than two years.
Coordinated increases in oil supply by OPEC+ began in August 2021, increasing
overall oil production by 400,000 barrels per day on a monthly basis from that
point forward. Further, on January 4, 2022, OPEC+ agreed to raise its output
target by 400,000 Bbl per day in February 2022, which move is expected to
further boost oil supply in response to rising demand. In its report issued on
February 10, 2022, OPEC noted its expectation that world oil demand will rise by
4.15 million Bbl per day in 2022, as the global economy continues to post a
strong recovery from the COVID-19 pandemic. Although this demand outlook is
expected to underpin oil prices, which have already seen a seven-year high in
early 2022, we cannot predict the impact of these events on commodity prices and
expect a competitive market for oilfield services for the foreseeable future. In
addition, the current Russian/Ukrainian military conflict could result in a
humanitarian crisis and have an adverse impact on the global energy and capital
markets and global stability.

We have taken, and continue to take, responsible steps to protect the health and
safety of our employees during the COVID-19 pandemic. We are also continuing to
monitor the adverse industry and market conditions resulting from the COVID-19
pandemic and have taken mitigating steps in an effort to preserve liquidity,
reduce costs and lower capital expenditures. These actions have included
reducing headcount, adjusting pay and limiting spending. We will continue to
take further actions that we deem to be in the best interest of the Company and
our stockholders if the current conditions worsen. Given the dynamic nature of
these events, we are unable to predict the ultimate impact of the COVID-19
pandemic, the volatility in commodity markets, the reduced demand for oil and
oilfield services and uncertain macroeconomic conditions on our business,
financial condition, results of operations, cash flows and stock price or the
pace or extent of any subsequent recovery.

2021 Highlights


•Net loss of $101.4 million, or $2.18 per diluted share, and adjusted net loss
of $99.3 million, or $2.13 per diluted share, for the year ended December 31,
2021. See "Non-GAAP Financial Measures" below for a reconciliation of net loss
to adjusted net loss.

•Adjusted EBITDA of ($11.6) million for the year ended December 31, 2021. See
"Non-GAAP Financial Measures" below for a reconciliation of net loss to Adjusted
EBITDA.

•Organically started a fiber division, which was awarded a fiber installation
contract with a cooperative in the Midwest in late 2021 with an expected
aggregate revenue of $4.5 million throughout 2022.

•Awarded a contract by a major utility to provide engineering and design
services for the building of electric vehicle charging station infrastructure
with an expected aggregate revenue of $5 million over the next three years.

Overview of Our Industries

Energy Infrastructure Industry


  Our infrastructure services business provides engineering, design,
construction, upgrade, maintenance and repair services to the electrical
infrastructure industry. We offer a broad range of services on electric
transmission and distribution, or T&D, networks and substation facilities, which
include engineering, design, construction, upgrade, maintenance and repair of
high voltage transmission lines, substations and lower voltage overhead and
underground distribution systems. Our commercial services include the
installation, maintenance and repair of commercial wiring. We also provide storm
repair and restoration
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services in response to storms and other disasters. We provide infrastructure
services primarily in the northeast, southwest, midwest and western portions of
the United States.

  We currently have agreements in place with private utilities, public IOUs and
Co-Ops. Since we commenced operations in this line of business, a substantial
portion of our infrastructure revenue has been generated from storm restoration
work, primarily from PREPA, due to damage caused by Hurricane Maria. On
October 19, 2017, Cobra and PREPA entered into an emergency master services
agreement for repairs to PREPA's electrical grid. The one-year contract, as
amended, provided for payments of up to $945 million (the "first contract"). On
May 26, 2018, Cobra and PREPA entered into a second one-year, $900 million
master services agreement to provide additional repair services and begin the
initial phase of reconstruction of the electrical power system in Puerto Rico
(the "second contract"). Our work under each of the contracts with PREPA ended
on March 31, 2019.

  As of December 31, 2021, PREPA owed us approximately $227 million for services
we performed, excluding $110.8 million of interest charged on these delinquent
balances as of December 31, 2021. See Note 2. Summary of Significant Accounting
Policies-Accounts Receivable to our consolidated financial statements included
elsewhere in this report. PREPA is currently subject to bankruptcy proceedings,
which were filed in July 2017 and are currently pending in the U.S. District
Court for the District of Puerto Rico. As a result, PREPA's ability to meet its
payment obligations under the contracts is largely dependent upon funding from
the Federal Emergency Management Agency, or FEMA, or other sources. On September
30, 2019, we filed a motion with the U.S. District Court for the District of
Puerto Rico seeking recovery of the amounts owed to us by PREPA, which motion
was stayed by the Court. On March 25, 2020, we filed an urgent motion to modify
the stay order and allow our recovery of approximately $62 million in claims
related to a tax gross-up provision contained in the first contract. This
emergency motion was denied on June 3, 2020 and the Court extended the stay of
our motion. On December 9, 2020, the Court again extended the stay of our motion
and directed PREPA to file a status report by June 7, 2021. On April 6, 2021, we
filed a motion to lift the stay order. Following this filing, PREPA initiated
discussion with Cobra, which resulted in PREPA and Cobra filing a joint motion
to adjourn all deadlines relative to the April 6, 2021 motion until the June 16,
2021 omnibus hearing as a result of PREPA's understanding that FEMA would be
releasing a report in the near future relating to the first contract. The joint
motion was granted by the Court on April 14, 2021. On May 26, 2021, FEMA issued
a Determination Memorandum related to the first contract between Cobra and PREPA
in which, among other things, FEMA raised two contract compliance issues and, as
a result, concluded that approximately $47 million in costs were not authorized
costs under the contract. On June 14, 2021, the Court issued an order adjourning
Cobra's motion to lift the stay order to a hearing on August 4, 2021 and
directing Cobra and PREPA to meet and confer in good faith concerning, among
other things, (i) the May 26, 2021 Determination Memorandum issued by FEMA and
(ii) whether and when a second determination memorandum is expected. The parties
were further directed to file an additional status report, which was filed on
July 20, 2021. On July 23, 2021, with our aid, PREPA filed an appeal of the
entire $47 million that FEMA de-obligated in the May 26, 2021 Determination
Memorandum. The appeal is currently pending. On August 4, 2021, the Court denied
Cobra's April 6, 2021 motion to lift the stay order, extended the stay of our
motion seeking recovery of amounts owed to Cobra and directed the parties to
file an additional joint status report, which was filed on January 22, 2022. On
January 26, 2022, the Court extended the stay and directed the parties to file a
further status report by July 25, 2022.

We believe all amounts charged to PREPA were in accordance with the terms of the
contracts. Further, we believe these receivables are collectible. However, in
the event PREPA (i) does not have or does not obtain the funds necessary to
satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary
funds but refuses to pay the amounts owed to us or (iii) otherwise does not pay
amounts owed to us for services performed, the receivable may not be collected
and our financial condition, results of operations and cash flows would be
materially and adversely affected. In addition, government contracts are subject
to various uncertainties, restrictions and regulations, including oversight
audits and compliance reviews by government agencies and representatives. In
this regard, on September 10, 2019, the U.S. District Court for the District of
Puerto Rico unsealed an indictment that charged the former president of Cobra
with conspiracy, wire fraud, false statements and disaster fraud. Two other
individuals were also charged in the indictment. The indictment is focused on
the interactions between a former FEMA official and the former President of
Cobra. Neither we nor any of our subsidiaries were charged in the indictment. We
are continuing to cooperate with the related investigation. We are also subject
to investigations and legal proceedings related to our contracts with PREPA.
Given the uncertainty inherent in the criminal litigation, investigations and
legal proceedings, it is not possible at this time to determine the potential
outcome or other potential impacts that they could have on us. See Note 19.
Commitments and Contingencies to our consolidated financial statements included
elsewhere in this report for additional information regarding these
investigations and proceedings. Further, as noted above, our contracts with
PREPA have concluded and we have not obtained, and there can be no assurance
that we will be able to obtain, one or more contracts with other customers to
replace the level of services that we provided to PREPA.

Although the COVID-19 pandemic and resulting economic conditions have not had a
material impact on demand or pricing for our infrastructure services, revenues
for our infrastructure services declined in 2021 as a result of certain
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management changes, which resulted in crew departures, as well as a decline in
storm restoration activities. Our crew count declined from approximately 100
crews as of December 31, 2020 to approximately 82 crews as of December 31, 2021.
During the third quarter of 2021, we made leadership changes in our
infrastructure group. We are focused on cutting costs and enhancing
accountability across the division, and we have already seen improvement in both
areas.

Funding for projects in the infrastructure space remains strong with added
opportunities expected from the Infrastructure Investment and Jobs Act, which
was signed into law on November 15, 2021. We continue to pursue opportunities
within this sector as we strategically structure our service offerings for
growth, intending to increase our infrastructure services activity and expand
both our geographic footprint and depth of projects. In late 2021, we were
awarded a fiber installation contract as well as an electric vehicle charging
station engineering contract. Both of these projects are currently in process.

We work for multiple utilities primarily across the northeastern, southwestern,
midwestern and western portions of the United States. We believe that we are
well-positioned to compete for new projects due to the experience of our
infrastructure management team, combined with our vertically integrated service
offerings. We are seeking to leverage this experience and our service offerings
to grow our customer base and increase our revenues in the continental United
States over the coming years.

Oil and Natural Gas Industry


   The oil and natural gas industry has traditionally been volatile and is
influenced by a combination of long-term, short-term and cyclical trends,
including the domestic and international supply and demand for oil and natural
gas, current and expected future prices for oil and natural gas and the
perceived stability and sustainability of those prices, production depletion
rates and the resultant levels of cash flows generated and allocated by
exploration and production companies to their drilling, completion and related
services and products budgets. The oil and natural gas industry is also impacted
by general domestic and international economic conditions, political instability
in oil producing countries, government regulations (both in the United States
and elsewhere), levels of customer demand, the availability of pipeline
capacity, storage capacity and other conditions and factors that are beyond our
control. See "Recent Developments-Impact of the COVID-19 Pandemic and Volatility
in Commodity Prices" above.

Demand for most of our oil and natural gas products and services depends
substantially on the level of capital expenditures by companies in the oil and
natural gas industry. The levels of capital expenditures of our customers are
predominantly driven by the prices of oil and natural gas. As discussed above,
oil prices dropped sharply throughout March and April of 2020. While improved
commodity pricing has contributed to positive industry movement and increased
equipment utilization, oil and natural gas prices are expected to continue to be
volatile and we cannot predict if, or at what levels, commodity prices will
stabilize. We experienced a weakening in demand for our oilfield services during
2019 as a result of reductions in our customers' capital expenditure budgets.
The sharp decline in oil prices beginning in March 2020, the continued
volatility and strategic operating decisions by producers to curtail drilling
activity have continued to adversely impact the utilization and pricing of our
oilfield services.

In response to market conditions, we have temporarily shut down our cementing
and acidizing operations and flowback operations beginning in July 2019, our
contract drilling operations beginning in December 2019, our rig hauling
operations beginning in April 2020, our coil tubing, pressure control and full
service transportation operations beginning in July 2020 and our crude oil
hauling operations beginning in July 2021. We continue to monitor the market to
determine if and when we can recommence these services. We are currently
operating two of our six pressure pumping fleets. Based on feedback from our
exploration and production customers, we believe they plan to take a cautious
approach with respect to their activity levels for 2022 given the recent
volatility in oil prices and investor sentiment calling for activities to remain
within or below cash flows. Market fundamentals are challenging for our oilfield
businesses and we expect this trend to continue. Although the reported
retirement of equipment across the industry may, at some point, help the market,
we believe pricing and utilization for our oilfield services will remain
challenging for the foreseeable future. Subject to our liquidity requirements,
we expect to be ready to ramp up our oilfield service offerings when oilfield
demand, pricing and margins strengthen.

We continue to closely monitor our cost structure in response to market
conditions and intend to pursue additional cost savings where possible. Further,
a significant portion of our revenue from our pressure pumping business had
historically been derived from Gulfport. On December 28, 2019, Gulfport filed a
lawsuit alleging our breach of our pressure pumping contract with Gulfport and
seeking to terminate the contract and recover damages for alleged overpayments,
audit costs and legal fees. Gulfport did not make the payments owed to us under
this contract for any periods subsequent to its alleged December 28, 2019
termination date. Further, on November 13, 2020, Gulfport filed petitions for
voluntary relief under chapter 11 of the Bankruptcy Code. On September 21, 2021,
we reached a settlement with Gulfport under which all litigation relating to the
Stingray Pressure Pumping contract was terminated, Stingray Pressure Pumping
released all claims against Gulfport and its
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subsidiaries with respect to Gulfport's bankruptcy proceedings and each of the
parties released all claims they had against the others with respect to the
litigation matters discussed above. We have not been able to obtain long-term
contracts with other customers to replace our contract with Gulfport. See Note
19. Commitments and Contingencies to our consolidated financial statements
included elsewhere in this report for additional information.

Natural Sand Proppant Industry


  In the natural sand proppant industry, demand growth for frac sand and other
proppants is primarily driven by advancements in oil and natural gas drilling
and well completion technology and techniques, such as horizontal drilling and
hydraulic fracturing, as well as overall industry activity growth.

  In 2018 and 2019, several new and existing suppliers completed planned
capacity additions of frac sand supply, particularly in the Permian Basin. The
industry expansion, coupled with increased capital discipline, budget exhaustion
and the impact on oil demand from the COVID-19 pandemic, caused the frac sand
market to become oversupplied, particularly in finer grades. With the frac sand
market oversupplied, pricing for all grades has fallen significantly from the
peaks experienced throughout 2018 and during the first half of 2019. This
oversupply resulted in several industry participants idling and closing high
cost mines in an attempt to restore the supply and demand balance and reduce the
number of industry participants. Nevertheless, demand for our sand declined
significantly in the second half of 2019 and throughout 2020 as a result of
completion activity falling due to lower oil demand and pricing as discussed
above, increased capital discipline by our customers, budget exhaustion and the
COVID-19 pandemic. Activity has rebounded modestly in 2021 as we have seen an
increase in the volume of sand sold, however the prices of frac sand have
continued to be depressed compared to prior levels. We cannot predict if and
when pricing and demand will recover sufficiently to return our natural sand
proppant services segment to profitability.

  Further, as a result of adverse market conditions, production at our Muskie
sand facility in Pierce County, Wisconsin has been temporarily idled since
September 2018. Our contracted capacity has provided a baseline of business,
which has kept our Taylor and Piranha plants operating and our costs low.

A portion of our revenue from our natural sand proppant business historically
had been derived from Gulfport pursuant to a long-term contract. Gulfport did
not made the payments owed to us under this contract for any periods subsequent
to May 2020. In September 2020, we filed a lawsuit seeking to recover delinquent
payments owed to us under this contract. On November 13, 2020, Gulfport filed
petitions for voluntary relief under chapter 11 of the Bankruptcy Code. On
September 21, 2021, the Company and Gulfport reached a settlement under which
all litigation relating to the Muskie contract was terminated and a portion of
Muskie's contract claim against Gulfport was allowed under Gulfport's plan of
reorganization. See Note 19. Commitments and Contingencies to our consolidated
financial statements included elsewhere in this report for additional
information.

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Results of Operations

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Years Ended

                                                              December 31, 2021           December 31, 2020
Revenue:                                                                     (in thousands)
Infrastructure services                                     $           93,403          $          157,751
Well completion services                                                84,334                      88,325
Natural sand proppant services                                          34,860                      34,360
Drilling services                                                        4,321                       7,785
Other services                                                          18,510                      28,829
Eliminations                                                            (6,466)                     (3,974)
Total revenue                                                          228,962                     313,076

Cost of revenue:
Infrastructure services (exclusive of depreciation and
amortization of $21,841 and $29,337, respectively, for 2021
and 2020)

                                                               90,559                     124,555

Well completion services (exclusive of depreciation and
amortization of $26,356 and $30,395, respectively, for 2021
and 2020)

                                                               64,552                      47,483

Natural sand proppant services (exclusive of depreciation,
depletion and accretion of $8,993 and $9,758, respectively,
for 2021 and 2020)

                                                      27,232                      25,955

Drilling services (exclusive of depreciation and
amortization of $7,995 and $10,036, respectively, for 2021
and 2020)

                                                                6,102                      10,909

Other services (exclusive of depreciation and amortization
of $13,209 and $15,713, respectively, for 2021 and 2020)

16,347                      27,093
Eliminations                                                            (6,466)                     (3,974)
Total cost of revenue                                                  198,326                     232,021
Selling, general and administrative expenses                            78,246                      67,185
Depreciation, depletion, amortization and accretion                     78,475                      95,317
Impairment of goodwill                                                     891                      54,973
Impairment of other long-lived assets                                    1,212                      12,897
Operating loss                                                        (128,188)                   (149,317)
Interest expense, net                                                   (6,406)                     (5,397)
Other income, net                                                       10,301                      34,938
Loss before income taxes                                              (124,293)                   (119,776)
Benefit for income taxes                                               (22,863)                    (12,169)
Net loss                                                    $         (101,430)         $         (107,607)



  Revenue. Revenue for 2021 decreased $84.1 million, or 27%, to $229.0 million
from $313.1 million for 2020. The decrease in total revenue is attributable to
declines in revenue across all business lines other than our natural sand
proppant services division. Revenue derived from related parties was $17.9
million, or 8% of our total revenue, for 2021 and $50.6 million, or 16% of our
total revenue, for 2020. Substantially all of our related party revenue was
derived from Gulfport under pressure pumping and sand contracts which have
ended. For additional information regarding the status of these contracts and
the related litigation, see "Industry Overview - Oil and Natural Gas Industry,"
"Industry Overview - Natural Sand Proppant Industry" and Note 19. Commitments
and Contingencies to our consolidated financial statements included elsewhere in
this report. Revenue by division was as follows:

Infrastructure Services. Infrastructure services division revenue decreased
$64.3 million, or 41%, to $93.4 million for 2021 from $157.8 million for 2020
primarily due to less storm activity during the year ended December 31, 2021
compared to the year ended December 31, 2020 resulting in an $58.4 million
decline in storm restoration revenue. Additionally, infrastructure services
revenue was negatively impacted by the decrease in crew count from
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approximately 100 crews as of December 31, 2020 to 82 crews as of December 31,
2021
. These crew departures were driven by changes in division level management.


Well Completion Services. Well completion services division revenue decreased
$4.0 million, or 5%, to $84.3 million for 2021 from $88.3 million for 2020.
Revenue derived from related parties was $15 million, or 18% of total well
completion revenue, for 2021 and $42.5 million, or 48% of total well completion
revenue, for 2020. Substantially all of our related party revenue was derived
from Gulfport under a pressure pumping contract which has ended. In 2021, we
recognized revenue totaling $15 million related to the modification of our
pressure pumping contract with Gulfport. For additional information regarding
the status of this contract, see "Industry Overview - Oil and Natural Gas
Industry" above. Intersegment revenue, consisting primarily of revenue derived
from our other services and sand segment, totaled $0.1 million and $1.1 million,
for 2021 and 2020, respectively.

The decrease in our well completion services revenue was primarily driven by a
decline in utilization. The number of stages completed decreased 12% to 2,544
for 2021 from 2,880 for 2020. An average of 1.1 of our six fleets were active
throughout 2021 compared to 1.5 fleets for 2020.

Natural Sand Proppant Services. Natural sand proppant services division revenue
increased $0.5 million, or 1%, to $34.9 million for 2021, from $34.4 million for
2020. Revenue derived from related parties was $2.1 million, or 6% of total sand
revenue, for 2021 and $8.4 million, or 24% of total sand revenue, for 2020. All
of our related party revenue was derived from Gulfport under a sand supply
contract. On November 13, 2020, Gulfport filed petitions for voluntary relief
under chapter 11 of the Bankruptcy Code. In 2021, we recognized revenue totaling
$2 million related to the modification of our sand supply contract with
Gulfport. For additional information regarding the status of this contract, see
"Industry Overview - Natural Sand Proppant Industry" above. Intersegment
revenue, consisting primarily of revenue derived from our well completion
segment, was $4.0 million, or 11% of total sand revenue, for 2021 and a nominal
amount for 2020.

The increase in our natural sand proppant services revenue was primarily
attributable to a 107% increase in tons of sand sold from approximately 0.5
million tons in 2020 to 1.0 million tons in 2021 coupled with a 15% increase in
average price per ton of sand sold from $14.58 in 2020 to $16.76 in 2021.
Included in natural sand proppant services revenue is shortfall revenue of $12.0
million and $24.8 million, for 2021 and 2020, respectively.

Drilling Services. Drilling services division revenue decreased $3.5 million, or
44%, to $4.3 million for 2021, from $7.8 million for 2020. Revenue derived from
related parties, consisting primarily of directional drilling revenue from El
Toro Resources LLC, was $0.6 million for 2021 and a nominal amount for 2020.

The decline in our drilling services revenue was primarily attributable to
declines in utilization for our directional drilling and rig hauling businesses.
In response to market conditions, we temporarily shut down our contract land
drilling operations beginning in December 2019 and our rig hauling operations
beginning in April 2020.

Other Services. Revenue from other services, consisting of revenue derived from
our aviation, coil tubing, pressure control, equipment rental, crude oil
hauling, full service transportation, remote accommodation and equipment
manufacturing, decreased $10.3 million, or 36%, to $18.5 million for 2021 from
$28.8 million for 2020. Revenue derived from related parties, consisting
primarily of equipment rental revenue from Gulfport and aviation revenue from
Brim Equipment Leasing, Inc., or Brim, was $0.4 million, or 2% of total other
services revenue, for 2021 and $1.0 million, or 3% of total other services
revenue, for 2020. Intersegment revenue, consisting primarily of revenue derived
from our infrastructure and well completion segments, totaled $2.2 million and
$2.7 million, for 2021 and 2020, respectively.

The decrease in our other services revenue was primarily due to a decline in
utilization for our equipment rental business. We rented an average of 135
pieces of equipment to customers during 2021, a decrease of 34% from an average
of 204 pieces of equipment rented to customers during 2020. Additionally,
utilization for our crude oil hauling and aviation businesses declined. Due to
market conditions, we temporarily shut down our coil tubing and full service
transportation operations beginning in July 2020 and our crude oil hauling
operations beginning in July 2021.

  Cost of Revenue (exclusive of depreciation, depletion, amortization and
accretion expense). Cost of revenue, exclusive of depreciation, depletion,
amortization and accretion expense, decreased $33.7 million from $232.0 million,
or 74% of total revenue, for 2020 to $198.3 million, or 87% of total revenue,
for 2021. The decrease was primarily due to a decline in activity across all of
our business lines. Cost of revenue by operating division was as follows:

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Infrastructure Services. Infrastructure services division cost of revenue,
exclusive of depreciation and amortization expense, decreased $34.0 million from
$124.6 million for 2020 to $90.6 million for 2021, primarily due to a decline in
activity. As a percentage of revenue, cost of revenue, exclusive of depreciation
and amortization expense of $21.9 million in 2021 and $29.4 million in 2020, was
97% and 79%, for 2021 and 2020, respectively. The increase as a percentage of
revenue is primarily due to increased labor costs as a percentage of revenue.

Well Completion Services. Well completion services division cost of revenue,
exclusive of depreciation and amortization expense, increased $17.1 million, or
36%, from $47.5 million for 2020 to $64.6 million for 2021 primarily due to an
increase in cost of goods sold as a result of providing sand and chemicals with
our service package to customers in 2021. As a percentage of revenue, our well
completion services division cost of revenue, exclusive of depreciation and
amortization expense of $26.4 million in 2021 and $30.4 million in 2020, was 77%
and 54%, for 2021 and 2020, respectively. The increase as a percentage of
revenue was primarily due to the recognition of more pressure pumping services
standby revenue in 2020, of which there was a lower percentage of costs
recognized compared to 2021. Additionally, during 2021 we provided sand and
chemicals with our service package to customers, resulting in higher cost of
goods sold as a percentage of revenue for this period in comparison to 2020.

Natural Sand Proppant Services. Natural sand proppant services division cost of
revenue, exclusive of depreciation, depletion and accretion expense, increased
$1.2 million, or 5%, from $26.0 million for 2020 to $27.2 million for 2021. As a
percentage of revenue, cost of revenue, exclusive of depreciation, depletion and
accretion expense of $9.0 million in 2021 and $9.8 million in 2020, was 78% and
76%, for 2021 and 2020, respectively.

Drilling Services. Drilling services division cost of revenue, exclusive of
depreciation and amortization expense, decreased $4.8 million, or 44%, from
$10.9 million for 2020 to $6.1 million for 2021, as a result of reduced
activity. In response to market conditions, we have temporarily shut down our
contract land drilling operations beginning in December 2019 and our rig hauling
operations beginning in April 2020. As a percentage of revenue, our drilling
services division cost of revenue, exclusive of depreciation and amortization
expense of $8.0 million in 2021 and $10.0 million in 2020, was 139% and 116%,
for 2021 and 2020, respectively. The increase as a percentage of revenue was
primarily due to a decline in utilization.

Other Services. Other services cost of revenue, exclusive of depreciation and
amortization expense, decreased $10.7 million, or 40%, from $27.1 million for
2020 to $16.3 million for 2021, primarily due to a decline in costs for our
equipment rental, coil tubing, and full service transportation businesses as a
result of reduced activity. Due to market conditions, we have temporarily shut
down our coil tubing and full service transportation operations beginning in
July 2020 and our crude oil hauling operations beginning in July 2021. As a
percentage of revenue, cost of revenue, exclusive of depreciation and
amortization expense of $13.2 million in 2021 and $15.7 million in 2020, was 88%
and 94%, for 2021 and 2020, respectively. The decrease as a percentage of
revenue is primarily due to a decline in equipment rental costs as a percentage
of revenue.

  Selling, General and Administrative Expenses. Selling, general and
administrative expenses, or SG&A, represent the costs associated with managing
and supporting our operations. Following is a breakout of SG&A expenses for the
periods indicated (in thousands):
                                              Years Ended
                               December 31, 2021       December 31, 2020
Cash expenses:
Compensation and benefits     $           15,064      $           14,876
Professional services                     11,400                  19,905
Other(a)                                   9,052                   8,828
Total cash SG&A expense                   35,516                  43,609
Non-cash expenses:
Bad debt provision                        41,662                  21,958

Stock based compensation                   1,068                   1,618
Total non-cash SG&A expense               42,730                  23,576
Total SG&A expense            $           78,246      $           67,185


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a.  Includes travel-related costs, IT expenses, rent, utilities and other
general and administrative-related costs.
b.  The bad debt provision for the year ended December 31, 2021 includes $41.2
million related to the Stingray Pressure Pumping and Muskie contracts with
Gulfport. The bad debt provision for the year ended December 31, 2020, included
$19.4 million related to the voluntary petitions for relief filed on November
13, 2020, by Gulfport and certain of its subsidiaries. See Notes 2 and 19 of the
Notes to the Consolidated Financial Statements.

  Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion,
amortization and accretion decreased $16.8 million, or 18%, to $78.5 million for
2021 from $95.3 million in 2020. The decrease is primarily due to a decline in
property and equipment depreciation expense as a result of lower capital
expenditures.

  Impairment of Goodwill. We recorded impairment of goodwill of $0.9 million and
$55.0 million in 2021 and 2020, respectively. As a result of our annual
assessment of goodwill, we determined that the carrying value of goodwill for
certain of our entities exceeded their fair values at December 31, 2021,
resulting in impairment expense of $0.9 million. As a result of market
conditions, we performed an impairment assessment of our goodwill as of March
31, 2020. We determined that the carrying value of goodwill for certain of our
entities exceeded their fair values, resulting in impairment expense of $55.0
million.

  Impairment of Other Long-lived Assets. We recorded impairments of other
long-lived assets of $1.2 million and $12.9 million, in 2021 and 2020,
respectively. Beginning in 2021, we temporarily shut down our crude oil hauling
operations, resulting in impairment of trade names of $0.5 million.
Additionally, as a result of a review of intangible asset balances as of
December 31, 2021, we determined the fair value of Higher Power's trade names
and customer relationships was less than their carrying value, resulting in
impairment expense of $0.7 million. During 2020, we recorded impairment of
property and equipment, including water transfer, crude oil hauling, coil tubing
and equipment rental assets, totaling $12.9 million.

  Operating Loss. We reported an operating loss of $128.2 million for 2021
compared to an operating loss $149.3 million for 2020. The reduced operating
loss was primarily due to the recognition of $67.9 million in impairment
expenses during 2020, as compared to $2.1 million in 2021, partially offset by a
$19.7 million increase in bad debt expense primarily due to the settlement with
Gulfport.

  Interest Expense, net. Interest expense, net increased $1.0 million to $6.4
million for 2021 from $5.4 million for 2020, primarily due to an increase in
expense recognized on sale-leaseback transactions.

  Other Income (Expense), net. Other income, net decreased $22.7 million during
2021 compared to 2020. During 2021, we recognized expense of $25.0 million
related to an agreement to settle a legal matter and legal fees related to the
matter totaling $5.4 million. This expense was partially offset by a $4.4
million increase in gains on asset disposals and a $4.4 million increase in
interest on delinquent account receivables.

  Income Taxes. During 2021, we recorded an income tax benefit of $22.9 million
on pre-tax loss of $124.3 million compared to an income tax benefit of $12.2
million on pre-tax loss of $119.8 million for 2020. Our effective tax rate was
18.4% for 2021 compared to 10.2% for 2020. Our tax rate is affected by recurring
items, such as tax rates in foreign jurisdictions and the relative amounts of
income we earn in those jurisdictions, as well as discrete items, such as return
to provision adjustments, goodwill impairment and changes in the valuation
allowance that may not be consistent from year to year. See Note 13 to our
consolidated financial statements for additional detail regarding our change in
tax expense.
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Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Years Ended

                                                              December 31, 2020           December 31, 2019
Revenue:                                                                     (in thousands)
Infrastructure services                                     $          157,751          $          213,285
Well completion services                                                88,325                     243,802
Natural sand proppant services                                          34,360                      97,063
Drilling services                                                        7,785                      31,964
Other services                                                          28,829                      88,586
Eliminations                                                            (3,974)                    (49,688)
Total revenue                                                          313,076                     625,012

Cost of Revenue:
Infrastructure services (exclusive of depreciation and
amortization of $29,337 and $30,323, respectively, for 2020
and 2019)

                                                              124,555                     173,551

Well completion services (exclusive of depreciation and
amortization of $30,395 and $40,117, respectively, for 2020
and 2019)

                                                               47,483                     206,543

Natural sand proppant services (exclusive of depreciation,
depletion and accretion of $9,758 and $14,039,
respectively, for 2020 and 2019)

                                        25,955                      87,652

Drilling services (exclusive of depreciation and
amortization of $10,036 and $13,138, respectively, for 2020
and 2019)

                                                               10,909                      36,953

Other services (exclusive of depreciation and amortization
of $15,713 and $19,323, respectively, for 2020 and 2019)

27,093                      88,837
Eliminations                                                            (3,974)                    (49,748)
Total cost of revenue                                                  232,021                     543,788
Selling, general and administrative expenses                            67,185                      51,552
Depreciation, depletion, amortization and accretion                     95,317                     117,033
Impairment of goodwill                                                  54,973                      33,664
Impairment of other long-lived assets                                   12,897                       7,358
Operating loss                                                        (149,317)                   (128,383)
Interest expense, net                                                   (5,397)                     (4,958)
Other income, net                                                       34,938                      42,216
Loss before income taxes                                              (119,776)                    (91,125)
Benefit for income taxes                                               (12,169)                    (12,081)
Net loss                                                    $         (107,607)         $          (79,044)



  Revenue. Revenue for 2020 decreased $311.9 million, or 50%, to $313.1 million
from $625.0 million for 2019. The decrease in total revenue is attributable to
declines in revenue across all business lines. Revenue derived from related
parties was $50.6 million, or 16% of our total revenue, for 2020 and $130.3
million, or 21% of our total revenue, for 2019. Substantially all of our related
party revenue was derived from Gulfport under pressure pumping and sand
contracts. For additional information regarding the status of these contracts,
see "Industry Overview - Oil and Natural Gas Industry," "Industry Overview -
Natural Sand Proppant Industry" and Note 19. Commitments and Contingencies to
our consolidated financial statements included elsewhere in this report. Revenue
by division was as follows:

Infrastructure Services. Infrastructure services division revenue decreased
$55.5 million, or 26%, to $157.8 million for 2020 from $213.3 million for 2019
primarily due to the conclusion on March 31, 2019 of the work we performed under
our contracts with PREPA for repairs to Puerto Rico's electrical grid as a
result of Hurricane Maria. For additional information regarding our contracts
with PREPA and our infrastructure services, see "Overview of Our Industries -
Electrical Infrastructure Industry" above. Revenue from our operations in the
continental United States increased $41.1 million, or 35%, to $157.8 million for
2020 from $116.7 million for 2019.

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Well Completion Services. Well completion services division revenue decreased
$155.7 million, or 64%, to $88.3 million for 2020 from $243.8 million for 2019.
Revenue derived from related parties was $42.5 million, or 48% of total well
completion revenue, for 2020 and $91.2 million, or 37% of total well completion
revenue, for 2019. Substantially all of our related party revenue was derived
from Gulfport under a well completion contract. On November 13, 2020, Gulfport
filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code. In
2020, we recognized pre-petition revenue totaling $38.5 million and
post-petition revenue totaling $3.9 million in accordance with the terms of this
contract. For additional information regarding the status of this contract, see
"Industry Overview - Oil and Natural Gas Industry" above. Intersegment revenue,
consisting primarily of revenue derived from our other services and sand
segment, was $0.9 million and $1.9 million, respectively, for 2020 and 2019.

The decrease in our well completion services revenue was primarily driven by a
decline in pricing as well as a decline in utilization. The number of stages
completed decreased 46% to 2,880 for 2020 from 5,378 for 2019. An average of 1.5
of our fleets were active throughout 2020 compared to 2.4 fleets for 2019.

Natural Sand Proppant Services. Natural sand proppant services division revenue
decreased $62.7 million, or 65%, to $34.4 million for 2020, from $97.1 million
for 2019. Revenue derived from related parties was $8.4 million, or 24% of total
sand revenue, for 2020 and $27.7 million, or 29% of total sand revenue, for
2019. All of our related party revenue was derived from Gulfport under a sand
supply contract. On November 13, 2020, Gulfport filed petitions for voluntary
relief under chapter 11 of the Bankruptcy Code. In 2020, we recognized
pre-petition revenue totaling $6.5 million and post-petition revenue totaling
$1.0 million in accordance with the terms of this contract. For additional
information regarding the status of this contract, see "Industry Overview -
Natural Sand Proppant Industry" above. Intersegment revenue, consisting
primarily of revenue derived from our well completion segment, was nominal for
2020 and $30 million, or 31% of total sand revenue, for 2019.

The decrease in our natural sand proppant services revenue was primarily
attributable to a 75% decline in tons of sand sold from approximately 2.0
million tons in 2019 to 0.5 million tons in 2020 coupled with a 51% decline in
average price per ton of sand sold from $29.70 in 2019 to $14.58 in 2020.
Included in natural sand proppant services revenue is shortfall revenue of $24.8
million and $2.8 million, respectively, for 2020 and 2019.

Drilling Services. Drilling services division revenue decreased $24.2 million,
or 76%, to $7.8 million for 2020, from $32.0 million for 2019. Revenue derived
from related parties, consisting primarily of directional drilling revenue from
El Toro Resources LLC, was nominal for 2020 and $0.6 million for 2019.

The decline in our drilling services revenue was primarily attributable to
declines in contract land drilling, rig hauling and directional drilling revenue
of $9.2 million, $8.6 million, and $6.3 million, respectively. In response to
market conditions, we temporarily shut down our contract land drilling
operations beginning in December 2019 and our rig hauling operations beginning
in April 2020.

Other Services. Revenue from other services, consisting of revenue derived from
our aviation, coil tubing, pressure control, flowback, cementing, acidizing,
equipment rental, crude oil hauling, full service transportation, remote
accommodation, equipment manufacturing and infrastructure engineering and design
businesses, decreased $59.8 million, or 67%, to $28.8 million for 2020 from
$88.6 million for 2019. Revenue derived from related parties, consisting
primarily of equipment rental revenue from Gulfport and aviation revenue from
Brim Equipment Leasing, Inc., or Brim, was $1.0 million, or 3% of total other
services revenue, for 2020 and $10.9 million, or 12% of total other services
revenue, for 2019. Intersegment revenue, consisting primarily of revenue derived
from our infrastructure and well completion segments, totaled $2.7 million and
$15.2 million, respectively for 2020 and 2019.

The decrease in our other services revenue was primarily due to a decline in
utilization for our equipment rental business. We rented an average of 204
pieces of equipment to customers during 2020, a decrease of 63% from an average
of 557 pieces of equipment rented to customers during 2019. Additionally,
utilization for our crude oil hauling and aviation businesses declined. Due to
market conditions, we temporarily shut down our cementing and acidizing
operations as well as our flowback operations in July 2019 and our coil tubing
and full service transportation operations beginning in July 2020. These
decreases were partially offset by an increase in revenue for our remote
accommodations business.

Cost of Revenue (exclusive of depreciation, depletion, amortization and
accretion expense). Cost of revenue, exclusive of depreciation, depletion,
amortization and accretion expense, decreased $311.8 million from $543.8
million
, or 87% of total revenue, for 2019 to $232.0 million, or 74% of total
revenue, for 2020. The decrease was primarily due to a decline in activity
across all business lines. Cost of revenue by operating division was as follows:

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Infrastructure Services. Infrastructure services division cost of revenue,
exclusive of depreciation and amortization expense, decreased $49.0 million from
$173.6 million for 2019 to $124.6 million for 2020. The decline is due to the
conclusion on March 31, 2019 of the work we performed under our contracts with
PREPA for repairs to Puerto Rico's electrical grid as a result of Hurricane
Maria. As a percentage of revenue, cost of revenue, exclusive of depreciation
and amortization expense of $29.4 million in 2020 and $30.3 million in 2019, was
79% and 81%, respectively, for 2020 and 2019.

Well Completion Services. Well completion services division cost of revenue,
exclusive of depreciation and amortization expense, decreased $159.6 million, or
77%, from $206.5 million for 2019 to $47.5 million for 2020 primarily due to a
decline in activity. As a percentage of revenue, our well completion services
division cost of revenue, exclusive of depreciation and amortization expense of
$30.4 million in 2020 and $40.2 million in 2019, was 54% and 85%, respectively,
for 2020 and 2019. The decrease was primarily due to the recognition of standby
revenue during 2020, of which there was a lower percentage of costs recognized
compared to 2019. Additionally, during 2019 we provided sand and chemicals with
our service package to customers, resulting in higher costs of goods sold as a
percentage of revenue for this period in comparison to 2020.

Natural Sand Proppant Services. Natural sand proppant services division cost of
revenue, exclusive of depreciation, depletion and accretion expense, decreased
$61.7 million, or 70%, from $87.7 million for 2019 to $26.0 million for 2020
primarily due to a decrease in cost of goods sold as a result of a decrease in
tons of sand sold. As a percentage of revenue, cost of revenue, exclusive of
depreciation, depletion and accretion expense of $9.8 million in 2020 and $14.1
million in 2019, was 76% and 90%, respectively, for 2020 and 2019. The decrease
in cost as a percentage of revenue is primarily due to an increase in shortfall
revenue, partially offset by a 51% decline in average price per ton of sand
sold.

Drilling Services. Drilling services division cost of revenue, exclusive of
depreciation and amortization expense, decreased $26.0 million, or 70%, from
$37.0 million for 2019 to $10.9 million for 2020, as a result of reduced
activity. In response to market conditions, we temporarily shut down our
contract land drilling operations beginning in December 2019 and our rig hauling
operations beginning in April 2020. As a percentage of revenue, our drilling
services division cost of revenue, exclusive of depreciation and amortization
expense of $10.0 million in 2020 and $13.1 million in 2019, was 140% and 116%,
respectively, for 2020 and 2019. The increase was primarily due to a decline in
utilization.

Other Services. Other services cost of revenue, exclusive of depreciation and
amortization expense, decreased $62.7 million, or 71%, from $88.8 million for
2019 to $27.1 million for 2020, primarily due to a decline in costs for our
equipment rental and crude oil hauling businesses as a result of reduced
activity. Additionally, due to market conditions, we temporarily shut down our
cementing and acidizing operations as well as our flowback operations beginning
in July 2019 and our coil tubing, pressure control and full service
transportation operations beginning in July 2020. We continue to monitor market
conditions to evaluate if and when we can recommence providing these services.
These declines were partially offset by an increase in costs for our equipment
manufacturing business. As a percentage of revenue, cost of revenue, exclusive
of depreciation and amortization expense of $15.7 million in 2020 and $19.3
million in 2019, was 93% and 101%, respectively, for 2020 and 2019.

  Selling, General and Administrative Expenses. Selling, general and
administrative expenses, or SG&A, represent the costs associated with managing
and supporting our operations. Following is a breakout of SG&A expenses for the
periods indicated (in thousands):
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                                              Years Ended
                               December 31, 2020       December 31, 2019
Cash expenses:
Compensation and benefits     $           14,876      $           19,364
Professional services                     19,905                  17,128
Other(a)                                   8,828                  10,300
Total cash SG&A expense                   43,609                  46,792
Non-cash expenses:
Bad debt provision                        21,958                   1,434

Stock based compensation                   1,618                   3,326
Total non-cash SG&A expense               23,576                   4,760
Total SG&A expense            $           67,185      $           51,552

a. Includes travel-related costs, IT expenses, rent, utilities and other
general and administrative-related costs.


  Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion,
accretion and amortization decreased $21.7 million, or 19%, to $95.3 million for
2020 from $117.0 million in 2019. The decrease is primarily due to a decline in
property and equipment depreciation expense as well as a decline in depletion
expense.

  Impairment of Goodwill. We recorded impairment of goodwill of $55.0 million
and $33.7 million, respectively, in 2020 and 2019. As a result of market
conditions, we performed an impairment assessment of our goodwill as of March
31, 2020. We determined that the carrying value of goodwill for certain of our
entities exceeded their fair values, resulting in impairment expense of $55.0
million. As a result of our annual assessment of goodwill, we determined that
the carrying value of goodwill for certain of our entities exceeded their fair
values at December 31, 2019, resulting in impairment expense of $33.7 million.
During 2019, we temporarily shut down our cementing and acidizing operations,
resulting in impairment of goodwill totaling $3.1 million.

  Impairment of Other Long-lived Assets. We recorded impairments of other
long-lived assets of $12.9 million and $7.4 million, respectively, in 2020 and
2019. During 2020, we recorded impairment of property and equipment, including
water transfer, crude oil hauling, coil tubing and equipment rental assets,
totaling $12.9 million. During 2019, we temporarily shut down our flowback
operations, resulting in fixed asset impairments of $3.6 million during 2019.
Additionally, we recorded impairment expense $3.0 million related to specified
drilling rigs and $0.8 million related to WTL's customer relationship intangible
asset during 2019.

  Operating Loss. We reported an operating loss of $149.3 million for 2020
compared to operating loss of $128.4 million for 2019. The increased operating
loss was primarily due to increases in impairment expense of $26.8 million and
SG&A expense of $15.6 million, partially offset by a 15% decline in cost of
revenue as a percentage of revenue.

Interest Expense, net. Interest expense, net remained relatively flat at $5.4
million
and $5.0 million for 2020 and 2019, respectively.


  Other Income (Expense), net. Other income, net decreased $7.3 million during
2020 compared to 2019 primarily due to a decline in the recognition of interest
on trade accounts receivable pursuant to the terms of our contracts with PREPA.

  Income Taxes. During 2020, we recorded an income tax benefit of $12.2 million
on pre-tax loss of $119.8 million compared to income tax benefit of $12.1
million on pre-tax loss of $91.1 million for 2019. Our effective tax rate was
10.2% for 2020 compared to 13.3% for 2019. Our tax rate is affected by recurring
items, such as tax rates in foreign jurisdictions and the relative amounts of
income we earn in those jurisdictions, as well as discrete items, such as return
to provision adjustments, goodwill impairment and changes in the valuation
allowance that may not be consistent from year to year. See Note 13 to our
consolidated financial statements for additional detail regarding our change in
tax expense.

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Non-GAAP Financial Measures

Adjusted EBITDA


  Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by
management and external users of our financial statements, such as industry
analysts, investors, lenders and rating agencies. We define Adjusted EBITDA as
net (loss) income before depreciation, depletion, amortization and accretion,
impairment of goodwill, impairment of other long-lived assets, inventory
obsolescence charges, acquisition related costs, public offering costs, equity
based compensation, stock based compensation, interest expense, net, other
(income) expense, net (which is comprised of the (gain) or loss on disposal of
long-lived assets, interest on trade accounts receivable and certain legal
expenses) and (benefit) provision for income taxes, further adjusted to add back
interest on trade accounts receivable. We exclude the items listed above from
net (loss) income in arriving at Adjusted EBITDA because these amounts can vary
substantially from company to company within our industries depending upon
accounting methods and book values of assets, capital structures and the method
by which the assets were acquired. Adjusted EBITDA should not be considered as
an alternative to, or more meaningful than, net (loss) income or cash flows from
operating activities as determined in accordance with GAAP or as an indicator of
our operating performance or liquidity. Certain items excluded from Adjusted
EBITDA are significant components in understanding and assessing a company's
financial performance, such as a company's cost of capital and tax structure, as
well as the historic costs of depreciable assets, none of which are components
of Adjusted EBITDA. Our computations of Adjusted EBITDA may not be comparable to
other similarly titled measures of other companies. We believe that Adjusted
EBITDA is a widely followed measure of operating performance and may also be
used by investors to measure our ability to meet debt service requirements.

The following tables also provide a reconciliation of Adjusted EBITDA to the
GAAP financial measure of net income or (loss) for each of our operating
segments for the specified periods (in thousands).

Consolidated

                                                                   Years Ended December 31,
Reconciliation of Adjusted EBITDA to net loss:           2021                2020                2019
Net loss                                             $ (101,430)         $ (107,607)         $  (79,044)
Depreciation, depletion, amortization and accretion      78,475              95,317             117,033
Impairment of goodwill                                      891              54,973              33,664
Impairment of other long-lived assets                     1,212              12,897               7,358
Inventory obsolescence charges                                -                   -               1,349
Acquisition related costs                                     -                   -                  45
Public offering costs                                        91                   -                   -

Stock based compensation                                  1,191               1,952               4,177
Interest expense, net                                     6,406               5,397               4,958
Other income, net                                       (10,301)            (34,938)            (42,216)
Benefit for income taxes                                (22,863)            (12,169)            (12,081)
Interest on trade accounts receivable                    34,709              34,130              42,040
Adjusted EBITDA                                      $  (11,619)         $   49,952          $   77,283



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Infrastructure Services

                                                                   Years Ended December 31,
Reconciliation of Adjusted EBITDA to net (loss)
income:                                                  2021                2020                2019
Net (loss) income                                    $  (36,711)         $     (928)         $   18,135
Depreciation, depletion, amortization and accretion      21,880              29,373              30,349
Impairment of goodwill                                      891                   -                   -
Impairment of other long-lived assets                       665                   -                   -
Acquisition related costs                                     -                   -                  12
Public offering costs                                        39                   -                   -
Stock based compensation                                    500                 580                 822
Interest expense                                          3,925               2,794               1,674
Other income, net                                        (6,785)            (32,437)            (41,949)
Provision for income taxes                                  712               7,133               7,908
Interest on trade accounts receivable                    36,551              32,214              42,040
Adjusted EBITDA                                      $   21,667          $   38,729          $   58,991



Well Completion Services
                                                              Years Ended December 31,
Reconciliation of Adjusted EBITDA to net loss:           2021           2020           2019
Net loss                                              $ (58,051)     $ (69,073)     $ (39,020)
Depreciation, depletion, amortization and accretion      26,377         30,411         40,159
Impairment of goodwill                                        -         53,406         23,423
Impairment of other long-lived assets                         -          4,203              -
Acquisition related costs                                     -              -             18
Public offering costs                                        31              -              -

Stock based compensation                                    333            527          1,693
Interest expense                                          1,107          1,130          1,228
Other expense (income), net                               1,073         (2,274)           580
Interest on trade accounts receivable                    (1,841)         1,888              -
Adjusted EBITDA                                       $ (30,971)     $  20,218      $  28,081


Natural Sand Proppant Services

                                                                   Years Ended December 31,
Reconciliation of Adjusted EBITDA to net (loss)
income:                                                  2021                2020                2019
Net loss                                             $   (6,328)         $  (11,324)         $  (12,589)
Depreciation, depletion, amortization and accretion       9,005               9,771              14,050
Impairment of goodwill                                        -                   -               2,684

Acquisition related costs                                     -                   -                   8
Public offering costs                                        12                   -                   -

Stock based compensation                                    202                 425                 812

Interest expense                                            474                 312                 193
Other (income) expense, net                                (874)              1,839                  67
Interest on trade accounts receivable                        (1)                  3                   -
Adjusted EBITDA                                      $    2,490          $    1,026          $    5,225



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Drilling Services

                                                              Years Ended December 31,
Reconciliation of Adjusted EBITDA to net loss:           2021           2020           2019
Net loss                                              $ (11,307)     $ 

(16,865) $ (26,117)
Depreciation, depletion, amortization and accretion 7,996 10,039 13,143


Impairment of other long-lived assets                         -            326          2,955
Acquisition related costs                                     -              -              2
Public offering costs                                         2              -              -

Stock based compensation                                     76            203            361
Interest expense                                            293            454            862
Other income, net                                          (177)          (227)            (9)

Adjusted EBITDA                                       $  (3,117)     $  (6,070)     $  (8,803)



Other Services(a)
                                                             Years Ended December 31,
Reconciliation of Adjusted EBITDA to net loss:           2021          2020 

2019

Net income (loss)                                     $ 10,967      $ (9,417)     $ (19,514)
Depreciation, depletion, amortization and accretion     13,217        15,722         19,332
Impairment of goodwill                                       -         1,567          7,557
Impairment of other long-lived assets                      547         8,368          4,403
Inventory obsolescence charges                               -             -          1,349
Acquisition related costs                                    -             -              5
Public offering costs                                        7             -              -

Stock based compensation                                    80           217            489
Interest expense, net                                      607           707          1,001
Other income, net                                       (3,538)       (1,839)          (905)
Benefit for income taxes                               (23,575)      (19,302)       (19,989)
Interest on trade accounts receivable                        -            25              -
Adjusted EBITDA                                       $ (1,688)     $ (3,952)     $  (6,272)


a.  Includes results for our aviation, coil tubing, pressure control, flowback,
cementing, acidizing, equipment rentals, crude oil hauling, full service
transportation, remote accommodations and equipment manufacturing and corporate
related activities. Our corporate related activities do not generate revenue.

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Adjusted Net Loss and Adjusted Loss per Share


  Adjusted net loss and adjusted basic and diluted loss per share are
supplemental non-GAAP financial measures that are used by management to evaluate
our operating and financial performance. Management believes these measures
provide meaningful information about the Company's performance by excluding
certain non-cash charges, such as impairment expense, that may not be indicative
of the Company's ongoing operating results. Adjusted net loss and adjusted loss
per share should not be considered in isolation or as a substitute for net loss
and loss per share prepared in accordance with GAAP and may not be comparable to
other similarly titled measures of other companies. The following tables provide
a reconciliation of adjusted net loss and adjusted loss per share to the GAAP
financial measures of net loss and loss per share for the periods specified.
                                                                   Years Ended December 31,
                                                         2021                  2020                2019
                                                           (in thousands, except per share amounts)
Net loss, as reported                             $      (101,430)         $ (107,607)         $  (79,044)
Impairment of goodwill                                        891              54,973              33,664
Impairment of other long-lived assets                       1,212              12,897               7,358

Adjusted net loss                                 $       (99,327)         $  (39,737)         $  (38,022)

Basic loss per share, as reported                 $         (2.18)         $    (2.36)         $    (1.76)
Impairment of goodwill                                       0.02                1.20                0.75
Impairment of other long-lived assets                        0.03                0.28                0.16

Adjusted basic loss per share                     $         (2.13)         

$ (0.88) $ (0.85)


Diluted loss per share, as reported               $         (2.18)         $    (2.36)         $    (1.76)
Impairment of goodwill                                       0.02                1.20                0.75
Impairment of other long-lived assets                        0.03                0.28                0.16

Adjusted diluted loss per share                   $         (2.13)         

$ (0.88) $ (0.85)

Liquidity and Capital Resources


  We require capital to fund ongoing operations, including maintenance
expenditures on our existing fleet of equipment, organic growth initiatives,
investments and acquisitions. Our primary sources of liquidity have been cash
flows from operations and borrowings under our revolving credit facility. Our
primary uses of capital have been for investing in property and equipment used
to provide our services and acquire complementary businesses. In July 2019, as a
result of oilfield market conditions as well as other factors, which include the
status of collections from PREPA, our board of directors suspended our quarterly
cash dividend. Future declaration of cash dividends are subject to approval by
our board of directors and may be adjusted at its discretion based on market
conditions and capital availability.

As of December 31, 2021, we had outstanding borrowing under our revolving
credit facility of $83.4 million.

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  The following table summarizes our liquidity as of the dates indicated (in
thousands):
                                                                        December 31,
                                                                 2021                   2020
Cash and cash equivalents                                  $       9,899          $      14,822
Revolving credit facility availability                           118,948                129,787
Less long-term debt                                              (85,240)               (81,338)
Less available borrowing capacity reserve                        (10,000)                     -
Less letter of credit facilities (bonding program)                (1,000)                (5,000)
Less letter of credit facilities (insurance programs)             (3,890)                (3,890)
Less letter of credit facilities (environmental
remediation)                                                      (3,694)                (3,694)
Less letter of credit facilities (rail car commitments)             (455)                  (455)
Net working capital (less cash)(a)                               280,651                321,328
Total                                                      $     305,219          $     371,560


a.  Net working capital (less cash) is a non-GAAP measure and, as of
December 31, 2021, is calculated by subtracting total current liabilities of
$150.2 million and cash and cash equivalents of $9.9 million from total current
assets of $440.8 million. As of December 31, 2020, net working capital (less
cash) is calculated by subtracting total current liabilities of $128.6 million
and cash and cash equivalents of $14.8 million from total current assets of
$464.7 million. Amounts include receivables due from PREPA of $337.8 million and
$301.2 million and corresponding liabilities of $42.3 million and $33.5 million
at December 31, 2021 and 2020, respectively.


  As of March 2, 2022, we had $83.7 million in borrowings outstanding under our
revolving credit facility, leaving an aggregate of $10.6 million of available
borrowing capacity under this facility, after giving effect to $8.5 million of
outstanding letters of credit and the requirement to maintain a $7.5 million
reserve out of the available borrowing capacity.

Continued prolonged volatility in the capital, financial and/or credit markets
due to the COVID-19 pandemic, volatility in commodity prices and/or adverse
macroeconomic conditions may further limit our access to, or increase our cost
of, capital or make capital unavailable on terms acceptable to us or at all. In
addition, if we are unable to comply with the covenants under our amended
revolving credit facility following the expiration of the waiver period
contemplated thereunder, or obtain an additional waiver of such covenants, as
discussed below, and an event of default occurs and remains uncured, our lenders
would not be required to lend any additional amounts to us, could elect to
increase our interest rate by 200 basis points, could elect to declare all
outstanding borrowings, together with accrued and unpaid interest and fees, to
be due and payable, may have the ability to require us to apply all of our
available cash to repay our outstanding borrowings and may foreclose on
substantially all of our assets.

Liquidity and Cash Flows


  The following table sets forth our cash flows for the years indicated (in
thousands):

                                                             Years Ended December 31,
                                                         2021          2020          2019
Net cash (used in) provided by operating activities   $ (18,865)     $ 6,967      $ (95,318)
Net cash provided by (used in) investing activities       5,507       (2,295)       (33,224)
Net cash provided by financing activities                 8,428        4,266         66,702
Effect of foreign exchange rate on cash                       7           12             87
Net change in cash                                    $  (4,923)     $ 8,950      $ (61,753)



Operating Activities

Net cash (used in) provided by operating activities was ($18.9) million, $7.0
million
and ($95.3) million, respectively, for the years ended December 31,
2021
, 2020 and 2019. The decrease in operating cash flows was primarily
attributable to the timing of cash inflows for accounts receivable.

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Investing Activities


  Net cash provided by (used in) investing activities was $5.5 million, ($2.3)
million and ($33.2) million, respectively, for the years ended December 31,
2021, 2020 and 2019. Substantially all remaining cash used in investing
activities was used to purchase property and equipment that is utilized to
provide our services, which was partially offset by proceeds from the disposal
of property and equipment.

The following table summarizes our capital expenditures by operating division
for the periods indicated (in thousands):

                                        Years Ended December 31,
                                       2021       2020       2019

Infrastructure services(a) $ 627 $ 258 $ 3,456
Well completion services(b)

             4,327     4,358     14,703
Natural sand proppant services(c)         484     1,073      2,877
Drilling services(d)                       44       432      3,156
Other(e)                                  361       716     11,569
Total capital expenditures          $   5,843   $ 6,837   $ 35,761


a.  Capital expenditures primarily for truck, tooling and equipment purchases
for new infrastructure crews for the years ended December 31, 2021, 2020 and
2019.
b.  Capital expenditures primarily for upgrades to our pressure pumping fleet
and water transfer equipment for the years ended December 31, 2021, 2020 and
2019.
c.  Capital expenditures primarily for maintenance for the years ended
December 31, 2021, 2020 and 2019.
d.  Capital expenditures primarily for directional drilling equipment for the
year ended December 31, 2020 and upgrades to our rig fleet for the year ended
December 31, 2019.
e.  Capital expenditures primarily for equipment for our equipment rental and
crude hauling businesses for the years ended December 31, 2021, 2020 and 2019.

Financing Activities


  Net cash provided by financing activities was $8.4 million, $4.3 million and
$66.7 million, respectively, for the years ended December 31, 2021, 2020 and
2019. Net cash provided by financing activities for the year ended December 31,
2021 was primarily attributable to net proceeds received from sale-leaseback
transactions of $6.5 million and net borrowings under our revolving credit
facility of $4.2 million, partially offset by principal payment on financing
leases and equipment notes of $2.3 million. Net cash provided by financing
activities for the year ended December 31, 2020 was primarily attributable to
net proceeds of $4.7 million received from a sale-leaseback transaction and net
borrowings under our revolving credit facility of $2.6 million, principal
payment on financing leases and equipment notes of $2.0 million and payment of
debt issuance costs of $1.0 million. Net cash provided by financing activities
for the year ended December 31, 2019 was primarily attributable to net
borrowings under our revolving credit facility of $80.0 million, partially
offset by dividends paid of $11.2 million.

Effect of Foreign Exchange Rate on Cash


  The effect of foreign exchange rate on cash was a nominal amount for both of
the years ended December 31, 2021 and 2020, and $0.1 million for 2019. The
year-over-year effect was driven primarily by a favorable (unfavorable) shift in
the weakness (strength) of the Canadian dollar relative to the U.S. dollar for
the cash held in Canadian accounts.

Working Capital


  Our working capital totaled $290.5 million and $336.1 million, respectively,
at December 31, 2021 and 2020. Our cash balances totaled $9.9 million and $14.8
million, respectively, at December 31, 2021 and 2020. Included in working
capital are receivables due from PREPA totaling $337.8 million and $301.2
million and corresponding liabilities of $42.3 million and $33.5 million at
December 31, 2021 and 2020, respectively.

Our Revolving Credit Facility


   On October 19, 2018, we and certain of our direct and indirect subsidiaries,
as borrowers, entered into an amended and restated revolving credit facility, as
subsequently amended, with the lenders party thereto and PNC Bank, National
Association, as a lender and as administrative agent for the lenders. At
December 31, 2021, we had outstanding borrowings under our revolving credit
facility of $83.4 million and $16.5 million of available borrowing capacity,
after giving effect to $9.0 million of outstanding letters of credit and the
requirement to maintain a $10.0 million reserve out of the available borrowing
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capacity during the limited waiver period as discussed below. As a result of the
lack of payment from PREPA, we projected that we would likely breach the
leverage ratio covenant contained in our revolving credit facility for the
fiscal quarter ended on September 30, 2021. On November 3, 2021, we entered into
a third amendment to the revolving credit facility (the "Third Amendment") to,
among other things, (i) suspend the leverage ratio and fixed charges coverage
ratio covenants for the quarters ending September 30, 2021 and December 31,
2021, (ii) permanently reduce the maximum revolving advance amount from $130
million to $120 million, (iii) add a minimum adjusted EBITDA financial covenant
of $6.0 million for the quarter ending December 31, 2021, (iv) set the
applicable margin on all loans at 3.50% during the limited covenant waiver
period, (v) add a requirement to maintain revolver availability of not less than
$10.0 million at all times during the limited covenant waiver period, (vi)
permanently reduce the maximum revolving advance amount in an amount equal to
fifty percent (50%) of any mandatory prepayments made with non-recurring
proceeds that are received during the limited covenant waiver period, and (vii)
eliminate the declaration of unrestricted subsidiaries during the limited
covenant waiver period. The limited covenant waiver period commenced on the
effective date of the Third Amendment and was scheduled to end on the earlier to
occur of (i) May 15, 2022, (ii) our reporting compliance with both the leverage
ratio and the fixed charge coverage ratio covenants for either its fiscal
quarter ending September 30, 2021 or December 31, 2021, and (iii) the occurrence
of any event of default after the effective date of the Third Amendment. Under
the Third Amendment, we also agreed to engage an advisor during the limited
covenant waiver period to advise us and our subsidiaries with regard to, among
other things, efforts to achieve certain operational efficiencies, improvement
in results of operations, and general business strategy, and provide assistance
to us and our subsidiaries in the preparation of the supplemental reporting and
information required by the Third Amendment. As of December 31, 2021, we were in
compliance with the covenants under our revolving credit facility, as amended
and waived by the Third Amendment.

On February 28, 2022, we entered into a fourth amendment to the revolving credit
facility (the "Fourth Amendment") to, among other things, (i) amend our
financial covenants as outlined below, (ii) provide for a conditional increase
of the applicable interest margin, (iii) permit certain sale-leaseback
transactions, (iv) provide for a reduction in the maximum revolving advance
amount in an amount equal to 50% of the PREPA claims proceeds, subject to a
floor equal to the sum of eligible billed and unbilled accounts receivables, and
(v) classifies the payments pursuant to our settlement agreement with MasTec
Renewables Puerto Rico, LLC as restricted payments and requires $20.0 million of
availability both before and after making such payments.

The financial covenants under our revolving credit facility were amended as
follows:


•the leverage ratio was eliminated;
•the fixed charge coverage ratio was reduced to 0.85 to 1.0 for the six months
ended June 30, 2022 and increases to 1.1 to 1.0 for the periods thereafter;
•a minimum adjusted EBITDA covenant of $4.7 million, excluding interest on the
accounts receivable from PREPA, for the five months ending May 31, 2022 was
added; and
•the minimum excess availability covenant was reduced to $7.5 million through
the earlier of (i) March 31, 2022 or (ii) the date on which proceeds of
permitted sale-leaseback transactions are received, after which the minimum
excess availability covenant will increase to $10.0 million.

The Fourth Amendment also permanently waived compliance by the borrowers with
the leverage ratio and fixed charge coverage ratio covenants in our revolving
credit facility for the fiscal quarters ended September 30, 2021 and December
31, 2021, respectively, ending the limited covenant waiver period under the
Third Amendment. For additional information regarding our revolving credit
facility, see Note 10. Debt to our consolidated financial statements included
elsewhere in this report.

Sale-Leaseback Transactions

On December 30, 2020, we entered into an agreement with First National Capital,
LLC, or FNC, whereby we agreed to sell certain assets from our infrastructure
segment to FNC for aggregate proceeds of $5.0 million. Concurrent with the sale
of assets, we entered into a 36 month lease agreement whereby we will lease back
the assets at a monthly rental rate of $0.1 million. On June 1, 2021, we entered
into another agreement with FNC whereby we sold additional assets from our
infrastructure segment to FNC for aggregate proceeds of $9.5 million and entered
into a 42 month lease agreement whereby we lease back the assets at a monthly
rental rate of $0.2 million. Under the agreements, we have the option to
purchase the assets at the end of the lease term. We recorded a liability for
the proceeds received and will continue to depreciate the assets. We imputed an
interest rate so that the carrying amount of the financial liabilities will be
the expected repurchase price at the end of the initial lease terms.

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Aviation Note


On November 6, 2020, Leopard and Cobra Aviation entered into a 39 month
promissory note agreement with Bank7, or the Aviation Note, in an aggregate
principal amount of $4.6 million and received net proceeds of $4.5 million. The
Aviation Note bears interest at a rate based on the Wall Street Journal Prime
Rate plus a margin of 1%. Principal and interest payments of $0.1 million are
due monthly, with a final payment of $0.2 million due on February 1, 2024. The
Aviation Note is collateralized by Leopard and Cobra Aviation's assets,
including a $1.8 million certificate of deposit. The Aviation Note contains
various customary affirmative and restrictive covenants. As of December 31,
2021, we did not meet the minimum debt coverage ratio of 1.25 to 1.0 set forth
in the Aviation Note. On March 2, 2022, Bank7 granted us a waiver of this event
of default.

Capital Requirements and Sources of Liquidity


As we pursue our business and financial strategy, we regularly consider which
capital resources are available to meet our future financial obligations and
liquidity requirement. We believe that our cash on hand, operating cash flow and
available borrowings under our credit facility will be sufficient to meet our
short-term and long-term funding requirements, including funding our current
operations, planned capital expenditures, debt service obligations, litigation
settlement obligations and other known contingencies. However, future cash flows
are subject to a number of variables (including receipt of payments from our
customers, including PREPA). As of December 31, 2021, PREPA owed Cobra
approximately $337.8 million for services performed, including $110.8 million of
interest charges. Throughout 2021, we released significant data that we obtained
through Freedom of Information Act requests that affirm the work performed by
Cobra in Puerto Rico. We believe these documents in conjunction with the current
Administration's focus on the recovery of Puerto Rico and our enhanced lobbying
efforts will aid in collecting the outstanding amounts owed to us by PREPA.
However, in the event PREPA (i) does not have or does not obtain the funds
necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains
the necessary funds but refuses to pay the amounts owed to Cobra or (iii)
otherwise does not pay amounts owed to Cobra for services performed, the
receivable may not be collectible, which may adversely impact our liquidity.

During 2021, our capital expenditures totaled $5.8 million and included $0.6
million in our infrastructure segment primarily related to truck, tooling and
equipment purchases for new crews, $4.3 million in our well completion segment
primarily related to upgrades to our pressure pumping fleet and water transfer
equipment, $0.5 million in our natural sand proppant services segment for
various maintenance equipment and $0.4 million for our other businesses
primarily related to equipment additions for our equipment rental business.

  During 2022, we currently estimate that our aggregate capital expenditures
will be $6 million, depending upon industry conditions and our financial
results. These capital expenditures include $2.5 million in our infrastructure
segment for assets for additional equipment, $3.0 million in our well completion
segment for conversion of a portion of our fleet to include DGB capabilities and
maintenance to our existing pressure pumping fleet and $0.5 million for our
other divisions, primarily for additional equipment for our rental business.

Also, as noted above in this report, in response to market conditions we have
(i) temporarily shut down certain of our oilfield service offerings, including
coil tubing, pressure control, flowback, crude oil hauling, cementing, acidizing
and land drilling services, (ii) idled certain facilities, including our sand
processing plant in Pierce County, Wisconsin and (iii) reduced our workforce
across all of our operations. We continue to monitor market conditions to
determine if and when we will recommence these services and operations and
increase our workforce. Any such recommencement and expansion will further
increase our liquidity requirements in advance of revenue generation.

  In addition, while we regularly evaluate acquisition opportunities, we do not
have a specific acquisition budget for 2022 since the timing and size of
acquisitions cannot be accurately forecasted. We continue to evaluate
acquisition opportunities, including those in the renewable energy sector as
well as transactions involving entities controlled by Wexford. Our acquisitions
may be undertaken with cash, our common stock or a combination of cash, common
stock and/or other consideration. In the event we make one or more acquisitions
and the amount of capital required is greater than the amount we have available
for acquisitions at that time, we could be required to reduce the expected level
of capital expenditures and/or seek additional capital.

If we seek additional capital for any of the above or other reasons, we may do
so through borrowings under our revolving credit facility, joint venture
partnerships, sale-leaseback transactions, asset sales, offerings of debt or
equity securities or other means. Although we expect that our sources of capital
will be adequate to fund our short-term and long-term liquidity requirement, we
cannot assure you that this additional capital will be available on acceptable
terms or at all. If we are unable to obtain funds we need, our ability to
conduct operations, make capital expenditures, satisfy debt services
obligations, pay
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litigation settlement obligations, fund contingencies and/or complete
acquisitions that may be favorable to us will be impaired, which would have a
material adverse effect on our business, financial condition, results of
operations and cash flows.

Contractual and Commercial Commitments

The following table summarizes our contractual obligations and commercial
commitments as of December 31, 2021 (in thousands):

                                                       Less than 1                                                 More than 5
                                      Total               year             1-3 Years           3-5 Years              Years
Contractual obligations:
Revolving credit facility(a)       $  83,370          $        -          $  83,370          $        -          $          -
Interest and commitment fees on
revolving credit facility(b)           6,671               3,712              2,959                   -                     -
Aviation note(c)                       3,569               1,620              1,949                   -                     -
Legal settlement obligation(d)        20,274              20,274                  -                   -                     -
Sale-leaseback arrangement(e)         10,565               4,382              6,183                   -                     -
Operating lease obligations(f)        12,532               6,220              5,241                 663                   408
Financing lease obligations(g)         6,549               2,004              3,226               1,319                     -
Equipment financing obligations(h)       490                 482                  8                   -                     -
Purchase commitments (i)                 521                 395                126                   -                     -
Capital purchase commitments (j)         915                 915                  -                   -                     -
                                   $ 145,456          $   40,004          $ 103,062          $    1,982          $        408



a.Excludes interest payments.
b.Assumption of revolving credit facility balance outstanding as of December 31,
2021 of $83.4 million using the weighted average interest rate as of December
31, 2021 of 4.17%
c.Assumption of an interest rate of 5%.
d.Obligation under a legal settlement, including accrued interest. See Note 19
to our consolidated financial statements.
e.Obligations under a sale-leaseback arrangement for a portion of our
infrastructure segment assets.
f.Operating lease obligations primarily relate to rail cars, real estate and
other equipment.
g.Financing lease obligations primarily relate to equipment for our
infrastructure segment.
h.Equipment financing obligations primarily relate to vehicles and other
equipment for our well completion segment.
i.Purchase commitments are comprised primarily of software subscriptions.
j.Obligations arising from capital improvements and equipment purchases.

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Critical Accounting Estimates


The preparation of financial statements requires the use of judgments and
estimates. Our critical accounting policies are described below to provide a
better understanding of how we develop our assumptions and judgments about
future events and related estimates and how they can impact our financial
statements. A critical accounting estimate is one that requires our most
difficult, subjective, or complex judgments and assessments and is fundamental
to our results of operations. We identified our most critical accounting
estimates to be:

-allowance for doubtful accounts;

-valuations of long-lived assets, including goodwill and intangible assets; and

-litigation and contingencies.


We base our estimates on historical experience and on various other assumptions
we believe to be reasonable according to the current facts and circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. We believe the following are the critical accounting policies used in
the preparation of our consolidated financial statements, as well as the
significant estimates and judgments affecting the application of these policies.
This discussion and analysis should be read in conjunction with our consolidated
financial statements and related notes included in this report.

Allowance for Doubtful Accounts


We regularly review receivables and provide for estimated losses through an
allowance for doubtful accounts. In evaluating the level of established
reserves, we make judgments regarding our customers' ability to make required
payments, economic events and other factors. As the financial condition of
customers changes, circumstances develop, or additional information becomes
available, adjustments to the allowance for doubtful accounts may be required.
This process involves judgment and estimation. Accordingly, our results of
operations can be affected by adjustments to the allowance due to actual
write-offs that differ from estimated amounts.

As of December 31, 2021 and 2020, our allowance for doubtful accounts totaled
$18.1 million and $30.1 million, respectively, which is primarily comprised of
accounts receivable from Gulfport. During 2021, we wrote-off accounts receivable
totaling $83.0 million, substantially all of which related to Gulfport. See
Notes 2, 3 and 19 to the consolidated financial statement for further
information related to Gulfport.

Our accounts receivable balance included $337.8 million and $301.2 million
related to PREPA as of December 31, 2021 and 2020, respectively, which includes
interest charged on delinquent balances. PREPA has not made any payments to us
on their outstanding receivable since 2019. PREPA is currently subject to
bankruptcy proceedings and, as a result, their ability to meet their obligations
is largely dependent upon funding from the FEMA or other sources. On September
30, 2019, we filed a motion with the U.S. District Court for the District of
Puerto Rico seeking recovery of the amounts owed to us by PREPA, which motion
was stayed by the court. On March 25, 2020, we filed an urgent motion to modify
the stay order and allow our recovery of approximately $62 million in claims
related to a tax gross-up provision contained in the first contract. This
emergency motion was denied on June 3, 2020 and the court extended the stay of
our motion. On December 9, 2020, the Court again extended the stay of our motion
and directed PREPA to file a status motion by June 7, 2021. On April 6, 2021, we
filed a motion to lift the stay order. Following this filing, PREPA initiated
discussion, which resulted in PREPA and Cobra filing a joint motion to adjourn
all deadlines relative to the April 6, 2021 motion until the June 16, 2021
omnibus hearing as a result of PREPA's understanding that FEMA will release a
report in the near future relating to the first contract. The joint motion was
granted by the court on April 14, 2021. On May 26, 2021, FEMA issued a
Determination Memorandum related to the first contract between Cobra and PREPA
in which, among other things, FEMA raised two contract compliance issues and, as
a result, concluded that approximately $47 million in costs were not authorized
costs under the contract. On June 14, 2021, the Court issued an order adjourning
Cobra's motion to lift the stay order to a hearing on August 4, 2021 and
directing Cobra and PREPA to meet and confer in good faith concerning (i) the
May 26, 2021 Determination Memorandum issued by FEMA and (ii) whether and when a
second determination memorandum is expected. The parties were further directed
to file an additional status report, which was filed on July 20, 2021. On July
23, 2021, with our aid, PREPA filed an appeal of the entire $47 million that
FEMA de-obligated in the May 26, 2021 Determination Memorandum. On August 10,
2021, after hearing oral argument at the August 4, 2021 omnibus hearing, the
Court issued an order denying Cobra's April 2021 motion to lift the stay and
directing Cobra and PREPA to file a status report on January 22, 2022. On
January 26, 2022, the Court issued an order directing the parties to file a
further status report by July 25, 2022.

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We continuously review the facts and circumstances related to this receivable to
determine if an allowance is needed. We believe all amounts charged to PREPA,
including interest charged on delinquent accounts receivable, were in accordance
with the terms of the contracts. Further, there have been multiple reviews
prepared by or on behalf of FEMA that have concluded that the amounts Cobra
charged PREPA were reasonable, that PREPA adhered to Puerto Rican legal statutes
regarding emergency situations and that PREPA engaged in a reasonable
procurement process. As noted above, in May 2021 FEMA raised two contract
compliance issues and concluded that $47 million in costs were not eligible
under the contract. PREPA, however, has filed an appeal of the entire
$47 million, which is currently pending. We believe these receivables are
collectible and for the reasons previously described as well as other factors,
no allowance was deemed necessary at December 31, 2021 or 2020. However, in the
event PREPA (i) does not have or does not obtain the funds necessary to satisfy
its obligations to Cobra under the contracts, (ii) obtains the necessary funds
but refuses to pay the amounts owed to us or (iii) otherwise does not pay
amounts owed to us for services performed, the receivable may not be
collectible.

See Note 2 to our consolidated financial statements for additional detail
regarding our allowance for doubtful accounts.

Valuation of Long-Lived Assets


Long-lived assets on our balance sheet include property, plant and equipment,
goodwill and intangible assets. We test goodwill for impairment annually, or
more frequently if events or changes in circumstances indicate that an
impairment may exist. We conduct impairment tests on long-lived assets, other
than goodwill, whenever events or changes in circumstances indicate that the
carrying value may not be recoverable.

Goodwill. Under generally accepted accounting principles, we have the option to
first assess qualitative factors to determine whether the existence of events or
circumstances leads to a determination that it is more likely than not that the
fair value of one or more of our reporting units is greater than its carrying
amount. If, after assessing the totality of events or circumstances, we
determine it is more likely than not that the fair value of a reporting unit is
greater than its carrying amount, there is no need to perform any further
testing. However, if we conclude otherwise, then we are required to perform a
quantitative impairment test by calculating the fair value of the reporting unit
and comparing the fair value with the carrying amount of the reporting unit. If
the fair value of the reporting unit is less than its carrying value, an
impairment loss is recorded based on that difference.

During the years ended December 31, 2021 and 2020, and 2019, we recorded
goodwill impairment charges of $0.9 million, $55.0 million and $33.7 million,
respectively. See Note 6 to our consolidated financial statements for details
regarding the facts and circumstances that led to this impairment and how the
fair value of each reporting unit was estimated, including significant
assumptions used and other details.

Other Long-Lived Assets. Impairment of other long-lived assets, including
property, plant and equipment and intangible assets is evaluated by measuring
the carrying amount of the assets against the estimated undiscounted future cash
flows associated with the assets. If such evaluations indicate that the future
undiscounted cash flow from the assets is not sufficient to recover the carrying
value of such assets, the assets are adjusted to their estimated fair values.

During the years ended December 31, 2021 and 2020, and 2019, we recorded
impairment charges of other long-lived assets totaling $1.2 million, $12.9
million
and $7.4 million, respectively. See Note 6 to our consolidated financial
statements for additional details.


The assumptions used in the impairment evaluation for long-lived assets are
inherently uncertain and require management's judgment. A continued period of
low oil and natural gas prices or continued reductions in capital expenditures
by our customers would likely have an adverse impact on our utilization and the
prices that we receive for our services. This could result in the recognition of
future material impairment charges on the same, or additional, property and
equipment if future cash flow estimates, based upon information then available
to management, indicate that their carrying values are not recoverable.

Litigation and Contingencies


As discussed in Note 19 of our consolidated financial statements, we are
involved in various litigation matters arising in the ordinary course of
business. Accruals for litigation and contingencies are based on our assessment,
including advice of legal counsel, of the expected outcome of litigation or
other dispute resolution proceedings and/or the expected resolution of
contingencies. For matters in which a liability is probable and reasonably
estimable, we accrue an estimate for the resolution of the matter. For matters
in which a liability is not probable and reasonably estimable, we do not accrue
any amounts. Significant judgment is required in both the determination of
probability of loss and the determination as to whether the amount is
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reasonably estimable. Accruals are based on information available at the time of
the assessment due to the uncertain nature of such matters. As additional
information becomes available, we reassess potential liabilities related to
pending claims and litigation and may revise previous estimates, which could
materially affect our results of operations in a given period.

New Accounting Pronouncements

Accounting Pronouncements Recently Adopted


  In February 2016, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2016-02 "Leases (Topic 842)" amending
the current accounting for leases. Under the new provisions, all lessees will
report a right of use asset and lease liability on the balance sheet for all
leases with a term longer than one year, while maintaining substantially similar
classifications for financing and operating leases. Lessor accounting remains
substantially unchanged with the exception that no leases entered into after the
effective date will be classified as leveraged leases. ASU 2016-02 is effective
for fiscal years beginning after December 15, 2018, and interim periods within
that fiscal year. We adopted this ASU effective January 1, 2019 utilizing the
transition method permitted by ASU No. 2018-11 "Leases (Topic 842): Targeted
Improvements", issued in August 2018, which permits an entity to recognize a
cumulative-effect adjustment to the opening balance of retained earnings in the
period of adoption with no adjustment made to the comparative periods presented
in the consolidated financial statements. See Note 14. Leases to our
consolidated financial statements included elsewhere in this annual report for
the impact the adoption of this standard had on our financial statements.

In June 2018, the FASB issued ASU No. 2018-07, "Compensation - Stock
Compensation (Topic 718): Improvements to Non-employee Share-Based Accounting,"
which simplifies the accounting for share-based payments granted to
non-employees by aligning the accounting with requirements for employee
share-based compensation. Upon transition, this ASU requires non-employee awards
to be measured at fair value as of the adoption date. This ASU is effective for
fiscal years beginning after December 15, 2018, and interim periods within that
fiscal year. We adopted this ASU effective January 1, 2019 and estimated the
fair value of our non-employee awards was approximately $18.9 million as of this
date.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,"
which amends current guidance on reporting credit losses on financial
instruments. This ASU requires entities to reflect its current estimate of all
expected credit losses. The guidance affects most financial assets, including
trade accounts receivable. This ASU is effective for fiscal years beginning
after December 31, 2019, with early adoption permitted. We adopted this standard
effective January 1, 2020. It did not have a material impact on the our
consolidated financial statements.

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