FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2022 TABLE OF CONTENTS Page PART I Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. PART II Item 5. Market for Item 6. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Item 8. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Item 9A. Item 9B. PART III Item 10. Item 11. Item 12. Security Ownership of Certain Beneficial Owners and Management and Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. PART IV Item 15. Item 16. PART I General Expro Group Holdings N.V. On March 10, 2021, the Company and New Eagle Holdings Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct wholly owned subsidiary of the Company (“Merger Sub”), entered into an Agreement and Plan of Merger with Expro Group Holdings International Limited (“Legacy Expro”) providing for the merger of Legacy Expro with and into Merger Sub in an all-stock transaction, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of the Company (the “Merger”). Our Operations With roots dating to 1938, the Description of Business Segments Our operations are comprised of • North and Latin America (“NLA”), • Europe and Sub-Saharan Africa (“ESSA”), • Middle East and North Africa (“MENA”), and • Asia-Pacific (“APAC”). The table below shows our consolidated revenue and each Year Ended Percentage (in thousands) December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2022 December 31, 2021 December 31, 2020 NLA ESSA MENA APAC Total Revenue Our broad portfolio of products and services includes: Well Construction • Well Management Our well management offerings consist of well flow management, subsea well access and well intervention and integrity services: • • • Corporate Strategy The combination of Legacy Expro and Frank’s brought together two companies with decades of market leadership to create a leading energy services provider with an extensive portfolio of capabilities across the well lifecycle. As a result of the Merger and the progress that we have made in integrating the business and operations of Legacy Expro and Frank’s, we believe we are well positioned to support our customers around the world, improve profitability and invest in emerging growth opportunities. Our corporate strategy is designed to leverage existing capabilities and position Expro as a solutions provider with a technologically differentiated offering. In particular, our objectives for 2023, which we expect will drive our performance in the year ahead, include: (i) exceeding industry expectations in regard to safety and operational performance; (ii) advancing our products and services portfolio to provide customers with cost-effective, innovative solutions to produce oil, gas and geothermal resources more efficiently and with a lower carbon footprint; (iii) improving financial performance by continuing to realize Merger-related synergies, sustaining our relentless drive for efficiency and better utilizing existing assets; (iv) nurturing our culture based on core values and agreed behaviors, empowering our people to be innovative, to be agile and responsive, and to embrace diversity; and (v) leveraging the power of data to improve our own business practices and to deliver more value to our customers. Human Capital At Expro, people are at the heart of our success and we are united by our Code of Conduct (“Code of Conduct”) and our core values; People, Performance, Partnerships, and Planet. We As of December 31, 2022, we had approximately 7,600 employees worldwide. We are a party to collective bargaining agreements or other similar arrangements in certain international areas in which we operate. As of December 31, 2022, approximately 17% of our employees were subject to collective bargaining agreements, with 8% being under agreements that expire within one year. We consider our relations with our employees to be positive. In the United States of America ("U.S."), where approximately 17% of our employees are located, most employees are at-will employees and, therefore, not subject to any type of employment contract or agreement. Outside the U.S., we enter into employment contracts and agreements in those countries in which such relationships are mandatory or customary. Based upon the geographic diversification of our employees, we believe any risk of loss from employee strikes or other collective actions would not be material to the conduct of our operations taken as a whole. Diversity and Inclusion At Expro, we strive to be a safe, diverse, inclusive and people-focused company that positively impacts local communities and society. Most people recognize the importance of diversity at work and the benefits it can bring to an organization and its people. However, diversity is only half of the story. The other half is inclusion: building a work environment in which people feel valued for who they are, bring their whole selves to work and contribute fully. In an inclusive work environment, people with different backgrounds, religious beliefs, sexual orientations, ethnicity and other differences feel like they belong. Employee Learning and Development We demonstrate our commitment to our values through our employee development initiatives. We invest in our people through learning and development programs that reinforce and update existing skill sets, and which develop employees’ competencies into new and complementary areas of expertise. Employees are empowered to drive their career progression through various learning platforms to facilitate achievement and career progression. A key tenet of our development is our strong performance management culture that enables and informs development plans and succession planning. We also actively solicit employee feedback and constantly strive to make the Company an employer of choice, one such program being the 2022 Global Employee Survey which was carried out to understand and act upon areas where we can positively influence and develop Expro’s culture. We empower employees with an ownership mindset that encourages accountability and creativity, leading to new and better solutions. Compensation and Benefits We offer opportunities for a challenging career in an energetic and friendly work environment. Providing our workforce with a career path, training, fair pay, and challenging, rewarding work are key tenets of our success. Our benefit packages are tailored to the local market of operation and are designed to attract and retain the best talent in the industry. Employee Health and Wellbeing The health and wellbeing of our people is, and will continue to be, a priority at Expro. We appreciate that emotional wellbeing can affect how individuals face life every day, and acknowledge that anyone can suffer from poor mental or physical health at any time. As leaders, we understand the need to recognize when an individual needs help and we encourage all managers and employees to be approachable in providing time, support and mentorship. We are committed to safeguarding our employees’ health and wellbeing and to providing encouragement to our teams to build supportive networks and a collaborative culture across our organization. An example of the programs we have put into place is our employee-driven regional online wellness hubs, which promote employee and cross-company participation in health and wellbeing initiatives. In addition, we also offer 24/7 online support through resources within Expro’s Employee Assistance Program (“EAP”), which provides health and wellbeing support and advice globally. The EAP covers a wide range of subjects for employees and their families, delivered across multiple channels and languages. Corporate Social Responsibility / Community Involvement Across our global operations, we encourage and celebrate participation in diverse community activities which align with our values of People, Partnerships, Performance and Planet. From tree planting to supporting those less fortunate, we are proud of the work our teams continue to put back into our communities. Our company-wide social steering committee helps to champion our social efforts. This team acts as a conduit for the broader employee community to gain input and perspective to ultimately support in enhancing our culture. Safety Safety is a critical component of our People and Performance core values. Many of our customers have safety standards we must satisfy before we can perform services. We continually monitor and seek to improve our safety performance through the evaluation of safety observations, job and customer surveys, and safety data. The primary measures for our safety performance are the tracking of the Lost Time Injury Frequency rate (“LTIF”) and the Total Recordable Case Frequency rate (“TRCF”). LTIF is a measure of the frequency of injuries that result in lost work time, normalized on the basis of per million man-hours worked. TRCF is a measure of the frequency of recordable workplace injuries, normalized on the basis of per million man-hours worked. A recordable injury includes occupational death, nonfatal occupational illness, and other occupational injuries that involve loss of consciousness, lost time injuries, restriction of work or motion cases, transfer to another job, or medical treatment cases other than first aid. The table below presents the worldwide LTIF and TRCF for the Company for the year ended December 31, Year Ended December 31, 2022 2021 2020 LTIF TRCF We have comprehensive compliance policies, programs and training that are applied globally to Code of Business We pledge to be forthright in We require every employee worldwide to certify compliance with our Code of Conduct annually as well as to bi-annually complete an online Code of Conduct training course, which addresses conflicts of interest, confidentiality, fair dealing with others, proper use of company assets, compliance with laws, insider trading, maintenance of books and records, zero tolerance for discrimination and harassment in the Suppliers and Raw Materials We acquire component parts, products and raw materials from suppliers, including foundries, forge shops, and original equipment manufacturers. The prices we pay for our raw materials may be affected by, among other things, energy, steel and other commodity prices, tariffs and duties on imported materials and foreign currency exchange rates. Certain Our ability to source Intellectual Property We own and control a variety of intellectual property, including patents, proprietary information, trade secrets and software tools and applications. We currently hold multiple U.S. and international patents and have a number of pending patent applications. Although in the aggregate our patents and licenses are important to us, we do not regard any single patent or license as critical or essential to our business as a whole. Seasonality Seasonal changes in weather and significant weather events can temporarily affect the delivery of our Customers We Competition The markets in which we operate are competitive. We compete with a number of companies, some of which have financial and other resources greater than ours. We believe several factors Governmental Regulations We are subject to numerous environmental and Environmental and Our operations are subject to numerous Certain environmental laws may impose joint and several strict liability, without regard to fault or the legality of the original conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment. The trend in environmental regulation The following is a summary of the more significant existing environmental and occupational health and safety laws and regulations to which our business operations are subject and for which compliance could have a material adverse impact on our capital expenditures, results of operations or financial position. Climate Change Climate change continues to Separately, various governments have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. At the international level, there is a non-binding agreement, the United Nations-sponsored “Paris Agreement,” for There are also increasing risks of litigation related to climate change effects. Governments and third-parties have brought suit against some fossil fuel companies alleging, among other things, that such companies created public nuisances by marketing fuels that contributed to global warming effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages as a result, or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts. Similar or more demanding cases are occurring in other jurisdictions where we operate. For example, in December 2019, the High Council of the Netherlands ruled that the government of the Netherlands has Financial risks also exist for fossil fuel producers (and companies that provide products and services to fossil fuel producers) as shareholders who are currently invested in such fossil fuel companies but are concerned about the potential effects of climate change may elect in the future to shift some or all of their investments into other sectors. Banks and institutional lenders that provide financing to fossil fuel companies (and their suppliers and service providers) also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel companies. Additionally, in recent years, the practices of institutional lenders have been the subject of intensive lobbying efforts not to provide funding for such companies. Oftentimes this pressure has been public in nature, by environmental activists, proponents of the The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the Hydraulic Fracturing Hydraulic fracturing is an important and common practice in the oil and gas industry. The process involves the injection of water, sand and chemicals under pressure into a formation to fracture the surrounding rock and stimulate production of hydrocarbons. While we may provide supporting products through Offshore Regulatory and Marine Safety Spurred on by environmental and safety concerns, governing bodies from time to time have pursued moratoria and legislation or regulatory initiatives that would materially limit or prohibit offshore drilling in certain areas, including areas where we or our oil and gas exploration and production customers conduct operations such as on the federal Outer Continental Shelf waters in the U.S. and Gulf of Mexico. Employee Health and Safety We are subject to a number of federal and state laws and regulations, including the Occupational Safety and Health Act We also operate in non-U.S. jurisdictions, which may impose similar legal requirements. Operating Risk and Insurance We maintain insurance coverage of types and amounts that we believe to be customary and reasonable for companies of our size and with similar operations. In accordance with industry practice, however, we do not maintain insurance coverage against all of the operating risks to which our business is exposed. Therefore, there is a risk our insurance program may not be sufficient to cover any particular loss or all losses. Currently, our insurance program includes, among other things, general liability, umbrella liability, sudden and accidental pollution, personal property, vehicle, workers’ compensation, and employer’s liability coverage. Our insurance includes various limits and deductibles or retentions, which must be met prior to or in conjunction with recovery. Available Information Our principal executive offices are located at Information about Our The following table sets forth, as of February 21, 2023, the Item 1A. Risk Factors You should carefully consider the risks described below together with the other information contained in this Form 10-K. Realization of any of the following risks could have a material adverse effect on our business, financial condition, cash flows and results of operations. Risks Related to Our Business and Operations Our business depends on the level of activity in the oil and gas Our business depends on the level of activity in oil and gas exploration, development and production in market sectors worldwide. Oil and gas prices and market expectations of potential changes in these prices significantly affect this level of activity. However, higher commodity prices do not necessarily translate into increased drilling or well construction and completion activity, since customers’ expectations of future commodity prices typically drive demand for our The availability of quality drilling prospects, exploration success, relative production costs, the stage of reservoir development and political and regulatory environments also affect the demand for our Demand for our offshore services and products substantially depends on the level of activity in offshore oil and gas exploration, development and production. The level of offshore activity is historically cyclical and characterized by large fluctuations in response to relatively minor changes in a variety of factors, including oil and gas • hurricanes, ocean currents and other adverse weather conditions; • terrorist attacks and piracy; • failure of offshore equipment and facilities; • local and international political and economic conditions and policies and regulations related to offshore drilling; • territorial disputes involving sovereignty over offshore oil and gas fields; • unavailability of offshore drilling rigs in the markets that we operate; • the cost of offshore exploration for, and production and transportation of, oil and gas; • successful exploration for, and production and transportation of, oil and gas from onshore sources; • the technical specifications of wells including depth of wells and complexity of well design; • demand for, availability of and technological viability of alternative sources of energy; • technological advances affecting energy exploration, production, transportation and consumption; • the availability and rate of discovery of new oil and gas reserves in offshore areas; • the availability of infrastructure to support oil and gas operations; and • the ability of oil and gas companies to generate or otherwise obtain funds for exploration and production. While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our business, financial condition and results of operations. Physical dangers and operating hazards are inherent in our operations and may expose us to significant potential losses. Our Risks inherent to these applications, such as equipment malfunctions and failures, equipment misuse and defects, explosions, blowouts and uncontrollable flows of oil, gas or well fluids and natural disasters, on land or in deepwater or shallow water environments, can cause personal injury, loss of life, suspension of operations, damage to formations, damage to facilities, business interruption and damage to or destruction of property, surface water and drinking water resources, equipment, natural resources and the environment. We may face significant warranty, contract and other litigation claims and incur substantial fines, liabilities or losses as a result of these hazards. Our insurance and contractual indemnity protection may not be sufficient or effective to protect us under all circumstances or against all risks. The occurrence of a significant event, against which we are not fully insured or indemnified or the failure of a customer to meet its indemnification obligations to us, could materially and adversely affect our results of operations and financial condition. We may not be fully indemnified against financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur. As is customary in our industry, our contracts typically provide that our customers indemnify us for claims arising from the injury or death of their employees, the loss or damage of their equipment, damage to the reservoir, pollution emanating from the customer’s equipment or from the reservoir (including uncontained oil flow from a reservoir) and catastrophic events, such as a well blowout, fire or explosion. Conversely, we typically indemnify our customers for claims arising from the injury or death of our employees, the loss or damage of our equipment, or pollution emanating from our equipment. Our indemnification arrangements may not protect us in every case. For example, from time to time (i) we may enter into contracts with less favorable indemnities or perform work without a contract that protects us, (ii) our indemnity arrangements may be held unenforceable in some courts and jurisdictions or (iii) we may be subject to other claims brought by third parties or government agencies. Furthermore, the parties from which we seek indemnity may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities, or may not otherwise be able to satisfy their indemnity obligations to us. The lack of enforceable indemnification could expose us to significant potential losses. Further, our assets generally are not insured against loss from political violence such as war, terrorism or civil unrest. If any of our assets are damaged or destroyed as a result of an uninsured cause, we could recognize a loss of those assets. Our operations and revenue expose us to political, economic and other uncertainties inherent We • political, social and economic instability; • potential expropriation, seizure or nationalization of assets, and trapped assets; • deprivation of contract rights; • inflationary pressures; • increased operating costs; • inability to collect revenue due to shortages of convertible currency; • unwillingness of foreign governments to make new onshore and offshore areas available for drilling; • civil unrest and protests, strikes, acts of terrorism, war or other armed conflict; • import/export quotas; • confiscatory taxation or other adverse tax policies; • continued application of foreign tax treaties; • currency exchange controls; • currency exchange rate fluctuations and devaluations; • restrictions on the repatriation of funds; and • other forms of government regulation which are beyond our control. Instability and disruptions in the political, regulatory, economic and social conditions of the In addition, in some countries our local managers may be personally liable for the acts of the Company, and may be subject to prosecution, detention, and the assessment of monetary levies, fines or penalties, or other actions by local governments in their individual capacity. Any such actions taken against our local managers could cause disruption of our business and operations and could cause us to incur significant costs. While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our business, financial condition and results of operations. To compete in our industry, we must continue to develop new technologies and products to support our The markets for our We may encounter resource constraints, technical barriers, or other difficulties that would delay introduction of new services and It may also be possible for a third party to design around our patents. We attempt to limit access to and distribution of our technology and trade secrets by customarily entering into confidentiality agreements with our employees, customers and potential customers and suppliers. However, our rights in our confidential information, trade secrets, and confidential know-how will not prevent third parties from independently developing similar information. Publicly available information (for example, information in expired issued patents, published patent applications, and scientific literature) can also be used by third parties to independently develop technology. We cannot provide assurance that this independently developed technology will not be equivalent or superior to our proprietary technology. In addition, we may become involved in legal proceedings from time to time to protect and enforce our intellectual property rights. Third parties from time to time may initiate litigation against us by asserting that the conduct of our business infringes, misappropriates or otherwise violates intellectual property rights. We may not prevail in any such legal proceedings related to such claims, and our products and services may be found to infringe, impair, misappropriate, dilute or otherwise violate the intellectual property rights of others. Any legal proceeding concerning intellectual property could be protracted and costly and is inherently unpredictable and could have a material adverse effect on our business, regardless of its outcome. Further, our intellectual property rights may not have the value that management believes them to have and such value may change over time as we and others develop new product designs and improvements. The industry in which we operate has undergone and may continue to undergo consolidation. Some of our largest customers have consolidated in recent years and are using their size and purchasing power to achieve economies of scale and pricing concessions. This consolidation may result in reduced capital spending by such customers or the acquisition of one or more of our other primary customers, which may lead to decreased demand for our products and services. If we cannot maintain sales levels for customers that have consolidated or replace such revenue with increased business activities from other customers, this consolidation activity could have a significant negative impact on our business, financial condition and results of operations. We are unable to predict what effect consolidations in our industry may have on prices, capital spending by customers, selling strategies, competitive position, ability to retain customers or ability to negotiate favorable agreements with customers. We are subject to the risk of supplier concentration. Certain of our product lines depend on a limited number of third party suppliers. As a result of this concentration in some of our supply chains, our business and operations have been and may in the future be negatively affected if our key suppliers were to experience significant disruptions affecting the price, quality, availability or timely delivery of their products. The partial or complete loss of any one of our key suppliers, or a significant adverse change in the relationship with any of these suppliers, through consolidation or otherwise, would limit our ability to manufacture or sell certain of our products. Seasonal and weather conditions, as well as natural disasters,could adversely affect demand for our services and products and could result in severe property damage or materially and adversely disrupt our operations. Weather can have a significant impact on demand as consumption of energy is seasonal, and any variation from normal weather patterns, such as cooler or warmer summers and winters, can have a significant impact on demand. Adverse weather conditions, such as hurricanes and ocean currents in the U.S. Gulf of Mexico or typhoons in the Asia Pacific region, may interrupt or curtail our operations or our customers’ operations, cause supply disruptions and result in a loss of revenue and damage to our equipment and facilities, which may or may not be insured. In addition, acute or chronic physical impacts of climate change, such as sea level rise, coastal storm surge, inland flooding from intense rainfall and hurricane-strength winds may damage our facilities. Extreme winter conditions in Canada, Russia, or the North Sea, or droughts in more arid regions in which we do business may interrupt or curtail our operations, or our customers’ operations, and result in a loss of revenue. If the facilities we own are damaged by severe weather or any other disaster, accident, catastrophe or event, our operations could be significantly interrupted. Similar interruptions could result from damage to production or other facilities that provide supplies or other raw materials to our plants or other stoppages arising from factors beyond our control. These interruptions might involve significant damage to property, among other things, and repairs might take from a week or less for a minor incident to many months or more for a major interruption. In addition, a portion of our business involves the movement of people and certain parts and supplies to or from foreign locations. Any restrictions on travel or shipments to and from foreign locations, due to the occurrence of natural disasters such as earthquakes, floods or hurricanes, in these locations, could significantly disrupt our operations and decrease our ability to provide services to our customers. If a natural disaster were to impact a location where we have a high concentration of business and resources, our local facilities and workforce could be affected by such an occurrence or outbreak which could also significantly disrupt our operations and decrease our ability to provide services and products to our customers. Investor and public perception related to the Company’s ESG performance as well as current and future ESG reporting requirements may affect our business and our operating results. Increasing focus on ESG factors has led to enhanced interest in, and review of performance results by investors, banks, institutional lenders and other Events outside of our control, including the ongoing COVID-19 pandemic, have and may further materially adversely affectour business. We face risks related to pandemics, epidemics, outbreaks or other public health events that are outside of our control and could significantly disrupt our operations and adversely affect our financial condition, including the ongoing COVID-19 pandemic which continues to cause significant global economic disruption. Any prolonged period of economic slowdown or recession in the U.S. and other countries or similar other events outside our control may negatively impact crude oil prices and the demand for our products and services and could have significant adverse consequences on our financial condition and the financial condition of our customers, suppliers and other counterparties, the ultimate impact of which is difficult to predict. Our business could be negatively affected by cybersecurity threats and other disruptions. We rely heavily on information systems to conduct and protect our business. These information systems are increasingly subject to sophisticated cybersecurity threats such as unauthorized access to data and systems, loss or destruction of data (including confidential customer information), computer viruses, ransomware, or other malicious code, phishing and cyberattacks, and other similar events. These threats arise from numerous sources, not all of which are within our control, including fraud or malice on the part of third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, or outbreaks of hostilities or terrorist acts. Geopolitical tensions or conflicts, such as the Russian war in Ukraine, may further heighten the risk of cyberattacks. Given the rapidly evolving nature of cyber threats, there can be no assurance that the systems we have designed and implemented to prevent or limit the effects of cyber incidents or attacks will be sufficient in preventing all such incidents or attacks or avoiding a material impact to our systems when such incidents or attacks do occur. We have experienced, and expect to continue to experience, cyber intrusions and attacks to our information systems and our operational technology. To our knowledge, none of these incidents or attacks have resulted in a material cybersecurity intrusion or data breach. If we were to be subject to a cyber incident or attack in the future, it could result in the disclosure of confidential or proprietary customer information, theft or loss of intellectual property, damage to our reputation with our customers and the market, failure to meet customer requirements or customer dissatisfaction, theft or exposure to litigation, damage to equipment (which could cause environmental or safety issues) and other financial costs and losses. A cyberattack or security breach could result in liability under data privacy laws, regulatory penalties, damage to our reputation or loss of confidence in us, or additional costs for remediation and modification or enhancement of our information systems to prevent future occurrences. In addition, as cybersecurity threats continue to evolve, we may be required to devote additional resources to continue to enhance our protective measures or to investigate or remediate any cybersecurity vulnerabilities. Our executive officers and certain key personnel are critical to our business, and these officers and key personnel may not remain with us in the future. We depend on the efforts of our executive officers and other key employees to manage our operations. The loss or unavailability of any of our executive officers or other key employees could have a material adverse effect on our business. If we are unable to adapt our business to the effects of the energy transition in a timely and effective manner, our financial condition and results of operations could be negatively impacted. The transition of the global energy sector from primarily a fossil fuel-based system to renewable energy sources could affect our customers’ levels of expenditures. Reduced activity in our areas of operation as a result of decreased capital spending could have a negative long-term impact on our business. Our business will need to adapt to changing customer preferences and government requirements. If the energy transition occurs faster than anticipated or in a manner we do not anticipate, demand for our services and products could be adversely affected. In addition, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors, banks or institutional lenders shift funding away from companies in fossil fuel-related industries, our access to capital or the market for our securities could be negatively impacted. The failure to integrate successfully the businesses of Frank’s and Legacy Expro could adversely affect the Company’s future results. Prior to the Merger, Frank’s and Legacy Expro operated independently. During 2022, we substantially completed the integration of Frank's and Legacy Expro into the combined Company. The success of the Merger, including anticipated benefits and cost savings, depends, in part, on our ability to successfully integrate the legacy companies. The integration of our operations following the Merger is a complex, and time-consuming process which began in October 2021 upon the closing of the Merger and remains ongoing. If we experience difficulties in this process, the anticipated benefits of the Merger may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on us for an undetermined period. There can be no assurances that we will be successful or that we will realize the expected operational and financial scale, increased free cash flow, or enhanced corporate returns on invested capital currently anticipated from the Merger. We are also incurring substantial integration-related costs related to the large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including accounting and finance, asset management, benefits, billing, health, safety and environmental, human resources, maintenance, marketing, payroll and purchasing. We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the integration of our operations. Risks Related to Accounting and Financial Matters Customer credit risks could result in losses. The concentration of our customers in the energy industry may impact our overall exposure to credit risk as customers may be similarly affected by prolonged changes in economic and industry conditions. Further, laws in some jurisdictions in which we operate could make collection difficult or time consuming. We perform ongoing credit evaluations of our customers and do not generally require collateral in support of our trade receivables. While we maintain reserves for potential credit losses, we cannot assure such reserves will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations. In addition, customers experiencing financial difficulty may delay payment for our products and services. Such delays, even if accounts are ultimately paid in full, could reduce our cash resources available and materially and adversely impact our credit available from suppliers and financial institutions. Restrictions in the agreement governing our Revolving Credit Facility ("RCF") could adversely affect our business, financial condition, results of operations andstock price. The operating and financial restrictions in our RCF and any future financing agreements could restrict our ability to finance future operations or capital needs, or otherwise pursue our business activities. These limit our and our subsidiaries' ability to, among other things, prepay certain indebtness and pay dividends or buyback shares. Furthermore, our RCF contains financial covenants which if we fail to comply with could result in an event of default, which, if not cured or waived, would permit the exercise of remedies against us that could have a material adverse effect on our business, results of operations and financial position. In addition, any borrowings under our RCF may be at variable rates of interest that expose us to interest rate risk. If interest rates continue to increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, and our net income and cash flows will correspondingly decrease. Risks Related to Legal and Regulatory Requirements Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that may increase our costs, limit the demand for our services and products or restrict our operations. Our business and our customers’ businesses may be significantly affected by: • • changes in these laws and regulations; and • the level of enforcement of these laws and regulations. In addition, we depend on the demand for our services and products from the oil and gas industry. This demand is affected by changing taxes, price controls and other laws and regulations relating to the oil and gas industry in general. For example, the adoption of laws and regulations curtailing exploration and development drilling for oil and gas for economic or other policy reasons could adversely affect our operations by limiting demand for our services and products. In addition, some non-U.S. countries may adopt regulations or practices that give advantage to indigenous oil companies in bidding for oil leases or require indigenous companies to perform oilfield services currently supplied by the Company and other international service companies. To the extent that such companies are not our customers, or we are unable to develop relationships with them, our business may suffer. We cannot determine the extent to which our future operations and earnings may be affected by new legislation, new regulations or changes in existing regulations. Because of our non-U.S. operations and sales, we are also subject to changes in non-U.S. laws and regulations that may encourage or require hiring of local contractors or require non-U.S. contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. If we fail to comply with any applicable law or regulation, our business, financial condition and results of operations may be adversely affected. Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities. Our oil and gas exploration and production customers’ operations in the U.S. and other countries are subject to stringent federal, state and local legal requirements governing environmental protection. These requirements may take the form of laws, regulations, executive actions and various other legal initiatives. See Part I, Item 1. “Business – Environmental and Occupational Health and Safety Regulation” for more discussion on these matters. Compliance with these regulations and other regulatory initiatives, or any other new environmental laws and regulations could, among other things, require us or our customers to install new or modified emission controls on equipment or processes, incur longer permitting timelines, and incur significantly increased capital or operating expenditures, which costs may be significant. Additionally, one or more of these developments that impact our customers could reduce demand for our products and services, which could have a material adverse effect on our business, results of operations and financial condition. Our operations may be adversely affected by various laws and regulations in countries in which we operate relating to the equipment and operation of drilling units, oil and gas exploration and development, as well as import and export activities. Governing bodies have enacted and may propose legislation or regulations that would materially limit or prohibit drilling in certain areas. The issuance of more stringent safety and environmental guidelines, regulations or moratoria for drilling could disrupt, delay or cancel drilling operations, increase the cost of drilling operations or reduce the area of operations for drilling. If laws are enacted or other governmental action is taken that restricts or prohibits drilling in our expected areas of operation, demand for our services and products could be reduced and our business could be materially adversely affected. Governments in some foreign countries have been increasingly active in regulating and controlling the ownership of concessions and companies holding concessions, the exploration for oil and gas and other aspects of the oil and gas industries in their countries, including local content requirements for participating in In addition, the shipment of goods, services and technology across international borders subjects us to extensive trade laws and regulations. Our import and export activities are governed by unique customs laws and regulations in each of the countries where we operate. Moreover, many countries control the import and export of certain goods, services and technology and impose related import and export recordkeeping and reporting obligations. Governments The laws and regulations concerning import and export activity, recordkeeping and reporting, import and export control and economic sanctions are complex and constantly changing. These laws and regulations may be enacted, amended, enforced or interpreted in a manner materially impacting our operations. We We operate internationally and in some countries with high levels of perceived corruption commonly gauged according to the Transparency International Corruption Perceptions Index. We must comply with complex foreign and U.S. laws including the United States Foreign Corrupt Practices Act (“FCPA”), the We have conducted an internal investigation of the operations of certain of Frank’s foreign subsidiaries in West Africa including possible violations of the FCPA, our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our internal review to the SEC and the U.S. Department of Justice (“DOJ”). The DOJ has provided a declination, subject to the Company and the SEC reaching a satisfactory settlement of civil claims. We are discussing a possible resolution with the SEC and, based on the course of these discussions to date, we believe that a final resolution of this matter is likely to include a civil penalty in the amount of approximately $8 million. While we believe the final resolution of this matter is nearing a conclusion, there can be no assurance as to the timing or the terms of any final resolution, including the amount of any civil penalty, or that a settlement will be reached at all. In the event a settlement is not reached, litigation may ensue and, accordingly, the actual loss incurred in connection with this matter could exceed the expected amount and may have a material adverse effect on our financial position, results of operations or cash flows. Compliance with There are various risks associated with greenhouse gases and climate change legislation or regulations that could result in increased operating costs and The threat of climate change continues to attract considerable attention. Numerous proposals have been made and Data protection and We are subject to regulations related to privacy, data protection and In recent years, there has been increasing regulatory enforcement and litigation activity in the areas of privacy, data protection and information security in the U.S. and in various countries in which we operate. In addition, legislators and/or regulators in the U.S., the EU and other jurisdictions in which we operate are increasingly adopting or revising privacy, data protection and information security laws that could create compliance uncertainty and could increase our costs or require us to change our business practices in a manner adverse to our business. Compliance with current or future privacy, data protection and information security laws could significantly impact our current and planned privacy, data protection and information security related practices, our collection, use, sharing, retention and safeguarding of employee information and information regarding others with whom we do business. Our failure to comply with privacy, data protection and information security laws could result in fines, sanctions or other penalties, which could materially and adversely affect our results of operations and overall business, as well as have an impact on our reputation. For example, the EU’s General Data Protection Regulations 2016/679 (the “GDPR”), as supplemented by any national laws (such as in the United Kingdom (“U.K.”), the Data Protection Act 2018) and further implemented through binding guidance from the European Data Protection Board, came into effect on May 25, Risks Related to Our Common Stock As a Dutch company with limited liability, the rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. We are a Dutch company with limited liability ( For example, resolutions of the general meeting of shareholders may be taken with majorities different from the majorities required for adoption of equivalent resolutions in, for example, Delaware corporations. Although shareholders will have the right to approve legal mergers or demergers, Dutch law does not grant appraisal rights to a company’s shareholders who wish to challenge the consideration to be paid upon a legal merger or demerger of a company. In addition, if a third party is liable to a Dutch company, under Dutch law shareholders generally do not have the right to bring an action on behalf of the company or to bring an action on their own behalf to recover damages sustained as a result of a decrease in value, or loss of an increase in value, of their ordinary shares. Only in the event that the Furthermore, certain provisions of Dutch corporate law have the effect of concentrating control over certain corporate decisions and transactions in the hands of our Our articles of association and Dutch corporate law contain provisions that may discourage a takeover attempt. Provisions contained in our amended and restated articles of association and the laws of the Netherlands could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders. Provisions of our articles of association impose various procedural and other requirements, which could make it more difficult for shareholders to effect certain corporate actions. Among other things, these In addition, based on Dutch corporate law and our articles of association, the 2022 annual general meeting of shareholders has authorized our Board, for a period of eighteen months as of the date of the 2022 annual meeting, to issue common stock, up to 20% of the issued share capital, for any legal purpose, which could include defensive purposes, without further shareholder approval being needed. These provisions, alone or together, could delay hostile takeovers and changes in control of our company or changes in our management. It may be difficult for you to obtain or enforce judgments against us or some of our executive officers and directors in the We were formed under the laws of the Netherlands and, as such, the rights of holders of our ordinary shares and the civil liability of our directors will be governed by the laws of the Netherlands and our amended and restated articles of association. In the absence of an applicable convention between the Without prejudice to the above, in order to obtain enforcement of a judgment rendered by a In all of the above situations, we note the following rules as applied by Dutch courts: • where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement; • the overriding mandatory provisions of the law of the courts remain applicable (irrespective of the law chosen); • effect may be given to overriding mandatory provisions of the law of the country where the obligations arising out of the relevant transaction documents have to be or have been performed, insofar as those overriding mandatory provisions render the performance of the contract unlawful; and • the application of the law of any jurisdiction may be refused if such application is manifestly incompatible with the public policy (openbare orde) of the courts. Under our amended and restated articles of association, we will indemnify and hold our officers and directors harmless against all claims and suits brought against them, subject to limited exceptions. Under our amended and restated articles of association, to the extent allowed by law, the rights and obligations among or between us, any of our current or former directors, officers and employees and any current or former shareholder will be governed exclusively by the laws of the Netherlands and subject to the jurisdiction of Dutch courts, unless those rights or obligations do not relate to or arise out of their capacities listed above. Although there is doubt as to whether U.S. courts would enforce such provision in an action brought in the Certain of the shareholders of the Company have the ability to exercise significant influence over certain corporate actions. Entities affiliated with Oak Hill Advisors, L.P. and members of the Mosing family and entities they control could have significant influence over the outcome of matters requiring a shareholder vote, including the election of directors, the adoption of any amendment to the articles of association of the Company and the approval of mergers and other significant corporate transactions. Their influence over the Company may have the effect of delaying or preventing a change of control or may adversely affect the voting and other rights of other shareholders. In addition, entities affiliated with Oak Hill Advisors, L.P. have the right to designate (i) two persons as its nominees for election to the Board as non-executive directors for so long as the Oak Hill Group (as defined in the Director Nomination Agreement) collectively owns shares of Common Stock equal to at least 20% of the total shares outstanding and (ii) one person as its nominee for election to the Board as a non-executive director for so long as the Oak Hill Group collectively owns shares of Common Stock equal to at least 10% (but less than 20%) of the total shares outstanding. Upon the Oak Hill Group ceasing to collectively own shares of Common Stock equal to at least 10% of the total shares outstanding, Oak Hill Advisors will not have a right to designate a director to the Board. Further, members of the Mosing family have the right to designate one person as their nominee for election to the Board as a non-executive director. Upon the Mosing Family Members (as defined in the Director Nomination Agreement) ceasing to collectively own shares of Common Stock equal to at least 10% of the total shares outstanding, the members of the Mosing family will not have a right to designate a director to the Board. Finally, if these shareholders were in the future to sell all or a material number of shares of Company Common Stock, the market price of Company’s Common Stock could be negatively impacted. Risks Related to Tax Changes in tax laws, treaties or regulations or adverse outcomes resulting from examination of our tax returns could adversely affect our financial results. Our future effective tax rates could be adversely affected by changes in tax laws, treaties and regulations, both in the None. In order to design, manufacture and service the proprietary The following table details our material facilities by segment, owned or leased by us as of December 31, Leased or Owned All Segments Houston, Texas Leased Corporate office Reading, United Kingdom Leased Corporate office Aberdeen, Scotland Owned/Leased Regional operations, manufacturing, engineering and administration Lafayette, Louisiana Owned Regional operations, manufacturing, engineering and administration NLA Georgetown, Guyana Leased Regional operations Macaé, Brazil Owned Regional operations Neuquen, Argentina Leased Regional operations New Iberia, Louisiana Leased Regional operations Villahermosa, Mexico Leased Regional operations ESSA Den Helder, the Netherlands Regional operations and administration Stavanger, Norway Leased Regional operations MENA Al Khobar, Saudi Arabia Leased Regional operations Dubai, United Arab Emirates Owned/Leased Regional operations Hassi Messaoud, Algeria Leased Regional operations APAC Kuala Lumpur, Malaysia Leased Regional operations and administration Labuan, Malaysia Leased Regional operations Perth, Australia Leased Regional operations Our largest manufacturing Information related to Item 3. Legal Proceedings is included in Not applicable. PART II Market Information Our common stock is traded on the NYSE under the symbol On February Dividend Policy The declaration and payment of future dividends will be at the discretion of Unregistered Sales of Equity We did not have any sales of unregistered equity securities during the year ended December 31, 2022, that we have not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K. Issuer Purchases of Equity Securities On June 16, 2022, the Board approved a new stock repurchase program, under which we are authorized to acquire up to $50.0 million of our Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Program (2) October 1 - October 31 November 1 - November 30 December 1 - December 31 Total 1) 2) Our Board authorized a program to repurchase our common stock from time to time. Approximately $37 million remained authorized for repurchases as of December 31, 2022, subject to the limitation set in our shareholder authorization for repurchases of our common stock, which is approximately 10% of the common stock issued as of March 21, 2022. Performance Graph The following performance graph compares the performance of our common stock to the Russell 2000 Index, the PHLX Oil Service Sector Index (“OSX”), the The graph below compares the cumulative total return to holders of our common stock with the cumulative total returns of the The performance graph above and related information shall not be deemed CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Form 10-K includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include those that express a belief, expectation or intention, as well as those that are not statements of historical fact. Forward-looking statements include information regarding our future plans and goals and our current expectations with respect to, among other things: • our business strategy and prospects for growth; • post-Merger integration; • our cash flows and liquidity; • our financial strategy, budget, projections and operating results; • the amount, nature and timing of capital expenditures; • the amount, nature and timing of capital expenditures; • the availability and terms of capital; • the exploration, development and production activities of our customers; • the market for our existing and future products and services; • competition and government regulations; and • general economic and political conditions, including political tensions, conflicts and war (such as the ongoing Russian war in Ukraine). These forward-looking statements are generally accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “goal,” “plan,” “intend,” “potential,” “predict,” “project,” “may,” “outlook,” or other terms that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. The forward-looking statements in this Form 10-K speak only as of the date of this report; we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following: • continuing uncertainty relating to global crude oil demand and crude oil prices that correspondingly may lead to further significant reductions in domestic oil and gas activity, which in turn could result in further significant declines in demand for our products and services; • uncertainty regarding the extent and duration of the remaining restrictions in the U.S. and globally on various commercial and economic activities due to global pandemics and epidemics (including COVID-19), including uncertainty regarding the re-imposition of restrictions due to resurgences in infection rates; • uncertainty regarding the timing, pace and extent of an economic recovery, or economic slowdown or recession, in the U.S. and other countries, which in turn will likely affect demand for crude oil and therefore the demand for the products and services we provide and the commercial opportunities available to us; • the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations; • unique risks associated with our offshore operations; • political, economic and regulatory uncertainties in our international operations, including the impact of actions taken by the OPEC and non-OPEC nations with respect to production levels and the effects thereof; • our ability to develop new technologies and products; • our ability to protect our intellectual property rights; • our ability to attract, train and retain key employees and other qualified personnel; • operational safety laws and regulations; • international trade laws and sanctions; • severe weather conditions and natural disasters, and other operating interruptions (including explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); • policy or regulatory changes; • • perception related to our ESG performance as well as current and future ESG reporting requirements; and • These and other important factors that could affect our operating results and performance are described in (i) Part I, Item The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes thereto included in Part II, Item 8, This section contains forward-looking statements that are based on This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Unless otherwise indicated, references to the terms “Frank’s”refers to Frank’s International N.V., the predecessor reporting entity prior to the Merger, references to “Legacy Expro” refer to Expro Group Holdings International Limited, the entity acquired by the Company, and references to “Expro,” the “Company,”“we,”“our,” and “us” refer to Expro Group Holdings N.V., following the consummation of the Merger and unless the context otherwise requires, Frank’s prior to the consummation of the Merger. Overview of Business Working for clients across the entire well life cycle, we are a With roots dating to Our Well Construction • Our well construction products and services support customers’ new wellbore drilling, wellbore completion and recompletion, and wellbore plug and abandonment requirements. In particular, we offer advanced technology solutions in drilling, tubular running services, cementing and tubulars. With a focus on innovation, we are continuing to advance the way wells are constructed by optimizing process efficiency on the rig floor, developing new methods to handle and install tubulars and mitigating well integrity risks. Well Management Our well management offerings consist of well flow management, subsea well access and well intervention and integrity services: • Well flow management: We gather valuable well and reservoir data, with a particular focus on well-site safety and environmental impact. We provide global, comprehensive well flow management systems for the safe production, measurement and sampling of hydrocarbons from a well during the exploration and appraisal phase of a new field; the flowback and clean-up of a new well prior to production; and in-line testing of a well during its production life. We also provide early production facilities to accelerate production; production enhancement packages to enhance reservoir recovery rates through the realization of production that was previously locked within the reservoir; and metering and other well surveillance technologies to monitor and measure flow and other characteristics of wells. • Subsea well access: With over 35 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to ensure safe well access and optimized production throughout the lifecycle of the well. We provide what we believe to be the most reliable, efficient and cost-effective subsea well access systems for exploration and appraisal, development, intervention and abandonment, including an extensive portfolio of standard and bespoke Subsea Test Tree Assemblies, a rig-deployed Intervention Riser System and a vessel-deployed, wire through water Riserless Well Intervention System. We also provide systems integration and project management services. • Well intervention and integrity: We provide well intervention solutions to acquire and interpret well data, ensure well bore integrity and improve production. In addition to our extensive fleet of mechanical and cased hole wireline units, we have recently introduced a number of cost-effective, innovative well intervention services, including CoilHose™, a lightweight, small-footprint solution for wellbore lifting, cleaning and chemical treatments; Octopoda™, for fluid treatments in wellbore annuli; and Galea™, an autonomous well intervention solution. We also possess several other distinct technical capabilities, including non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring. We operate a global business and have a diverse and relatively stable customer base that is comprised of national oil companies (“NOC”), international We organize and manage our operations on a How We Generate Our Revenue Our revenue is derived primarily from For the year ended December 31, 2022, approximately 79% of our Market Conditions and Price of Oil and Gas Fiscal year 2022 has seen positive signs of recovery in the market following the impact of the COVID-19 pandemic and the Russian war in Ukraine. There are a number of market factors that have had, and may continue to have, an effect on our business, including: • The market for energy services and our business are substantially dependent on the price of oil and, to a lesser extent, the regional price of gas, which are both driven by market supply and demand. Changes in oil and gas prices impact customers' willingness to spend on exploration and appraisal, development, production and abandonment activities. The extent of the impact of a change in oil and gas prices on these activities varies extensively between geographic regions, types of customers, types of activities and the financial returns of individual projects. In response to this uncertain industry outlook, we continue to evaluate additional cost saving opportunities in order to reduce service delivery costs, increase productivity and improve profitability; however, our commitment to safety, service quality and innovation remains steadfast. • Oil demand in 2022 exceeded 2021; in 2023 liquids demand is estimated to approximate 2019 levels. Brent prices remained volatile during the fourth quarter of 2022, with the average Brent oil price falling as a result of a slowdown in demand growth and tighter governmental monetary policies, offset by falling global oil inventories, uncertainty around the impact of the latest sanctions on Russia, and continued production restraint from OPEC+ members. In February 2023, Russia announced that it will cut production by 500,000 bbl/d in March, equivalent to 5% of its January output, following the enactment of the EU embargo and the $60 per barrel price cap for Russian oil. • Following the multi-year underinvestment in new reserves, Expro and other energy service companies expect that operators will increase activity levels in exploration and development in 2023 and beyond, while maintaining fiscal discipline. • Activity related to gas production and associated asset development is continuing to accelerate in the North Sea, Sub-Saharan Africa and MENA as a result of Russian gas supply shortfalls and Europe’s effort to diversify its gas supply and reduce its reliance on Russian pipeline gas supplies over the long term. • Growth is not expected to be uniform across geo-markets or type of activity; however, international and deepwater activity are expected to continue to improve in 2023 and beyond. We also expect that the demand for services related to brownfield and production enhancement and infield development programs will continue to show increased demand. In addition, we envisage an increase in demand for early production facilities, especially in support of gas and liquified natural gas (“LNG”) developments. • The clean energy transition continues to gain momentum. Hydrocarbons, however, are expected to continue to play a vital role in the transition towards more sustainable energy resources, with natural gas in particular acting as a key transition fuel and potentially as a structural source of low carbon electricity generation. We also believe that the existing expertise and future innovation within the energy services sector, both to reduce emissions and enhance efficiency, will be critical. We are already active in the early-stage carbon capture and storage segment and have expertise and established operations within the geothermal and flare reduction segments. We continue to develop technologies to enhance the sustainability of our customers’ operations which, along with our digital transformation initiatives, are expected to enable us to continue to support our customers’ commercial and environmental initiatives. As the industry changes, we continue to evolve our approach to adapt and help our customers address the critical energy transition. • Increased expectations of host countries in regard to local content is another multi-year trend that gained additional momentum in recent years. Our commitment to developing local capabilities and in-country personnel has reduced our dependence on international staff, enabling us to continue to service our customers in their ongoing operations and mitigate some of the operational challenges associated with pandemic-related travel restrictions. Outlook Demand continues to improve despite volatile oil prices, with oil demand forecast to return to pre-pandemic levels in early 2023. The U.S. Energy Information Administration (“EIA”) estimates that global liquids consumption will increase from In addition to the The EIA expects Henry Hub spot prices to The outlook for 2023 indicates a continuing recovery in exploration and production expenditures, with investments expected to reach pre-pandemic levels with growth maintained in As a result, we NLA: In North America, activity is projected to increase in 2023 by approximately 12% to 810 active rigs and over 21,900 new well spuds, which will also support an increase of 6% in frac activity over 2022. Approximately 792 rigs are forecast to be active in onshore North America, and 18 rigs active offshore, a 20% increase over 2022 active offshore rig count. Therate of growth has decelerated recently, most likely due to increased oilfield inflation and fiscal discipline from operators looking to return excess cash to investors or use cash to reduce financial leverage. In Latin America, drilling activity is forecast to increase 19% in 2023 to 202 active rigs and approximately 2,700 new wells, driven by the continued recovery in Argentina and Mexico, two countries with ESSA: European drilling is projected to average 84 active rigs in 2023 (up 14%) accounting for approximately 775 new wells. Offshore drilling is projected to rise by 9% in 2023, averaging 35 rigs with 425 new wells. As a result of energy security concerns and a desire by European policy makers to reduce reliance on Russian oil and gas imports, there remains an increased focus on North Sea operations and production optimization from existing assets, core areas of Expro’s expertise. In Sub-Saharan Africa, drilling activity is forecast to jump by 12% in MENA: In the Middle East and North Africa, drilling activity is projected to rise substantially in APAC: In Asia-Pacific, drilling activity is forecast to How We Evaluate Our Operations We use a number of financial and operational measures to routinely analyze and evaluate the performance of our business, including Revenue: We analyze our Adjusted EBITDA: We regularly evaluate our financial performance using Adjusted EBITDA. Our management believes Adjusted EBITDA is a useful financial performance measure as it excludes non-cash charges and other transactions not related to our core operating activities and allows more meaningful analysis of the trends and performance of our core operations. Adjusted Cash Flow from Operations: We regularly evaluate our operating cash flow performance using Adjusted Cash Flow from Operations. Our management believes Adjusted Cash Flow from Operations is a useful tool to measure the operating cash performance of the Company as it excludes exceptional payments, interest payments and non-cash charges not related to our core operating activities and allows more meaningful analysis of the trends and performance of our core operations. Cash Conversion: We regularly evaluate our efficiency of generating cash from operations using Cash Conversion which provides a useful tool to measure Adjusted Cash Flow from Operations as a percentage of Adjusted EBITDA. Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion are non-GAAP financial measures. Please refer to the section titled “Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial performance measure calculated and presented in accordance with GAAP and a reconciliation of Adjusted Cash Flow from Operations to net cash provided by operating activities, the most directly comparable liquidity measure calculated and presented in accordance with GAAP. Executive Overview Year ended December 31, 2022 compared to year ended December 31, 2021 Certain highlights of our financial results and other key developments include: • • • • Selected Unaudited Financial Information for the Three Months Ended December 31, 2022 and September 30, 2022 Operating Segment Results The following table shows revenue by segment and revenue as a percentage of total revenue by segment for the three months ended December 31, 2022 and September 30, 2022: Three Months Ended Percentage (in thousands) December 31, 2022 September 30, 2022 December 31, 2022 September 30, 2022 NLA ESSA MENA APAC Total Revenue The following table shows the Segment EBITDA and Segment EBITDA as a percentage of total revenue by segment (“Segment EBITDA margin”) and a reconciliation to income (loss) before income taxes for the three months ended December 31, 2022 and September 30, 2022: Three Months Ended Segment EBITDA Margin (in thousands) December 31, 2022 September 30, 2022 December 31, 2022 September 30, 2022 NLA ESSA MENA APAC Total Segment EBITDA Corporate costs Equity in income of joint ventures Depreciation and amortization expense Merger and integration expense Severance and other expense Stock-based compensation expense Foreign exchange gain (loss) Other income, net Interest and finance (expense) income, net Income (loss) before income taxes Quarter endedDecember 31, 2022compared to quarter ended September 30, 2022 NLA Revenue for the NLA segment was $131.7 million for the three months ended December 31, 2022, a decrease of $2.9 million, or 2.1%, compared to $134.6 million for the three months ended September 30, 2022. The decrease was primarily due to lower well management services revenue in Mexico and the U.S., partially offset by higher well construction services revenue in the Gulf of Mexico driven by higher customer activities. Segment EBITDA for the NLA segment was $35.2 million, or 26.7% of revenues, during the three months ended December 31, 2022, compared to $39.7 million, or 29.5% of revenues, during the three months ended September 30, 2022. The decrease of $4.5 million in Segment EBITDA was attributable to lower activity and the reduction in Segment EBITDA margin was attributable to a less favorable product mix during the three months ended December 31, 2022. ESSA Revenue for the ESSA segment was $117.3 million for the three months ended December 31, 2022, an increase of $17.5 million, or 17.6%, compared to $99.8 million for the three months ended September 30, 2022. The increase in revenues was primarily driven by higher well flow management revenue in Congo from a new contract and in the U.K. from increased customer activities. Segment EBITDA for the ESSA segment was $30.2 million, or 25.7% of revenues, for the three months ended December 31, 2022, an increase of $12.4 million, or 69.9%, compared to $17.8 million, or 17.8% of revenues, for the three months ended September 30, 2022. The increase in Segment EBITDA and Segment EBITDA margin was primarily attributable to higher activity levels and a more favorable activity mix during the three months ended December 31, 2022. MENA Revenue for the MENA segment was $55.4 million for the three months ended December 31, 2022, an increase of $5.4 million, or 10.7%, compared to $50.0 million for the three months ended September 30, 2022. The increase in revenue was driven by higher well flow management services revenue in Algeria and the Kingdom of Saudi Arabia. Segment EBITDA for the MENA segment was $19.4 million, or 35.1% of revenues, for the three months ended December 31, 2022, an increase of $4.7 million, or 32.5%, compared to $14.7 million, or 29.3% of revenues, for the three months ended September 30, 2022. The increase in Segment EBITDA and Segment EBITDA margin was primarily due to higher activity and a more favorable activity mix during the three months ended December 31, 2022. APAC Revenue for the APAC segment was $46.6 million for the three months ended December 31, 2022, a decrease of $3.3 million, or 6.8%, compared to $49.9 million for the three months ended September 30, 2022. The decrease in revenue was primarily due to lower subsea well access revenue in Australia and Malaysia. Segment EBITDA for the APAC segment was $3.7 million, or 7.9% of revenues, for the three months ended December 31, 2022, an increase of $12.3 million compared to $(8.6) million, or (17.3)% of revenues, for the three months ended September 30, 2022. The increase in Segment EBITDA (despite the decrease in revenues) was primarily due to lower start-up and commissioning costs incurred on a large subsea project during the three months December 31, 2022, as compared to the three months ended September 30, 2022. Excluding $4.8 million and $16.8 million of start-up and commissioning costs during the three months ended December 31, 2022 and September 30, 2022, respectively, Segment EBITDA would have been $8.5 million and $8.1 million and Segment EBITDA margin would have been 18.2% and 16.3% respectively, for the three months ended December 31, 2022 and September 30, 2022. Non-GAAPFinancial Measures We include in this Form 10-K the non-GAAP financial measures Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion. We provide reconciliations of net loss, the most directly comparable financial performance measure calculated and presented in accordance with GAAP, to Adjusted EBITDA. We also provide a reconciliation of Adjusted Cash Flow from Operations to net cash provided by operating activities, the most directly comparable liquidity measure calculated and presented in accordance with GAAP. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Cash Flow from Operations and Cash Conversion are used as supplemental financial measures by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others. These non-GAAP financial measures allow our management and others to assess our We define Adjusted EBITDA as net loss adjusted for (a) income We Adjusted EBITDA, The following table presents a reconciliation of net loss to Adjusted EBITDA Year ended December 31, 2022 2021 2020 Net loss Income tax expense (benefit) Depreciation and amortization expense Impairment expense (1) Severance and other expense Merger and integration expense Gain on disposal of assets Other income, net (2) Stock-based compensation expense Foreign exchange losses Interest and finance expense, net Adjusted EBITDA (3) Adjusted EBITDA Margin (1) Impairment expense represents impairments recorded on goodwill and other long-lived assets, including property, plant and equipment, intangible assets and operating lease right-of-use assets. (2) Other income, net, is comprised of immaterial, unusual or infrequently occurring transactions which, in management’s view, do not provide useful measures of the underlying operating performance of the business. (3) The following table provides a reconciliation of net cash provided by operating activities to Adjusted Cash Flow from Operations for each of the periods presented (in thousands): Year Ended December 31, 2022 2021 2020 Net cash provided by operating activities Cash paid during the year for interest, net Cash paid during the year for severance and other expense Cash paid during the year for merger and integration expense Adjusted Cash Flow from Operations Adjusted EBITDA Cash Conversion Results of Operations Operating Segment Results We evaluate our business segment operating performance using segment revenue and Segment EBITDA, as described in Note The following table shows revenue by segment and revenue as a Year Ended Percentage (in thousands) December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2022 December 31, 2021 December 31, 2020 NLA ESSA MENA APAC Total Revenue The following table Year Ended Segment EBITDA Margin (in thousands) December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2022 December 31, 2021 December 31, 2020 NLA ESSA MENA APAC (1) Total Segment EBITDA Corporate costs (2) Equity in income of joint ventures Depreciation and amortization expense Impairment expense Merger and integration expense Severance and other expense Stock-based compensation expense Foreign exchange loss Other income, net Gain on disposal of assets Interest and finance expense, net Income (loss) before income taxes (1) Excluding $27.7 million of start-up and commissioning costs during the year ended December 31, (2) Corporate costs include the costs of running our corporate head office and other central functions that support the operating segments, including research, engineering and development, logistics, sales and marketing and health and safety and are not attributable to Year NLA Revenue for the NLA segment was $499.8 million for the year ended December 31, Segment EBITDA for the NLA segment was $135.2 million, or 27.1% of revenues, during the year ended December 31, 2022, compared to $32.3 million or 16.7% of revenues during the year ended December 31, 2021, an increase of $102.9 million. The increase was primarily attributable to a combination of the impact of the Merger and higher activities during the year ended December 31, 2022. Further, the increase in Segment EBITDA margin was due to a more favorable activity mix and lower support costs as a result of merger-related synergies, which together contributed to a higher fall-through from incremental revenue. ESSA Revenue for the ESSA segment was $389.3 million for the year ended December 31, 2022, an increase of $88.7 million, or 29.5%, compared to $300.6 million for the year ended December 31, 2021. The Merger contributed an increase of $85.6 million, reflecting well construction revenue during the year ended December 31, 2022. Additionally, well intervention and integrity services revenue was higher during the current period in the U.K. and Mozambique due to increased customer activities. We also benefited from higher well flow management revenue during the three months ended December 31, 2022, driven by a new long-term construction project in Congo. This increase was partially offset by lower well flow management business activity in Nigeria due to a large production equipment sale in 2021 that did not recur during the current period and lower well flow management services revenue in Norway from reduced customer activities. Segment EBITDA for the ESSA segment was $74.7 million, or 19.2% of revenues, during the year ended December 31, 2022, compared to $53.3 million, or 17.7% of revenues, during the year ended December 31, 2021, an increase of $21.4 million, primarily due to the impact of the Merger and higher activities during the year ended December 31, 2022. The increase in Segment EBITDA margin was primarily due to a more favorable activity mix. MENA Revenue for the MENA segment was $201.5 million for the year ended December 31, 2022, an increase of $30.4 million, or 17.7%, compared to $171.1 million for the year ended December 31, 2021. Of the total increase, $15.9 million was attributable to the Merger reflecting the well construction revenue during the year, and the remaining increase was primarily driven by well flow management equipment sales in Saudi Arabia and higher well flow management revenue in Algeria and Egypt, partially offset by lower well intervention and integrity activities in Algeria. Segment EBITDA for the MENA segment was $63.3 million, or 31.4% of revenues, during the year ended December 31, 2022, compared to $56.3 million, or 32.9% of revenues during the year ended December 31, 2021. The increase was primarily attributable to a combination of the impact of the Merger and higher activities during the year ended December 31, 2022. The reduction in Segment EBITDA margin was primarily due to lower activity on higher margin contracts and a less favorable activity mix. APAC Revenue for the APAC segment was $188.8 million for the year ended December 31, 2022, an increase of $27.9 million, or 17.3%, compared to $160.9 million for the year ended December 31, 2021. Of the total increase, $26.5 million was attributable to the Merger with the addition of well construction revenue during the period, and the remaining increase was primarily attributable to higher subsea well access and well intervention and integrity services revenue in Australia and Brunei, respectively, partially offset by lower well flow management and well intervention and integrity revenue in Thailand. Segment EBITDA for the APAC segment was $4.9 million, or 2.6% of revenues, during the year ended December 31, 2022, compared to $33.4 million, or 20.8% of revenues, during the year ended December 31, 2021. The reduction in Segment EBITDA and Segment EBITDA margin was primarily due to $27.7 million in start-up and commissioning costs incurred on a large subsea project during the year ended December 31, 2022 that did not occur during the year ended December 31, 2021, lower activity on higher margin contracts and a resulting less favorable activity mix. Excluding the $27.7 million of such start-up and commissioning costs during the year ended December 31, 2022, Segment EBITDA would have been $32.6 million and Segment EBITDA margin would have been 17.3%. Corporate Costs Corporate costs for the year ended December 31, 2022 increased by $21.4 million, or 32.3%, to $87.6 million as compared to $66.2 million for the year ended December 31, 2021. The increase in the corporate costs is primarily driven by the impact of the Merger, whereby the statement of operations reflect the corporate costs of only Legacy Expro prior to the Merger and of the combined company (including activities of Frank’s) for all periods subsequent to the Merger, partially offset by lower support costs as a result of merger-related synergies. Equity in income of joint ventures Equity in income of joint ventures for the year ended December 31, 2022 decreased by $1.0 million, or 6.1%, to $15.7 million as compared to $16.7 million for the year ended December 31, 2021. The decrease reflects lower income from our joint venture in China compared to the previous year. Depreciation and amortization expense Depreciation and amortization expense for the year ended December 31, 2022 increased by $15.9 million, or 12.8%, to $139.8 million, as compared to $123.9 million for the year ended December 31, 2021. The increase in depreciation and amortization expense for the year ended December 31, 2022 is primarily related to the Merger. Merger and integration expense Merger and integration expense for the year ended December 31, 2022 decreased by $34.0 million, to $13.6 million as compared to $47.6 million for the year ended December 31, 2021. The decrease was primarily attributable to lower Stock-based compensation expense Stock-based compensation expense for the year ended December 31, Gain on disposal of assets No gain on disposal of assets was Interest and Interest and Income tax (expense) benefit Income tax expense for the year ended December 31, Our effective income tax rate Liquidity and Capital Resources Liquidity Our financial objectives include the maintenance of sufficient liquidity, adequate financial resources and financial flexibility to fund our business. At December 31, Our total capital expenditures are estimated On Credit Facility Revolving Credit Facility On November 5, 2018, certain subsidiaries of On December 20, 2018, subsidiaries of Legacy Expro entered into a revolving credit facility (the “2018 RCF”) with aggregate commitments of $150.0 million with up to Concurrently with the cancelation of the ABL Credit Facility and the 2018 RCF, we entered into the New Facility with DNB Bank ASA, London Branch, as agent, with total commitments of $200.0 million, of which $130.0 million is available for drawdowns as loans and $70.0 million is available for letters of credit. Proceeds of the New Facility may be used for general corporate and working capital purposes. Please see Note 16 “Interest bearing loans”in the Notes to the Consolidated Financial Statements for additional information. On July 21, 2022, the Company entered into an agreement to increase the facility available for letters of credit Cash flow from operating, investing and Cash flows provided by (used in) our operations, investing and financing activities are summarized below (in thousands): Year Ended December 31, (in thousands) 2022 2021 2020 Net cash provided by operating activities Net cash (used in) provided by investing activities Net cash used in financing activities Effect of exchange rate changes on cash activities Net (decrease) increase to cash and cash equivalents and restricted cash Net cash Net cash provided by operating activities was Adjusted Cash Flow from Operations during the year ended December 31, 2022 was Net cash (used in) provided by investing activities Net cash used in investing activities was Net cash used Net cash used in financing activities was Off-balancesheet arrangements We have outstanding letters of credit/guarantees that relate to performance bonds, custom/excise tax guaranties and facility lease/rental obligations. These were entered into in the ordinary course of business and are Critical accounting policies and The preparation of consolidated financial statements and related disclosures in conformity with U.S. GAAP requires Revenue Service revenue is recognized We Where contractual arrangements contain multiple performance obligations, judgment is involved to analyze each performance obligation within the sales arrangement to determine whether they are distinct. The revenue for contracts involving multiple performance obligations is allocated to each distinct performance obligation based on relative selling prices and is recognized on satisfaction of each of the distinct performance obligations. We recognize revenue for long-term construction-type contracts, involving significant design and engineering efforts in order to satisfy custom designs for customer-specific applications, on an over a period of time basis, using an input method, which represents the ratio of actual costs incurred to date on the project in relation to total estimated project costs. The estimate of total project costs has a significant impact on both the amount of revenue recognized as well as the related profit on a project. Revenue and profits on contracts can also be significantly affected by change orders and claims. Profits are recognized based on the estimated project profit multiplied by the We are required to determine the Business Combinations We record business combinations using the acquisition method of accounting. All of the assets acquired and liabilities assumed are recorded at estimated fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill. The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed, in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. The fair value assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation If the actual results differ from the estimates and judgments Goodwill and identified intangible assets We record the excess of No impairment expense was recorded for goodwill during the year ended December 31, 2022 or December 31, 2021. During the We review our identified intangible assets for No impairment expense was recorded for Defined benefit plans Our We evaluate these critical assumptions at least annually on a plan and country specific basis. We periodically evaluate other assumptions involving demographic factors such as retirement age, mortality and turnover, and update them to reflect our experience and expectations for The discount rate that we use reflects the market rate of a portfolio of high-quality corporate bonds with maturities approximately matching the expected timing of payment of the related benefit obligations. The discount rates used to determine the benefit obligations for our principal pension plans were 4.7% in 2022, 1.8% in 2021 and 1.3% in 2020, reflecting market interest rates. As of December 31, 2022, we estimate that a 1% increase or decrease in the discount rate would result in an impact of approximately $18.5 million to our present value of defined benefit obligations at December 31, The expected rate of return on plan assets represents the average rate of return expected to be earned on plan assets over the period that benefits included in the benefit obligation are expected to be paid, with consideration given to the distribution of investments by asset class and Income Taxes We use the asset and liability method to account for income taxes whereby we calculate the deferred tax asset or liability account balances using tax laws and rates in effect at that time. Under this method, the balances of deferred tax liabilities and assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are recorded to reduce gross deferred tax assets when it is more likely than not that all or some portion of the gross deferred tax assets will not be realized. In determining the need for valuation allowances, we have made judgments and considered estimates regarding estimated future taxable income and available tax planning strategies. These estimates and judgments include some degree of uncertainty, therefore changes in these estimates and assumptions could require us to adjust the valuation allowances for our deferred tax assets accordingly. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income in the applicable taxing jurisdictions. We operate in approximately 60 countries. As a result, we are subject to numerous domestic and foreign taxing jurisdictions and tax agreements and treaties among various governments. Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding future events, including the amount, timing and character of income, deductions, and tax credits. Changes in tax laws, regulations or agreements in each taxing jurisdiction could have an impact on the amount of income taxes that we provide during any given year. Our tax filings for various periods are subject to audit by the tax authorities in most jurisdictions in which we operate, and these assessments can result in additional taxes. Estimating the outcome of audits and assessments by the tax authorities involves uncertainty. We review the facts of each case and apply judgments and assumptions to determine the most likely outcome and provide for taxes, interest and penalties on this basis. In line with U.S. GAAP, we recognize the effects of a tax position in the consolidated financial statements when it is more likely than not that, based on the technical merits, some level of tax benefit related to a tax position will be sustained upon audit by tax authorities. Our experience has been that the estimates and assumptions used to provide for future tax assessments have proven to be appropriate. However, past experience is only a guide, and the potential exists that tax resulting from the resolution of current and potential future tax disputes may differ materially from the amount accrued. In such an event, we will record additional tax expense or tax benefit in the period in which such resolution occurs. New accounting pronouncements See Note Item 7A. Quantitative and Qualitative Disclosures Financial risk factors Our operations expose us to Foreign currency risk Cash flow exposure We expect many of the subsidiaries of our Transaction exposure Many of our subsidiaries have assets and liabilities that are As of December 31, 2022, we estimate that a Interest rate risk We Credit risk Our exposure to We extend credit to customers and other parties in the normal course of INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Consolidated Statements of Comprehensive Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of We have also audited, in Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Goodwill – ESSA and APAC Reporting Units — Refer to Notes 2, 3, 4 and 15 to the financial statements Critical Audit Matter Description The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the discounted cash flow model and the market approach. The determination of the fair value using the discounted cash flow model requires management to make significant assumptions related to short-term and long-term forecasts of operating performance, including revenue growth rates and profitability margins, and discount rates. The determination of the fair value using the market approach requires management to make significant assumptions related to the selection of the appropriate peer companies and valuation multiples. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment expense, or both. The goodwill balance was $221.0 million as of December 31, 2022, of which $80.1 million and $18.2 million was allocated to the ESSA and APAC reporting units, respectively. The fair value of ESSA and APAC reporting units exceeded their carrying values as of the measurement date and, therefore, no impairment was recognized. We identified goodwill for ESSA and APAC as a critical audit matter because of the significant judgments made by management when developing the fair value of its ESSA and APAC reporting units, the high degree of auditor judgment in performing procedures and evaluating audit evidence related to management’s anticipated future cash flows and significant assumptions related to short-term and long-term forecasts of operating performance, revenue growth rates, profitability margins and discount rates, and an increased extent of audit effort, including the need to involve professionals with specialized skill and knowledge. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the short-term and long-term forecasts of operating performance, including revenue growth rates and profitability margins, and the selection of discount rates for ESSA and APAC reporting units included the following, among others: ● We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of ESSA and APAC, such as controls related to management’s forecasts and selection of the discount rates. ● We evaluated management’s ability to accurately forecast future revenues and profitability margins by comparing actual results to management’s historical forecasts. ● We evaluated the reasonableness of management’s short-term and long-term forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in Company press releases as well as in analyst and industry reports of the Company and companies in its peer group. ● We evaluated the impact of changes in management’s forecast from the October 31, 2022, annual measurement date to December 31, 2022. ● With the assistance of our fair value specialists, we evaluated the terminal revenue growth rates and discount rates and developed a range of independent estimates and compared those to the terminal revenue growth rates and discount rates selected by management. ● With the assistance of our fair value specialists, we evaluated the valuation multiples used in the market approach, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its guideline companies. /s/ Deloitte & Touche LLP Houston, Texas February 23, 2023 We have served as the Company's auditor since 2020. To the stockholders and the Board of Directors of Expro Group Holdings N.V. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Expro Group Holdings N.V. and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022 of the Company and our report dated February 23, 2023, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls, appearing under Part II, Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Houston, Texas February Consolidated Statements of Operations (in thousands) Year Ended December 31, 2022 2021 2020 Total revenue Operating costs and expenses: Cost of revenue, excluding depreciation and amortization General and administrative expense, excluding depreciation and amortization Depreciation and amortization expense Impairment expense Gain on disposal of assets Merger and integration expense Severance and other expense Total operating cost and expenses Operating income (loss) Other income, net Interest and finance expense, net Income (loss) before taxes and equity in income of joint ventures Equity in income of joint ventures Income (loss) before income taxes Income tax (expense) benefit Net loss Loss per common share: Basic and diluted Weighted average common shares outstanding: Basic and diluted The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of Comprehensive Loss (in thousands) Year Ended December 31, 2022 2021 2020 Net loss Other comprehensive income (loss): Actuarial gain (loss) on defined benefit plans Plan curtailment / amendment credit recognized Reclassified net remeasurement (loss) gains Amortization of prior service credit Income taxes on pension Other comprehensive income (loss) Comprehensive loss The accompanying notes are an integral part of these consolidated financial statements. Consolidated Balance Sheets (in thousands, except share data) December 31, 2022 2021 Assets Current assets Cash and cash equivalents Restricted cash Accounts receivable, net Inventories Assets held for sale Income tax receivables Other current assets Total current assets Property, plant and equipment, net Investments in joint ventures Intangible assets, net Goodwill Operating lease right-of-use assets Non-current accounts receivable, net Other non-current assets Total assets Liabilities and stockholders’ equity Current liabilities Accounts payable and accrued liabilities Income tax liabilities Finance lease liabilities Operating lease liabilities Other current liabilities Total current liabilities Deferred tax liabilities, net Post-retirement benefits Non-current finance lease liabilities Non-current operating lease liabilities Other non-current liabilities Total liabilities Commitments and contingencies (Note 18) Stockholders’ equity: Common stock, €0.06 nominal value, 200,000,000 shares authorized, 110,710,188 and 109,697,040 shares issued and 108,743,761 and 109,142,925 shares outstanding Treasury stock (at cost), 1,966,427 and 554,115 shares Additional paid-in capital Accumulated other comprehensive income Accumulated deficit Total stockholders’ equity Total liabilities and stockholders’ equity The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, Cash flows from operating activities: 2022 2021 2020 Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Impairment expense Depreciation and amortization expense Equity in income of joint ventures Stock-based compensation expense Changes in fair value of investments Elimination of unrealized profit on sales to joint ventures Debt issuance expense Gain on disposal of assets Deferred taxes Unrealized foreign exchange losses Changes in assets and liabilities: Accounts receivable, net Inventories Other assets Accounts payable and accrued liabilities Other liabilities Income taxes, net Dividends received from joint ventures Other Net cash provided by operating activities Cash flows from investing activities: Capital expenditures Cash and cash equivalents and restricted cash acquired in the Merger Acquisition of technology Proceeds from disposal of assets Proceeds from sale / maturity of investments Net cash (used in) provided by investing activities Cash flows from financing activities: (Cash pledged for) release of collateral deposits Repayment of financed insurance premium Payments of loan issuance and other transaction costs Acquisition of Company common stock Payment of withholding taxes on stock-based compensation plans Repayments of finance leases Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase to cash and cash equivalents and restricted cash Cash and cash equivalents and restricted cash at beginning of year Cash and cash equivalents and restricted cash at end of year The accompanying notes are an integral part of these consolidated financial statements. Consolidated Statements of Stockholders’ Equity (in thousands) Accumulated Additional other Total Common stock Treasury paid-in comprehensive Accumulated Stockholders’ Shares Value Stock Warrants capital income (loss) deficit Equity Balance at January 1, 2020 Adoption of ASU 2016-13, Financial Instruments - Credit Losses (“Topic 326”) Net loss Other comprehensive loss Balance at December 31, 2020 Net loss Other comprehensive income Stock-based compensation expense Common shares issued upon vesting of share-based awards Common shares issued for ESPP Treasury shares withheld Cancellation of Legacy Expro common stock Cancellation of warrants Merger Balance at December 31, 2021 Net loss Other comprehensive income Stock-based compensation expense Common shares issued upon vesting of share-based awards Acquisition of common stock Common stock withheld Balance at December 31, 2022 The accompanying notes are an integral part of these consolidated financial statements. With roots dating to 1938, the Company is a global provider of energy services with operations in approximately 60 countries. The On March 10, 2021, Frank’s International N.V. Pursuant to the Merger Agreement, as of the effective time of the Merger (the “Effective Time”), each outstanding ordinary share of common stock, par value $0.01 per share, of Legacy Expro was converted into the right to receive 1.2120 shares of common stock, nominal value €0.06 per share, of the Company (“Company Common Stock”). The number of shares of Company Common Stock received by the Legacy Expro shareholders was equal to 7.2720 (the “Exchange Ratio” as provided in the Merger Agreement) multiplied by the 1-for-6 reverse stock split ratio. Further, pursuant to the Merger Agreement, at the Effective Time, the articles of association of the Company (the “Company Articles”) were amended to increase the total authorized capital stock of the Company from 798,096,000 shares of Company Common Stock to 1,200,000,000 shares of Company Common Stock (200,000,000 shares of Company Common Stock on a post-reverse split basis) and to effect certain other amendments to the Company Articles contemplated by the Merger Agreement. On October 4, 2021, the first trading day following the closing of the Merger, the Company Common Stock began trading on a post-reverse split basis on the New York Stock Exchange under the new name and new ticker symbol “XPRO.” Further, the supervisory board of directors of Frank’s unanimously approved a 1-for-6 reverse stock split of Frank’s common stock, which was affected on October 1, 2021. All of the outstanding share numbers, nominal value, share prices and per share amounts in these consolidated financial statements have been retroactively adjusted to reflect the Exchange Ratio (as defined below) and the 1-for-6 reverse stock split for all periods presented, as applicable. On June 16, 2022, the Company’s Board of Directors (the “Board”) approved a new stock repurchase program, under which the Company is authorized to acquire up to $50.0 million of its outstanding common stock through November 24, 2023. Under the Stock Repurchase Program, the Company may repurchase shares of the Company’s common stock in open market purchases, in privately negotiated transactions or otherwise. The Stock Repurchase Program is being utilized at management’s discretion and in accordance with federal securities laws. The timing and actual numbers of shares repurchased will depend on a variety of factors including price, corporate requirements, the constraints specified in the Stock Repurchase Program along with general business and market conditions. The Stock Repurchase Program does not obligate the Company to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. The Company has repurchased a total of 1.1 million shares at an average price of $11.81 per share, for a total cost of $13.0 million as of December 31, 2.Basis of presentation and Basis of presentation The consolidated financial statements of the The consolidated financial statements have been prepared using the U.S. dollar (“$” or “USD”) as the reporting currency. Basis of consolidation The consolidated financial statements reflect the accounts of the Company and Use of Preparation of the Revenue recognition We Revenue from the sale of goods is generally recognized at the point in time when the control has passed onto the customer which generally coincides with delivery and installation, where applicable. We also recognize revenue for “bill and hold” sales, associated with certain product sales, once the following criteria have been met: (1) there is a substantive reason for the arrangement, (2) the product is identified as the customer’s asset, (3) the product is ready for delivery to the customer, and (4) we cannot use the product or direct it to another customer. Where contractual arrangements contain multiple performance obligations, we analyze each performance obligation within the sales arrangement to determine whether they are distinct. The revenue for contracts involving multiple performance obligations is allocated to each distinct performance obligation based on Expro recognizes revenue for long-term construction-type contracts, involving significant design and engineering efforts in order to satisfy custom designs for customer-specific applications, on an over a Revenue is recognized to depict the Foreign currency transactions The functional currency of all our Interest and finance expense, net Our interest and finance expense primarily consists of interest and other costs that we incur in connection with our revolving credit facility and finance lease liabilities. Costs incurred that are directly related to the raising of debt financing, together with any original issue discount or premium, are capitalized and recognized over the term of the loan or facility, using the effective interest method other than for those debt instruments that we elect to account for under the fair value option, in which case such costs are expensed in the period incurred. All other finance costs are expensed in the period they are incurred. Income taxes We use the asset and liability method to account for income taxes whereby we calculate the deferred tax asset or liability account balances using tax laws and rates in effect at that time. Under this method, the balances of deferred tax liabilities and assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are recorded to reduce gross deferred tax assets when it is more likely than not that some portion or all of the gross deferred tax assets will not be realized. In determining the need for valuation allowances, we have made judgments and considered estimates regarding estimated future taxable income and ongoing achievable tax planning strategies. These estimates and judgments include some degree of uncertainty therefore changes in these estimates and assumptions could require us to adjust the valuation allowances for our deferred tax assets accordingly. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income in the applicable taxing jurisdictions. We operate in approximately 60 countries and are subject to domestic and numerous foreign taxing jurisdictions. Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of income, deductions, and tax credits. Changes in tax laws, regulations or agreements in each taxing jurisdiction could have an impact on the amount of income taxes that we provide during any given year. Our tax filings for various periods are subject to audit by the tax authorities in most jurisdictions in which we operate, and these assessments can result in additional taxes. Estimating the outcome of audits and assessments by the tax authorities involves uncertainty. We review the facts of each case and apply judgments and assumptions to determine the most likely outcome and we provide for taxes, interest and penalties on this basis. In line with U.S. GAAP, we recognize the effects of a tax position in the consolidated financial statements when it is more likely than not that, based on the technical merits, some level of tax benefit related to a tax position will be sustained upon audit by tax authorities. Cash, cash equivalents and restricted cash We consider all highly liquid instruments with original maturities of three months or less at the time of purchase to be cash equivalents. Restricted cash primarily relates to bank deposits which have been pledged as cash collateral for certain guarantees issued by various banks or minimum cash balances which must be maintained in accordance with contractual arrangements. Accounts receivable, net Accounts receivable represents customer transactions that have been invoiced as of the balance sheet date and unbilled receivables relating to customer transactions that have not yet been invoiced as of the balance sheet date. The carrying value of our receivables, net of expected credit losses, represents the estimated net realizable value. We have an extensive global customer base comprised of a large number of international oil companies, national oil companies, independent exploration and production companies and service partners that operate in all major oil and gas locations around the world. We estimate reserves for expected credit losses using information about past events, current conditions and risk characteristics of customers, and reasonable and supportable forecasts relevant to assessing risk associated with the collectability of accounts and unbilled receivables. Past-due receivables are written off when our internal collection efforts have been unsuccessful. Inventories Inventories are stated at the lower of cost or net realizable value. Cost comprises direct materials and where applicable, direct labor costs and overheads that have been incurred in bringing the inventories to their current location and condition which are calculated using the average cost method. We regularly evaluate the quantities and values of our inventories in light of current market conditions, market trends and other factors, and record inventory write-downs as appropriate. This evaluation considers historical usage, expected demand, product obsolescence and other factors. Market conditions are subject to change, and actual consumption of our inventory could differ from expected demand. Impairment of long-lived assets We assess long-lived assets, including our property, plant and equipment, for impairment whenever events or changes in business circumstances arise that may indicate that the carrying amount of our long-lived assets may not be recoverable. These events and changes can include significant current period operating losses or negative cash flows associated with the use of a long-lived asset, or group of assets, combined with a history of such factors, significant changes in the manner of use of the assets, and current expectations that it is more likely than not that a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When impairment indicators are present, we compare undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset group, (ii) third-party valuations, and/or (iii) information available regarding the current market for similar assets. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, an impairment equal to the difference is recorded in the period that the impairment indicator occurs. Estimating future cash flows requires significant judgment, and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been impaired. We consider a long-lived asset to be abandoned after we have ceased use of such asset and we have no intent to use or re-purpose the asset in the future. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation. Cost includes the price paid to acquire or construct the asset, required installation costs, interest capitalized during the construction period and any expenditure that substantially adds to the value of the asset, substantially upgrades the assets for an enhanced use or substantially extends the useful life of an existing asset. We expense costs related to the routine repair and maintenance of property, plant and equipment at the time we incur them. We capitalize interest as part of the cost of acquiring or constructing certain assets, to the extent incurred, during the period of time required to place the property, plant and equipment into service. When properties or equipment are sold, retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the books and the resulting gain or loss is recognized on the consolidated statements of operations. We begin depreciation for such assets, including any related capitalized interest, once an asset is placed into operational service. We consider an asset to be placed into operational service when the asset is both in the location and condition for its intended use. We compute depreciation expense, with the exception of land, using the straight-line method on a net cost basis over the estimated useful lives of the assets, as presented in the table below. Land improvement 12 years Buildings Up to 40 years Leased property, including leasehold buildings over the lesser of the remaining useful life or period of the lease Plant and equipment 2 to 12 years Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively. For property, plant and equipment that has been placed into service, but is subsequently idled, we continue to record depreciation expense during the idle period. We adjust the estimated useful lives of the idled assets if the estimated useful lives have changed. Goodwill Goodwill is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. A qualitative assessment is allowed to determine if goodwill is potentially impaired. We have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The qualitative assessment determines whether it is more likely than not that a reporting unit’s fair value is less than Intangible assets, Identifiable intangible assets are amortized using the straight-line method over the estimated useful lives of the Investments in joint ventures We use the equity method of The Company evaluates its investments in The results of the joint ventures are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies used in line with those of the Company, to take into account fair values assigned at the date of acquisition; and to reflect impairment losses where appropriate. Adjustments are also made in our consolidated financial statements to eliminate our share of unrealized gains and losses on transactions between us and our joint ventures. Fair value measurements We measure certain financial assets and liabilities at fair value at each balance sheet date and, for the purposes of impairment testing, use fair value to determine the recoverable amount of our non-financial assets. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by us. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value is reported in one of three levels: Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted market prices from active markets for identical assets or liabilities being measured; Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques; and Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about the assumptions that market participants would use to price an asset or liability. When available, we use quoted market prices to determine the fair value of an asset or liability. We determine the policies and procedures for both recurring fair value measurements and non-recurring fair value measurements, such as impairment tests. At each reporting date, we analyze the movements in the values of assets and liabilities which are required to be remeasured or reassessed as per our accounting policies. For the purpose of fair value disclosures, we have determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. Leases We have operating and finance leases primarily related to real estate, transportation and equipment. We determine if an arrangement is a lease at inception. Upon commencement of a lease, we recognize an operating lease right-of-use asset (“ROU Asset”) and corresponding operating lease liability based on the then present value of all lease payments over the lease term. ROU Assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligations to make lease payments arising from the lease. The accounting for some of our leases may require significant judgments, which includes determining the incremental borrowing rates to utilize in our net present value calculation of lease payments for lease agreements which do not provide an implicit rate, and assessing the likelihood of renewal or termination options, which are considered as part of assessing the lease term if the extension or termination is deemed to be reasonably certain. Leases which meet the criteria of a finance lease in accordance with Accounting Standards Codification (“ASC”) 842Leases are capitalized and included in “Property, plant and equipment, We do not separate lease and Post-retirement benefits Defined Benefit Plans The cost of providing benefits under defined benefit plans are determined separately for each plan using the projected unit credit method, which attributes entitlement to benefits to the current and prior periods. Both current and past service costs are recognized in net income (loss) as they arise. The interest element of the defined benefit cost represents the change in present value of plan obligations resulting from the passage of time and is determined by applying a discount rate to the opening present value of the benefit obligation, taking into account material changes in the obligation during the year. The expected return on plan assets is based on an assessment made at the beginning of the year of long-term market returns on plan assets, adjusted for the We initially recognize actuarial gains and losses as other comprehensive income in the year they arise. Where the net cumulative actuarial gains or losses for a plan exceeds 10 percent of that plan’s gross pension liability, or asset if higher, the amount of gains or losses above the 10 percent threshold are recognized The defined benefit pension asset or liability on the consolidated balance sheets comprise the total for each plan of the present value of the defined benefit obligation using a discount rate based on high quality corporate bonds less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information and Defined Contribution Plans The costs of providing benefits under a defined contribution plan are expensed at the time contributions become payable to the Stock-based compensation Effective October 1, 2021, in connection with Stock-based compensation expense is measured at the grant date of the share-based awards based on their fair value. Stock-based compensation expense is recognized on a straight-line basis over the vesting period and is included in cost of revenue and general and administrative The grant date fair value of the RSUs, which are not entitled to receive dividends until vested, is measured by reducing the share price at that date by the present value of the dividends expected to be paid during the requisite vesting period, discounted at the appropriate risk-free interest rate. The grant date fair value and compensation expense of PRSU grants is estimated based on a Monte Carlo simulation using the In October 2018, Legacy Expro established the Expro Group Holdings International Limited 2018 Management Incentive Plan (the “Management Incentive Plan”) which was comprised of the following stock-based compensation awards: (a) stock options to non-executive directors and key management personnel and (b) restricted stock units, each of which were assumed by the Company in connection with the Merger. Due to the Merger, the Company recorded stock-based compensation expense based on the fair value on the Closing Date to the extent each award was fully vested. Compensation expense associated with those awards that have a Research and development Research and development costs are expensed as incurred and relate to spending for new product development and innovation and includes internal engineering, materials and third-party costs. We incurred $7.3 million, $6.7 million and $10.4 million of research and development costs for the years ended December 31, 2022, 2021 and 2020, respectively, which are included in “Cost of revenue, excluding depreciation and amortization” in the consolidated statements of operations. Income (loss) per share Basic income (loss) per share excludes dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities to issue common stock were exercised or converted to common stock. Recent accounting pronouncements Accounting Changes to GAAP are established by the Financial Accounting Standards Board 3.Business combinations and dispositions Frank’s International N.V. As discussed in Note 1, the Merger of Frank’s with Legacy Expro pursuant to the Merger Agreement was completed on October 1, 2021. U.S. GAAP requires the determination of the accounting acquirer, the acquisition date, the fair value of assets and liabilities of the acquired and the resulting measurement of goodwill. The merger consideration was Per share Amount Shares issued Price (in thousands) Issuance of common stock attributable to Frank’s stockholders Replacement of Frank’s equity awards Cash payment to Mosing Holdings LLC pursuant to the amended and restated tax receivable agreement Total Merger Consideration Exchanged The following table Initial allocation of the consideration Measurement period adjustments Allocation of consideration as of December 31, 2022 Cash and cash equivalents Restricted cash Accounts receivables, net Inventories Assets held for sale Income tax receivables Other current assets Property, plant and equipment Goodwill Intangible assets Operating lease right-of-use assets Other assets Total assets Accounts payable and accrued liabilities Operating lease liabilities Current income tax liabilities Other current liabilities Deferred tax liabilities Non-current operating lease liabilities Other non-current liabilities Total Liabilities Total Merger Consideration Exchanged The The Goodwill will not be amortized but rather subject to an annual impairment test, absent any indicators of impairment. Goodwill is Results of Frank’s for the period October 1, 2021 through December 31, 2021 Year Ended December 31, 2021 2020 Unaudited pro forma revenues Unaudited pro forma net loss Estimated unaudited pro forma information is not necessarily indicative of Merger and integration expense During the Below is a reconciliation of our liability balance associated with our severance plan initiated during 2021 related to the integration in connection with the Merger, which is included in “Other current liabilities” on the consolidated balance sheets (in thousands): NLA ESSA MENA APAC Central Total Balance as of December 31, 2021 Expense (reversal) during the period Payments made during the year Balance as of December 31, 2022 Sale of assets On November 13, 2020, Legacy Expro entered into an agreement to transfer, sell and assign all rights, title and interest in and to certain identified tangible and intangible assets and liabilities relating to its pressure-control chokes product line for total cash consideration of $15.5 million and an additional earn-out consideration of up to a 4.Fair value �� Recurring Basis A summary of financial assets and liabilities that are measured at fair value on a recurring basis, as of December 31, December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Investments: Non-current accounts receivable, net Liabilities: Finance lease liabilities December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Investments: Cash surrender value of life insurance policies- Deferred compensation plan Non-current accounts receivable, net Liabilities: Deferred compensation plan Finance lease liabilities Our investments associated with our deferred compensation plan at December 31, 2021 consist primarily of the cash surrender value of life insurance policies and is included in Non-recurring Basis We apply the provisions of the fair value measurement standard to our non-recurring, non-financial measurements including business combinations and assets identified as held for sale, as well as impairment related to goodwill and other long-lived assets. For business combinations, Goodwill is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. A qualitative assessment is allowed to determine if goodwill is potentially impaired. We When conducting an impairment test on long-lived assets, other than goodwill, we first compare estimated future undiscounted cash flows associated with the asset to the asset’s carrying amount. If the undiscounted cash flows are less than the asset’s carrying amount, we then determine the The impairment assessments discussed above incorporate inherent uncertainties, including projected commodity pricing, supply and demand for our services and future market conditions, which are difficult to predict in volatile economic environments and could result in impairment No impairment expense was recognized during the year ended December 31, 2022 and 2021. The following table presents total amount of impairment expense recognized during the year ended December 31, 2020 (in thousands): Year Ended December 31, 2020 Goodwill Intangible assets, net Property, plant and equipment, net Operating lease right-of-use assets Total Goodwill For the year ended December 31, 2022, we performed a quantitative goodwill impairment assessment as of our annual testing date and determined that the fair value was substantially in excess of the carrying value for each reporting unit. For the year ended December 31, 2021, we performed a qualitative goodwill impairment assessment of our goodwill as of our annual testing date and determined that there were no events or circumstances that indicated it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Accordingly, no impairment expense related to goodwill was recorded during the years ended December 31, 2022 and December 31, 2021. In March 2020, the Company observed a material increase in macro-economic uncertainty and a material decrease in oil and gas prices as a result of a combination of factors, including the substantial decline in global demand for oil caused by the COVID-19 pandemic and disagreements between the Organization of Petroleum Exporting Countries and other oil producing nations regarding limits on production. As a result, customers significantly decreased capital budgets and other spending, which significantly impacted our global outlook for the industry. We determined that these events constituted a triggering event that required us to perform a quantitative goodwill impairment assessment as of March 31, 2020 (“Testing Date”) and to review the recoverability of all our long-lived assets. Our interim quantitative goodwill impairment test in 2020 determined the carrying value of certain of our reporting units exceeded their estimated fair value as of the Testing date, which resulted in goodwill impairment expenses of $191.9 million. Our quantitative goodwill impairment test as of our annual testing date on 2020 determined no further impairment to goodwill was to be recorded. After recording of the impairment expense, the carrying value of our impaired reporting units equaled their fair value whereas the estimated fair values of other reporting units were more that their carrying values. In performing our quantitative goodwill impairment assessments, we used the income approach and the market approach to estimate the fair value of our reporting units. The Long-lived Assets The Company did not identify any indicators of impairment related to our long-lived assets during the years ended December 31, 2022 and December 31, 2021. In reviewing the recoverability of our long-lived assets during 2020, we identified certain of our long-lived assets which exceeded their respective fair values and certain of our long-lived assets which were deemed to be no longer useable. As a result, during 2020 we recorded impairment expense of $20.0 million, $60.4 million and $15.2 million relating to our property, plant and equipment, intangible assets and operating lease right-of-use assets, respectively. Financial Instruments The estimated fair values of the Company’s financial instruments have been determined at discrete points in time based on relevant market information. The Company’s financial instruments consist of cash and cash equivalents, 5.Business segment reporting Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s Chief Operating Decision Maker (“CODM”), which is our CEO, in deciding how to allocate resources and assess performance. Our operations are comprised of four operating segments which also represent our reporting segments and are aligned with our geographic regions as below: ● North and Latin America (“NLA”), ● Europe and Sub-Saharan Africa (“ESSA”), ● Middle East and North Africa (“MENA”), and ● Asia-Pacific (“APAC”). The following table presents our revenue disaggregated by our operating segments (in thousands): Year Ended December 31, 2022 2021 2020 NLA ESSA MENA APAC Total Segment EBITDA Our CODM regularly evaluates the performance of our operating segments using Segment EBITDA, which we define as loss before income taxes adjusted for corporate costs, equity in income of joint ventures, depreciation and amortization expense, impairment expense, severance and other expense, gain on disposal of assets, foreign exchange losses, merger and integration expense, other income, net, interest and finance expense, net and stock-based compensation expense. The following table presents our Segment EBITDA disaggregated by our operating segments and reconciliation to income (loss) before income taxes (in thousands): Year Ended December 31, 2022 2021 2020 NLA ESSA MENA APAC Total Segment EBITDA Corporate costs Equity in income of joint ventures Depreciation and amortization expense Impairment expense Severance and other expense Stock-based compensation expense Gain on disposal of assets Foreign exchange losses Merger and integration expense Other income, net Interest and finance expense, net Income (loss) before income taxes Corporate costs include the costs of running our corporate head office and other central functions that support the operating segments, including research, engineering and development, logistics, sales and marketing and health and safety and are not attributable to a particular operating segment. We are a Netherlands based company and we derive our revenue from services and product sales to customers primarily in the oil and gas industry. No single customer accounted for more than 10% of our revenue for the years ended December 31, 2022 and 2021.One customer in our MENA operating segment accounted for 16% of our consolidated revenue for the year ended December 31, 2020. The revenue generated in the Netherlands was immaterial for the years ended December 31, 2022, 2021 and 2020. Other than the U.S. in 2022, Norway in 2021, and Algeria in 2020,no individual country represented more than 10% of our revenue for the years ended December 31, 2022, 2021 and 2020. The following table presents total assets by geographic region and assets held centrally. Assets held centrally includes certain property plant and equipment, investments in joint ventures, collateral deposits, income tax related balances, corporate cash and cash equivalents, accounts receivable and other current and non-current assets, which are not included in the measure of segment assets reviewed by the CODM: December 31, 2022 2021 NLA ESSA MENA APAC Assets held centrally Total The following table presents our capital expenditures disaggregated by our operating segments (in thousands): Year Ended December 31, 2022 2021 NLA ESSA MENA APAC Assets held centrally Total 6.Revenue Disaggregation of revenue We disaggregate our revenue from contracts with customers by geography, as disclosed in Note 5 above, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Additionally, we disaggregate our revenue into areas of capability. The following table sets forth the total amount of revenue by areas of capability as follows (in thousands): Year Ended December 31, 2022 2021 2020 Well construction Well management Total Contract balances We perform our obligations under contracts with our customers by transferring services and products in exchange for consideration. The timing of our performance often differs from the timing of our customers’ payments, which results in the recognition of receivables and deferred revenue. Unbilled receivables are initially recognized for revenue earned on completion of the performance obligation which are not yet invoiced to the customer. The amounts recognized as unbilled receivables are reclassified to trade receivable upon billing. Deferred revenue represents the Company’s obligations to transfer goods or services to customers for which the Company has received consideration, in full or part, from the customer. Contract balances consisted of the following as of December 31, 2022 and December 31, 2021 (in thousands): December 31, 2022 2021 Trade receivable, net Unbilled receivables (included within accounts receivable, net) Deferred revenue (included within other liabilities) The Company recognized revenue of $15.5 million, $15.4 million and $6.3 million for the years ended December 31, 2022, 2021 and 2020, respectively, out of the deferred revenue balance as of the beginning of the applicable year. As of December 31, 2022, $50.9 million of our deferred revenue was classified as current and is included in “Other current liabilities” on the consolidated balance sheets, with the remainder classified as non-current and included in “Other non-current liabilities” on the consolidated balance sheets. Transaction price allocated to remaining performance obligations Remaining performance obligations represent firm contracts for which work has not been performed and future revenue recognition is expected. We have elected the practical expedient permitting the exclusion of disclosing remaining performance obligations for contracts that have an original expected duration of one year or less and for our long-term contracts we have a right to consideration from customers in an amount that corresponds directly with the value to the customer of the performance completed to date. With respect to our long term construction contracts, revenue allocated to remaining performance obligations is $139.2 million. 7.Income taxes The components of income tax expense (benefit) for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Current tax: Netherlands (2020: U.K.) Foreign Total current tax Deferred tax: Netherlands (2020: U.K.) Foreign Total deferred tax Income tax expense (benefit) Following the closing of the Merger on October 1, 2021, the tax domicile of the Company changed from the U.K. to the Netherlands. As a result of this change in domicile due to the Merger, income tax expense (benefit) is split between the Netherlands and foreign tax jurisdictions for the year ended December 31, 2022 and 2021 and between the U.K. and foreign tax jurisdictions for the year ended December 31,2020. The Netherland, U.K. and foreign components of income (loss) from continuing operations before income taxes and equity in income of joint ventures for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Netherlands (2020: U.K.) Foreign Total A reconciliation of the differences between the income tax provision computed at the Netherlands statutory rate of 25.8% and 25.0% for the year ended December 31, 2022 and 2021, respectively, and the U.K. statutory rate of 19.0% for the years ended December 31, 2020 to income (loss) from continuing operations before taxes and equity in joint ventures for the reasons below (in thousands): Year Ended December 31, 2022 2021 2020 Statutory tax rate Income tax expense (benefit) at statutory rate Permanent differences Effect of overseas tax rates Net tax charge related to attributes with full valuation allowance Exempt dividends from joint ventures Return to provision adjustments Withholding taxes Foreign exchange movements on tax balances Movement in uncertain tax positions Income tax expense (benefit) Effective tax rate Deferred tax assets and liabilities are recorded for the anticipated future tax effects of temporary differences between the financial statement basis and tax basis of our assets and liabilities and The primary components of December 31, 2022 2021 Deferred tax assets: Net operating loss carry forwards Employee compensation and benefits Depreciation Other Investment in partnership Intangibles Valuation allowance Total deferred tax assets Deferred tax liabilities: Depreciation Goodwill and other intangibles Investment in partnership Other Total deferred tax liabilities Net deferred tax liabilities We recognize a valuation allowance where it is more likely than not that some or all of the deferred tax assets will not be realized. The realization of a deferred tax asset is dependent upon the ability to generate sufficient taxable income in the appropriate taxing jurisdictions where the deferred tax assets are initially recognized. The changes in valuation allowances were as follows (in thousands): Year Ended December 31 2022 2021 2020 Balance at the beginning of the period Additions attributable to the Merger Additions not attributable to the Merger Reductions Balance at end of period As of December 31, 2022, the Company had U.S. federal net operating loss carryforwards (“NOLs”) of approximately $628.7 million, net of existing Section 382 (as defined below) limitations, $160.6 million, of which were incurred prior to January 1, 2018 (and will begin to expire, if unused, in 2036) and $468.1 million of which were incurred on or after January 1, 2018 (and will not expire and will be carried forward indefinitely). Section 382 of the Code (“Section 382”) imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone an “ownership change” (as determined under Section 382). An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at least 5% of such corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. In the event that an ownership change occurs, utilization of the relevant corporation’s NOLs would be subject to an annual limitation under Section 382, generally determined, subject to certain adjustments, by multiplying (i) the fair The Company underwent an ownership change under Section 382 as a result of the Merger, which will trigger a limitation (calculated as described above) on the combined company’s ability to utilize any historic Frank’s NOLs and will cause some of the Frank’s NOLs incurred prior to January 1, 2018 to expire before the combined company will be able to utilize them to reduce taxable income in future periods. The exchange of ordinary shares of Legacy Expro for shares of the Company's common stock (“Company Common Stock”) in the Merger was, standing alone, insufficient to result in an ownership change with respect to Legacy Expro. However, the Company will undergo an ownership change as a result of the Merger taking into account other changes in ownership of Company stock occurring within the relevant three-year period described above. Due to the ownership change with respect to Legacy Expro as a result of the Merger, the combined company will be prevented from fully utilizing Legacy Expro’s historic NOLs incurred prior to January 1, 2018 prior to their expiration. We have performed an analysis of uncertain tax positions in the various jurisdictions in which we operate and concluded that we are adequately provided. Our tax filings are subject to regular audits by tax authorities in the various jurisdictions in which we operate. Tax liabilities are based on estimates, however due to The Company is subject to income taxation in many jurisdictions around the world. The following table presents the changes in our uncertain tax positions as of December 31, 2022 and 2021 (in thousands): Year ended December 31 2022 2021 Balance at the beginning of the period Additions attributable to the Merger Additions based on tax positions related to current period not attributable to the Merger Additions for tax positions of prior year period not attributable to the Merger Settlements with tax authorities Reductions for tax positions of prior years Reductions due to the lapse of statute of limitations Effect of changes in foreign exchange rates Balance at the end of the period The amounts above include penalties and interest of $9.8 million and $4.2 million for the years ended December 31, 2022 and 2021, respectively. We classify penalties and interest relating to uncertain tax positions within income tax (expense) benefit in the consolidated statements of operations. Approximately $58.0 million and $46.0 million of unrecognized tax benefits as of December 31, 2022 and December 31, 2021 respectively, included in “Other non-current liabilities” on the consolidated balance sheet, would positively impact our future rate and be recognized as additional tax benefit in our statement of operations if resolved in our favor. Approximately $30.1 million of unrecognized tax benefits as of December 31, 2022 and at December 31, 2021 relate to certain deductions and should not impact our future rate. We do not foresee material resolution of these positions in the coming 12 months. We file income tax returns in the Netherlands and in various other foreign jurisdictions in respect of the Company’s subsidiaries. In all cases we are no longer subject to income tax examination by tax authorities for years prior to 2008. Tax filings of our subsidiaries, branches and related entities are routinely examined in the normal course of business by the relevant tax authorities. We believe that there are no jurisdictions in which the outcome of unresolved issues is likely to be material to our results of operations, financial position or cash flows. 8.Investment in joint ventures We have investments in two joint ventures, which together provide us access to certain Asian markets that otherwise would be challenging for us to penetrate or develop effectively on our own. COSL - Expro Testing Services (Tianjin) Co. Ltd (“CETS”), in which we have a 50% equity interest, has extensive offshore well testing and completions capabilities and a reputation for providing technology-driven solutions in China. Similarly, PV Drilling Expro International Co. Ltd. (“PVD-Expro”) in which we have a 49% equity interest, offers the full suite of the Company’s products and services, including well testing and completions, in Vietnam. Both of these are strategic to our activities and offer the full capabilities and technology of the Company, but each company is independently managed. The carrying value of our investment in joint ventures as of December 31, 2022 and 2021 was as follows (in thousands): December 31, 2022 2021 CETS PVD-Expro Total 9.Accounts receivable, net Accounts receivable, net consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Accounts receivable Less: Expected credit losses Total Current Non – current Total The movement of expected credit losses for the years ended December 31, 2022, 2021 and 2020 was as follows (in thousands): Year Ended December 31, 2022 2021 2020 Balance at beginning of year Additions - Acquired in the Merger Additions - Charged to expense Deductions Balance at end of year 10.Inventories Inventories consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Finished goods Raw materials, equipment spares and consumables Work-in progress Total 11.Other assets and liabilities Other assets consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Cash surrender value of life insurance policies Prepayments Value-added tax receivables Collateral deposits Deposits Other Total Current Non – current Total Other liabilities consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Deferred revenue Other tax and social security Income tax liabilities - non-current portion Deferred compensation plan Provisions Other Total Current Non – current Total Cash Surrender Value of Life Insurance Policies We had $18.9 million of cash surrender value of life insurance policies as of December 31, 2021, that were held within a trust established to settle payment of future executive deferred compensation benefit obligations. During 2022, the Company terminated the executive deferred compensation benefit plan. Please see Note 12.Accounts payable and accrued liabilities Accounts payable and accrued liabilities consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Accounts payable – trade Payroll, vacation and other employee benefits Accruals for goods received not invoiced Other accrued liabilities Total 13.Property, plant and equipment, net Property, plant and equipment, net consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Cost: Land Land improvement Buildings and lease hold improvements Plant and equipment Less: accumulated depreciation Total The carrying amount of our property, plant and equipment recognized in respect of assets held under finance leases as of December 31, 2022 and 2021 and included in amounts above is as follows (in thousands): December 31, 2022 2021 Cost: Buildings Plant and equipment Less: accumulated amortization Total Depreciation expense related to property, plant and equipment, including assets under finance leases, was $102.3 million, $95.8 million and $85.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. No impairment expense related to property, plant and equipment was recognized for the years ended December 31, 2022 and 2021.We During the year ended December 31, 2022, a building classified as assets held for sale as of December 31, 2021, was sold for net proceeds of $6.3 million. Additionally, during the year ended December 31, 2022, a building with net carrying value of $2.2 million met the criteria to 14.Intangible assets, net The following table summarizes our intangible assets comprising of Customer Relationships & Contracts (“CR&C”), Trademarks, Technology and Software as of December 31, 2022 and 2021 (in thousands): December 31, 2022 December 31, 2021 December 31, 2022 Accumulated Accumulated Weighted Gross impairment Gross impairment average carrying and Net book carrying and Net book remaining amount amortization value amount amortization value life (years) CR&C Trademarks Technology Software Total Amortization expense for intangible assets was $37.4 million, $28.1 million and $28.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. During the first quarter of 2022, we acquired technology to bolster our well intervention and integrity product offering, resulting in an The following table summarizes the Acquired Fair Value Weighted average life CR&C Trademarks Technology Software Total No impairment expense associated with our intangible assets was recognized during the years ended December 31, The following table 2020: CR&C Technology Trademarks Total NLA ESSA APAC Total Expected future intangible asset amortization as of December 31, 2022 is as follows (in thousands): Years ending December 31, 2023 2024 2025 2026 2027 Thereafter Total 15.Goodwill Our reporting units are either our operating segments or components of our operating segments depending on the level at which segment management oversees the business. Prior to the Merger, Legacy Expro’s reporting units included Europe and December 31, 2022 2021 NLA ESSA MENA APAC Total The following table provides the gross carrying amount and cumulative impairment expense of goodwill for each operating segment as of December 31, 2022 and 2021 (in thousands): 2022 2021 Cost Measurement period adjustments Accumulated impairment Net Book Value Cost Acquired in Merger Accumulated impairment Net Book Value NLA ESSA MENA APAC Total During the third quarter of 2022, goodwill associated with the Merger increased by $41.1 million as a result of measurement period adjustments to our preliminary estimates due to additional information received. Please see Note 3 “Business combinations and dispositions” for additional information. No goodwill impairment expense was recognized during the years ended December 31, 2022 and 2021. We recorded goodwill impairment expense of $191.9 million for the year ended December 31, 2020. Refer to Note 4 “Fair value measurements” for further details. The following table summarizes our goodwill impairment expense by operating segment for the year ended December 31, 2020 (in thousands): Year Ended December 31, 2020 NLA ESSA MENA APAC Total 16.Interest bearing loans On October 1, 2021, in connection with the closing of the All obligations under the New Facility are guaranteed jointly and severally by the Company and certain of the Company’s subsidiaries incorporated in the U.S., the U.K., the Netherlands, Norway, Hungary, Australia, Cyprus, the Cayman Islands and Guernsey. Going forward, the guarantors must comprise at least 80% of the EBITDA (as defined in the New Facility) and 70% of the consolidated assets of the Company and its subsidiaries, as well as subsidiaries individually representing 5% or more of the EBITDA or assets of the group, subject to customary exceptions and exclusions. In addition, the obligations under the New Facility are secured by first priority liens on Borrowings under the New Facility bear interest at a rate per annum of LIBOR, subject to a 0.00% floor, plus an applicable margin of 3.75% for cash borrowings or 3.00% for letters of credit. A 0.75% per annum fronting fee applies to letters of credit, and an additional 0.25% or 0.50% per annum utilization fee is payable on drawdowns as loans to the extent one-third or two-thirds, respectively, or more of commitments are drawn. The unused portion of the New Facility is subject to a commitment fee of 30% per annum of the applicable margin. Interest on loans is payable at the end of the selected interest period, but no less frequently than semi-annually. The New Facility contains various undertakings and affirmative and negative covenants which limit, subject to certain customary exceptions and thresholds, the Company and its subsidiaries’ ability to, among other things, (1) enter into asset sales; (2) incur additional indebtedness; (3) make investments, acquisitions, or loans and create or incur liens; (4) pay certain dividends or make other distributions; and (5) engage in transactions with affiliates. The New Facility also requires the Company to maintain (i) a minimum cash flow cover ratio of 1.5 to 1.0 based on the ratio of cash flow to debt service; (ii) a minimum interest cover ratio of 4.0 to 1.0 based on the ratio of EBITDA to net finance charges; and (iii) a maximum senior leverage ratio of 2.25 to 1.0 based on the ratio of total net debt to EBITDA, in each case tested quarterly on a last-twelve-months basis, subject to certain exceptions. In addition, the aggregate capital expenditure of the Company and its subsidiaries cannot exceed 110% of the forecasted amount in the relevant annual budget, subject to certain exceptions. If the Company fails to perform its obligations under the agreement that results in an event of default, the commitments under the New Facility could be terminated and any outstanding borrowings under the New Facility may be declared immediately due and payable. The New Facility also contains cross-default provisions that apply to the Company and its subsidiaries’ other indebtedness. On March 31, 2022, the Agent, on behalf of the consenting lenders, countersigned a Consent Request Letter dated March 10, 2022 to the New Facility (the “Consent”). Pursuant to the Consent, the lenders consented to, among other things, an amendment to the New Facility permitting dividends or distributions by the Company, or the repurchase or redemption of the Company’s shares in an aggregate amount of $50.0 million over the life of the New Facility, subject to pro forma compliance with the 2.25 to 1.0 maximum senior leverage ratio financial covenant. The Facility remained undrawn on a cash basis (i.e., no loans were outstanding) as of December 31, 2022 and December 31, 2021. We utilized $53.8 million and $33.4 million as of December 31, 2022 and December 31, 2021, respectively, for bonds and guarantees. 17.Leases We are a lessee for numerous operating leases, primarily related to real estate, transportation and equipment. The terms and conditions for these leases vary by the type of underlying asset. The vast majority of our operating leases have terms ranging between one and fifteen years, some of which include options to extend the leases, and some of which include options to terminate the leases. We include the renewal or termination options in the lease terms, when it is reasonably certain that we will exercise that option. We also lease certain real estate and equipment under finance leases. Our lease contracts generally do not provide any guaranteed residual values. The accounting for some of our leases may require significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in our net present value calculation of lease payments for lease agreements which do not provide an implicit rate, and assessing the likelihood of renewal or termination options. The following tables illustrate the financial impact of our leases as of and for the years ended December 31, 2022, 2021 and 2020, along with other supplemental information about our existing leases (in thousands, except years and percentages): Year Ended December 31, 2022 2021 2020 Components of lease expenses: Finance lease expense: Amortization of right of use assets Interest incurred on lease liabilities Operating lease expense Short term lease expense Total lease expense December 31, 2022 2021 2020 Other supplementary information (in thousands, except years and discount rates): Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases Right-of-use assets obtained in an exchange for lease obligations Operating leases Weighted average remaining lease term: Operating leases Finance leases Weighted average discount rate for operating leases Weighted average discount rate for finance leases The operating cash flows for finance leases approximates the interest expense for the year. As of December 31, 2022, maturity of our lease liabilities are as follows (in thousands): Operating Finance Leases Leases Years ending December 31, 2023 2024 2025 2026 2027 Due after 5 years Less: amounts representing interest Total Short-term portion Long-term portion Total 18.Commitments and contingencies Commercial Commitments During the normal course of business, we enter into commercial commitments in the form of letters of credit and bank guarantees to provide financial and performance assurance to third parties. We entered into contractual commitments for the acquisition of property, plant and equipment totaling $45.5 million and $26.3 million as of December 31, 2022 and 2021, respectively. We also entered into purchase commitments related to inventory on an as-needed basis. As of December 31, 2022 and 2021, inventory purchase commitments were $25.8 million and $14.2 million, respectively. We are committed under various lease agreements primarily related to real estate, vehicles and certain equipment that expire at various dates throughout the next several years. Refer to Note 17 ��Leases” for further details. Contingencies Certain conditions may exist as of the date our consolidated financial statements are issued that may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management, with input from legal counsel, assesses such contingent liabilities, and such assessment inherently involves an exercise in judgment. In assessing loss contingencies related to legal proceedings pending against us or unasserted claims that may result in proceedings, our management, with input from legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable a material loss has been incurred and the amount of liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. We are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of December 31, 2022 and December 31, 2021. We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows. We have conducted an internal investigation of the operations of certain of Frank’s foreign subsidiaries in West Africa including for possible violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our internal review to the SEC and the U.S. Department of Justice (“DOJ”). The DOJ has provided a declination, subject to the Company and the SEC reaching a satisfactory settlement of civil claims. We are discussing a possible resolution with the SEC and, based on the course of these discussions to date, we believe that a final resolution of this matter is likely to include a civil penalty in the amount of approximately $8 million and, accordingly, we have recorded a loss contingency in that amount within “Other current liabilities” on our consolidated balance sheet as of December 31, 2022, with the offset taken as an increase to goodwill as a measurement period adjustment associated with the Merger. While we believe the final resolution, including the amount of any civil penalty, of this matter is nearing a conclusion, there can be no assurance as to the timing or the terms of any final resolution, or that a settlement will be reached at all. In the event a settlement is not reached, litigation may ensue and, accordingly, the actual loss incurred in connection with this matter could be less than or exceed the amount accrued and may have a material adverse effect on our financial position, results of operations or cash flows. At the present time, we are unable to reasonably estimate the amount of any potential loss in excess of the amount already accrued relating to this matter. Other than discussed above, we had no other material legal accruals for loss contingencies, individually or in the aggregate, as of December 31, 2022 and December 31, 2021. Our Board and management are committed to continuously enhancing our internal controls that support improved compliance and transparency throughout our global operations, including the integration of the legacy Frank’s compliance related processes into the Expro compliance framework and program. 19.Post-retirement benefits We operate a number of post-retirement benefit plans, primarily consisting of defined contribution plans for U.S. and non-U.S. employees. We also sponsor defined benefit pension plans for certain employees located in the U.K., Norway and Indonesia. The majority of our post-retirement expense relates to defined contribution plans. The assets of the various defined benefit plans are held separately from those of the Company. Our principal retirement savings plans and pension plans are discussed below. Defined contribution plans We offer various defined contribution plans for employees around the globe as per local statute and market practice. Specific to our largest employee populations, for employees in the U.S., we offer a 401(K) plan, which is a defined contribution retirement savings plan to which the employer matches employee contributions up to 4% of eligible earnings. For U.K. employees, we offer the Group Personal Pension plan (“GPP”), which is a portable, personal pension plan to which the employer contributes on a matching basis between a base of 4.5% and a ceiling of 6% of base salary. Expense recognized in respect of these plans were $8.4 million, $7.3 million and $6.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. Defined benefit plans We offer a pension plan to certain of our U.K. employees, which qualifies as a defined benefit plan. Effective October 1, 1999, this plan was closed to new entrants. The contributions to the plan are determined by a qualified external actuary on the basis of an annual valuation. In December 2015, the decision was taken to close the U.K. defined benefit plan (“DB Plan”) to new accruals. The status of the DB Plan’s remaining active members has changed to that of deferred members. This change affected approximately 80 employees. As deferred members, these employees will no longer accrue further benefits under the DB Plan through their service. However, benefits earned through past service are retained and will continue to increase with inflation. In addition, affected individuals were auto-enrolled in the Company’s defined contribution pension plan. On December 28, 2020, the Company, with the written consent of the trustees, amended the DB Plan rules to introduce a new pension option for members who retire before their state pension age, a bridging pension option. Under this new option, a plan member who receives his or her pension before the later of age 65 or their state pension age can elect to have their pension temporarily increased at retirement and then reduced at the time of state pension. Key assumptions The major assumptions, included on a weighted average basis across the defined benefit plans, used to calculate the defined benefit plan liabilities were: December 31, 2022 2021 2020 Discount rate Expected return on plan assets Expected rate of salary increases The discount rate has been calculated with reference to AA rated corporate bonds of a suitable maturity. Expected rates of salary increases have been estimated by management following a review of the participant data. Within the U.K. plans pensionable salary was frozen in 2012 resulting in the reduction in the weighted average assumption for salary increases disclosed above. The expected long-term return on cash is based on cash deposit rates available at the reporting date. The expected return on bonds is determined by reference to U.K. long term government bonds and bond yields at the reporting date. The expected rates of return on equities and property have been determined by setting an appropriate risk premium above government bond yields having regard to market conditions at the reporting date. Net periodic benefit cost Amounts recognized in the consolidated statements of operations and in the consolidated statements of comprehensive loss in respect of the defined benefit plans were as Year Ended December 31, 2022 2021 2020 Current service cost Interest cost Expected return on plan assets Plan curtailment / amendment events recognized in consolidated statements of operations Amortization of prior service credit Reclassified net remeasurement (loss) gains Amounts included in consolidated statements of operations Actuarial gain (loss) on defined benefit plans Plan curtailment / amendment credit recognized in consolidated statements of other comprehensive loss Amortization of prior service credit Reclassified net remeasurement (loss) gains Other comprehensive income (loss) Total comprehensive income (loss) The The actuarial gain (loss) is derived from the components shown in the table Year Ended December 31, 2022 2021 2020 Actuarial (loss) gain on assets Actuarial gain (loss) on liabilities Actuarial gain (loss) on defined benefit plans The actuarial gain on the The amount of employer contributions expected to be paid Years ending December 31: 2023 2024 2025 2026 2027 Thereafter to December 31, 2032 The amounts included in the consolidated balance sheets arising from December 31, 2022 2021 Present value of defined benefit obligations Fair value of plan assets Deficit recognized under non-current liabilities Changes in December 31, 2022 2021 Opening balance Current service cost Interest cost Actuarial gain Exchange differences Benefits paid Ending balance Movements in fair value of plan assets were as follows (in thousands): December 31, 2022 2021 Opening balance Actual return on plan assets Exchange differences Contributions from the sponsoring companies Benefits paid Ending balance The actual return on plan assets consists of the following (in thousands): December 31, 2022 2021 2020 Expected return on plan assets Actuarial (loss) gain on plan assets Actual return on plan assets Information for pension plans with an accumulated benefit obligation in excess of plan assets were as follows (in thousands): December 31, 2022 2021 Accumulated benefit obligation Fair value of plan assets The investment strategy of the main U.K. plan (“U.K. Plan”) is set by the trustees and is based on advice received from an investment consultant. The primary investment objective for the U.K. Plan is to achieve an overall rate of return that is sufficient to ensure that assets are available to meet all liabilities as and when they become due. In doing so, the aim is to maximize returns at an acceptable level of risk taking into consideration the circumstances of the U.K. Plan. The investment strategy has been determined after considering the U.K. Plan’s liability profile and requirements of the U.K. statutory funding objective, and an appropriate level of investment risk. Taking all these factors into consideration, approximately 45% of the assets are invested in a growth portfolio, comprising diversified growth funds (“DGFs”) and property, and approximately 55% of the assets in a stabilizing portfolio, comprising corporate bonds and liability driven investments. DGFs are actively managed multi-asset funds. The managers of the DGFs aim to deliver equity like returns in the long term, with lower volatility. They seek to do this by investing in a wide range of assets and investment contracts in order to implement their market views. The present value of the U.K. Plan’s future Assets of the other plans are invested in a combination of equity, bonds, real estate and insurance contracts. The analysis of the plan assets and the expected rate of return at the reporting date were as follows (in thousands): December 31, 2022 December 31, 2021 Expected rate Fair value of Expected rate Fair value of of return % asset of return % asset Mutual funds DGFs LDI funds Bond funds Equities Other assets Total The aggregated asset categorization for the plans were as follows (in thousands): December 31, 2022 Level 1 Level 2 Level 3 Total Mutual funds DGFs LDI funds Bond funds Equities Other assets Total December 31, 2021 Level 1 Level 2 Level 3 Total Mutual funds DGFs LDI funds Bond funds Equities Other assets Total Other assets primarily represent insurance contracts. The fair value is estimated, based on the underlying defined benefit obligation assumed by the insurers. Movements in fair value of Level 3 assets were as follows (in thousands): December 31, 2022 2021 Opening balance Actual return on plan assets Exchange differences Contributions from the sponsoring companies Ending balance Executive Deferred Compensation Plan The Company maintained the Executive Deferred Compensation Plan (the “EDC Plan”) for certain current and former Frank’s employees. Effective during 2015, this plan was closed to new entrants. The purpose of the EDC Plan was to provide participants with an opportunity to defer receipt of a portion of their salary, bonus, and other specified cash compensation. Participant contributions were immediately vested. Company contributions vested after five years of service. Participant benefits under the EDC Plan were paid from the general funds of the Company or a grantor trust, commonly referred to as a Rabbi Trust, created for the purpose of informally funding the EDC Plan. The assets of the EDC Plan’s trust were invested in corporate-owned, split-dollar life insurance policies and mutual funds. During 2022, the Company terminated the EDC Plan and settled substantially all remaining obligations under the plan by liquidating the cash surrender value of life insurance policies that were held within the Rabbi Trust. As of December 31, 2021, the total liability related to the EDC Plan was $9.3 million and was included in “Other non-current liabilities” on the consolidated balance sheets. As of December 31, 2021, the cash surrender value of life insurance policies that are held within a Rabbi Trust for the purpose of paying future executive deferred compensation benefit obligations was $18.9 million. 20.Stock-based compensation Management Incentive Plan During October 2018, Legacy Expro’s board of directors approved the Management Incentive Plan (“MIP”) which was comprised of (a) stock options to non-executive directors and key management personnel and (b) restricted stock units. The outstanding awards under the MIP were assumed by the Company in connection with the Merger. MIP Stock options Stock options issued under the MIP vest over a three or four year vesting period as defined in the award agreement, subject to the There were 5.8 million MIP stock options issued and Due to the nature of the performance conditions, recognition of compensation expense for the stock options was deferred until the occurrence of a Liquidity Event as defined in the MIP as the performance condition was deemed to be improbable. On October 1, 2021, the MIP stock options were modified to redefine the occurrence of the Liquidity Event to the closing of the Merger. Upon Closing, the MIP stock options were exchanged for options to purchase Company common stock based on the The aforementioned event was accounted for as an improbable-to-probable modification and as a result, the fair value of The Company recognized stock-based compensation expense related to the MIP stock options of $3.6 million and $39.5 million during the years ended December 31, 2022 and 2021 respectively. As of December 31, 2022, unrecognized stock compensation expense relating to MIP stock options totaled $0.9 million which will be expensed over a weighted average period of 0.6 years. As of December 31, 2022 and 2021, there were 6.7 million and 6.9 million, respectively, MIP stock options issued and outstanding with a weighted average exercise price of $17.19 and 17.20, respectively. There were no stock options granted during 2021 or 2022 and there are no plans to grant stock options in 2023. During the year ended December 31, 2022 there were 0.1 million options forfeited; the number of options exercised was not material. Both options forfeited and options exercised had a weighted average exercise price of $17.08. As of December 31, 2022, there were 2.7 million exercisable MIP stock options with a weighted average exercise price of $17.15 per option. The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of options exercised was not material during 2022. There were no stock option exercises during 2021 and 2020. At December 31, 2022, options outstanding had an intrinsic value of approximately $6.3 million with a weighted-average remaining life of 5.4 years. At December 31, 2022, options exercisable had an intrinsic value of $2.6 million, with a weighted-average remaining life of 5.4 years. The fair value of the time-based MIP stock options granted to non-executive directors and management was estimated at the Closing Date using a Black-Scholes model and the fair value of the performance-based MIP stock options granted to management was estimated at the Closing Date using a Monte-Carlo Option valuation model. The Closing Date fair value of the Company’s shares is a key input in the determination of the fair value of the awards. The key assumptions used to estimate the fair value of the MIP stock options were as follows: Risk free interest rate Expected volatility Dividend yield Stock price on valuation date MIP Restricted stock units (“MIP RSUs”) RSUs granted under the Expro Group Holdings N.V. Long-Term Incentive Plan Effective October 1, 2021, in connection with LTIP Restricted Stock Units All RSUs granted under the LTIP vest ratably over a period of one to three years. Employees granted LTIP RSUs are not entitled to dividends declared on the underlying shares while the Stock-based compensation expense relating to LTIP RSUs The following is a summary of Number Weighted Average of Grant Date Shares Fair Value Non-vested on the Closing Date Granted Vested Forfeited Non-vested at December 31, 2021 Granted Vested Forfeited Non-vested at December 31, 2022 Performance Restricted Stock Units The purpose of the PRSUs is to closely align the incentive compensation of the executive leadership team for the duration of the Though the value of the PRSU grant may change for each participant, the compensation expense recorded by the Company is determined on the date of grant. Expected volatility is based on historical equity volatility of our In 2022, no 2021 Total expected term (in years) Expected volatility Risk-free interest rate Correlation range In the event of death or disability, the restrictions related to forfeiture as defined in the performance awards agreement will lapse with respect to 100% of the PRSUs at the target level effective on the date of such Stock-based compensation expense related to PRSUs The following is a summary of PRSU information and weighted-average grant-date fair values for Expro’s PRSUs: Number Weighted Average of Grant Date Shares Fair Value Non-vested on the Closing Date Granted Vested Non-vested at December 31, 2021 Vested Non-vested at December 31, 2022 Employee Stock Purchase Plan Under the 21.Loss per share Basic income (loss) per share attributable to Company stockholders is calculated by dividing net income (loss) attributable to the Company by the weighted-average number of common shares outstanding for the period. Diluted income (loss) per share attributable to Company stockholders is computed giving effect to all potential dilutive common stock, unless there is a net loss for the period. We apply the treasury stock method to determine the dilutive weighted average common shares represented by unvested restricted stock units and ESPP shares. The calculation of basic and diluted loss per share attributable to the Company stockholder for years ended December 31, 2022, 2021 and 2020 respectively, are as follows (in thousands, except shares outstanding and per share amounts): Year Ended December 31, 2022 2021 2020 Net loss Basic and diluted weighted average number of shares outstanding Total basic and diluted loss per share Approximately 0.3 million shares of Additionally, since the conditions upon which 22.Related party transactions Our related parties consist primarily of CETS and PVD-Expro, the two companies in which we exert significant influence, and Mosing Holdings LLC, a company that is owned by a member of our Board, and its affiliates. During the years ended December 31, 2022, 2021 and 2020, we provided goods and services to Additionally, we entered into various operating lease agreements to lease facilities with affiliated companies. Rent expense associated with our related party leases was $0.6 million and $0.5 million for the years ended December 31, Further, during the years ended December 31, As of As of December 31, 2022, $0.7 million of our operating lease right-of-use assets and $0.7 million of our lease liabilities were associated with related party leases. As of December 31, 2021, $1.3 million of our operating lease right-of-use assets and $1.3 million of our lease liabilities were associated with related party leases. Tax Receivable Agreement Mosing Holdings, LLC, a Delaware limited liability company (“Mosing Holdings”), converted all of its shares of Frank’s Series A convertible preferred stock into shares of Frank’s common stock on August 26, 2016, in The tax receivable agreement (the “Original TRA”) that Frank’s entered into with FICV and Mosing Holdings in connection with Frank’s initial public offering (“IPO”) generally provided for the In connection with the Merger Agreement, Frank’s, FICV and 23.Supplemental Cash Flow Year Ended December 31, 2022 2021 2020 Supplemental disclosure of cash flow information: Cash paid for income taxes net of refunds Cash paid for interest, net Change in accounts payable and accrued expenses related to capital expenditures Fair value of net assets acquired in the Merger, net of cash and cash equivalents and restricted cash None. Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Management's Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under Our management with the participation of the chief executive officer (“CEO”) and chief financial officer (“CFO”) conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 based on the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on its evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022. Attestation Report of the Registered Public Accounting Firm See Changes in Control Over Financial Reporting As of December 31, 2022, management has concluded that there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. Item 10 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, Item 11 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, Item12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 12 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, Item 13 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, Item 14 is incorporated by reference to our definitive proxy statement to be filed pursuant to Regulation 14A under the Exchange Act. We expect to file the definitive proxy statement with the SEC within 120 days after December 31, PART IV (a)(1) Financial Statements Our Consolidated Financial Statements are included under Part II, Item 8, (a)(2) Financial Statement Schedules Schedules not listed (a)(3) Exhibits The following exhibits are EXHIBIT INDEX Exhibit Number Description 2.1 †10.9 † † † † † † † †10.19 † † †10.22 †10.23 † † †10.26 †10.29 † †10.31 † †10.34 †10.35 †10.36 10.37 *21.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350. Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350. * The following materials from Expro’s Annual Report on Form 10-K for the period ended December 31, 2022 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Loss; (iv) Consolidated Statements of Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements. * Cover Page Interactive Data File (embedded within the Inline XBRL † Represents management contract or compensatory plan or arrangement. * Filed herewith. ** Furnished herewith. None. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. By: Expro Group Holdings N.V. (Registrant) Date: February 23, 2023 By: /s/ Quinn P. Fanning Quinn P. Fanning Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February Signature Title /s/ Michael President and Chief Executive Officer and Director Michael (Principal Executive Officer) /s/ Chief Financial Officer Quinn P. Fanning (Principal Financial Officer) /s/ Michael Bentham /s/ Chairman of the Board Michael C. Kearney /s/ Eitan Arbeter Director Eitan Arbeter /s/ Robert W. Drummond Director Robert W. Drummond /s/ Erich L. Mosing Director Erich L. Mosing Director Director Director /s/ Director Eileen G. WhelleyFRANK'S INTERNATIONAL N.V.FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2017EXPRO GROUP HOLDINGS N.V. PagePART I Item 1.BusinessItem 1A.Risk FactorsItem 1B.Unresolved Staff CommentsItem 2.PropertiesItem 3.Legal ProceedingsItem 4.Mine Safety Disclosures PART IIRegistrant'sRegistrant’s Common Equity, Related Stockholder Matters andIssuer Purchases of Equity Securities Selected Financial DataManagement'sItem 9A.9C.Controls and ProceduresDisclosure Regarding Foreign Jurisdictions that Prevent InspectionsItem 9B.Other Information Related Stockholder Matters 3CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K (this "Form 10-K") includes certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include those that express a belief, expectation or intention, as well as those that are not statements of historical fact. Forward-looking statements include information regarding our future plans and goals and our current expectations with respect to, among other things:our business strategy and prospects for growth;our cash flows and liquidity;our financial strategy, budget, projections and operating results;the amount, nature and timing of capital expenditures;the availability and terms of capital;competition and government regulations; andgeneral economic conditions.Our forward-looking statements are generally accompanied by words such as "anticipate," "believe," "estimate," "expect," "goal," "plan," "potential," "predict," "project," or other terms that convey the uncertainty of future events or outcomes, although not all forward-looking statements contain such identifying words. The forward-looking statements in this Form 10-K speak only as of the date of this report; we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following:the level of activity in the oil and gas industry;further or sustained declines in oil and gas prices, including those resulting from weak global demand;the timing, magnitude, probability and/or sustainability of any oil and gas price recovery;unique risks associated with our offshore operations;political, economic and regulatory uncertainties in our international operations;our ability to develop new technologies and products;our ability to protect our intellectual property rights;our ability to employ and retain skilled and qualified workers;the level of competition in our industry;operational safety laws and regulations;weather conditions and natural disasters; andpolicy changes domestically in the United States.These and other important factors that could affect our operating results and performance are described in (1) Part I, Item 1A “Risk Factors” and in Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K, and elsewhere within this Form 10-K, (2) our other reports and filings we make with the Securities and Exchange Commission ("SEC") from time to time and (3) other announcements we make from time to time. Should one or more of the risks or uncertainties described in the documents above or in this Form 10-K occur, or should underlying assumptions prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statements. All such forward-looking statements in the Form 10-K are expressly qualified in their entirety by the cautionary statements in this section.4Frank’s International ("FINV") is a Netherlands limited liability company ( ("FICV"), Blackhawk Group Holdings, LLC ("Blackhawk") and their wholly owned subsidiaries (either individually or together, as context requires, “Expro,” the "Company," "we," "us"“Company,” “we,” “us” and "our"“our”).We were establishedThe Merger closed on October 1, 2021, and the Company, previously known as Frank’s International N.V. (“Frank’s”), was renamed Expro Group Holdings N.V. The Merger has been accounted for using the acquisition method of accounting with Legacy Expro being identified as the accounting acquirer. The historical financial statements presented in 1938this Annual Report on Form 10-K (this “Form 10-K”) reflect the financial position, results of operations and are an industry-leading global providercash flows of highly engineered tubular services, tubular fabrication and specialty well construction and well intervention solutionsonly Legacy Expro for all periods prior to the oilMerger and gas industry. We provide our services to leading exploration and production companies in both offshore and onshore environments, with a focus on complex and technically demanding wells. We believe that we are one of the largest global providerscombined company (including activities of tubular servicesFrank’s) for all periods subsequent to the oil and gas industry.Tubular services involvehandling and installation of multiple joints of pipe to establish a cased wellbore and the installation of smaller diameter pipe inside a cased wellbore to provide a conduit for produced oil and gas to reach the surface. The casing of a wellbore isolates the wellbore from the surrounding geologic formations and water table, provides well structure and pressure integrity, and allows well operators to target specific zones for production. Given the central role that our services play in the structural integrity, reliability and safety of a well, and the importance of efficient tubular services to managing the overall cost of a well, we believe that our roleCompany is vital to the overall process of producing oil and gas.In addition to our services offerings, we design and manufacture certain products that we sell directly to external customers, including large outside diameter (“OD”) pipe connectors. We also provide specialized fabrication and welding services in support of deepwater projects in the U.S. Gulf of Mexico, including drilling and production risers, flowlines and pipeline end terminations, as well as long-length tubulars (up to 300 feet in length) for use as caissons or pilings. Finally, we distribute large OD pipe manufactured by third parties, and generally maintain an inventory of this pipe in order to support our pipe sales and distribution operations.On November 1, 2016, we completed our acquisition of Blackhawk, the ultimate parent company of Blackhawk Specialty Tools, LLC, a leading provider of energy services, offering cost-effective, innovative solutions and what the Company considers to be best-in-class safety and service quality. The Company’s extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention and integrity solutions. The Company provides services in many of the world’s major offshore and products.onshore energy basins, with operations in approximately 60 countries. The merger consideration wasCompany’s broad portfolio of products and services provides solutions to enhance production and improve recovery across the well lifecycle, from exploration through abandonment.a combination of $150.4 million of cash on handfour operating segments which also represent our reporting segments and the issuance of 12.8 million shares of our common stock, for total consideration of $294.6 million (based on our closing share price on October 31, 2016 of $11.25 and including the working capital adjustments). The acquisition of this company resulted in a new segment for us and will allow us to combine Blackhawk’s cementing tool expertise and well intervention servicesare aligned with our global tubular services. We will be able to offer our customers an integrated well construction solution across land, shelf and deepwater.We offer our tubular services, tubular sales, and other well construction and well intervention services and products through our four operating segments: (1) International Services, (2) U.S. Services, (3) Tubular Sales and (4) Blackhawk, each of which is described in more detail in "Description of Business Segments."5segment's externalsegment’s revenue and percentage of consolidated revenue for the periods indicated (revenue in thousands): $ 499,813 $ 193,156 $ 115,738 39.1 % 23.4 % 17.2 % 389,342 300,557 219,534 30.4 % 36.4 % 32.5 % 201,495 171,136 194,033 15.7 % 20.7 % 28.7 % 188,768 160,913 145,721 14.8 % 19.5 % 21.6 % $ 1,279,418 $ 825,762 $ 675,026 100.0 % 100.0 % 100.0 % Year Ended December 31, 2017 2016 2015 Revenue Percent Revenue Percent Revenue Percent International Services $ 206,746 45.5% $ 237,207 48.7 % $ 442,107 45.3 % U.S. Services 118,815 26.1% 152,827 31.3 % 326,437 33.5 % Tubular Sales 58,210 12.8% 87,515 18.0 % 206,056 21.2 % 71,024 15.6% 9,982 2.0 % — — % Total $ 454,795 100.0% $ 487,531 100.0 % $ 974,600 100.0 % Our well construction products and services support customers’ new wellbore drilling, wellbore completion and recompletion, and wellbore plug and abandonment requirements. In particular, we offer advanced technology solutions in drilling, tubular running services, cementing and tubulars. With a focus on innovation, we are continuing to advance the way wells are constructed by optimizing process efficiency on the rig floor, developing new methods to handle and install tubulars and mitigating well integrity risks. Well flow management: We gather valuable well and reservoir data, with a particular focus on well-site safety and environmental impact. We provide global, comprehensive well flow management systems for the safe production, measurement and sampling of hydrocarbons from a well during the exploration and appraisal phase of a new field; the flowback and clean-up of a new well prior to production; and in-line testing of a well during its production life. We also provide early production facilities to accelerate production; production enhancement packages to enhance reservoir recovery rates through the realization of production that was previously locked within the reservoir; and metering and other well surveillance technologies to monitor and measure flow and other characteristics of wells. Subsea well access: With over 35 years of experience providing a wide range of fit-for-purpose subsea well access solutions, our technology aims to ensure safe well access and optimized production throughout the lifecycle of the well. We provide what we believe to be the most reliable, efficient and cost-effective subsea well access systems for exploration and appraisal, development, intervention and abandonment, including an extensive portfolio of standard and bespoke Subsea Test Tree Assemblies, a rig-deployed Intervention Riser System and a vessel-deployed, wire through water Riserless Well Intervention System. We also provide systems integration and project management services. Well intervention and integrity: We provide well intervention solutions to acquire and interpret well data, ensure well bore integrity and improve production. In addition to our extensive fleet of mechanical and cased hole wireline units, we have recently introduced a number of cost-effective, innovative well intervention services, including CoilHose™, a lightweight, small-footprint solution for wellbore lifting, cleaning and chemical treatments; Octopoda™, for fluid treatments in wellbore annuli; and Galea™, an autonomous well intervention solution. We also possess several other distinct technical capabilities, including non-intrusive metering technologies and wireless telemetry systems for reservoir monitoring. purchased Blackhawkare committed to living our values through corporate responsibility efforts that help people across the globe live better lives and build sustainable, vibrant, stable communities where highly motivated people can engineer futures. We strive to consistently improve the ways in November 2016, which resultedwe work to keep our employees safe, minimize our impact on the environment and to provide for robust and transparent governance.
We are committed to ensure the equal treatment of all employees, job applicants and associated personnel regardless of race, color, nationality, ethnic or nation originals, sex, disability, age, religion or belief, or any other factors prohibited by law. We aim to create a work environment free of harassment and bullying, where everyone is treated with dignity and respect.
Diversity and inclusiveness are important to our current and future success by providing varied experiences, ideas and insights to inform decisions, identify new segment for us. As such, 2016 revenues areapproaches, and solve business challenges. Our goal is to put the right people forward to do the right work for the two monthsright customers, in the right places, attracting, retaining and nurturing a talented and diverse workforce to turn our growth ambitions into reality.2016.Our Corporate StructureWe are a publicly traded company on the New York Stock Exchange ("NYSE"). As part of our initial public offering ("IPO") in August 2013, we issued 52,976,000 shares of our Series A convertible preferred stock (the “Preferred Stock”)2022 and a 25.7% limited partnership interest in FICV, our subsidiary, to Mosing Holdings, LLC ("Mosing Holdings"), a Delaware limited liability company and affiliate of the Company with Mosing family entities as its shareholders. Under our Amended Articles of Association in effect at time of the IPO, upon the written election of Mosing Holdings, each Preferred Share, together with a unit in FICV, our subsidiary, was convertible into a share of our common stock on a one-for-one basis.On August 19, 2016, we received notice from Mosing Holdings exercising its rightcombined basis for Legacy Expro and Frank’s for the years ended December 31, 2021 and 2020: 0.36 0.46 0.34 1.07 1.31 1.34 exchange (the “Exchange Right”) for an equivalent numberour entire workforce. We also standardize our global training processes to ensure all jobs are executed to high standards of each of the following securities for common shares: (i) 52,976,000 Preferred Sharessafety and (ii) 52,976,000 units in FICV. We issued 52,976,000 common shares to Mosing Holdings on August 26, 2016. As a result, there are no remaining issued Preferred Shares and the Mosing family beneficially owns approximately 68% of our common shares as of February 19, 2018. Mosing Holdings no longer has a minority interest holding in FICV.Descriptionquality.SegmentsInternational ServicesThe International Services segment provides tubular servicesConduct and Ethicsinternational offshore marketsall our business interactions and in several onshore international regions in approximately 50 countries on six continents.conduct our business to the highest ethical standards. That commitment extends to strict compliance with all relevant laws, regulations and business standards. We have comprehensive compliance programs and policies that are applied globally to our entire workforce. Our customers in these international marketsethical foundation is our Code of Conduct, the provisions of which all employees are primarily large explorationexpected to understand and production companies, including integrated oilcomply with. Our compliance and gas companies and national oil and gas companies, and other oilfield services companies.U.S. ServicesThe U.S. Services segment provides tubular services in the active onshore oil and gas drilling regions in the U.S., including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus Shale, Niobrara Shale and Utica Shale,ethics policies undergo regular review.U.S. Gulfwork environment. We encourage reporting of Mexico.Tubular SalesThe Tubular Sales segment designs, manufacturesviolations of our Code of Conduct and distributes large OD pipe, connectorsother policies, and casing attachments and sells large OD pipe originally manufactured by various pipe mills. We also provide specialized fabrication and welding serviceswe have safeguards to prevent retribution against persons that report potential violations in support of offshore projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long-length tubulars (up to 300 feet in length) for use as caissons or pilings. This segment also designs and manufactures proprietary equipment for use in our International Services and U.S. Services segments.BlackhawkThe Blackhawk segment provides well construction and well intervention services and products, in addition to cementing tool expertise, in the U.S. and Mexican GulfTable of Mexico, onshore U.S. and other select international locations. Blackhawk’s customer base consists primarily of major and independent oil and gas companies as well as other oilfield services companies.ContentsFinancial Information About Segment and Geographic AreasSegment financial and geographic information is provided in Part II, Item 8, "Financial Statements and Supplementary Data", Note 21 - Segment Information of the Notes to Consolidated Financial Statements.ofequipment utilized within our product lines (primarily pipe) are only available from a limited number of suppliers (primarily in the Tubular and Blackhawk segments).low costlow-cost raw materials and components, such as steel castings and forgings, is critical to our ability to manufacture our casing products competitively and, in turn, our ability to provide onshore and offshore casing services.competitively. In order to purchase raw materials and components in a cost effectivecost-effective manner, we have developedsought to develop a broad international sourcing capability and we maintain quality assurance and testing programs to analyze and test these raw materials and components.PatentsA substantial portionbusiness isproducts and services and otherwise impact our business. For example, the winter months in the North Sea and the monsoon season in South and Southeast Asia can produce severe weather conditions that can temporarily reduce levels of activity. In addition, hurricanes and typhoons can disrupt coastal and offshore operations. Furthermore, customer spending patterns may result in higher or lower activity in the fourth quarter of the year based on year-to-date spending relative to their approved annual budgets and higher or lower activity in the first quarter of the year based on whether or not significantly impacted by changing seasons. the new year’s budget has been approved.can be impacted by hurricanes, ocean currents, winter stormsderive our revenue from services and other disruptions.CustomersOurproduct sales to customers consist primarily ofin the oil and gas exploration and production companies, both domestic and international, including major and independent companies, national oil companies and, on occasion, other service companies that have contractual obligations to provide casing and handling services or comparable services. Demand for our services depends primarily upon the capital spending of oil and gas companies and the level of drilling activity in the U.S. and internationally. We do not believe the loss of any of our individual customers would have a material adverse effect on our business. In 2017 and 2016, one customer accounted for 10% and 13% of our revenues, respectively. For both years, all four of our segments generated revenue from this customer.industry. No single customer accounted for more than 10% of our revenue for the years ended December 31, 2022 and 2021. One customer in our MENA segment accounted for 16% of our consolidated revenue for the year ended December 31, 2015.TheWe believe the principal competitive factors in ourthe markets arein which we participate include the technologies and solutions offered; the quality, price and availability of products and servicesservices; safety and a company’sservice quality; operating footprint; and responsiveness to customer needs and its reputation for safety. In general, we face a larger number of smaller, more regionally-specific customers in the U.S. onshore market as compared to offshore markets, where larger competitors dominate.give us asupport our strong competitive position. In particular, we believe ourOur portfolio of technology-enabled products and services in each segment fulfill our customer’s requirements for international capability, availability of tools,a wide range of services provided, intellectual property, technological sophistication, quality assurance systems and availability of equipment, along with reputation and safety record.our customers’ requirements. We also seek to differentiate ourselves from our competitors by providing a rapid response to the needs of our customers, a high level of customer service, by providing innovative products and innovative product development initiatives. Although we havewell intervention servicesother governmental and products on an aggregate, global basis.Market EnvironmentDespite a meaningful improvement in commodity prices and increases in U.S. onshore activity and profitability, our customers have not yet allocated material levels of capital toward deepwater projects, particularly in the markets of West Africa and the U.S. Gulf of Mexico. For 2018, we expect to see some improvement in activity levels offshore, but pricing of our services offshore is unlikely to increase materially during the year. International markets are showing signs of stabilization or improvement in some regions, but lower pricing is expected to offset activity increases. We expect to see strong growth in our Blackhawk segment both in the U.S. onshore and in select international markets during the next several quarters as we expand its operational footprint. In order to offset some of the lower realized pricing, we continue to look for ways to optimize our operational footprint and improve efficiency. We also continue to evaluate potential acquisitions which introduce new technologies that broaden our portfolio of products and services and seek to improve efficiency and profitability.Inventories and Working CapitalAn important consideration for many of our customers in selecting a vendor is timely availability of the product or service. Often customers will pay a premium for earlier or immediate availability because of the cost of delays in critical operations. We aim to stock certain of our consumable products in regional warehouses around the world so we can have these products available for our customers when needed. This availability is especially critical for our proprietary products, causing us to carry inventories for these products. For critical capital items for which demand is expected to be strong, we often build certain items before we have a firm order. Having such goods available on short notice can be of great valueregulatory requirements related to our customers.Inventories are required to be stated at the lower of cost or net realizable value. During 2017, we recorded an impairment of $51.2 million related to a lower of cost or net realizable value adjustment for our pipeoperations worldwide. connectors inventory, which is included in the financial statement line item severance and other charges on our consolidated statements of operations. The factors that led to this impairment included new technology (external and internal), oil and gas prices below levels necessary for our customers to sanction a significant amount of new offshore projects in the near-term and a change in customers' preferences for newer technologies, all of which significantly impacted the net realizable value of our connectors inventory.We cannot accurately predict what or how many products our customers will need in the future. Orders are placed with our suppliers based on forecasts of customer demand and, in some instances, we may establish buffer inventories to accommodate anticipated demand. If we overestimate customer demand, we may allocate resources to the purchase of material or manufactured products that we may not be able to sell when we expect to, if at all.Environmental, Occupational Health and Safety Regulation stringent and complex laws and regulations governing the emission and discharge of materials into the environment, occupational health and safety aspects of our operations, or otherwise relating to environmental protection. Failure to comply with these laws or regulations or to obtain or comply with permits may result in the assessment of sanctions, including administrative, civil and criminal penalties, imposition of investigatory, remedial or corrective action requirements,actions, the required incurrence of capital expenditures, the occurrence of restrictions, delays or cancellations in the permitting, development or expansion of projects, and the imposition of orders or injunctions to prohibit or restrict certain activities or force future compliance.Numerous governmental authorities, such as the U.S. Environmental Protection Agency (“EPA”), analogous state agencies and, in certain circumstances, citizens’ groups, have the power to enforce compliance with these laws and regulations and the permits issued under them. has beenis to impose increasinglytypically place more stringent restrictions and limitations on activities that may impact the environment, and thus, any changes in environmental laws and regulations or in enforcement policies that result in more stringent and costly waste handling, storage, transport, disposal, or remediation requirements could have a material adverse effect on our operations and financial position. Moreover, accidental releases or spills of regulated substances may occur in the course of our operations, and we cannot assure that we will not incur significant costs and liabilities as a result of such releases or spills, including any third-party claims for damage to property, natural resources or persons.8Hazardous Substances and WasteThe Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes, regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. Under the auspices of the EPA, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. We are requiredmanage the transportation, storage and disposal of hazardous and non-hazardous wastes in compliance with RCRA. Certain petroleum exploration and production wastes are excluded from RCRA’s hazardous waste regulations. However, it is possible that these wastes willattract considerable attention in the future be designated as hazardous wastesU.S. and therefore be subject to more rigorousother countries. Numerous proposals have been made and costly disposal requirements. For example, in December 2016, the EPA and environmental groups entered into a consent decree to address EPA’s alleged failure to timely assess its RCRA Subtitle D criteria regulations exempting certain exploration and production related oil and gas wastes from regulation as hazardous wastes. The consent decree requires EPA to propose a rulemaking no later than March 15, 2019 for any revisions relating to oil and gas wastes or to sign a determination that revision of the regulations is not necessary. Any such changes in the laws and regulations could have a material adverse effect on our operating expenses or the operating expenses of our customers, which could result in decreased demand for our services.The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), also known as the Superfund law, imposes joint and several liability, without regard to fault or legality of conduct, on classes of persons who are consideredcontinue to be responsible for the release of a hazardous substance into the environment. These persons include the owner or operator of the site where the release occurred, and anyone who disposed or arranged for the disposal of a hazardous substance releasedmade at the site. We currently own, lease, or operate numerous properties that have been used for manufacturinginternational, national, regional and other operations for many years. We also contract with waste removal servicesstate levels of government to monitor and landfills. These properties and the substances disposed or released on them may be subject to CERCLA, RCRA and analogous state laws. Under such laws, we could be required to remove previously disposed substances and wastes, remediate contaminated property, or perform remedial operations to prevent future contamination. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment.Water DischargesThe Federal Water Pollution Control Act (the “Clean Water Act”) and analogous state laws impose restrictions and strict controls with respect to the dischargelimit existing emissions of pollutants, including spills and leaks of oil and other substances, into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. A responsible party includes the owner or operator of a facility from which a discharge occurs. The Clean Water Act and analogous state laws provide for administrative, civil and criminal penalties for unauthorized discharges and, together with the Oil Pollution Act of 1990, impose rigorous requirements for spill prevention and response planning,greenhouse gases (“GHGs”) as well as substantial potential liability for the costs of removal, remediation, and damages in connection with any unauthorized discharges. Pursuant to these laws and regulations, we may be required to obtain and maintain approvalsrestrict or permits for the discharge of wastewater or storm water from our operations and may be required to develop and implement spill prevention, control and countermeasure plans, also referred to as “SPCC plans,” in connection with on-site storage of significant quantities of oil, including refined petroleum products.Air EmissionsThe federal Clean Air Act and comparable state laws regulate emissions of various air pollutants through air emissions permitting programs and the imposition of other emission control requirements. In addition, the EPA has developed, and continues to develop, stringent regulations governing emissions of toxic air pollutants at specified sources. Non-compliance with air permits or other requirements of the federal Clean Air Act and associated state laws and regulations caneliminate such future emissions. As a result, in the imposition of administrative, civil and criminal penalties, as well as the issuance of orders or injunctions limiting or prohibiting non-compliant operations. Over the next several years, we may be required to incur certain capital expenditures for air pollution control equipment or other air emissions related issues. For example, in October 2015, the EPA lowered the National Ambient Air Quality Standard, or NAAQS, for ozone from 75 to 70 parts per billion. State implementation of the revised NAAQS could result in stricter air emissions permitting requirements, delay or prohibit our ability to obtain such permits, and result in increased expenditures for pollution control equipment, the costs of which could be significant. We do not believe that any of our operations are subject to a series of regulatory, political, litigation, and financial risks associated with the federal Clean Air Act permitting or regulatory requirements for major9sourcestransport of air emissions, but some of our facilities could be subject to state “minor source” air permitting requirementsfossil fuels and other state regulatory requirements applicable to air emissions, such as source registration and recordkeeping requirements.Climate ChangeThe EPA has determined that emissions of carbon dioxide, methane and other “greenhouse gases” present an endangerment to public health and the environment because emissions of such gases are contributing to warming of the Earth’s atmosphere and other climatic changes. Based on these findings, the EPA has begun adopting and implementing regulations to restrict emissions of greenhouse gases under existing provisions of the federal Clean Air Act. The EPA has proposed various measures regulating the emission of greenhouse gases, including proposed performance standardsGHGs.new and existing power plants, and pre-construction and operating permit requirements for certain large stationary sources already subjectnations to limit their GHG emissions through individually-determined reduction goals every five years after 2020. While the U.S. withdrew from the Paris Agreement under the Trump Administration, effective November 4, 2020, President Biden issued an executive order on January 20, 2021 recommitting the U.S. to the Clean Air Act. The EPAParis Agreement. Under the Paris Agreement, the Biden Administration has also adopted rules requiringcommitted the reporting ofUnited States to reducing its greenhouse gas emissions by 50 - 52% from specified large greenhouse gas emission2005 levels by 2030. In November 2021, the U.S. and other countries entered into the Glasgow Climate Pact, which includes a range of measures designed to address climate change, including but not limited to the phase-out of fossil fuel subsidies, reducing methane emissions by 30% by 2030, and cooperating toward the advancement of the development of clean energy. With the U.S. recommitting to the Paris Agreement, executive orders may be issued or federal legislation or regulatory initiatives may be adopted to achieve the agreement’s goals. Within the U.S., President Biden signed into law the Inflation Reduction Act in August 2022, which contains tax inducements and other provisions that incentivize investment, development, and deployment of alternative energy sources inand technologies, which could increase operating costs within the United States, as well as onshore and offshore oil and gas production facilities, on an annual basis.Whileindustry and accelerate the U.S. Congresstransition away from fossil fuels.yeta legal obligation to adopt legislationdecrease the country’s GHG emissions, and in May 2021, the Hague District Court ordered Royal Dutch Shell plc to reduce its worldwide emissions by 45% by 2030 compared to 2019 levels. Such litigation has the potential to adversely affect the production of greenhouse gases, manyfossil fuels, which in turn could result in reduced demand for our services.states have already taken legal measures to reduce emissionsinternational Paris Agreement, and foreign citizenry concerned about climate change. Limitation of greenhouse gases. For example, the state of California has adopted a "capinvestments in and trade program" that requires major sources of greenhouse gas emissions to acquire and surrender emission allowances. The number of allowances availablefinancings for purchase is reduced each year in an effort to achieve the overall greenhouse gas emission reduction goal.The adoption of legislation or regulatory programsfossil fuel companies could result in the U.S.restriction, delay or abroad designed to reduce emissionscancellation of greenhouse gases could require us or our customers to incur increased operating costs, such as costs to purchase and operate emissions control systems, to acquire emissions allowances, pay carbon taxes, or comply with new regulatory or reporting requirements. For example, the EPA had previously finalized standards in June 2016 designed to reduce methane emissions from certainproduction of crude oil and natural gas, facilities. However,which could in June 2017, the EPA published a proposed ruleturn decrease demand for our services. Our own operations could also face limitations on access to stay certain portions of these 2016 standards for two years and reconsider the entirety of the 2016 standards. Ascapital as a result of these actions, the 2016 methane standards are currently in effect but futuretrends, which could adversely affect our business and results of operation.standards is uncertain atoil and natural gas sector or otherwise restrict the areas in which this time. The federal Bureau of Land Management (“BLM”) finalized similar rules in November 2016 but, following the change in U.S. Presidential Administrations, finalized a rule in December 2017 delaying implementation of the BLM methane rules for one year. Environmental groupssector may produce oil and some states have announced their intent to challenge the actions of both the EPA and BLM, and future implementation of methane rules at the federal level is uncertain at this time. These rules, to the extent implemented have the potential to impose significant costs on our customers. Also, new legislationnatural gas or regulatory programs related to the control of greenhouse gasgenerate GHG emissions could encourage the useresult in increased costs of alternative fuelscompliance or otherwise increase the costcosts of consuming, and thereby reduce demand for, the oil and natural gas, produced bywhich could reduce demand for our customers. Consequently, legislationservices and regulatory programsproducts. Additionally, political, litigation and financial risks may result in our oil and natural gas customers restricting or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce emissionsdemand for our services and products. Moreover, the increased competitiveness of greenhouse gasesalternative energy sources (such as wind, solar, geothermal, tidal and biofuels) could reduce demand for hydrocarbons, and therefore for our products and services, which would lead to a reduction in our revenues. Over time, one or more of these developments could have ana material adverse effect on our business, financial condition and results of operations. Finally, it should be noted that some scientists have concluded that increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other extreme weather events. Offshore operations are particularly susceptible to damage from extreme weather events. If any of the potential effects of climate change were to occur, they could have an adverse effect on our business, financial condition and results of operations.Blackhawk,our cementing product offering, we do not perform hydraulic fracturing, but many of our onshore customers utilize this technique. Certain environmental advocacy groups and regulatory agencies have suggested that additional federal, state and local laws and regulations may be needed to more closely regulate the hydraulic fracturing process, and have made claims that hydraulic fracturing techniques are harmful to surface water and drinking water resources and may cause earthquakes. Various governmental entities (within and outside the United States)U.S.) are in the process of studying, restricting, regulating or preparing to regulate hydraulic fracturing, directly or indirectly. For example, the EPA has already begunAdditionally, states and local governments may also seek to regulate certainlimit hydraulic fracturing activities through time, place, and manner restrictions on operations involving diesel underor ban the Underground Injection Control program of the federal Safe Drinking Water Act. In December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources, which concluded "water cycle" activities associated with hydraulic fracturing may impact drinking water sources "under some circumstances," noting that the following hydraulic fracturing water cycle activities and local - or regional - scale factors are more likely than others to result in more frequent or more severe impacts: water withdrawals for fracturing in times or areas of low water availability; surface spills during the management of fracturing fluids, chemicals or produced water; injection of fracturing fluids into wells with inadequate10mechanical integrity; injection of fracturing fluids directly into groundwater resources; discharge of inadequately treated fracturing wastewater to surface waters; and disposal or storage of fracturing wastewater in unlined pits. Based on the report's findings, additional regulation of hydraulic fracturing by the EPA appears unlikely at this time. In addition, the BLM finalized rules in March 2015 that impose new or more stringent standards for performing hydraulic fracturing on federal and American Indian lands, but this rule was repealed in December 2017.process altogether. The adoption of legislation or regulatory programs that restrict hydraulic fracturing could adversely affect, reduce or delay well drilling and completion activities, increase the cost of drilling and production, and thereby reduce demand for our services. There also exists the potential for states and local governments to pursue new or amended laws, regulations, executive actions and other regulatory initiatives that could impose more stringent restrictions on hydraulic fracturing, including potential restrictions on hydraulic fracturing by banning new oil and gas permitting on federal lands.("OSHA") and comparable state statutes, establishing requirements to protect the health and safety of workers. In addition, the OSHAU.S. Occupational Safety and Health Administration hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in our operations and that this information be provided to employees, state and local government authorities and the public. Substantial fines and penalties can be imposed and orders or injunctions limiting or prohibiting certain operations may be issued in connection with any failure to comply with laws and regulations relating to worker health and safety.We do not believe that complianceHistorically, our environmental and worker safety costs to comply with existing environmental laws and regulations will have not had a material adverse impact on us. However, we also believe that it is reasonably likely that the trend in environmental legislation and regulation will continue toward stricter standards and, thus, we cannot give any assurance that wesuch costs will not bematerially adversely affectedaffect us in the future.EmployeesAt December 31, 2017, we had approximately 2,900 employees worldwide. We are a party to collective bargaining agreementsgenerally do not procure or other similar arrangements in certain international areas in which we operate, such as Brazil, Asia Pacific, Africa and Europe. We consider our relations with our employees to be satisfactory.Mastenmakersweg 1, 1786 PB Den Helder, the Netherlands,1311 Broadfield Boulevard, Suite 400, Houston, Texas 77084, and our telephone number at that address is +31 (0)22 367 0000. Our primary U.S. offices are located at 10260 Westheimer Rd., Houston, Texas 77042, and our telephone number at that address is (281) 966-7300. (713) 463-9776. Our website address is www.franksinternational.comwww.expro.com, and we make available free of charge through our website our Annual Reports on Form 10-K, Proxy Statements, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC. Our website also includes general information about us, including our Code of Conduct, Financial Code of Ethics, Corporate Governance Guidelines, Whistleblower Policy and charters for the Audit Committee, Compensation Committee and Nominatingthe Environmental, Social and Governance Committee of our Board of Supervisory Directors.Directors (the “Board”). We may from time to time provide important disclosures to investors by posting them in the investor relations section of our website, as allowed by SECSecurities and Exchange Commission (“SEC”) rules. Also, it is our intention to provide disclosure of amendments and waivers by website posting. Information on our website or any other website is not incorporated by reference herein and does not constitute a part of this report.common stock is traded onExecutive Officers and Other Key EmployeesNYSE undernames, ages and experience of our executive officers and other key employees, including all offices and positions held by each for the symbol ("FI").Materials we file with the SEC may be inspected without charge and copied, upon payment of a duplicating fee, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the PublicName Age Current Position and Five-Year Business Experience Michael Jardon 53 President and Chief Executive Officer and Director, since October 2021; Chief Executive Officer, Legacy Expro, from April 2016 to October 2021; various technical and executive roles, Legacy Expro, Vallourec and Schlumberger Limited, from 1992 to 2016. Quinn Fanning 59 Chief Financial Officer, since October 2021; Chief Financial Officer, Legacy Expro, from October 2019 to October 2021; Executive Vice President, Tidewater Inc., from July 2008 to March 2019, Chief Financial Officer, Tidewater Inc., from September 2008 to November 2018; investment banker with Citigroup Global Markets, Inc., from 1996 to 2008. Alistair Geddes 60 Chief Operating Officer, since October 2021; Chief Operating Officer, Legacy Expro, from 2019 to October 2021; Executive Vice President, Product Lines, Technology and Business Development, Legacy Expro, from 2014 to 2019; various technical and executive roles, Expro, ExxonMobil, BG Group and Weatherford International plc from 1984 to 2014. Steven Russell 55 Chief Technology Officer, since October 2021; Senior Vice President, Operations, Frank’s, from November 2019 to October 2021; President, Tubular Running Services, Frank’s, from June 2018 to November 2019; Senior Vice President, Human Resources, Frank’s, May 2017 to June 2018; Vice President, Human Resources, Archer Ltd., from January 2011 to May 2017; various technical and executive roles, Schlumberger Limited, from 1990 to 2011. John McAlister 56 General Counsel and Secretary, since October 2021; Group General Counsel, Legacy Expro, from June 2006 to October 2021; solicitor, Clifford Chance, and various executive roles, BG Group, Lattice Group plc and National Grid plc, from 1991 to 2006. Michael Bentham 60 Principal Accounting Officer, since October 2021; Principal Accounting Officer and Vice President, Legacy Expro, from October 2019 to October 2021; Chief Financial Officer, Legacy Expro, from July 2017 to October 2019; IDS Product Line Controller, Schlumberger Limited, from July 2016 to July 2017; Vice President Finance MI Swaco, Schlumberger Limited, from August 2012 to June 2016. Keith Palmer 63 Primary Integration Lead, since October 2021; Primary Integration Lead, Legacy Expro, from September 2021 to October 2021; Executive Vice President – Product Lines, Legacy Expro, from May 2019 to September 2021; Vice President Asia Pacific, Legacy Expro, from May 2016 to May 2019; President Expro PTI, Legacy Expro, from January 2015 to May 2016. Natalie Questell 49 Senior Vice President, Human Resources, since October 2021; Vice President of Human Resources, Frank’s, from June 2018 to October 2021; Director of Global Total Rewards and HRIS, Frank’s, from 2015 to June 2018. Karen David-Green 54 Chief Communications, Stakeholder, and Sustainability Officer, since October 2021; Chief Communications, Stakeholder, and Sustainability Officer, Legacy Expro, from June 2021 to October 2021; previously Senior Vice President, Stakeholder Engagement & Chief Marketing Officer, Weatherford International plc. Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet website at www.sec.govthat contains reports, proxy and information statements, and other information regarding our company that we file electronically with the SEC.Risks Related to Our Businessindustry, which is significantly affected by oil and gas prices and other factors.services. services and products. In addition, the effects of world events, such as the COVID-19 pandemic, the Russian war in Ukraine and an economic slowdown or recession in the U.S. and other countries, have and may continue to materially impact the demand for crude oil and natural gas, which has contributed further to price volatility. Prices are also impacted by decisions made by the Organization of the Petroleum Exporting Countries (“OPEC”) plus the countries of Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan (together with OPEC, “OPEC+”) to either increase or cut production of oil and gas as well as their compliance with those decisions. Global economic conditions have a significant impact on oil and natural gas prices, and any stagnation or deterioration in these conditions could result in less demand for our products and services and could cause our customers to reduce their planned capital spending. Adverse global economic conditions also may cause our customers, vendors and/or suppliers to lose access to the financing necessary to sustain or increase their current level of operations, fulfill their commitments and/or fund future operations and obligations. Even during periods of high prices for oil and natural gas, companies exploring for oil and gas may cancel or curtail programs, seek to renegotiate contract terms, including the price of our products and services, or reduce their levels of capital expenditures for exploration and production for a variety of reasons. These risks are greater during periods of low or declining commodity prices. As a result of declining commodity prices, certain of our customers may be unable to pay their vendors and service providers, including us. A prolonged reduction in oil and natural gas prices may require us to record asset impairments. Such a potential impairment charge could have a material adverse impact on our operating results.services.services and products. Worldwide military, political, economic and economicpublic health events have in the past contributed to volatility in demand and prices for oil and gas price volatility and are likelycontinue to do so in the future. The demand for our products and services may be affected by numerous factors, including:the level of worldwide oil and gas exploration and production;the cost of exploring for, producing and delivering oil and gas;demand for energy, which is affected by worldwide economic activity and population growth;the level of excess production capacity;the discovery rate of new oil and gas reserves;the ability of the Organization of the Petroleum Exporting Countries ("OPEC") to set and maintain production levels for oil;the level of production by non-OPEC countries;U.S. and global political and economic uncertainty, socio-political unrest and instability or hostilities;demand for, availability of and technological viability of, alternative sources of energy; andtechnological advances affecting energy exploration, production, transportation and consumption.prices, which have had a material adverse effect on our business, financial condition and results of operations.A significant amount of our U.S. onshore business is focused on unconventional shale resource plays. The demand for those services is substantially affected by oil and gas prices and market expectations of potential changes in these prices. Commodity prices have gone below a certain threshold for an extended period of time and demand for our services in the U.S. onshore market has been reduced as compared to the historic highs experienced prior to 2015, resulting in a material adverse effect on our business, financial condition and results of operations.Oil and gas prices are extremely volatile and have fluctuated during the year ended December 31, 2017, with average daily prices for New York Mercantile Exchange West Texas Intermediate ranging from a low of approximately $42/Bbl in June 2017 to a high of approximately $60/Bbl in December 2017. Although average daily prices increased through the end of 2017 and the beginning of 2018, any actual or anticipated reduction in oil or gas prices may reduce the level of exploration, drilling and production activities. The current price environment has already resulted in capital budget reductions by our customers compared to prior years. Prolonged lower oil prices have resulted in softer demand for our products and services. Further, we have reduced pricing in some of our customer contracts in light of the volatility of the oil and gas market.12Furthermore, the oil and gas industry has historically experienced periodic downturns, which have been characterized by reduced demand for oilfield products and services and downward pressure on the prices we charge. A significant downturn in the oil and gas industry has adversely affectedOther factors that influence the demand for oilfieldoffshore services and our business, financial condition and results of operations.The downturn in the oil and gas industry has negatively affected and will likely continue to affect our ability to accurately predict customer demand, causing us to potentially hold excess or obsolete inventory and experience a reduction in gross margins and financial results.We cannot accurately predict what or how many products our customers will need in the future. Orders are placed with our suppliers based on forecasts of customer demand and, in some instances, we may establish buffer inventories to accommodate anticipated demand. Our forecasts of customer demand are based on multiple assumptions, each of which may introduce errors into the estimates. In addition, many of our suppliers, such as those for certain of our standardized valves, require a longer lead time to provide products than our customers demand for delivery of our finished products. If we overestimate customer demand, we may allocate resources to the purchase of material or manufactured products that we may not be able to sell when we expect to, if at all. As a result, we would hold excess or obsolete inventory, which would reduce gross margin and adversely affect financial results. Conversely, if we underestimate customer demand or if insufficient manufacturing capacity is available, we would miss revenue opportunities and potentially lose market share and damage our customer relationships. In addition, any future significant cancellations or deferrals of product orders or the return of previously sold products could materially and adversely affect profit margins, increase product obsolescence and restrict our ability to fund our operations.Physical dangers are inherent in our operations and may expose us to significant potential losses. Personnel and property may be harmed during the process of drilling for oil and gas.Drilling for and producing oil and gas, and the associated services that we provide, include inherent dangers that may lead to property damage, personal injury, death or the discharge of hazardous materials into the environment. Many of these events are outside our control. Typically, we provide services at a well site where our personnel and equipment are located together with personnel and equipment of our customers and third parties, such as other service providers. At many sites, we depend on other companies and personnel to conduct drilling operations in accordance with applicable environmental laws and regulations and appropriate safety standards. From time to time, personnel are injured or equipment or property is damaged or destroyed as a result of accidents, failed equipment, faulty products or services, failure of safety measures, uncontained formation pressures, or other dangers inherent in drilling for oil and gas. With increasing frequency, our services are deployed on more challenging prospects, particularly deepwater offshore drilling sites, where the occurrence of the types of events mentioned above can have an even more catastrophic impact on people, equipment and the environment. Such events may expose us to significant potential losses, which could adversely affect our business, financial condition and results of operations.We are vulnerable to risks associated with our offshore operations that could negatively impact our business, financial condition and results of operations.We conduct offshore operations in the U.S. Gulf of Mexico and almost every significant international offshore market, including Africa, Middle East, Latin America, Europe, the Asia Pacific region and several other producing regions. Our operations and financial results could be significantly impacted by conditions in some of these areas because we are vulnerable to certain unique risks associated with operating offshore, including those relating to:hurricanes, ocean currents and other adverse weather conditions;terrorist attacks, such as piracy;failure of offshore equipment and facilities;local and international political and economic conditions and policies and regulations related to offshore drilling;unavailability of offshore drilling rigs in the markets that we operate;the cost of offshore exploration for, and production and transportation of, oil and gas;13successful exploration for, and production and transportation of, oil and gas from onshore sources;the availability and rate of discovery of new oil and gas reserves in offshore areas; andthe ability of oil and gas companies to generate or otherwise obtain funds for exploration and production.internationalservices and products are provided in connection with potentially hazardous drilling, completion and production applications in the oil and gas industry where an accident can potentially have catastrophic consequences.to international business.have substantial international operations, and we intendare exposed to grow those operations further. For the years ended December 31, 2017, 2016 and 2015, international operations accounted for approximately 46%, 49% and 45%, respectively, of our revenue. Our international operations are subject to a number of risks inherent in anydoing business operating in foreigneach of the countries in which we operate, including, but not limited to, the following:political, social and economic instability;deprivation of contract rights;increased operating costs;inability to collect revenues due to shortages of convertible currency;unwillingness of foreign governments to make new onshore and offshore areas available for drilling;civil unrest and protests, strikes, acts of terrorism, war or other armed conflict;import/export quotas;confiscatory taxation or other adverse tax policies;continued application of foreign tax treaties;currency exchange controls;currency exchange rate fluctuations and devaluations;restrictions on the repatriation of funds; andother forms of government regulation which are beyond our control. foreign countries in which we conduct business, including economically and politically volatile areas such as Eastern Europe, Africa and the Middle East, Latin America and the Asia Pacific region, could cause or contribute to factors that could have an adverse effect on the demand for the products and services we provide. Worldwide political, economic, and military events have contributed to oil and gas price volatility and are likely to continue to do so in the future. In particular, heightened levels of uncertainty related to the ongoing Russian war in Ukraine, may lead to additional economic sanctions by the U.S. and the international community and could further disrupt financial and commodities markets. Depending on the market prices of oil and gas, oil and gas exploration and development companies may cancel or curtail their drilling or other programs, thereby reducing demand for our services.tubular and other well construction services,operations, secure and maintain patents related to our current and new technologies and products and protect and enforce our intellectual property rights.tubularservices and other well construction servicesproducts are characterized by continual technological developments. While we believe that the proprietary products we have developed provide us with technological advances in providing services to our customers, substantialSubstantial improvements in the scope and quality of the productsequipment in the marketmarkets in which we operate may occur over a short period of time. Alternative products and services have been and may in the future be developed which compete with or displace our products and services. If we are not able to develop commercially competitive products in a timely manner, in response, our ability to service our customers’ demands may be adversely affected. Our future ability14to develop new products in order to support our services depends on our ability to design and produce products that allow us to meet the needs of our customers and third parties on an integrated basis, and obtain and maintain patent protection. related products in the future. Our competitors may introduce new products or obtain patents before we do and achieve a competitive advantage. Additionally, the time and expense invested in product development may not result in commercial applications.We currently hold multiple U.S. and international patents and have multiple pending patent applications for products and processes. Patent rights give the owner of a patent the right to exclude third parties from making, using, selling, and offering for sale the inventions claimed in the patents in the applicable country. Patent rights do not necessarily grant the owner of a patent the right to practice the invention claimed in a patent, but merely the right to exclude others from practicing the invention claimed in the patent. Furthermore, patentPatent rights have strict territorial limits. Some of our work will be conducted in international waters and would, therefore, not fall within the scope of any country’s patent jurisdiction. We may not be able to enforce our patents against infringement occurring in international waters and other “non-covered” territories. Also, weWe do not have patents in every jurisdiction in which we conduct business and our patent portfolio will not protect all aspects of our business and may relate to obsolete or unusual methods, which would not prevent third parties from entering the same market.Our tubularwell constructionstakeholders, and the potential for reputational risk. Regulatory requirements related to ESG or sustainability reporting have been issued in the European Union (“EU”) that apply to financial market participants, with implementation and enforcement starting in 2021. In the U.S., such regulations have been issued related to pension investments in California, and for the responsible investment of public funds in Illinois. Additional regulation is pending in other states and federally, including the recent release of proposed rules by the SEC that would require companies to enhance and standardize disclosures related to climate change, specifically those associated with physical risks and transitional risks. We expect regulatory requirements related to ESG matters to continue to expand globally. The Company is committed to transparent and comprehensive reporting of our sustainability performance. If we are not able to meet future sustainability reporting requirements of regulators or current and future expectations of investors, customers or other stakeholders, our business and ability to raise capital may be adversely affected.federal, state and local and non-U.S. laws and other regulations relating to oilfield operations, worker safety and protection of the environment and natural resources; tenders for certain tubular and well construction services. We operate in several of these countries, including Angola, Nigeria, Indonesia, Malaysia, Brazil and Canada.tenders. Many governments favor or effectively require that contracts be awarded to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These practices may result in inefficiencies or put us at a disadvantage when we bid for contracts against local competitors.15entities, and weentities. We are also subject to the U.S. anti-boycott law. In addition, certain anti-dumping regulations in the foreignlaws. The U.S. and other countries in which we operatealso from time to time may prohibit us from purchasing pipeimpose special punitive tariff regimes targeting goods from certain suppliers.A globalAn economic downturn may increase some foreign governments’ efforts to enact, enforce, amend or interpret laws and regulations as a method to increase revenue. Materials that we import can be delayed and denied for varying reasons, some of which are outside our control and some of which may result from failure to comply with existing legal and regulatory regimes. Shipping delays or denials could cause unscheduled operational downtime. Any failure to comply with these applicable legal and regulatory obligations also could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from government contracts, seizure of shipments and loss of import and export privileges.may be exposedare required to unforeseen risks in our services and product manufacturing, which could adversely affect our results of operations.We operatecomply with a number of manufacturing facilities to support our tubular and other well construction services. In addition, we also manufacture certain products, including large OD pipe connectors that we sell directly to external customers. The equipment and management systems necessary for such operations may break down, perform poorly or fail, resulting in fluctuations in manufacturing efficiencies. Additionally, some of our U.S. onshore business may be conducted under fixed price or “turnkey” contracts. Under fixed price contracts, we agree to perform a defined scope of work for a fixed price. Prices for these contracts are based largely upon estimates and assumptions relating to project scope and specifications, personnel and material needs.Fluctuations in our manufacturing process and inaccurate estimates and assumptions used in our projects may occur due to factors out of our control, resulting in cost overruns, which we may be required to absorb and could have a material adverse effect on our business, financial condition and results of operations. Such fluctuations or incorrect estimates may affect our ability to deliver services and products to our customers on a timely basis and we may suffer financial penalties and a diminution of our commercial reputation and future product orders, which could adversely affect our business, financial condition and results of operations.We may be unable to employ a sufficient number of skilled and qualified workers to sustain or expand our current operations.The delivery of our tubular and other well construction services requires personnel with specialized skills and experience. Our ability to be productive and profitable will depend upon our ability to employ and retain skilled workers. In addition, our ability to expand our operations depends in part on our ability to increase the size of our skilled labor force. The demand for skilled workers is high, the supply can be limited in certain jurisdictions, and the cost to attract and retain qualified personnel has increased over the past few years. In addition, we are currently a party to collective bargaining or similar agreements in certain international areas in which we operate, which could result in increases in the wage rates that we must pay to retain our employees. Furthermore, a significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases in the wage rates that we must pay, or both. If any of these events were to occur, our capacity could be diminished, our ability to respond quickly to customer demands or strong market conditions may be inhibited and our growth potential could be impaired, any of which could have a material adverse effect on our business, financial condition and results of operations.We operate in an intensively competitive industry, and if we fail to compete effectively, our business will suffer.Our competitors may attempt to increase their market share by reducing prices, or our customers may adopt competing technologies. The drilling industry is driven primarily by cost minimization, and our strategy is aimed at reducing drilling costs through the application of new technologies. Our competitors, many of whom have a more diverse product line and access to greater amounts of capital than we do, have the ability to compete against the cost16savings generated by our technology by reducing prices and by introducing competing technologies. Our competitors may also have the ability to offer bundles of products and services to customers that we do not offer. We have limited resources to sustain prolonged price competition and maintain the level of investment required to continue the commercialization and development of our new technologies. Any failure to continue to do so could adversely affect our business, financial condition or results of operations.Our business depends upon our ability to source low cost raw materials and components, such as steel castings and forgings. Increased costs of raw materials and other components may result in increased operating expenses.Our ability to source low cost raw materials and components, such as steel castings and forgings, is critical to our ability to manufacture our drilling products competitively and, in turn, our ability to provide onshore and offshore drilling services. Should our current suppliers be unable to provide the necessary raw materials or components or otherwise fail to deliver such materials and components timely and in the quantities required, resulting delays in the provision of products or services to customers could have a material adverse effect on our business.In particular, we have experienced increased costs in recent years due to rising steel prices. There is also strong demand within the industry for forgings, castings and outsourced coating services necessary for us to make our products. We cannot assure that we will be able to continue to purchase these raw materials on a timely basis or at historical prices. Our results of operations may be adversely affected by our inability to manage the rising costs and availability of raw materials and components used in our products.We are subject to the risk of supplier concentration.Certain of our product lines (in the Tubular Sales Segment - 12.8% of revenue for the year ended December 31, 2017 and Blackhawk Segment - 15.6% of revenue for the year ended December 31, 2017) depend on a limited number of third party suppliers. The suppliers for the Tubular Sales Segment are concentrated in Japan (2) and Germany (2) and are vendors for pipe (driven by customer requirements) while the two suppliers for the Blackhawk Segment are concentrated in the U.S. As a result of this concentration in some of our supply chains, our business and operations could be negatively affected if our key suppliers were to experience significant disruptions affecting the price, quality, availability or timely delivery of their products. The partial or complete loss of any one of our key suppliers, or a significant adverse change in the relationship with any of these suppliers, through consolidation or otherwise, would limit our ability to manufacture or sell certain of our products.Our tubular and other well construction services are provided in connection with operations that are subject to potential hazards inherent in the oil and gas industry, and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation.Our tubular and other well construction services are provided in connection with potentially hazardous drilling, completion and production applications in the oil and gas industry where an accident can potentially have catastrophic consequences. This is particularly true in deepwater operations. Risks inherent to these applications, such as equipment malfunctions and failures, equipment misuse and defects, explosions, blowouts and uncontrollable flows of oil, gas or well fluids and natural disasters, on land or in deepwater or shallow water environments, can cause personal injury, loss of life, suspension of operations, damage to formations, damage to facilities, business interruption and damage to or destruction of property, surface water and drinking water resources, equipment and the environment. If our services fail to meet specifications or are involved in accidents or failures, we could face warranty, contract, fines or other litigation claims, which could expose us to substantial liability for personal injury, wrongful death, property damage, loss of oil and gas production, pollution and other environmental damages. Our insurance policies may not be adequate to cover all liabilities. Further, insurance may not be generally available in the future or, if available, insurance premiums may make such insurance commercially unjustifiable. Moreover, even if we are successful in defending a claim, it could be time-consuming and costly to defend.In addition, the frequency and severity of such incidents will affect operating costs, insurability and relationships with customers, employees and regulators. In particular, our customers may elect not to purchase our services if they view our safety record as unacceptable, which could cause us to lose customers and substantial revenues. In addition,17these risks may be greater for us because we may acquire companies that have not allocated significant resources and management focus to safety and have a poor safety record requiring rehabilitative efforts during the integration process and we may incur liabilities for losses before such rehabilitation occurs.The imposition of stringent restrictions or prohibitions on offshore drilling by any governing body may have a material adverse effect on our business.Events in recent years have heightened environmental and regulatory concerns about the oil and gas industry. From time to time, governing bodies have enacted and may propose legislation or regulations that would materially limit or prohibit offshore drilling in certain areas. If laws are enacted or other governmental action is taken that restrict or prohibit offshore drilling in our expected areas of operation, our expected future growth in offshore services could be reduced and our business could be materially adversely affected.For example, in April 2016 the U.S. Bureau of Safety and Environmental Enforcement (“BSEE”) finalized more stringent standards relating to well control equipment used in connection with offshore well drilling operations. The standards focus on blowout preventers, along with well design, well control, casing, cementing, real-time well monitoring, and subsea containment requirements. During 2017, however, following the issuance of a Presidential Executive Order, the BSEE has been directed to reconsider a number of regulatory initiatives governing offshore oil and gas safety and performance-related activities, including, for example, the rules relating to blow-out preventers and well control, and provide recommendations on whether such regulatory initiatives should continue to be implemented. In addition, in December 2017, the BSEE published proposed revisions to its regulations regarding offshore drilling safety equipment, which proposal includes the removal of the requirement for offshore operators to certify through an independent third party that their critical safety and pollution prevent equipment (e.g., subsea safety equipment, including blowout preventers) is operational and functioning as designed in the most extreme conditions. The December 2017 proposed rule has not been finalized and there remains substantial uncertainty as to the scope and extent of any revisions to existing oil and gas safety and performance-related regulations and other regulatory initiatives that may ultimately be adopted by the BSEE. If these regulations, to the extent they continue to be implemented, along with any changes in operating procedures and possibility of increased legal liability, are viewed by our current or future customers as a significant increased financial burden on drilling projects in the U.S. Gulf of Mexico for other potentially more profitable regions, drillships and other floating rigs could depart the U.S. Gulf of Mexico, which would likely affect the supply and demand for our equipment and services. In addition, government agencies could issue new safety and environmental guidelines or regulations for drilling in the U.S. Gulf of Mexico that could disrupt or delay drilling operations, increase the cost of drilling operations or reduce the area of operations for drilling. All of these uncertainties could result in a reduced demand for our equipment and services, which could have an adverse effect on our business.We may not be fully indemnified against financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.As is customary in our industry, our contracts typically provide that our customers indemnify us for claims arising from the injury or death of their employees, the loss or damage of their equipment, damage to the reservoir and pollution emanating from the customer’s equipment or from the reservoir (including uncontained oil flow from a reservoir). Conversely, we typically indemnify our customers for claims arising from the injury or death of our employees, the loss or damage of our equipment, or pollution emanating from our equipment. Our contracts typically provide that our customer will indemnify us for claims arising from catastrophic events, such as a well blowout, fire or explosion.Our indemnification arrangements may not protect us in every case. For example, from time to time (i) we may enter into contracts with less favorable indemnities or perform work without a contract that protects us, (ii) our indemnity arrangements may be held unenforceable in some courts and jurisdictions or (iii) we may be subject to other claims brought by third parties or government agencies. Furthermore, the parties from which we seek indemnity may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities, or may not otherwise be able to satisfy their indemnity obligations to us. The lack of enforceable indemnification could expose us to significant potential losses.18Further, our assets generally are not insured against loss from political violence such as war, terrorism or civil unrest. If any of our assets are damaged or destroyed as a result of an uninsured cause, we could recognize a loss of those assets.We may incur liabilities, fines, penalties or additional costs, or we may be unable to provide services to certain customers, if we do not maintain safe operations.If we fail to comply with safety regulations or maintain an acceptable level of safety in connection with our tubular or other well construction services, we may incur civil fines, penalties or other liabilities or may be held criminally liable. We expect to incur additional costs over time to upgrade equipment or conduct additional training or otherwise incur costs in connection with compliance with safety regulations. Failure to maintain safe operations or achieve certain safety performance metrics could disqualify us from doing business with certain customers, particularly major oil companies. Because we provide tubular and other well construction services to a large number of major oil companies, any such failure could adversely affect our business, financial condition and results of operations.Our business is dependent on our ability to provide highly reliable and safe equipment. If our equipment does not meet statutory regulations and/or our clients do not accept the quality of our equipment, we could encounter loss of contracts and/or loss of reputation, which could materially impact our operations and profitability. Further, the failure of our equipment could subject us to litigation, regulatory fines and/or adverse customer reaction. In addition, equipment certification requirements vary by region and changes in these requirements could impact our ability to operate in certain markets if our tools do not comply with these requirements.The industry in which we operate is undergoing continuing consolidation that may impact results of operations.Some of our largest customers have consolidated in recent years and are using their size and purchasing power to achieve economies of scale and pricing concessions. This consolidation may result in reduced capital spending by such customers or the acquisition of one or more of our other primary customers, which may lead to decreased demand for our products and services. If we cannot maintain sales levels for customers that have consolidated or replace such revenues with increased business activities from other customers, this consolidation activity could have a significant negative impact on our business, financial condition and results of operations. We are unable to predict what effect consolidations in our industry may have on prices, capital spending by customers, selling strategies, competitive position, ability to retain customers or ability to negotiate favorable agreements with customers.Our operations and our customers’ operations are subject to a variety of governmental laws and regulations that may increase our costs, limit the demand for our services and products or restrict our operations.Our business and our customers’ businesses may be significantly affected by:federal, state and local and non-U.S. laws and other regulations relating to oilfield operations, worker safety and protection of the environment and natural resources;changes in these laws and regulations; andthe level of enforcement of these laws and regulations.In addition, we depend on the demand for our services and products from the oil and gas industry. This demand is affected by changing taxes, price controls and other laws and regulations relating to the oil and gas industry in general. For example, the adoption of laws and regulations curtailing exploration and development drilling for oil and gas for economic or other policy reasons could adversely affect our operations by limiting demand for our products. In addition, some non-U.S. countries may adopt regulations or practices that give advantage to indigenous oil companies in bidding for oil leases, or require indigenous companies to perform oilfield services currently supplied by international service companies. To the extent that such companies are not our customers, or we are unable to develop relationships with them, our business may suffer. We cannot determine the extent to which our future operations and earnings may be affected by new legislation, new regulations or changes in existing regulations.19Because of our non-U.S. operations and sales, we are also subject to changes in non-U.S. laws and regulations that may encourage or require hiring of local contractors or require non-U.S. contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. If we fail to comply with any applicable law or regulation, our business, financial condition and results of operations may be adversely affected.Our business is dependent on capital spending by our customers, and reductions in capital spending could have a material adverse effect on our business.Any change in capital expenditures by our customers or reductions in their capital spending could directly impact our business by reducing demand for our products and services and could have a material adverse effect on our business. Our customers are subject to risks which, in turn, could impact our business, including volatile oil and gas prices, difficulty accessing capital on economically advantageous terms and adverse developments in their own business or operations. With respect to national oil company customers, we are also subject to risk of policy, regime and budgetary changes.An inability to obtain visas and work permits for our employees on a timely basis could negatively affect our operations and have an adverse effect on our business.Our ability to provide services worldwide depends on our ability to obtain the necessary visas and work permits for our personnel to travel in and out of, and to work in, the jurisdictions in which we operate. Governmental actions in some of the jurisdictions in which we operate may make it difficult for us to move our personnel in and out of these jurisdictions by delaying or withholding the approval of these permits. If we are not able to obtain visas and work permits for the employees we need for conducting our tubular and other well construction services on a timely basis, we might not be able to perform our obligations under our contracts, which could allow our customers to cancel the contracts. If our customers cancel some of our contracts, and we are unable to secure new contracts on a timely basis and on substantially similar terms, our business, financial condition and results of operations could be materially adversely affected.Our operations are subject to environmental and operational safety laws and regulations that may expose us to significant costs and liabilities.Our operations are subject to numerous stringent and complex laws and regulations governingpertaining to business conduct, including the discharge of materials into the environment, health and safety aspects of our operations, or otherwise relating to occupational health and safety and environmental protection. These laws and regulations may, among other things, regulate the management and disposal of hazardous and non-hazardous wastes; require acquisition of environmental permits related to our operations; restrict the types, quantities, and concentrations of various materials that can be released into the environment; limit or prohibit operational activities in certain ecologically sensitive and other protected areas; regulate specific health and safety criteria addressing worker protection; require compliance with operational and equipment standards; impose testing, reporting and record-keeping requirements; and require remedial measures to mitigate pollution from former and ongoing operations. Failure to comply with these laws and regulations or to obtain or comply with permits may result in the assessment of administrative, civil and criminal penalties, imposition of remedial or corrective action requirements and the imposition of injunctions to limit or prohibit certain activities or force future compliance. Certain environmental laws may impose joint and several liability, without regard to fault or legality of conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment.The trend in environmental regulation has been to impose increasingly stringent restrictions and limitations on activities that may impact the environment. The implementation of new laws and regulations could result in materially increased costs, stricter standards and enforcement, larger fines and liability and increased capital expenditures and operating costs, particularly for our customers.20Our operations in countries outside of the United States are subject to a number of U.S. federal laws and regulations, including restrictions imposed by the Foreign Corrupt Practices Act as well as trade sanctions administeredand similar legislation enacted by Governments outside the Office of Foreign Assets Control and the Commerce Department.UKU.K. Bribery Act 2010 and the United Nations Convention Against Corruption, which prohibit engaging in certain activities to obtain or retain business or to influence a person working in an official capacity. We do business and may in the future do additional business in countries and regions in which we may face, directly or indirectly, corrupt demands by officials, tribal or insurgent organizations, or by private entities in which corrupt offers are expected or demanded. Furthermore, many of our operations require us to use third parties to conduct business or to interact with people who are deemed to be governmental officials under the anticorruption laws. Thus, we face the risk of unauthorized payments or offers of payments or other things of value by our employees, contractors or agents. It is our policy to implement compliance procedures to prohibit these practices. However, despite those safeguards and any future improvements to them, our employees, contractors, and agents may engage in conduct for which we might be held responsible, regardless of whether such conduct occurs within or outside the United States.U.S. We may also be held responsible for any violations by an acquired company that occur prior to an acquisition, or subsequent to the acquisition but before we are able to institute our compliance procedures. In addition, our non-U.S. competitors that are not subject to the FCPA or similar anticorruption laws may be able to secure business or other preferential treatment in such countries by means that such laws prohibit with respect to us. A violation of any of these laws, even if prohibited by our policies, may result in severe criminal and/or civil sanctions and other penalties, and could have a material adverse effect on our business. Actual or alleged violations could damage our reputation, be expensive to defend, and impair our ability to do business.U.S.laws and regulations on trade sanctions and embargoes including those administered by the United States Department of the Treasury’s Office of Foreign Assets Control also poses a risk to us. We cannot provide products or services to or in certain countries subject to U.S. or other international trade sanctions or to certain individuals and entities subject to sanctions. Furthermore, the laws and regulations concerning import activity, export recordkeeping and reporting, export control and economic sanctions are complex and constantly changing. Any failure to comply with applicable legaltrade-related laws and regulatory trading obligationsregulations, even if prohibited by our policies, could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from governmental contracts, seizure of shipments and loss of import and export privileges.Compliance It is our policy to implement procedures concerning compliance with applicable trade sanctions, export controls, and changesother trade-related laws and regulations. However, despite those safeguards and any future improvements to them, our employees, contractors, and agents may engage in laws couldconduct for which we might be costly and could affect operating results.We have operations inheld responsible, regardless of whether such conduct occurs within or outside the U.S. and in approximately 50 countriesWe may also be held responsible for any violations by an acquired company that can be impacted by expected and unexpected changes inoccur prior to an acquisition, or subsequent to the legal and business environments in whichacquisition but before we operate. Political instability and regional issues in many of the areas in which we operate may contributeare able to such changes with greater significance or frequency. Our ability to manageinstitute our compliance procedures.compliance programs will impact our business, financial condition and results of operations. Compliance-related issues could also limit our ability to do business in certain countries. Changes that could impact the legal environment include new legislation, new regulations, new policies, investigations and legal proceedings and new interpretations of existing legal rules and regulations, in particular, changes in export control laws or exchange control laws, additional restrictions on doing business in countries subject to sanctions and changes in laws in countries where we operate or intend to operate.21Restrictions on emissions of greenhouse gases could increase our operating costs or reducereduced demand for our products.Environmental advocacy groupsservices.regulatory agencies incould continue to be made at the United Statesinternational, national, regional and other countries have focused considerable attention onstate levels of government to monitor and limit existing emissions of carbon dioxide, methaneGHGs as well as to restrict or eliminate such future emissions. As a result, our operations are subject to a series of regulatory, political, litigation, and other "greenhouse gases"financial risks associated with the production and their potential role in climate change. The EPA has already begun to regulate greenhouse gas emissions under existing provisionsprocessing of the federal Clean Air Act,fossil fuels and the state of California has established a “cap-and-trade” program requiring state-wide annual reductions in emission of greenhouse gases. For example, in May 2016,GHGs. See Part I, Item 1. “Business—Environmental and Occupational Health and Safety Regulation” for more discussion on the EPA finalized rulesthreat of climate and restriction of GHG emissions. The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that establish new controlsimpose more stringent standards for GHG emissions of methane for new, modified or reconstructed sources infrom the oil and natural gas source category, including production, processing, transmission and storage activities. The rules include first-time standards to address emissions of methane from equipment and processes acrosssector or otherwise restrict the source category, including hydraulically fracturedareas in which this sector may produce oil and natural gas well completions. However, in June 2017, the EPA published a proposed rule to stay certain portions of these 2016 standards for two years and reconsider the entirety of the 2016 standards. As a result of these actions, the 2016 methane standards are currently in effect but future implementation of the standards is uncertain at this time. The BLM finalized similar rules in November 2016 but, following the change in U.S. Presidential Administrations, finalized a rule in December 2017 delaying implementation of the BLM methane rules for one year. Environmental groups and some states have announced their intent to challenge the actions of both the EPA and BLM and, as a result, future implementation of these federal methane rules remains uncertain at this time. To the extent implemented, these rules have the potential to impose significant costs on our customers. The adoption of additional legislation or regulatory programs to reduce emissions of greenhouse gases could require us to incur increased operating costs to comply with new emissions-reduction or reporting requirements or pay carbon taxes. Also any legislation or regulatory programs related to the control of greenhouse gasgenerate GHG emissions could increase the costresult in increased costs of compliance or costs of consuming fossil fuels, and thereby reduce demand for, hydrocarbons that our customers produce,oil and natural gas, which could impact demand for our services. Consequently, legislation and regulatory programs to reduce emissions of greenhouse gases could have an adverse effect on our business, financial condition and results of operations. Finally, some scientists have concluded that increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other extreme weather events. Offshore operations are particularly susceptible to damage from extreme weather events. If any of the potential effects of climate change were to occur, they could have an adverse effect on our business, financial condition and results of operations.We face risks related to natural disasters and pandemic diseases, which could result in severe property damage or materially and adversely disrupt our operations and affect travel required for our worldwide operations.Some of our operations involve risks of, among other things, property damage, which could curtail our operations. For example, disruptions in operations or damage to a manufacturing plant could reduce our ability to produce products and satisfy customer demand. In particular, we have offices and manufacturing facilities in Houston, Texas and Houma and Lafayette, Louisiana as well as in various places throughout the Gulf Coast region of the United States. These offices and facilities are particularly susceptible to severe tropical storms and hurricanes, which may disrupt our operations. If one or more manufacturing facilities we own are damaged by severe weather or any other disaster, accident, catastrophe or event, our operations could be significantly interrupted. Similar interruptions could result from damage to production or other facilities that provide supplies or other raw materials to our plants or other stoppages arising from factors beyond our control. These interruptions might involve significant damage to, among other things, property, and repairs might take from a week or less for a minor incident to many months or more for a major interruption.In addition, a portion of our business involves the movement of people and certain parts and supplies to or from foreign locations. Any restrictions on travel or shipments to and from foreign locations, due to the occurrence of natural disasters such as earthquakes, floods or hurricanes, or an epidemic or outbreak of diseases, including the H1N1 virus and the avian flu, in these locations, could significantly disrupt our operations and decrease our ability to provide services to our customers. In addition, our local workforce could be affected by such an occurrence or outbreak which could also significantly disrupt our operations and decrease our ability to provide services to our customers.22Our business could be negatively affected by cybersecurity threats and other disruptions.We rely heavily on information systems to conduct and protect our business. These information systems are increasingly subject to sophisticated cybersecurity threats such as unauthorized access to data and systems, loss or destruction of data (including confidential customer information), computer viruses, or other malicious code, phishing and cyberattacks, and other similar events. These threats arise from numerous sources, not all of which are within our control, including fraud or malice on the part of third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, or outbreaks of hostilities or terrorist acts.Given the rapidly evolving nature of cyber threats, there can be no assurance that the systems we have designed and implemented to prevent or limit the effects of cyber incidents or attacks will be sufficient in preventing all such incidents or attacks, or avoiding a material impact to our systems when such incidents or attacks do occur. If we were to be subject to a cyber incident or attack, it could result in the disclosure of confidential or proprietary customer information, theft or loss of intellectual property, damage to our reputation with our customers and the market, failure to meet customer requirements or customer dissatisfaction, theft or exposure to litigation, damage to equipment (which could cause environmental or safety issues) and other financial costs and losses. In addition, as cybersecurity threats continue to evolve, we may be required to devote additional resources to continue to enhance our protective measures or to investigate or remediate any cybersecurity vulnerabilities.Our exposure to currency exchange rate fluctuations may result in fluctuations in our cash flows and could have an adverse effect on our financial condition and results of operations.From time to time, fluctuations in currency exchange rates could be material to us depending upon, among other things, the principal regions in which we provide tubular or well construction services. For the year ended December 31, 2017, on a U.S. dollar-equivalent basis, approximately 25% of our revenue was represented by currencies other than the U.S. dollar. In particular, we are sensitive to fluctuations in currency exchange rates between the U.S. dollar and each of the Euro, Norwegian Krone, British Pound, Canadian Dollar and Brazilian Real. There may be instances in which costs and revenue will not be matched with respect to currency denomination. As a result, to the extent that we continue our expansion on a global basis, as expected, we expect that increasing portions of revenue, costs, assets and liabilities will be subject to fluctuations in foreign currency valuations. We may experience economic loss and a negative impact on earnings or net assets solely as a result of foreign currency exchange rate fluctuations. Further, the markets in which we operate could restrict the removal or conversion of the local or foreign currency, resulting in our inability to hedge against these risks.Seasonal and weather conditions could adversely affect demand for our services and operations.Weather can have a significant impact on demand as consumption of energy is seasonal,products. Additionally, political, litigation and any variation from normal weather patterns, such as cooler or warmer summers and winters, can have a significant impact on demand. Adverse weather conditions, such as hurricanes and ocean currents in the U.S. Gulf of Mexico or typhoons in the Asia Pacific region,financial risks may interrupt or curtail our operations, or our customers’ operations, cause supply disruptions and result in our oil and natural gas customers restricting or canceling production activities, incurring liability for infrastructure damages as a lossresult of revenue and damageclimatic changes, or impairing their ability to our equipment and facilities,continue to operate in an economic manner, which may or may not be insured. Extreme winter conditions in Canada, Russia or the North Sea may interrupt or curtail our operations, or our customers’ operations, in those areas and result in a loss of revenue.Legislation or regulations restricting the use of hydraulic fracturingalso could reduce demand for our services.Hydraulic fracturing is an importantservices and common practice in the oil and gas industry. The process involves the injection of water, sand and chemicals under pressure into a formation to fracture the surrounding rock and stimulate production of hydrocarbons. While we may provide supporting products through Blackhawk, we do not perform hydraulic fracturing, but many of our customers utilize this technique. Certain environmental advocacy groups and regulatory agencies have suggested that additional federal, state and local laws and regulations may be needed to more closely regulate the hydraulic fracturing process, and have made claims that hydraulic fracturing techniques are harmful23to surface water and drinking water resources and may cause earthquakes. Various governmental entities (within and outside the United States) are in the process of studying, restricting, regulating or preparing to regulate hydraulic fracturing, directly or indirectly. For example, in December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources, which concluded that "water cycle" activities associated with hydraulic fracturing may impact drinking water sources "under some circumstances," noting that the following hydraulic fracturing water cycle activities and local- or regional-scale factors are more likely than others to result in more frequent or more severe impacts: water withdrawals for fracturing in times or areas of low water availability; surface spills during the management of fracturing fluids, chemicals or produced water; injection of fracturing fluids into wells with inadequate mechanical integrity; injection of fracturing fluids directly into groundwater resources; discharge of inadequately treated fracturing wastewater to surface waters; and disposal or storage of fracturing wastewater in unlined pits. The EPA has also taken steps to regulate certain aspects of hydraulic fracturing. In addition, the BLM finalized rules in March 2015 that impose new or more stringent standards for performing hydraulic fracturing on federal and American Indian lands but this rule was repealed in December 2017. The adoption of legislation or regulatory programs that restrict hydraulic fracturing could adversely affect, reduce or delay well drilling and completion activities, increase the cost of drilling and production, and thereby reduce demand for our services.Customer credit risks could result in losses.The concentration of our customers in the energy industry may impact our overall exposure to credit risk as customers may be similarly affected by prolonged changes in economic and industry conditions. Those countries that rely heavily upon income from hydrocarbon exports would be hit particularly hard by a drop in oil prices. Further, laws in some jurisdictions in which we operate could make collection difficult or time consuming. We perform ongoing credit evaluations of our customers and do not generally require collateral in support of our trade receivables. While we maintain reserves for potential credit losses, we cannot assure such reserves will be sufficient to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us. To the extent oneproducts. One or more of our key customers is in financial distress or commences bankruptcy proceedings, contracts with these customers may be subject to renegotiation or rejection under applicable provisions of the United States Bankruptcy Code and similar international laws. Any material nonpayment or nonperformance by our key customersdevelopments could adversely affect our business, financial condition and results of operations.If our long-lived assets, goodwill, other intangible assets and other assets are impaired, we may be required to record significant non-cash charges to our earnings.We recognize impairments of goodwill when the fair value of any of our reporting units becomes less than its carrying value. Our estimates of fair value are based on assumptions about future cash flows of each reporting unit, discount rates applied to these cash flows and current market estimates of value. Based on the uncertainty of future revenue growth rates, gross profit performance, and other assumptions used to estimate our reporting units’ fair value, future reductions in our expected cash flows could cause a material non-cash impairment charge of goodwill, which could have a material adverse effect on our results of operations and financial condition.We also have certain long-lived assets, other intangible assets and other assets which could be at risk of impairment or may require reserves based upon anticipated future benefits to be derived from such assets. Any change in the valuation of such assets could have a material effect on our profitability.We may be unable to identify or complete acquisitions or strategic alliances.We expect that acquisitions and strategic alliances will be an important element of our business strategy going forward. We can give no assurance that we will be able to identify and acquire additional businesses or negotiate with suitable venture partners in the future on terms favorable to us or that we will be able to integrate successfully the assets and operations of acquired businesses with our own business. Any inability on our part to integrate and manage the24growth of acquired businesses may have a material adverse effect on our business, financial condition and results of operations.Our executive officerscertain key personnel are criticalregulations related to privacy, data protection and information security could increase our business,costs, and these officers and key personnel may not remain with usour failure to comply could result in the future.Our future success depends in substantial part on our ability to hire and retain our executive officers and other key personnel who possess extensive expertise, talent and leadership and are critical to our success. The diminution or loss of the services of these individuals,fines, sanctions or other integral key personnel affiliated with entities that we acquire in the future,penalties, which could have a material adverse effect on our business. Furthermore, we may not be able to enforce all of the provisions in any agreement we have entered into with certain of our executive officers,materially and such agreements may not otherwise be effective in retaining such individuals. In addition, we may not be able to retain key employees of entities that we acquire in the future. This may impact our ability to successfully integrate or operate the assets we acquire.Control of oil and gas reserves by state-owned oil companies may impact the demand for our services and create additional risks in our operations.Much of the world’s oil and gas reserves are controlled by state-owned oil companies, and we provide tubular and other well construction services for a number of those companies. State-owned oil companies may require their contractors to meet local content requirements or other local standards, such as joint ventures, that could be difficult or undesirable for us to meet. The failure to meet the local content requirements and other local standards may adversely impact our operations in those countries. In addition, our ability to work with state-owned oil companies is subject to our ability to negotiate and agree upon acceptable contract terms.Risks Related to Our Corporate StructureWe are a holding company and our sole material assets are our direct and indirect equity interests in our operating subsidiaries, and we are accordingly dependent upon distributions from such subsidiaries to pay taxes, make payments under the tax receivable agreement ("TRA"), and pay dividends.We are a holding company and have no material assets other than our direct and indirect equity interests in our operating subsidiaries. We have no independent means of generating revenue. We intend to cause our subsidiaries to make distributions in an amount sufficient to cover (i) all applicable taxes at assumed tax rates, (ii) payments under the TRA we entered into with Mosing Holdings in connection with the IPO and (iii) dividends, if any, declared by us. To the extent that we need funds and our subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of their financing or other contractual arrangements, or is otherwise unable to provide such funds, it could materially adversely affect our liquidityresults of operations, as well as have an impact on our reputation.financial condition.Mosing family holds a majorityGDPR expanded the scope of the total voting powerEU data protection law to all foreign companies processing personal data of European Economic Area individuals and imposed a stricter data protection compliance regime, including the Company's common stock (the "FINV Stock") and, accordingly, has substantial control over our management and affairs.The Mosing family (through Mosing Holdings and the various holding entitiesintroduction of the Mosing family members) currently controls approximately 68% of the total voting power entitled to vote at annual or special meetings. The Mosing family members have entered into a voting agreement with respect to the shares they own. Accordingly, the Mosing family has the ability (but not the requirement) to dictate on an annual basis who will comprise our Board of Supervisory Directors nominated to the shareholders, thus being able to control our management and affairs. Moreover, pursuant to our amended and restated articles of association, our board of directors will consist of no more than nine individuals. The Mosing family hasadministrative fines for non-compliance, as well as the right to recommend one directorcompensation for nomination to the supervisory board for each 10% of the outstanding FINV Stock they collectively beneficially own, up to a maximum of five directors. The remaining directors are nominatedfinancial or non-financial damages claimed by our supervisory board.any individuals under Article 82 GDPR. Our supervisory board consists of eight members, three of whom are members of the Mosing family. As a result, members of the Mosing family have meaningful influence over us and potential conflicts may arise. In addition, the Mosing family will be able to determine the outcome of all matters requiring shareholder approval, including mergers, amendments of our articles of association and other material transactions, and will be able to cause or prevent a change in the composition of our supervisory board or a change in control of our company that could deprive our shareholders of an opportunity to receive a premium for their common stock as part of a sale of our company. The existence of significant shareholdersbusiness may also have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in the best interests of our company. So long as the Mosing family continues to own a significant amount of the FINV Stock, even if such amount represents less than 50% of the aggregate voting power, it will continue to be able to strongly influence all matters requiring shareholder approval, regardless of whether or not other shareholders believe that the transaction is in their own best interests.The Mosing family may have interests that conflict with holders of shares of our common stock.The Mosing family may have conflicting interests with other holders of shares of our common stock. For example, the Mosing family may have different tax positions from us or other holders of shares of our common stock which could influence their decisions regarding whether and when to cause us to dispose of assets, whether and when to cause us to incur new or refinance existing indebtedness, especially in light of the existence of the TRA that we entered into in connection with the IPO. In addition, the structuring of future transactions may take into consideration the Mosing family’s tax or other considerations even where no similar benefit would accrue to us.We are required under the TRA to pay Mosing Holdings or its permitted transferees for certain tax benefits we may claim, and the amounts we may pay could be significant.We entered into the TRA with FICV and Mosing Holdings in connection with the IPO. This agreement generally provides for the payment by us of 85% of actual reductions, if any, in payments of U.S. federal, state and local income tax or franchise tax in periods after the IPOface reputational damages as a result of (i) the tax basis increases resulting from the transfer of FICV interests to us in connection with the conversion of shares of Preferred Stock into shares of our common stock and (ii) imputed interest deemed to be paid by us as a result of, and additional tax basis arising from, payments under the TRA. In addition, the TRA provides for interest earned from the due date (without extensions)any personal data breach or violation of the corresponding tax return to the date of payment specified by the TRA.The payment obligations under the TRA are our obligations and are not obligations of FICV. The term of the TRA continues until all such tax benefits have been utilized or expired, unless we exercise our sole right to terminate the TRA early.Estimating the timing of payments that may be made under the TRA is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The timing of any payments under the TRA will vary depending upon a number of factors, including the amount and timing of the taxable income we realize in the future and the tax rate then applicable, our use of loss carryovers and the portion of our payments under the TRA constituting imputed interest or depreciable or amortizable basis. We expect that the payments that we will be required to make under the TRA will be substantial. There may be a substantial negative impact on our liquidity if, as a result of timing26discrepancies or otherwise, (i) the payments under the TRA exceed the actual benefits we realize in respectIn certain cases, payments under the TRA to Mosing Holdings or its permitted transferees may be accelerated or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the TRA.The TRA provides that we may terminate it early. If we elect to exercise our sole right to terminate the TRA early, we are required to make an immediate payment equal to the present value of the anticipated future tax benefits subject to the TRA (based upon certain assumptions and deemed events set forth in the TRA, including the assumption that we have sufficient taxable income to fully utilize such benefits and that any interests in FICV that Mosing Holdings or its transferees own on the termination date are deemed to be exchanged on the termination date). Any early termination payment may be made significantly in advance of the actual realization, if any, of such future benefits. In addition, payments due under the TRA are similarly accelerated following certain mergers or other changes of control. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. For example, if the TRA were terminated on December 31, 2017, the estimated termination payment would be approximately $60.7 million (calculated using a discount rate of 5.58%). The foregoing number is merely an estimate and the actual payment could differ materially. There can be no assurance that we will be able to finance our obligations under the TRA. If we were unable to finance our obligations due under the TRA, we would be in breach of the agreement. Any such breach could adversely affect our business, financial condition or results of operations.Payments under the TRA will be based on the tax reporting positions that we will determine. Although we are not aware of any issue that would cause the Internal Revenue Service (the “IRS”) to challenge a tax basis increase or other benefits arising under the TRA, the holders of rights under the TRA will not reimburse us for any payments previously made under the TRA if such basis increases or other benefits are subsequently disallowed, except that excess payments made to any such holder will be netted against payments otherwise to be made, if any, to such holder after our determination of such excess. As a result, in such circumstances, we could make payments that are greater than our actual cash tax savings, if any, and may not be able to recoup those payments, which could adversely affect our liquidity.Future sales of our common stock in the public market could lower our stock price, and any additional capital raised by us through the sale of equity may dilute your ownership in us.In August 2016, we received a notice from Mosing Holdings exercising its Exchange Right for an equivalent number of each of the following securities for common shares: (i) 52,976,000 Preferred Shares and (ii) 52,976,000 units in FICV. We issued 52,976,000 common shares to Mosing Holdings on August 26, 2016. As a result, there are no remaining issued Preferred Shares. Mosing Holdings also transferred its limited partnership interest in FICV to FINV as Mosing Holdings has withdrawn as limited partner of FICV and FINV has been admitted in Mosing Holdings' place.As of February 19, 2018, we had 223,390,309 outstanding shares of our common stock. We may sell additional shares of common stock in subsequent public offerings. Members of the Mosing family own, both directly and indirectly (through Mosing Holdings), approximately 68% of our total outstanding FINV Stock. All of these shares may be sold into the market in the future.We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts27of our common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our common stock.We are a “controlled company” within the meaning of the NYSE rules and qualify for and have the ability to rely on exemptions from certain NYSE corporate governance requirements.Because the Mosing family beneficially owns a majority of our outstanding common stock, we are a “controlled company” as that term is set forth in Section 303A of the NYSE Listed Company Manual. Under the NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a “controlled company” and may elect not to comply with certain NYSE corporate governance requirements, including:the requirement that a majority of its supervisory board consist of independent directors;the requirement that its nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; andthe requirement that its compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.These requirements will not apply to us as long as we remain a “controlled company.” So long as members of the Mosing family control the outstanding common stock representing at least a majority of the outstanding voting power in FINV, we may utilize these exemptions. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE. Please note that our supervisory board is currently comprised of 50% independent directors, as well as a compensation committee and nominating and governance committee comprised entirely of independent directors. However, the significant ownership interest held by the Mosing family could adversely affect investors’ perceptions of our corporate governance.Our declaration of dividends is within the discretion of our management board, with the approval of our supervisory board, and subject to certain limitations under Dutch law, and there can be no assurance that we will pay dividends.Our dividend policy is within the discretion of our management board, with the approval of our supervisory board, and the amount of future dividends, if any, will depend upon various factors, including our results of operations, financial condition, capital requirements and investment opportunities. We can provide no assurance that we will pay dividends on our common stock. No dividends on our common stock will accrue in arrears. In addition, Dutch law contains certain restrictions on a company’s ability to pay cash dividends, and we can provide no assurance that those restrictions will not prevent us from paying a dividend in future periods.agencies.management board and supervisory boardBoard may be different from those in companies governed by the laws of U.S. jurisdictions.28management board and supervisory board.Board. As a result, holders of our shares may have more difficulty in protecting their interests in the face of actions by members of our management board and supervisory boardBoard than if we were incorporated in the United States.management board and supervisory boardBoard will be required by Dutch law to act in the interest of the companyCompany and its affiliated business, and to consider the interests of our company, our shareholders, our employees and other stakeholders in all cases with reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, interests of our shareholders.provisions:authorize our management board, with the approval of our supervisory board, for a period of five years (which ends on May 19, 2022, unless extended) to issue common stock, including for defensive purposes, without shareholder approval; andUnited StatesU.S. or the Netherlands.United StatesU.S. and the Netherlands providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards and divorce decrees) in civil and commercial matters, a judgment rendered by a court in the United StatesU.S. will not automatically be recognized by the courts of the Netherlands. In principle, the courts of the Netherlands will be free to decide, at their own discretion, if and to what extent a judgment rendered by a court in the United States should be recognized in the Netherlands.United StatesU.S. court in the Netherlands, a claim against the relevant party on the basis of such judgment should be brought before the competent29where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement;the overriding mandatory provisions of the law of the courts remain applicable (irrespective of the law chosen);effect may be given to overriding mandatory provisions of the law of the country where the obligations arising out of the relevant transaction documents have to be or have been performed, insofar as those overriding mandatory provisions render the performance of the contract unlawful; andthe application of the law of any jurisdiction may be refused if such application is manifestly incompatible with the public policy (openbare orde) of the courts.United StatesU.S. under U.S. securities laws, this provision could make judgments obtained outside of the Netherlands more difficult to have recognized and enforced against our assets in the Netherlands or jurisdictions that would apply Dutch law. Insofar as a release is deemed to represent a condition, stipulation or provision binding any person acquiring our ordinary shares to waive compliance with any provision of the Securities Act or of the rules and regulations of the SEC, such release will be void.RisksUnited StatesU.S. and internationally. Tax laws, treaties and regulations are highly complex and subject to interpretation. Consequently, we are subject to changing tax laws, treaties and regulations in and between countries in which we operate or are resident. Our income tax expense is based upon the interpretation of the tax laws in effect in various countries at the time that the expense was incurred. A change in these tax laws, treaties or regulations, or in the interpretation thereof, could result in a materially higher tax expense or a higher effective tax rate on our worldwide earnings. If any country successfully challenges our income tax filings based on our structure, or if we otherwise lose a material tax dispute, our effective tax rate on worldwide earnings could increase substantially and our financial results could be materially adversely affected.U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. holders.A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation’s assets for any taxable year produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest and gains from the sale or exchange of investment property and rents and royalties other than certain rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business, but does not include income derived from the performance of services. U.S. shareholders of a PFIC are subject to a30disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC, and the gain, if any, they derive from the sale or other dispositionWe believe that we will not be a PFIC for the current taxable year or for any future taxable year. However, this involves a facts and circumstances analysis and it is possible that the IRS would not agree with our conclusion, or the U.S. tax laws could change significantly.U.S. “anti-inversion” tax laws could negatively affect our results and could result in a reduced amount of foreign tax credit for U.S. holders.Under rules contained in U.S. tax law, we would be subject to tax as a U.S. corporation in the event that we acquire substantially all of the assets of a U.S. corporation and the equity owners of that U.S. corporation own at least 80% (calculated without regard for any stock issued in a public offering) of our stock by reason of holding stock in the U.S. corporation.We acquired the assets of Mosing Holdings (a Delaware limited liability company); however, the ownership of Mosing Holdings in our stock, taking into account common stock that Mosing Holdings is deemed to own under the “stock equivalent” rules, is below the 80% standard for the application of the rules. Accordingly, we do not believe these rules should apply.There can be no assurance that the IRS will not challenge our determination that these rules are inapplicable. In the event that these rules were applicable, we would be subject to U.S. federal income tax on our worldwide income, which would negatively impact our cash available for distribution and the value of our common stock. Application of the rules could also adversely affect the ability of a U.S. holder to obtain a U.S. tax credit with respect to any Dutch withholding tax imposed on a distribution.productsequipment that support our tubular and other well construction services,operations, as well as thosethe products that we offer for sale directly to external customers, we maintain several manufacturing and service facilities around the world. Though our manufacturing and service capabilities are primarily concentrated in the U.S., weWe currently provide our services and products in approximately 5060 countries.312017.Location Leased or Principal/Most Significant Use Den Helder, the Netherlands Owned U.S. Services and Tubular Sales Segments Lafayette, Louisiana Owned/ manufacturing, engineering and administration International Services Segment Aberdeen, Scotland OwnedOwned/Leased Regional operations, engineering and administrationDubai, United Arab EmiratesOwned Owned Local operations and administrationSingaporeOwned and administrationIndiaOwnedAdministration Blackhawk Segment Houma, Louisiana manufacturing and administrationfacility isfacilities are located in Aberdeen, Scotland and Lafayette, Louisiana, where we design and manufacture a substantial portion of our tubular handling tools. The facility serves our U.S. Services segment in the U.S. Gulf of Mexico and our Tubular Sales segment. The Lafayette facility is our global headquarters for the design and manufacture of our equipment and is situated on a total of 175 acres. The main facility occupies 148 acres and consists of manufacturing, operations, pipe storage, training and administration. The remaining 27 acres located off of the main campus consists of manufacturing, warehousing and administration. There is a total of 16 buildings onsite and 17 buildings offsite. Our manufacturing operations occupy 16 of the 33 buildings, with the remaining buildings dedicated to administration, training and other operational tasks. The main administrative building within the facility is approximately 172,636 square feet.service equipment. We believe the facilities that we currently occupy are suitable for their intended use.We are the subject of lawsuits and claims arising the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of December 31, 2017. We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows. See Note 18 - “Commitments and Contingencies in the Notes to Consolidated Financial Statements, which are incorporated herein by reference to Part II, Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.We are conducting an internal investigation of the operations of certain of our foreign subsidiaries in West Africa including possible violations of the FCPA, our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our extensive internal reviewcontingencies” to the SEC, the United States Department of Justice and other governmental entities. It is our intent to fully cooperate with these agencies and any other applicable authorities in connection with any further investigation that may be conducted in connection with this matter. While our review has not indicated that there has been any material impact on our previously filedconsolidated financial statements, we have continued to collect information and cooperate with the authorities, but at this time are unable to predict the ultimate resolution of these matters with these agencies. In addition, during the course of the investigation, we discovered historical business transactions (and bids to enter into business transactions) in certain countries that may have been subject to U.S. and other international sanctions. We have disclosed this information to various governmental entities (including those involved in our ongoing investigation), but at this time are unable to predict the ultimate resolution of these matters with these agencies, including any financial impact to us. Our board and management are committed to continuously enhancing our internal controls that support improved compliance and transparency throughout our global operations.32Registrant’sRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities"FI"“XPRO”. The following table sets forth, forPrior to the periods indicated, the high and low sale prices and the dividend payments forMerger, our common stock. High Low Year Ended December 31, 2017 First Quarter $ 13.00 $ 9.20 $ 0.075 Second Quarter 10.66 7.02 0.075 Third Quarter 9.15 6.04 0.075 Fourth Quarter 7.80 5.79 — Year Ended December 31, 2016 First Quarter $ 17.07 $ 12.34 $ 0.150 Second Quarter 17.73 14.05 0.150 Third Quarter 15.44 10.91 0.075 Fourth Quarter 14.86 10.47 0.075 19, 2018,21, 2023, we had 223,390,309108,817,989 shares of common stock outstanding. The common shares outstanding at February 19, 201821, 2023, were held by approximately 3020 record holders. The actual number of shareholders is greater than the number of holders of record.See Part III, Item 12, "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" for discussion of equity compensation plans.theour Board of Supervisory Directors and will depend upon, among other things, future earnings, general financial condition, liquidity, capital requirements, restrictions contained in our financing agreements and general business conditions. Accordingly, there can be no assurance that we will pay dividends. On October 27, 2017, the Board of Managing Directors of the Company, with the approval of the Board of Supervisory Directors of the Company, approved a plan to suspend the Company's quarterly dividend in order to preserve capital for various purposes, including to invest in growth opportunities.As partIPO in August 2013,outstanding common stock through November 24, 2023 (the “Stock Repurchase Program”). Under the Stock Repurchase Program, we issued 52,976,000may repurchase shares of Preferred Stock to Mosing Holdings. Under our Amended Articles of Association, upon the written election of Mosing Holdings, each Preferred Share, together with a unit in FICV, our subsidiary, was convertible into a share of our common stock in open market purchases, in privately negotiated transactions or otherwise. The Stock Repurchase Program is being utilized at management’s discretion and in accordance with U.S. federal securities laws. The timing and actual numbers of shares repurchased, if any, will depend on a one-for-one basis.On August 19, 2016,variety of factors including price, corporate requirements, the constraints specified in the Stock Repurchase Program along with general business and market conditions. The Stock Repurchase Program does not obligate us to repurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. From the inception of this program in June 2022 to date, we received notice from Mosing Holdings exercising its Exchange Right for an equivalent number of each of the following securities for common shares: (i) 52,976,000 Preferred Shares and (ii) 52,976,000 units in FICV. We issued 52,976,000 commonrepurchased 1.1 million shares to Mosing Holdings on August 26, 2016. As a result, there are no remaining issued Preferred Shares and the Mosing family beneficially owns approximately 68% of our common shares. -- $ -- -- $ 37,004,400 -- $ -- -- $ 37,004,400 -- $ -- -- $ 37,004,400 -- $ -- -- This table excludes shares withheld from employees to satisfy tax withholding requirements on equity-based transactions. We administer cashless settlements and do not repurchase stock in connection with cashless settlements. 33The issuanceIssuer Purchases of Equity SecuritiesNone.34ContentsRussell 1000 Index, Russell 2000 IndexSPDR S&P Oil & Gas Equipment & Services ETF (“XES”) and to a peer group established by management. The peer group consists of the following companies: Baker Hughes Inc.,Company, ChampionX Corporation, Core Laboratories N.V., Diamond Offshore Drilling, Inc., Dril-Quip, Inc., EnscoTechnipFMC plc, Forum Energy Technologies, Inc., Halliburton Company, Helmerich & Payne,Helix Energy Solutions Group Inc., Hornbeck OffshoreNational Energy Services Inc.Reunited Corp., Nabors Industries Ltd., National Oilwell Varco,NexTier Oilfield Solutions Inc., Oceaneering International, Inc., Patterson-UTI Energy,NOV Inc., Rowan Companies plc, and Schlumberger N.V., Tesco Corporation, Transocean Ltd. and Weatherford International Ltd.During 2017, we moved from inclusion in the Russell 1000 Index to inclusion in the Russell 2000 Index. For comparative purposes, both the Russell 2000 and the Russell 1000 indices are reflected in the following performance graph. Going forward, we plan to use the most comparable of these two indices based on our market capitalization and inclusion.PHLX Oil Service SectorRussell 2000 Index, the Russell 1000 Index, Russell 2000 IndexOSX, the XES and our peer group for the period from August 9, 2013, using the closing price for the first day of trading immediately following the effectiveness of our IPODecember 31, 2017 through December 31, 2017.2022. The graph assumes that the value of the investment in our common stock was $100 at August 9, 2013 or JulyDecember 31, 20132017 and for each index (including reinvestment of dividends) and tracks the return on the investment through December 31, 2017.2022. The shareholder return set forth herein is not necessarily indicative of future performance.
*$100 invested on 8/9/13 in stock or 7/31/13 in index, including reinvestment of dividends.Fiscal year ending December 31."soliciting material"“soliciting material” or to be "filed"“filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate by reference.the overall timing and level of transition of the global energy sector from fossil-based systems of energy production and consumption to more renewable energy sources; uncertainty with respect to integration and realization of expected synergies following completion of the Merger. 6. Selected Financial DataThe selected consolidated financial information contained below is derived from our Consolidated Financial Statements1A “Risk Factors” and should be read in conjunction with Part II, Item 7 "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” of this Form 10-K, and elsewhere within this Form 10-K, (ii) our audited Consolidated Financial Statements that are includedother reports and filings we make with the SEC from time to time and (iii) other announcements we make from time to time. Should one or more of the risks or uncertainties described in the documents above or in this Form 10-K. Our historical10-K occur, or should underlying assumptions prove incorrect, our actual results, are not necessarily indicative of our results to be expectedperformance, achievements or plans could differ materially from those expressed or implied in any future period. Year Ended December 31, 2017 2016 2015 2014 2013 (in thousands, except per share amounts) Financial Statement Data: Revenue $ 454,795 $ 487,531 $ 974,600 $ 1,152,632 $ 1,077,722 Income (loss) from continuing operations (159,457 ) (156,079 ) 106,110 229,312 308,195 Total assets 1,261,769 1,588,061 1,726,838 1,758,681 1,561,195 Debt 4,721 276 7,321 304 376 Total equity 1,115,901 1,311,319 1,451,426 1,472,536 1,333,327 Earnings Per Share Information: Basic income (loss) per common share: Continuing operations $ (0.72 ) $ (0.77 ) $ 0.51 $ 1.03 $ 1.69 Discontinued operations — — — — 0.24 Total $ (0.72 ) $ (0.77 ) $ 0.51 $ 1.03 $ 1.93 Diluted income (loss) per common share: Continuing operations $ (0.72 ) $ (0.77 ) $ 0.50 $ 1.03 $ 1.62 Discontinued operations — — — — 0.23 Total $ (0.72 ) $ (0.77 ) $ 0.50 $ 1.03 $ 1.85 Weighted average common shares outstanding: Basic 222,940 176,584 154,662 153,814 132,257 Diluted 222,940 176,584 209,152 207,828 185,506 Cash dividends per common share $ 0.225 $ 0.450 $ 0.600 $ 0.450 $ 0.075 Other Data: $ 5,715 $ 25,031 $ 319,086 $ 451,513 $ 438,739 (1)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. For a definition and a reconciliation of Adjusted EBITDA to our income from continuing operations, its most directly comparable financial measure presented in accordance with GAAP, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - How We Evaluate Our Operations - Adjusted EBITDA and Adjusted EBITDA Margin."36Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operation"Financial“Financial Statements and Supplementary Data"Data” included in this Form 10-K.management'smanagement’s current expectations, estimates and projections about our business and operations, and involve risks and uncertainties. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements because of various factors, including those described in the sections titled "Cautionary“Cautionary Note Regarding Forward-Looking Statements,"” Part I, Item 1A, "Risk Factors"“Risk Factors” and elsewhere in this Form 10-K.Wegloballeading provider of highly engineered tubularenergy services, tubular fabricationoffering cost-effective, innovative solutions and specialtywhat we consider to be best-in-class safety and service quality. The Company’s extensive portfolio of capabilities spans well construction, well flow management, subsea well access, and well intervention solutionsand integrity solutions.the oil1938, we have approximately 7,600 employees and gas industryprovide services and have been in business for over 75 years. We provide our servicessolutions to leading exploration and production companies in both onshore and offshore and onshore environments with a focus on complex and technically demanding wells.We conduct our business through four operating segments:International Services. We currently provide our services in approximately 50 countries on six continents. 60 countries.customers in thesebroad portfolio of products and services are designed to enhance production and improve recovery across the well lifecycle from exploration through abandonment, including:markets are primarily largeoil companies (“IOC”), independent exploration and production companies including integrated oil(“Independents”) and gas companies and national oil and gas companies, and other oilfield services companies.U.S. Services. service partners. We service customers in the offshore areashave strong relationships with a number of the U.S. Gulfworld’s largest NOCs and IOCs, some of Mexico. In addition, wewhich have been our customers for decades. We are dedicated to safely and sustainably delivering maximum value to our customers.presence ingeographical basis. Our reporting structure and the active onshore oilkey financial information used by our management team is organized around our four operating segments: (i) NLA, (ii) ESSA, (iii) MENA and gas drilling regions in the U.S., including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus Shale, Niobrara Shale and Utica Shale.Tubular Sales. We design, manufacture and distribute large OD pipe, connectors and casing attachments and sell large OD pipe originally manufactured by various pipe mills. We also provide specialized fabrication and welding services in support of offshore projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long-length tubulars (up to 300 feet in length) for use as caissons or pilings. This segment also designs and manufactures proprietary equipment for use in our International and U.S. Services segments.Blackhawk. We provide well construction and well intervention services and products, in addition to cementing tool expertise, in the U.S. and Mexican Gulf of Mexico, onshore U.S. and other select international locations. Blackhawk’s customer base consists primarily of major and independent oil and gas companies as well as other oilfield services companies.The majority of our services revenues arepersonnel rates for our specially trained employees who perform tubular and otherproviding services in well construction, services forwell flow management, subsea well access and well intervention and integrity to operators globally. Our revenue includes equipment service charges, personnel charges, run charges and consumables. Some of our customers; and rates wecontracts allow us to charge for additional deliverables, such as the suitecosts of mobilization of people and equipment and customer specific engineering costs associated with a project. We also procure products and equipment that our employees use to perform these services.In addition,services on behalf of our customers typically reimburse usthat are provided by third parties for transportation costs thatwhich we incurare reimbursed with a mark-up or in connection with transportingan integrated services contract. We also design, manufacture and sell equipment, which is typically done in connection with a related operations and maintenance arrangement with a particular customer. In addition, we also generate revenue from the sale of certain well construction products.productsrevenue was generated outside of the United States and equipmentapproximately 70% of our revenue was generated by activities related to offshore oil and gas operations. Approximately 70% of our revenue was generated by services tied to drilling and completions-related activities, which are generally funded by customers’ capital expenditures, and approximately 30% of our revenue was generated by production optimization related activities, which are generally funded by customers’ operating expenditures rather than capital expenditures.our staging areasan average of 99.4 million barrels per day ("b/d") in 2022 to 100.5 million b/d in 2023 (approximating 2019 consumption levels) and rise further to 102.2 million b/d in 2024. The EIA expects continued OPEC+ production growth in 2023 and a further increase of 0.8 million b/d over 2022, to average 29.5 million b/d in 2024. The increase in OPEC+ production along with growth in U.S. oil production in 2023 (expected to rise to 12.4 million b/d in 2023 and 12.8 million b/d in 2024, greater than the highest annual average U.S. crude oil production on record) is expected to lead to an overall build in global oil inventories in 2023. As a result, the EIA has reduced its forecast for Brent crude oil spot prices from its third quarter prediction to an average $83 per barrel in 2023 and $78 per barrel in 2024, compared to an average $101 per barrel in 2022. The EIA’s third quarter forecast was an average $102 per barrel in 2022 and $95 per barrel in 2023, so the EIA is increasingly forecasting a stabilizing oil price with lower price peaks.customers’ job sites.In contrast, our Tubular Sales revenues are derivedimproving oil market outlook, global natural gas prices remain elevated due to a combination of sustained economic activity and energy security concerns in Europe driving continued strong demand for LNG to replace Russian pipeline gas. The global demand for natural gas is set to decline from salesthe highs of certain products, including large OD pipe connectors2022 as domestic consumption from the electric power and large OD pipe manufactured by third parties, directlyindustrial sectors is reduced and LNG exports remain relatively flat, limiting further upwards pricing pressures in 2023.external customers.Our Blackhawk revenues are deriveddecrease to an average of $4.90 per million British thermal unit (“MMBtu”) in 2023, down close to 25% from well construction$6.42 MMBtu in 2022, then falling to $4.80/MMBtu in 2024 as natural gas production outpaces an increase in LNG exports resulting from rising LNG export capacity. Rystad forecasts the European and well intervention servicesAsian LNG spot price to trade at approximately $32.0/MMBtu and products. $30.0/MMBtu respectively in 2023, a reduction from previous forecasts as record-strong LNG supplies have driven a storage build, suggesting a comparably softer market for 2023. The revenues have historically been split evenly between service revenuemarket does however remain tight for 2023 with upside risks due to further reduction in Russian gas and product revenue.OutlookIn 2018, we expect to see increased customer spending globally on oilLNG exports, cold spells in the northern hemisphere, and natural gasa recovery in Chinese demand.response tooffshore shelf activity, driven by Latin America, shale / tight oil led by the improvementU.S. land markets, and significant investments in commodity prices in recent months. However, much of the anticipated increase in spending37will likely continue to be associated with onshore projects that contribute lower revenue and margins to the Company than offshore projects. Activityincremental capacity in the deepMiddle East, including Saudi Arabia, the United Arab Emirates and ultra-deep offshore markets is not projectedQatar, in order to see significant improvementoffset the decline in 2018 and pricing of newly sanctioned projects is estimated to be approximately in-line with recent trends. In response,Russian gas supply.are expanding products and services historically weighted to the U.S. market to international markets, reducing costs through operational efficiency gains and prioritizing projects that improve market share and profitability.Our offshore businesses, both in the U.S. and internationally, continue to trend toward less predictable, shorter-term projects. We expect to see share gains in certain markets, but competitive pricing is likely to persist that could result in low growth in both revenue and margins.Our onshore operations are expected to see sequential improvement, particularly in the U.S. onshore market, as drilling activity levels remain strong. The increase in demand for our services combinedand solutions to continue to trend positively through 2023. The following provides an outlook for 2023 by our reporting segments based on data from Spears and Associates, Inc.a leaner cost structurethe highest drilling activity in the region. Offshore drilling activity in Latin America is forecast to rise 13% to 44 active rigs and 280 wells, driven by Brazil and Mexico, but offshore activity in Guyana is also expected to remain buoyant.higher revenues and improved profitability for this business in 2018.The Tubular Sales segment2023 to average 129 active rigs, drilling over 1,000 new wells. Sub-Saharan Africa growth is primarily driven by specialized needsoffshore activity with 16% growth forecast in 2023, with the progression of our customersdevelopment programs for a number of large offshore projects. In addition, exploration campaigns in Namibia are also progressing. New gas and the timing ofLNG projects specifically in the Gulf of Mexico. We expect to benefit from increased sales in select international markets that are predicted to supplement our modest activity growth outlook in the offshore Gulf of Mexico.The Blackhawk product and service lines are expected to see meaningful improvementboost Africa’s natural gas production to record levels over the next decade, driven by Europe’s demand for non-Russian imports and Africa’s own gas demand rising.2018. The U.S. onshore products2023 (26%) to an average of 356 active rigs, drilling over 3,100 new wells as Saudi Arabia seeks to meet increased demand for its oil with several large oilfield expansion schemes. Abu Dhabi, Qatar and services will likely improve from higherIraq also plan to increase their production capacity. There also is increased focus on infield development and production optimization and enhancement projects to increase production rates (for example in Saudi Arabia, Iraq and Qatar), also adding to a positive future activity levels and the expansion of product and servicesoutlook.markets outside of the U.S. should lead to sequential increasesincrease by 11% with 189 active rigs drilling around 2,500 new wells in revenue for this segment. However, some of these increases could be at risk if2023. Offshore activity levels in the U.S. Gulf of Mexico were to materially decrease as it represents a primary market for revenue generation.Overall, our market outlook is modestly improved. The onshore markets in the U.S. are expected to continueforecast to grow 20% to an average of 49 rigs, with growth primarily in India, Indonesia, Malaysia and weThailand. In addition, carbon capture, utilization and storage project interest is growing, with opportunities being investigated in Thailand as well as in Indonesia, Australia and Malaysia. Production enhancement, well intervention and well abandonment activities are expecting higher activity and international share growth from Blackhawk and Tubular Sales segments. However, we could face continued headwinds in the global offshore market in the near-term as customers look for commodity prices to remain at current levels for an extended periodalso gaining momentum.revenue,Revenue, Adjusted EBITDA, Adjusted EBITDA marginCash Flow from Operations and safety performance.Revenuerevenue growthperformance by comparing actual monthly revenue by operating segments and areas of capabilities to our internal projections for each monthmonth. Our revenue is primarily derived from well construction, well flow management, subsea well access and well intervention and integrity solutions.Revenue for the year ended December 31, 2022 increased by $453.6 million, or 54.9%, to $1,279.4 million, compared to $825.8 million for the year ended December 31, 2021. Of the total increase, $385.7 million represents an increase in well construction revenue, reflecting a full-year impact of the Merger (versus only the last quarter of 2021 in the prior year). The remaining increase was driven by higher well management revenue due to higher customer activities. Activity and revenue across all our geography-based operating segments also increased during the year ended December 31, 2022. Revenue for our segments is discussed separately below under the heading “Operating Segment Results.” We reported a net loss for the year ended December 31, 2022 of $20.1 million, compared to a net loss of $131.9 million for the year ended December 31, 2021. The overall decrease in net loss was primarily driven by increased revenue and Adjusted EBITDA due to a combination of the impact of the Merger, Merger-related synergies and higher activity during the year ended December 31, 2022, a reduction in stock-based compensation expense of $35.7 million and a reduction in merger and integration expense of $34.0 million. The above improvement was partially offset by higher start-up and commissioning costs of $27.7 million incurred on a large subsea project in the current year and an increase in tax expenses by $25.0 million during the year ended December 31, 2022. Adjusted EBITDA for the year ended December 31, 2022 increased by $80.3 million, or 63.8%, to $206.2 million from $125.9 million for the year ended December 31, 2021. The overall increase in Adjusted EBITDA was due to the impact of the Merger, Merger-related synergies and higher activity during the year ended December 31, 2022, partially offset by start-up and commissioning costs incurred on a large subsea project during 2022. Adjusted EBITDA margin increased to 16.1% during the year ended December 31, 2022, as compared to 15.3% during the year ended December 31, 2021, due to a combination of favorable product mix and lower support costs as a result of merger-related synergies, partially offset by start-up and commissioning costs incurred on a large subsea project during the current period. Excluding $27.7 million of such start-up and commissioning costs during the year ended December 31, 2022, Adjusted EBITDA would have been $233.9 million and Adjusted EBITDA margin would have been 18.3%. Net cash provided by operating activities was $80.2 million during the year ended December 31, 2022 as compared to $16.1 million during the year ended December 31, 2021. The increase of $64.1 million in net cash provided by operating activities for the year ended December 31, 2022 was primarily due to improvements in Adjusted EBITDA of $80.3 million (despite the start-up and commissioning costs referenced above), a decrease in payment of merger and integration expenses related to the Merger of $9.8 million, and a decrease in payment of severance and other expense of $4.1 million, partially offset by unfavorable movements in working capital of $15.9 million and an increase in tax payments of $13.0 million during the year ended 31 December 2022. Adjusted Cash Flow from Operations and Cash Conversion for the year ended December 31, 2022, were $115.3 million and 55.9%, respectively, compared to $65.3 million and 51.9%, respectively, for the year ended December 31, 2021. $ 131,684 $ 134,574 37.5 % 40.2 % 117,344 99,809 33.4 % 29.9 % 55,387 50,030 15.8 % 15.0 % 46,551 49,938 13.3 % 14.9 % $ 350,966 $ 334,351 100.0 % 100.0 % $ 35,153 $ 39,743 26.7 % 29.5 % 30,179 17,760 25.7 % 17.8 % 19,433 14,667 35.1 % 29.3 % 3,673 (8,617 ) 7.9 % -17.3 % $ 88,438 $ 63,553 25.2 % 19.0 % (23,954 ) (18,849 ) 5,590 3,510 (34,538 ) (34,825 ) (4,996 ) (1,629 ) (2,411 ) (3,242 ) (3,554 ) (4,684 ) 2,044 (7,957 ) 1,477 432 (3,468 ) 1,502 $ 24,628 $ (2,189 ) performance. We also assess incremental changesfinancial and operating performance as compared to those of other companies in our monthly revenue acrossindustry, without regard to the effects of our operating segments to identify potential areas for improvement.Adjusted EBITDAcapital structure, asset base, items outside the control of management and Adjusted EBITDA Margin(loss) before interest income, net,tax expense (benefit), (b) depreciation and amortization income tax benefit or expense, asset impairments,(c) impairment expense, (d) severance and other expense, net, (e) stock-based compensation expense, (f) merger and integration expense, (g) gain or loss on disposal of assets, (h) other income, net, (i) interest and finance income (expense), net and (j) foreign currency gain or loss, equity-based compensation, unrealized and realized gain or loss, the effects of the TRA, other non-cash adjustments and other charges or credits.exchange losses. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of our revenues.review define Adjusted Cash Flow from Operations as net cash provided by operating activities adjusted for cash paid during the period for interest, net, severance and other expense and merger and integration expense. We define Cash Conversion as Adjusted Cash Flow from Operations divided by Adjusted EBITDA. and Adjusted EBITDA margin, on both a consolidated basisAdjusted Cash Flow from Operations and on a segment basis. We use Adjusted EBITDA and Adjusted EBITDA margin to assess our financial performance because it allows us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), items outside the control of our management team (such as income tax and foreign currency exchange rates) and other charges outside the normal course of business. Adjusted EBITDA and Adjusted EBITDA marginCash Conversion have limitations as analytical tools and should not be considered in isolation or as an alternativea substitute for analysis of our results as reported under GAAP. As Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion may be defined differently by other companies in our industry, our presentation of Adjusted EBITDA, Adjusted Cash Flow from Operations and Cash Conversion may not be comparable to net income (loss), operating income (loss), cash flow from operating activities or anysimilarly titled measures of other measure of financial performance presented in accordance with generally accepted accounting principles in the U.S. ("GAAP").38 and Adjusted EBITDA margin to net income (loss) for each of the periods presented (in thousands): Year Ended December 31, 2017 2016 2015 Net income (loss) $ (159,457 ) $ (156,079 ) $ 106,110 Interest income, net (2,309 ) (2,073 ) (341 ) Depreciation and amortization 122,102 114,215 108,962 Income tax expense (benefit) 72,918 (25,643 ) 37,319 (Gain) loss on disposal of assets (2,045 ) 1,117 (1,038 ) Foreign currency (gain) loss (2,075 ) 10,819 6,358 (122,515 ) — — 99,096 82,675 61,716 Adjusted EBITDA $ 5,715 $ 25,031 $ 319,086 Adjusted EBITDA margin 1.3 % 5.1 % 32.7 % $ (20,145 ) $ (131,891 ) $ (307,045 ) 41,247 16,267 (3,400 ) 139,767 123,866 113,693 - - 287,454 7,825 7,826 13,930 13,620 47,593 1,630 - (1,000 ) (10,085 ) (3,149 ) (3,992 ) (3,908 ) 18,486 54,162 - 8,341 4,314 2,261 241 8,795 5,656 $ 206,233 $ 125,940 $ 100,186 16.1 % 15.3 % 14.8 % Excluding $27.7 million of start-up and commissioning costs on a large subsea project during the year ended December 31, 2022, Adjusted EBITDA would have been $233.9 million and Adjusted EBITDA margin would have been 18.3%. $ 80,169 $ 16,144 $ 70,391 3,851 4,192 2,630 3,970 8,052 15,602 27,344 36,921 - $ 115,334 $ 65,309 $ 88,623 $ 206,233 $ 125,940 $ 100,186 55.9 % 51.9 % 88.5 % 13 - Related Party Transactions5 “Business segment reporting” in the Notes to the Consolidated Financial Statements for further discussion.(2)Comprised of Equity-based compensation expense (2017: $13,862; 2016: $15,978; 2015: $26,318), Mergers and acquisition expense (2017: $459; 2016: $13,784; 2015: none), Severance and other charges (2017: $75,354; 2016: $46,406; 2015: $35,484), Changes in value of contingent consideration (2017: none; 2016: none; 2015: $(1,532)) Unrealized and realized losses (2017: $2,791; 2016: $110; 2015: none), Investigation-related matters (2017: $6,143; 2016: $6,397; 2015: $1,446) and Other adjustments (2017: $487; 2016: none; 2015: none).Safety PerformanceSafety is our primary core value. Maintaining a strong safety recordconsolidated financial statements. We believe Segment EBITDA is a critical componentuseful operating performance measure as it excludes non-cash charges and other transactions not related to our core operating activities and corporate costs, and Segment EBITDA allows management to more meaningfully analyze the trends and performance of our operational success. Manycore operations by segment as well as to make decisions regarding the allocation of resources to our customers have safety standards we must satisfy before we can perform services. Assegments.result, we continually monitor and improve our safety performance through the evaluationpercentage of safety observations, job and customer surveys, and safety data. The primary measure for our safety performance is the tracking of the Total Recordable Incident Rate ("TRIR"). TRIR is a measure of the rate of recordable workplace injuries, normalized on the basis of 100 full time employees for an annual period. The factor is derivedtotal revenue by multiplying the number of recordable injuries in a calendar year by 200,000 and dividing this value by the total hours actually worked in the year. A recordable injury includes occupational death, nonfatal occupational illness, and other occupational injuries that involve loss of consciousness, lost time injuries, restriction of work or motion cases, transfer to another job, or medical treatment cases other than first aid.The table below presents our worldwide TRIRsegment for the years ended December 31, 2017, 20162022 and 2015: $ 499,813 $ 193,156 $ 115,738 39.1 % 23.4 % 17.2 % 389,342 300,557 219,534 30.4 % 36.4 % 32.5 % 201,495 171,136 194,033 15.7 % 20.7 % 28.7 % 188,768 160,913 145,721 14.8 % 19.5 % 21.6 % $ 1,279,418 $ 825,762 $ 675,026 100.0 % 100.0 % 100.0 % Year Ended December 31, 2017 2016 2015 TRIR 0.57 0.87 0.76 Results of Operationspresents our consolidated resultsshows Segment EBITDA and Segment EBITDA margin by segment and a reconciliation to income (loss) before income taxes for the periods presented (in thousands): Year Ended December 31, 2017 2016 2015 Revenues: Services $ 364,061 $ 397,369 $ 766,252 Products 90,734 90,162 208,348 Total revenue 454,795 487,531 974,600 Operating expenses: Cost of revenues, exclusive of depreciation and amortization 223,222 246,652 384,842 87,200 70,616 129,748 163,704 171,887 174,479 Depreciation and amortization 122,102 114,215 108,962 Severance and other charges 75,354 46,406 35,484 Changes in contingent consideration — — (1,532 ) (Gain) loss on disposal of assets (2,045 ) 1,117 (1,038 ) Operating income (loss) (214,742 ) (163,362 ) 143,655 Other income (expense): 122,515 — — Other income 1,763 4,170 5,791 Interest income, net 2,309 2,073 341 Mergers and acquisition expense (459 ) (13,784 ) — Foreign currency gain (loss) 2,075 (10,819 ) (6,358 ) Total other income (expense) 128,203 (18,360 ) (226 ) Income (loss) before income tax expense (benefit) (86,539 ) (181,722 ) 143,429 Income tax expense (benefit) 72,918 (25,643 ) 37,319 Net income (loss) (159,457 ) (156,079 ) 106,110 Less: Net income (loss) attributable to noncontrolling interest — (20,741 ) 27,000 Net income (loss) attributable to Frank's International N.V. $ (159,457 ) $ (135,338 ) $ 79,110 $ 135,236 $ 32,254 $ 54 27.1 % 16.7 % 0.0 % 74,681 53,336 35,393 19.2 % 17.7 % 16.1 % 63,315 56,312 77,296 31.4 % 32.9 % 39.8 % 4,850 33,444 34,976 2.6 % 20.8 % 24.0 % 278,082 175,346 147,719 (87,580 ) (66,153 ) (61,122 ) 15,731 16,747 13,589 (139,767 ) (123,866 ) (113,693 ) - - (287,454 ) (13,620 ) (47,593 ) (1,630 ) (7,825 ) (7,826 ) (13,930 ) (18,486 ) (54,162 ) - (8,341 ) (4,314 ) (2,261 ) 3,149 3,992 3,908 - 1,000 10,085 (241 ) (8,795 ) (5,656 ) $ 21,102 $ (115,624 ) $ (310,445 ) For2016, $45,336 and $11,5792022, Segment EBITDA would have been reclassified from general$32.6 million and administrative expensesSegment EBITDA margin would have been 17.3%.services and products, respectively, and $80,369 and $15,830, respectively, for the year ended December 31, 2015. See Note 1 - Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements.a particular operating segment. (2)Please see Note 13 - Related Party Transactions in the Notes to Consolidated Financial Statements for further discussion.Consolidated Results of Operations Endedended December31, 2017 Compared2022 compared to Year Ended December 31, 2016Revenues. Revenues from external customers, excluding intersegment sales, for the year endedDecember 31, 2017 decreased by $32.7 million, or 6.7%, to $454.8 million from $487.520212016. revenues inlegal and other professional fees, and lower integration and other costs related to the majority of our segments dueMerger incurred during the year ended December 31, 2022 as compared to declining activity as depressed oil and gas prices resulted in reduced rig count in offshore markets, downward pricing pressures, rig cancellations and delays as well as deferred work scopes in the International and offshore U.S. Services regions. Tubular Sales decreased due to lower international demand and decreased deepwater fabrication revenue. The decreased revenues were partially offset by an increase in revenues from our Blackhawk segment of $61.0 million resulting from our acquisition of Blackhawk in November 2016 and improved U.S. onshore revenues. See Note 3 - Acquisition and Divestitures in the Notes to Consolidated Financial Statements for additional information on our Blackhawk acquisition. Revenues for our segments are discussed separately below under the heading "Operating Segment Results."Cost of revenues, exclusive of depreciation and amortization. Cost of revenuesyear ended December 31, 2021.2017 decreased by $6.82022 was $18.5 million or 2.2%,as compared to $310.4 million from $317.3$54.2 million for the year ended December 31, 2016. primarily due to lower cost of product sales in our Tubular Sales segment driven by lower activity volumes and cost cutting initiatives, partially offset by $26.6 million in additional cost of revenues related to our Blackhawk acquisition, which was acquired in November 2016.General and administrative expenses. General and administrative ("G&A") expensesrecorded for the year ended December 31, 2017 decreased by $8.2 million, or 4.8%,2022 as compared to $163.7 million from $171.9$1.0 million for the year ended December 31, 2016, primarily due to2021. The gain during the bad debt expenseprevious year represented the earn-out consideration related to Venezuelan receivablesa sale of assets which occurred in 2016, a reduction in compensation2020; the gain was recognized as the conditions upon which the consideration was contingent were met during the year ended December 31, 2021.benefit related expenses,finance expense, netone-time property tax credits earned in 2017, partially offset by higher IT expenses and increased G&Afinance expense, related to the Blackhawk acquisition. Expense related to the write-off of Venezuelan receivables in 2017 is included in severance and other charges.Depreciation and amortization. Depreciation and amortizationnet, for the year ended December 31, 2017 increased by $7.92022, was $0.2 million, a decrease of $8.6 million, or 6.9%97.7%, compared to $122.1 million from $114.2$8.8 million for the year ended December 31, 2016. 2021. The increasedecrease in interest and finance expense was primarily attributabledue to our Blackhawk acquisition, partially offset by a lower depreciable base as a result of asset retirementsfees incurred with respect to the New Facility established following the Merger during the fourth quarter of 2016.Severance and other charges. Severance and other chargesprevious year.2017 increased $28.92022 was $41.2 million, or 62.4%, to $75.4 million, primarily due to impairments of our pipe and connectors inventory of $51.2 million and accounts receivable write offs of $15.0 million related to Venezuela, Nigeria and Angola. During the fourth quarter of 2017, management decided to significantly reduce our footprint in Nigeria and Angola by exiting certain bases and temporarily abandoning our investment in Venezuela. This was partially offset by lower severance and other costs of $13.8 million and lower fixed asset retirements and abandonments of $23.4 million as compared to the prior year. See Note 19 - Severance and Other Charges in the Notes to Consolidated Financial Statements for additional information.Foreign currency gain (loss). Foreign currency gain (loss) for the year ended December 31, 2017 changed by $12.9 million to a gainan income tax expense of $2.1 million from a loss of $(10.8)$16.3 million for the year ended December 31, 2016. The change was primarily due to the devaluation of the Nigerian Naira during 2016.Income2021. Our statutory tax expense (benefit). Income tax expense (benefit)rate for the year ended December 31, 2017 changed by $98.6 million2022 was 25.8% as compared to an expense of $72.9 million from a benefit of $(25.6) million25.0% for the year ended December 31, 2016. 2021. The effective income tax rate was (84.3)%768.0% and 14.1%(12.3%) for the years ended December 31, 20172022 and December 31, 2016,2021 respectively. The change from 2016 to 2017Our effective tax rate wasprimarily because of recording valuation allowances against our net deferred tax assets, impacted by the Merger in 2021 and the reversalgeographic mix of deferred taxes associated with the derecognition of the TRA. Excluding these one-time items, theprofits and losses between deemed profit and taxable profit jurisdictions.and incomefluctuates from the statutory tax expense (benefit) for 2017 would have been 57.4% and $(49.7) million, respectively. The change from 2016 to 2017, excluding one-time items, is primarily due torate based on, among other factors, changes in the jurisdictional mix of earnings.41We are subject to many U.S. and foreignpretax income in jurisdictions with varying statutory tax rates along with jurisdictions and many tax agreements and treaties among the various taxing authorities. Our operations in these jurisdictions are taxed on various bases such as income before taxes,utilizing a deemed profits (which is generally determined using a percentage of revenues rather than profits) and withholding taxes based on revenues; consequently, the relationship between our pre-tax income from operations and our income tax provision varies from period to period.On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. Among the significant changes made by the Act was the reduction of the federal income tax rate from 35% to 21% as well as the imposition of a one-time repatriation tax on deemed repatriated earnings of certain foreign subsidiaries. US GAAP requires thatprofit taxation regime, the impact of the Tax Act be recognized in the period in which the law was enacted. Because of the change in tax rate, the Company recorded a $23.8 million reduction in the value of its deferred tax assets and liabilities. The reduction in value was fully offset by a corresponding change in valuation allowance. The net effect on total tax expense was zero. Due to its legal structure, the Company does not expect to incur any material liability with respect to the repatriation tax. These provisional amounts are the Company’s best estimates based on its current interpretation of the Tax Act and may change as the Company receives additional clarification of the Tax Act and or guidance on its implementation as part of its 2017 income tax compliance process.Year Ended December 31, 2016 Compared to Year Ended December 31, 2015Revenues. Revenues from external customers, excluding intersegment sales, for the year ended December 31, 2016 decreased by $487.1 million, or 50.0%, to $487.5 million from $974.6 million for the year ended December 31, 2015. The decrease was primarily attributable to lower revenues in the majority of our segments due to declining activity as depressed oil and gas prices resulted in reduced rig count, downward pricing pressures, rig cancellations and delays as well as deferred work scopes in the International and U.S. Services regions while revenues for Tubular Sales decreased due to lower international demand and decreased deep water fabrication revenue. The decreased revenues were partially offset by revenues in our Blackhawk segment of $10.0 million resulting from our acquisition in November 2016. See Note 3 - Acquisition and Divestitures in the Notes to Consolidated Financial Statements for additional information on our Blackhawk acquisition. Revenues for our segments are discussed separately below under the heading "Operating Segment Results."Cost of revenues, exclusive of depreciation and amortization. Cost of revenues for the year ended December 31, 2016 decreased by $197.3 million, or 38.3%, to $317.3 million from $514.6 million for the year ended December 31, 2015. The decrease was due to lower activity volumes, offset by cost actions taken throughout 2016. We also incurred additional costs of $8.9 million related to our Blackhawk acquisition in November 2016.General and administrative expenses. General and administrative expenses for the year ended December 31, 2016 decreased by $2.6 million, or 1.5%, to $171.9 million from $174.5 million for the year ended December 31, 2015. Excluding the bad debt expense of $11.3 million related primarily to the collectability of receivables in Venezuela and the bankrupt customer in Nigeria, G&A expenses for the year ended December 31, 2016 decreased by $13.9 million, or 8.0%, primarily as a result of declining activity and pricing pressures, offset by internal cost initiatives, which included workforce reductions and lease terminations. Also, equity-based compensation expense decreased by $10.3 million as the IPO grants for retirement-eligible employees had a two year service requirement, which was completed during the third quarter of 2015. The decreased costs were partially offset by an increase in professional fees, which included costs related to our ongoing global corporate initiatives and the investigation mentioned in Note 18 - Commitments and Contingencies in the Notes to Consolidated Financial Statements.Depreciation and amortization. Depreciation and amortization for the year ended December 31, 2016 increased by $5.3 million, or 4.8%, to $114.2 million from $109.0 million for the year ended December 31, 2015. The increase was primarily attributable to our acquisitions of Timco Services, Inc. and Blackhawk, as well as a higher depreciable base resulting from property and equipment additions.Severanceallowances, foreign inclusions and other charges. Severance and other charges for the year ended December 31, 2016 were $46.4 million as we continued to take steps to adjust our workforce to meet the depressed demand in the industry in addition to the retirement of fixed assets of $29.9 million.42Mergers and acquisition expense. Mergers and acquisition expense for the year ended December 31, 2016 were $13.8 million as a result of our Blackhawk acquisition as mentioned in Note 3 - Acquisition and Divestitures in the Notes to Consolidated Financial Statements.Foreign currency loss. Foreign currency loss for the year ended December 31, 2016 increased by $4.5 million to $10.8 million from $6.4 million for the year ended December 31, 2015. The increase was primarily due to the devaluation of the Nigerian Naira.Income tax expense (benefit). Income tax expense (benefit) for the year ended December 31, 2016 decreased by $63.0 million, or 168.7%, to $(25.6) million from $37.3 million for the year ended December 31, 2015 primarily as a result of a decrease in taxable income and a change in jurisdictional mix. We are subject to many U.S. and foreign tax jurisdictions and many tax agreements and treaties among the various taxing authorities. Our operations in these jurisdictions are taxed on various bases such as income before taxes, deemed profits (which is generally determined using a percentage of revenues rather than profits) and withholding taxes based on revenues; consequently, the relationship between our pre-tax income from operations and our income tax provision varies from period to period.Operating Segment ResultsThe following table presents revenues and Adjusted EBITDA by segment (in thousands): Year Ended December 31, 2017 2016 2015 Revenue: International Services $ 206,746 $ 237,207 $ 442,107 U.S. Services 118,815 152,827 326,437 Tubular Sales 58,210 87,515 206,056 Blackhawk 71,024 9,982 — Total $ 454,795 $ 487,531 $ 974,600 International Services $ 30,801 $ 33,264 $ 182,475 (39,357 ) (11,012 ) 95,612 Tubular Sales 3,181 1,741 40,999 Blackhawk 11,090 1,038 — Total $ 5,715 $ 25,031 $ 319,086 (1)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. (For a reconciliation of our Adjusted EBITDA, see "—Adjusted EBITDA and Adjusted EBITDA Margin.")(2)Amounts previously reported as Corporate and other of $478 and $96 for 2016 and 2015, respectively, have been reclassified to U.S. Services to conform to the current presentation.Year Ended December 31, 2017 Compared to Year Ended December 31, 2016International ServicesRevenue for the International Services segment decreased by $30.5 million, or 12.8%, compared to 2016, primarily due to loweroffshore rig counts globally and increased pricing pressure on new contracts. Revenue declines in our Africa, Europe, and Asia Pacific regions were mostly attributable to our major customers reducing the amount of work they do in the regions, which was partially offset by our attempts to expand into countries with drilling activity where43we have historically had a smaller presence and increases in Canada and the Middle East due to higher activity with key customers. Adjusted EBITDA for the International Services segment decreased by $2.5 million, or 7.4%, compared to 2016, primarily due to the decrease in revenue, which was partially offset by lower expenses due to reduced activity and cost-cutting measures.U.S. ServicesRevenue for the U.S. Services segment decreased by $34.0 million, or 22.3%, compared to 2016 primarily due to a decrease in offshore services revenue of $51.4 million as a result of overall lower activity from weaknesses seen in the Gulf of Mexico due to rig cancellations and delays, coupled with downward pricing pressures. This was partially offset by an increase in onshore services revenue of $17.4 million as a result of improved activity due to increased oil prices, which has led to higher rig counts and more favorable pricing.Adjusted EBITDA for the U.S. Services segment decreased by $28.3 million, or 257.4%, compared to 2016 primarily due to higher pricing concessions, increased asset related expenses and higher labor costs to support increased land activity, as well as higher corporate and other costs, which were attributable to ongoing global corporate initiatives.Tubular SalesRevenue for the Tubular Sales segment decreased by $29.3 million, or 33.5%, compared to 2016, primarily as a result of lower deepwater activity in the Gulf of Mexico.Adjusted EBITDA for the Tubular Sales segment increased by $1.4 million, or 82.7%, compared to 2016, due to cost cutting measures and lower product costs, offset by an increase in freight costs associated with project work.BlackhawkThe Blackhawk segment is comprised solely of the assets we acquired on November 1, 2016. Revenues and Adjusted EBITDA for the segment were $71.0 million and $11.1 million, respectively, for the year ended December 31, 2017, compared to $10.0 million and $1.0 million, respectively, for the two months ended December 31, 2016. See Note 3 - Acquisition and Divestitures in the Notes to Consolidated Financial Statements for additional information on our Blackhawk acquisition.Year Ended December 31, 2016 Compared to Year Ended December 31, 2015International ServicesRevenue for the International Services segment decreased by $204.9 million, or 46.3%, compared to 2015, primarily due to depressed oil and gas prices, which challenged the economics of current development projects and caused the termination of ongoing drilling campaigns and the delay in the commencement of new projects, as well as cancellations or deferred work scopes.Adjusted EBITDA for the International Services segment decreased by $149.2 million, or 81.8%, compared to 2015, primarily due to the decrease in revenue and $11.3 million of bad debt expensepermanent differences related to the collectabilityrecognition of receivables in Venezuelaincome and Nigeria, which were partially offset by lower expenses due to reduced activity and cost-cutting measures.U.S. ServicesRevenue for the U.S. Services segment decreased by $173.6 million, or 53.2%, compared to 2015 primarily due to depressed oil and gas prices. Onshore services revenue decreased by $51.3 million as a result of lower activity from declining rig counts and pricing discounts. The offshore business saw a decrease in revenue of $125.9 million as a44resultAdjusted EBITDA for the U.S. Services segment decreased by $106.5 million, or 111.5%, compared to 2015 primarily due to higher pricing concessions and lower activity of $94.6 million and higher corporate and other costs of $11.9 million primarily due to increased professional fees, which were attributable to ongoing global corporate initiatives.Tubular SalesRevenue for the Tubular Sales segment decreased by $118.5 million, or 57.5%, compared to 2015, primarily as a result of lower international demand and decreased deepwater fabrication revenue.Adjusted EBITDA for the Tubular Sales segment decreased by $39.3 million, or 95.8%, compared to 2015, as it was negatively impacted by fixed costs associated with the manufacturing division and decreased revenues.BlackhawkThe Blackhawk segment is comprised solely of the assets we acquired on November 1, 2016. Revenues and Adjusted EBITDA for the segment were $10.0 million and $1.0 million, respectively, for the year ended December 31, 2016. See Note 3 - Acquisition and Divestitures in the Notes to Consolidated Financial Statements for additional information on our Blackhawk acquisition.2017, we had2022, total available liquidity was $348.5 million, including cash and cash equivalents and short-term investmentsrestricted cash of $294.0$218.5 million and debt of $4.7 million.$130.0 million available for borrowings under our New Facility. Expro believes these amounts, along with cash generated by ongoing operations, will be sufficient to meet future business requirements for the next 12 months and beyond. Our primary sources of liquidity to date have been cash flows from operations. Our primary uses of capital have been for organic growth capital expenditures and acquisitions. We continually monitor potential capital sources, including equity and debt financing, in order to meet our investment and target liquidity requirements.at $48.0to range between $120.0 million and $130.0 million for 2018. We expect2023. Our total capital expenditures were $81.9 million for year ended December 31, 2022, out of which approximately $38.0 million90% were used for the purchase and manufacture of equipment to directly support customer-related activities and $10.0 millionapproximately 10% for other property, plant and equipment, inclusive of the purchase or construction of facilities.software costs. The actual amount of capital expenditures for the purchase and manufacture of equipment may fluctuate based on market conditions. During the years ended December 31, 2017, 2016 and 2015,Our total capital expenditures (exclusive of the Merger) were $21.9$81.5 million $42.1 million and $99.7 million, respectively, all of which were funded from internally generated sources. We believe our cash on hand and cash flows from operations will be sufficient to fund our capital expenditure and liquidity requirements for the next twelve months.We paid dividends on our common stock of $50.2 million, or an aggregate of $0.225 per common share during the year ended December 31, 2017. The timing, declaration, amount2021, which were generally used for the purchase and manufacture of equipment to directly support customer-related activities. We continue to focus on preserving and payment of any dividends is within the discretionprotecting our strong balance sheet, optimizing utilization of our board of managing directors subject to the approval of our Board of Supervisory Directorsexisting assets and, will depend upon many factors, including our financial condition, earnings,where practical, limiting new capital requirements, covenants associated with certain of our debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets, and other factors deemed relevant by our board of managing directors and our Board of Supervisory Directors. We do not have a legal obligation to pay any dividend and there can be no assurance that we will be able to do so. expenditures.October 27, 2017,June 16, 2022, the Board of Managing Directors ofapproved the Company, withStock Repurchase Program. Under the approval from the Board of Supervisory Directors of the Company, approved a plan to suspend the Company's quarterly dividend in order to preserve capital for various purposes, including to invest in growth opportunities.On August 19, 2016,Stock Repurchase Program, we received notice from Mosing Holdings that it was exercising its right to exchange, for 52,976,000 commonmay repurchase shares each of the following securities: (i) 52,976,000 Preferred Shares and (ii) 52,976,000 units in FICV. We issued 52,976,000 common shares to Mosing Holdings on August 26, 2016. As a result, there are45no remaining issued or outstanding Preferred Shares and the Mosing family beneficially owns approximately 68% of our common shares. In addition, our obligationstock in open market purchases, in privately negotiated transactions or otherwise. The Stock Repurchase Program is being utilized at management’s discretion and in accordance with U.S. federal securities laws. The timing and actual numbers of shares repurchased, if any, will depend on a variety of factors including price, corporate requirements, the constraints specified in the Stock Repurchase Program along with general business and market conditions. The Stock Repurchase Program does not obligate us to make payments to our noncontrolling interest pursuant torepurchase any particular amount of common stock, and it could be modified, suspended or discontinued at any time. During the Limited Partnership Agreementyear ended December 31, 2022, we repurchased 1.1 million shares at an average price of Frank's International C.V. ceased as$11.81 per share, for a total cost of the effective date$13.0 million under this $50.0 million program.the exchange.Credit FacilityWe have a $100.0 millionFrank’s entered into an asset-based revolving credit facility (the “ABL Credit Facility”) with aggregate commitments of $100.0 million secured by certain financial institutions, includingassets of the subsidiary guarantors.$20.0$100.0 million available for drawdowns as loans and up to $50 million for bonds and guarantees. The 2018 RCF was secured by a fixed and floating charge on certain assets of some of our wholly owned subsidiaries. On October 1, 2021, following the closing of the Merger, the ABL Credit Facility and 2018 RCF were cancelled.and up to $10.0$92.5 million, in swingline loans, which matures in August 2018 (the “Credit Facility”). Subject toon the same terms of our Credit Facility, we haveas the ability to increase thecurrent facility, increasing total facility commitments to $150.0$222.5 million. At December 31, 2017 and 2016, we did not have any outstanding indebtedness under the Credit Facility. At December 31, 2017 and 2016, we had $2.8 million and $3.7 million, respectively, in letters of credit outstanding. As of December 31, 2017, our ability to borrow under the Credit Facility has been reduced to approximately $14.3 million less letters of credit outstanding under the Credit Facility as a result of our decreased Adjusted EBITDA. Our borrowing capacity under the Credit Facility could be reduced or eliminated depending on our future Adjusted EBITDA. If this were to occur, our overall liquidity would be diminished.Borrowings under the Credit Facility bear interest, at our option, at either a base rate or an adjusted Eurodollar rate. Base rate loans under the Credit Facility bear interest at a rate equal to the higher of (i) the prime rate as published in the Wall Street Journal, (ii) the Federal Funds Effective Rate plus 0.50% or (iii) the adjusted Eurodollar rate plus 1.00%, plus an applicable margin ranging from 0.50% to 1.50%, subject to adjustment based on the leverage ratio. Interest is in each case payable quarterly for base-rate loans. Eurodollar loans under the Credit Facility bear interest at an adjusted Eurodollar rate equal to the Eurodollar rate for such interest period multiplied by the statutory reserves, plus an applicable margin ranging from 1.50% to 2.50%. Interest is payable at the end of applicable interest periods for Eurodollar loans, except that if the interest period for a Eurodollar loan is longer than three months, interest is paid at the end of each three-month period. The unused portion of the Credit Facility is subject to a commitment fee ranging from 0.250% to 0.375% based on certain leverage ratios.The Credit Facility contains various covenants that, among other things, limit our ability to grant certain liens, make certain loans and investments, enter into mergers or acquisitions, enter into hedging transactions, change our lines of business, prepay certain indebtedness, enter into certain affiliate transactions, incur additional indebtedness or engage in certain asset dispositions.The Credit Facility also contains financial covenants, which, among other things, require us, on a consolidated basis, to maintain (i) a ratio of total consolidated funded debt to Adjusted EBITDA (as defined in the Credit Facility) of not more than 2.5 to 1.0; and (ii) a ratio of EBITDA to interest expense of not less than 3.0 to 1.0.In addition, the Credit Facility contains customary events of default, including, among others, the failure to make required payments, failure to comply with certain covenants or other agreements, breach of the representations and covenants contained in the agreements, default of certain other indebtedness, certain events of bankruptcy or insolvency and the occurrence of a change in control.On April 28, 2017, the Company obtained a limited waiver under its Revolving Credit Agreement, dated August 14, 2013, by and among FICV (as borrower), Amegy Bank National Association (as administrative agent), Capital One, National Association (as syndication agent) and the other lenders party thereto (the "Credit Agreement"), of its leverage ratio and interest coverage ratio for the fiscal quarters ending March 31, 2017 and June 30, 2017 (the “Waiver”) in order to not be in default for the first quarter of 2017. The Company agreed to comply with the following conditions during the period from the effective date of the Waiver until the delivery of its compliance certificate with respect to the fiscal quarter ending September 30, 2017: (i) maintain no less than $250.0 million in liquidity; (ii) abide by certain restrictions regarding the issuance of senior unsecured debt; and (iii) pay interest and commitment fees based on the highest “Applicable Margin” (as defined in the Credit Agreement) level. In connection with the Waiver, the Company paid a waiver fee to each lender that executed the Waiver equal to five basis points of the respective lender’s commitment under the Credit Agreement. As of December 31, 2017, we were in compliance with the covenants included in the Credit Agreement.46Citibank Credit FacilityIn 2016, we entered into a three-year credit facility with Citibank N.A., UAE Branch in the amountTable of $6.0 million for the issuance of standby letters of creditContentsguarantees. The credit facility also allows for open ended guarantees. Outstanding amounts under the credit facility bear interest of 1.25% per annum for amounts outstanding up to one year. Amounts outstanding more than one year bear interest at 1.5% per annum. As of December 31, 2017 and 2016, we had $2.6 million and $2.2 million, respectively, in letters of credit outstanding.Insurance Notes PayableIn 2017, we entered into three notes to finance our annual insurance premiums totaling $5.1 million. The notes bear interest at an annual rate of 2.3% with a final maturity date in October 2018. At December 31, 2017, the total outstanding balance was $4.7 million.Cash Flows from Operating, Investing and Financing Activities Year Ended December 31, 2017 2016 2015 Operating activities $ 24,774 $ (10,831 ) $ 427,758 Investing activities (77,709 ) (178,915 ) (174,689 ) Financing activities (52,471 ) (96,765 ) (141,209 ) (105,406 ) (286,511 ) 111,860 Effect of exchange rate changes on cash activities (1,105 ) 3,678 1,145 Increase (decrease) in cash and cash equivalents $ (106,511 ) $ (282,833 ) $ 113,005 Statements $ 80,169 $ 16,144 $ 70,391 (71,206 ) 112,046 (96,773 ) (25,612 ) (7,176 ) (625 ) (4,738 ) (1,876 ) 631 $ (21,387 ) $ 119,138 $ (26,376 )
Analysis of cash flows for entities with international operations that useflow changes between the local currency as the functional currency exclude the effects of the changes in foreign currency exchange rates that occur during any given year, as these are noncash changes. As a result, changes reflected in certain accounts on the consolidated statements ofyears ended December 31, 2022 and 2021 flows may not reflect the changes in corresponding accounts on the consolidated balance sheets.Operating ActivitiesCash flow provided by (used in)operating activities$24.8$80.2 million forduring the year ended December 31, 20172022 as compared to $(10.8)$16.1 million during the year ended December 31, 2021. The increase of $64.1 million in 2016. The increase innet cash provided by operating activities in 2017 of $35.6 million as compared to 2016 was primarily a result of positive changes to working capital and other long-term assets and liabilities of $39.8 million, partially offset by an increase in net loss of $3.4 million. Most of the increase in working capital during 2017 was due to tax refunds of $29.7 million.The decrease in cash flow provided by (used in) operating activities for the year ended December 31, 20162022 was primarily due to improvements in Adjusted EBITDA of $438.6$80.3 million, as compareda decrease in payment of merger and integration expenses related to the Merger by $9.8 million, and a decrease in payment of severance and other expense by $4.1 million partially offset by unfavorable movements in working capital of $15.9 million and an increase in income tax payments by $13.0 million during the year ended December 31, 20152022.primarily due$115.3 million compared to a$65.3 million during the year ended December 31, 2021. Our primary uses of net loss as a result of lower activity due to depressed oilcash provided by operating activities were capital expenditures and gas prices, the impact of deferred taxes and working capital changes primarilyfunding obligations related to accounts receivable and accrued expense and other liabilities.47Investing ActivitiesCash flowour financing arrangements.$77.7$71.2 million forduring the year ended December 31, 20172022 as compared to $178.9net cash provided by investing activities of $112.0 million forduring the year ended December 31, 2016.2021. Our principal recurring investing activity is our capital expenditures. The decrease of $101.2 million period over period was primarily related to the acquisition of Blackhawk during 2016, for which $150.4 millionchange in cash was used. In addition, lower purchases of property plant and equipment of $20.2 million and higher proceeds from sale of assets of $10.2 million also contributed to the decrease. These changes were partially offset by a net increase in purchase of investments of $79.8 million, primarily related to net purchases of investments with original maturities greater than three months but less than twelve months.Cash flowcash used in investing activities was $178.9primarily due to cash of $189.7 million foracquired as part of the Merger during the year ended December 31, 2016 as compared to $174.72021 and an acquisition of technology of $8.0 million forduring the year ended December 31, 2015. The increase of $4.2 million period over period was primarily related to an increase in cash used for acquisitions of $71.8 million,2022, partially offset by lower purchasesproceeds from sale / maturity of property plant and equipmentinvestments of $57.6$11.3 million and an increase of $11.1 million in proceeds from disposal of assets by $3.4 million during the sale of investments related to our executive deferred compensation plan, which wasyear ended December 31, 2022. Capital expenditures during the years ended December 31, 2022 and December 31, 2021 both approximated $82 million.to make payments to former key employees.Financing ActivitiesCash flowin financing activities$52.5$25.6 million forduring the year ended December 31, 20172022 as compared to $96.8$7.2 million forduring the year ended December 31, 2016.2021. The decreaseincrease of $44.3$18.4 million period over periodin cash used in financing activities is primarily related to lower dividends paid onrepurchase of common stock of $28.9$13.0 million, the absencean increase in payment of a payment to our noncontrolling interestfinanced insurance premium of $8.0$7.0 million, and lower repaymentsan increase in payment of withholding taxes on borrowingsstock-based compensation plans of $6.5 million.Cash flow used in financing activities was $96.8$3.4 million, for the year ended December 31, 2016 as compared to $141.2 million for the year ended December 31, 2015. The decrease of $44.4 million period over period was primarily due to lower dividend payments of $13.8 million as a result of a reduction in the dividends per share amount and lower noncontrolling interest payments of $35.5 million. These decreases were partially offset by higher repayments on borrowingslower payment of $6.4 million.loan issuance and other transaction costs of $5.0 million during 2022.Contractual Obligationsa partycustomary practices in the various countries where we operate. It is not practicable to various contractual obligations. A portionestimate the fair value of these obligations are reflected in our financial statements, such as long-term debt, while other obligations, such as operating leases and purchase obligations, are not reflectedinstruments. None of the off-balance sheet arrangements either has, or is likely to have, a material effect on our balance sheet. The following is a summary of our contractual obligations asconsolidated financial statements. As of December 31, 2017 (in thousands): Payments Due by Period Less than More than Total 1 year 1-3 years 3-5 years 5 years Long-term debt $ 4,721 $ 4,721 $ — $ — $ — Noncancellable operating leases 37,390 10,563 11,020 7,882 7,925 22,147 12,578 9,569 — — Total $ 64,258 $ 27,862 $ 20,589 $ 7,882 $ 7,925 (1)Includes purchase commitments primarily related to connectors, pipe and other inventory. We enter into purchase commitments as needed.Not included in the table above are uncertain tax positions of $0.2 million.48Tax Receivable AgreementWe entered into a TRA with FICV and Mosing Holdings in connection with our IPO. The TRA generally provides for the payment by us to Mosing Holdings of 85% of the amount of the actual reductions, if any, in payments of U.S. federal, state and local income tax or franchise tax in periods after our IPO (which reductions we refer to as "cash savings") as a result of (i) the tax basis increases resulting from the transfer of FICV interests to us in connection with the conversion of shares of Preferred Stock into shares of our common stock on August 26, 2016 and (ii) imputed interest deemed to be paid by us as a result of, and additional tax basis arising from, payments under the TRA. In addition, the TRA provides for interest earned from the due date (without extensions) of the corresponding tax return to the date of payment specified by the TRA. We will retain the remaining 15% of cash savings, if any. The payment obligations under the TRA are our obligations and not obligations of FICV. The term of the TRA continues until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the TRA.If we elect to execute our sole right to terminate the TRA early, we would be required to make an immediate payment equal to the present value of the anticipated future tax benefits subject to the TRA (based upon certain assumptions and deemed events set forth in the TRA, including the assumption that it has sufficient taxable income to fully utilize such benefits and that any FICV interests that Mosing Holdings or its transferees own on the termination date are deemed to be exchanged on the termination date). In addition, payments due under the TRA will be similarly accelerated following certain mergers or other changes of control.In certain circumstances, we may be required to make payments under the TRA that we have entered into with Mosing Holdings. In most circumstances, these payments will be associated with the actual cash savings that we recognize in connection with the conversion of Preferred Stock, which would reduce the actual tax benefit to us. If we were to elect to exercise our sole right to terminate the TRA early or enter into certain change of control transactions, we may incur payment obligations prior to the time we actually incur any tax benefit. In those circumstances, we would need to pay the amounts out of cash on hand, finance the payments or refrain from triggering the obligation. Though we do not have any present intention of triggering an advance payment under the TRA, based on our current liquidity and our expected ability to access debt and equity financing, we believe we would be able to make such a payment if necessary. Any such payment could reduce our cash on hand and our borrowing availability, however, which would also reduce the amount of cash available to operate our business, to fund capital expenditures and to be paid as dividends to our stockholders, among other things. Please see Note 13 - Related Party Transactions in the Notes to Consolidated Financial Statements.Off-Balance Sheet ArrangementsAt December 31, 2017,2022, we had no material off-balance sheet financing arrangements with the exception of operating leasesother than those discussed above.purchase obligations.Critical Accounting PoliciesmanagementExpro to select appropriate accounting principles from those available, to apply those principles consistently and to make reasonable estimates and assumptions that affect the reported amounts of revenues and associated costs as well as reported amounts of assets and liabilities and related disclosuredisclosures of contingent assets and liabilities. Certain accounting policies involve judgments and uncertainties. We evaluate estimates and assumptions on a regular basis. We base our respective estimates on historical experience and various other assumptions that we believe to be reasonable under the 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. Actual results may differ from thethese estimates andunder different assumptions used in preparation of our consolidated financial statements.or conditions. We consider the following policies to be the most critical to understanding the judgments that are involved and the uncertainties that could impact our results of operations, financial condition and cash flows.49RecognitionAllrecognitionwhen allover a period of time as services are performed or rendered and the customer simultaneously consumes the benefit of the following criteriaservice while it is being rendered, and, therefore, reflects the amount of consideration to which we have been met: (1) evidence of an arrangement exists; (2) deliverya right to and acceptance by the customer has occurred; (3) the price to the customer is fixed or determinable; and (4) collectability is reasonably assured, as follows:Services Revenue.invoice. We provide tubular and other well construction services to clients in the oil and gas industry. Wegenerally perform services either under direct service purchase orders or master service agreements. Service revenue is recognized as servicesagreements which are performed or rendered.International service hours are billed per man hour, per day or similar basis.U.S. services are billed on,i) Offshore - per day or similar basis.ii) Land - per man hour or on a project basis.Blackhawk services are billed primarily on a per day basis for both domestic and international.We design and manufacture a suite of highly technical equipment and products that we use in connection with providing our services to our customers, including high-end, proprietary tubular handling or well construction equipment. Substantially all equipment has a service element for personnel operating the equipment. We provide our equipment either under direct agreements or with customers with agreements in place. Revenue from equipment agreements is recognized as earned over the relevant period.International equipment is billed on a per month or similar basis.U.S. equipment is billed on,i) Offshore - per day or similar basis.ii) Land - on completion of a job or project basis.Blackhawk services are billed on,i) Offshore and Land - per day basis with some minimum days requirements.ii) International - negotiated contracts but are primarily based on monthly rates.direct service purchase orders and direct agreements,such arrangements, an accrual is recorded in unbilled accounts receivable for revenue earned but not yet invoiced.Tubular Sales and Blackhawk Product Revenue. Revenue on tubular and Blackhawk product salesfrom the sale of goods is generally recognized at the point in time when the productcontrol has shippedpassed onto the customer which generally coincides with delivery and, significant riskswhere applicable, installation. We also regularly assess customer credit risk inherent in the carrying amounts of ownership have passedreceivables, contract costs and estimated earnings, including the risk that contractual penalties may not be sufficient to offset our accumulated investment in the customer. The sales arrangements typically do not include rightevent of return or other similar provisions or other post-delivery obligations.Some of our tubular sales and well construction customers have requested that we store pipe, connectors and other products purchased from us in our facilities. customer termination.considered whetheralso recognize revenue should be recognized on these sales under thefor “bill and hold” guidance providedsales, once the following criteria have been met: (1) there is a substantive reason for the arrangement, (2) the product is identified as the customer’s asset, (3) the product is ready for delivery to the customer, and (4) we cannot use the product or direct it to another customer.SEC Staff; however, based upon the assessment performed, revenue recognition on these transactions totaling $4.7 million and $18.1 million was deferred at December 31, 2017 and 2016, respectively until delivery and significant risks of ownership have passedpercentage complete. Due to the customer.Income TaxesThe liability method is used for determining our income tax provisions, under which currentnature of these projects, adjustments to estimates of contract revenue and deferred tax liabilities and assetstotal contract costs are often required as work progresses. Any expected losses on a project are recorded in accordance with enacted tax laws and rates. Under this method,full in the amounts of deferred tax liabilities and assets atperiod in which they are identified.endtransaction price in respect of each period are determined usingof our contracts with customers. In making such judgment, we assess the tax rate expectedimpact of any variable consideration in the contract, due to bediscounts or penalties, the existence of any significant financing component and any non-cash consideration in effect when taxes are actually paid or recovered. Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all the deferred tax assets will not be realized.contract. In determining the needimpact of variable consideration, we use the “most-likely amount” method whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts.allowances, we have made judgmentsprocedures and techniques. Significant assumptions and estimates regardinginclude, but are not limited to, the cash flows that an asset is expected to generate in the future taxable income and ongoing prudent and feasible tax planning strategies. Thesewhat we believe to be an appropriate weighted-average cost of capital.include some degree of uncertainty, and changesused in these estimates, and assumptions could require us to adjust the valuation allowances for our deferred tax assets. Historically, changes to valuation allowances have been caused by major changesamounts recorded in the business cycle in certain50countriesconsolidated financial statements may be exposed to potential impairment of long-lived assets, including intangible assets and changes in local country law.goodwill. The ultimate realizationMerger of the deferred tax assets depends on the generation of sufficient taxable income in the applicable taxing jurisdictions.Through FICV, we operate in approximately 50 countries under many legal forms. As a result, we are subjectFrank’s with Legacy Expro pursuant to the jurisdictionMerger Agreement was completed on October 1, 2021. Refer to Note 3 “Business combinations and dispositions” of numerous U.S. and foreign tax authorities, as well as to tax agreements and treaties among these governments. Our operations in these different jurisdictions are taxed on various bases: actual income before taxes, deemed profits (which are generally determined using a percentage of revenue rather than profits) and withholding taxes based on revenue. Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of deductions, permissible revenue recognition methods under the tax law and the sources and character of income and tax credits. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes that we provide during any given year.Our tax filings for open tax periods are subject to audit by the tax authorities . These audits may result in assessments of additional taxes that are resolved either with the tax authorities or through the courts. These assessments may occasionally be based on erroneous and even arbitrary interpretations of local tax law. Resolution of these situations inevitably includes some degree of uncertainty; accordingly, we provide taxes only for the amounts we believe will ultimately result from these proceedings. The resulting change to our tax liability, if any, is dependent on numerous factors including, among others, the amount and nature of additional taxes potentially asserted by local tax authorities; the willingness of local tax authorities to negotiate a fair settlement through an administrative process; the impartiality of the local courts; the number of countries in which we do business; and the potential for changes in the tax paid to one country to either produce, or fail to produce, an offsetting tax change in other countries. Our experience has been that the estimates and assumptions used to provide for future tax assessments have proven to be appropriate. However, past experience is only a guide, and the potential exists that the tax resulting from the resolution of current and potential future tax controversies may differ materially from the amount accrued.In addition to the aforementioned assessments received from various tax authorities, we also provide for taxes for uncertain tax positions where formal assessments have not been received. The determination of these liabilities requires the use of estimates and assumptions regarding future events. Once established, we adjust these amounts only when more information is available or when an event occurs necessitating a change to the reserves such as changes in the facts or law, judicial decisions regarding the application of existing law or a favorable audit outcome. We believe that the resolution of tax matters will not have a material effect on our consolidated financial condition, although a resolution could have a material impact on our consolidated statements for further details.operations for a particular periodpurchase price over the fair value of the tangible and on our effective tax rate for any period in which such resolution occurs.GoodwillThe amountIf the fair value of impairment for goodwillthe reporting unit is measured as the excess ofless than its carrying value, over its fair value.fourth quarteryear ended December 31, 2020, we recorded impairment expense of 2017, we elected$191.9 million, relating to change the timingour goodwill. Refer to Note 4 “Fair value measurements” of our annual goodwillconsolidated financial statements for details regarding the facts and circumstances that led to this impairment testing from December 31and other details. We used the income approach and the market approach to October 31 for our U.S Services, International Services, Tubular Sales and Manufacturing reporting units. This accounting change is considered to be preferable because it allows for additional time to completeestimate the annual goodwill impairment test, better aligns with our planning process, and synchronizes the testing date for allfair value of our reporting units as October 31, which isunits. The income approach estimates the Blackhawkfair value by discounting the reporting unit's annual impairment testing date. This change did not resultunit’s estimated future cash flows using what we believe to be an appropriate risk-adjusted rate. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results and involves significant judgment in adjustments to previously issued financial statements.51No goodwill impairment was recorded for years ended December 31, 2017, 2016the selection of the appropriate peer group companies and 2015. Our goodwill is allocated to our operating segments as follows: U.S. Services - approximately $16.2 million; Tubular Sales - approximately $2.4 million; Blackhawk - approximately $192.4 million.valuation multiples. The inputs used in the determination of fair value are generally level 3 inputs.AllowanceDoubtful AccountsWe evaluate whether client receivables are collectible. We perform ongoing credit evaluationsimpairment whenever events or changes in business circumstances arise that may indicate that the carrying amount of our clientsits intangible assets may not be recoverable. These events and monitor collections and paymentschanges can include significant current period operating losses or negative cash flows associated with the use of an intangible asset, or group of assets, combined with a history of such factors, significant changes in order to maintain a provision for estimated uncollectible accounts based on our historical collection experience and our current agingthe manner of client receivables outstanding in addition to clients' representations and our understandinguse of the economic environment in which our clients operate. Based on our review,assets, and current expectations that it is more likely than not that an intangible asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. When impairment indicators are present, we establish or adjust allowances for specific clients andcompare undiscounted future cash flows, including the accounts receivable as a whole.We have experienced payment delays from certain customers in Nigeria, Angola and Venezuela. During 2016, we recorded an allowanceeventual disposition of $9.6 million for trade accounts receivable from our national oil company customer in Venezuela duethe asset group at market value, to the uncertaintyasset group’s carrying value to determine if the asset group is recoverable. If the carrying values are in excess of collection. Duringundiscounted expected future cash flows, we measure any impairment by comparing the fourth quarterfair value of 2017 management decidedthe asset or asset group to significantly reduce our footprint in Nigeriaits carrying value. Estimating future cash flows requires significant judgment, and Angola by exiting certain bases and temporarily abandoning our investment in Venezuela, primarily consisting of accounts receivable,projections may vary from the cash flows eventually realized, which we believe will diminishcould impact our ability to collect amounts owed. As a result, we wrote off the previously reserved trade accounts receivable of $9.6 million. In addition, we wrote off trade accounts receivables of $15.0 millionaccurately assess whether an asset has been impaired.Nigeria, Angola and Venezuela, which is included in the financial statement line item severance and other chargesidentified intangible assets during the year ended December 31, 2017. 2022 or December 31, 2021. During the year ended December 31, 2020, we recorded impairment expense relating to our identified intangible assets of $60.4 million. Refer to Note 4 “Fair value measurements” of our consolidated financial statements for further details.allowancepost-retirement benefit obligations are described in detail in Note 19 “Post-retirement benefits” of our consolidated financial statements. Defined pension benefits are calculated using significant inputs to the actuarial models that measure pension benefit obligations and related effects on operations. Two assumptions, discount rate and expected return on assets, are important elements of plan asset/liability measurement and are updated on an annual basis, or more frequently if events or changes in circumstances so indicate.doubtful accountsthe future. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.20172022.2016historical rates of return for each individual asset class. The weighted average expected rate of return on plan assets for the pension plans was $4.8 million5.6% in 2022, 3.2% in 2021 and $14.3 million, respectively.Recent Accounting Pronouncements1 - 2 “Basis of Presentationpresentation and Significant Accounting Policiessignificant accounting policies” in the Notes to Consolidated Financial Statements set forth in Part II, Item 8, "Financial Statements and Supplementary Data,"our consolidated financial statements under the heading "Recent Accounting Pronouncements" included in this Form 10-K.“Recent accounting pronouncements.”Aboutabout Market RiskWe are exposedcertainseveral financial risks, principally market risks that are inherent in our financial instruments and arise from changes in foreignrisk (foreign currency exchange ratesrisk and interest rates. A discussionrate risk) and credit risk.market risk exposure in financial instruments is presented below.The primary objective of the following information isbusiness to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The disclosures are not meant tohave future cash flows that will be precise indicators of expected future losses or gains, but rather indicators of reasonably possible losses or gains. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.Foreign Currency Exchange RatesWe operate in virtually every oil and natural gas exploration and production region in the world. In some parts of the world, the currency of our primary economic environment is the U.S. dollar, and we use the U.S. dollar as our functional currency. In other parts of the world, such as Europe, Norway, Africa and Brazil, we conduct our businessdenominated in currencies other than the U.S. dollar,United States Dollar ("USD"). Our primary cash flow exposures are revenues and the functional currency is the applicable local currency. Assets and liabilities of entities for which the functional currency is the local currency are translated into U.S. dollars usingexpenses. Changes in the exchange rates between USD and other currencies in effect atwhich our subsidiaries transact will cause fluctuations in the balance sheet date, resulting in translation adjustmentscash flows we expect to receive or pay when these cash flows are realized or settled. We generally attempt to minimize our currency exchange risk by seeking to naturally hedge our exposure by offsetting non-USD denominated inflows with non-USD denominated local expenses. We generally do not enter into forward hedging agreements, and our largest exposures are to the British pound and Norwegian kroner, mainly driven by facility costs and employee compensation and benefits.reflecteddenominated in accumulated other comprehensive income (loss) in the shareholders’ equity section on our consolidated balance sheets. A portion of our net assets are impacted by changes in foreign currencies in relation to the U.S. dollar.For the year ended December 31, 2017, on a U.S. dollar-equivalent basis, approximately 25% of our revenue was represented by currencies other than the U.S. dollar. However, no single foreign currency poses a primary risk to us. A52hypothetical 10% decreaseUSD. Changes in the exchange rates for each ofbetween USD and the foreignother currencies in which such liabilities are denominated can create fluctuations in our reported consolidated statements of operations and cash flows.portion of our revenues is denominated5% appreciation (depreciation) in USD would result in a 2.2% decreasechange in our overall revenues for the year ended December 31, 2017.enter into short-duration foreign currency forward contractscurrently have no outstanding variable interest rate bearing debt and accordingly, we are not exposed to mitigate ourvariability in interest expense and cash flows due to interest rate changes.non-local currency operating working capital. We are also exposed to market risk on our forward contracts related to potential non-performance by our counterparty. It is our policy to enter into derivative contracts with counterparties that are creditworthy institutions.We account for our derivative activities under the accounting guidance for derivatives and hedging. Derivatives are recognized on the consolidated balance sheet at fair value. Although the derivative contracts will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts for hedge accounting treatment. Accordingly, any changes in the fair value of the derivative instruments during a period will be included in our consolidated statements of operations.As of December 31, 2017 and 2016, we had the following foreign currency derivative contracts outstanding in U.S. dollars (in thousands):Foreign Currency Notional Amount Contractual Exchange Rate Fair Value at December 31, 2017 Canadian dollar $ 6,226 1.2850 $ (165 ) Euro 5,326 1.1836 (101 ) Norwegian krone 6,212 8.3704 (157 ) Pound sterling 6,039 1.3419 (64 ) $ (487 ) Foreign Currency Notional Amount Contractual Exchange Rate Fair Value at December 31, 2016 Canadian dollar $ 4,553 1.3179 $ 74 Euro 4,753 1.0563 (11 ) Euro 2,558 1.0659 (24 ) Norwegian krone 3,643 8.5101 38 Pound sterling 3,908 1.2607 69 $ 146 Based on the derivative contracts that were in place as of December 31, 2017, a simultaneous 10% weakening of the U.S. dollar as compared to the Canadian dollar, Euro, Norwegian krone, and Pound sterling would result in a $2.6 million decrease in the market value of our forward contracts.Interest Rate RiskAs of December 31, 2017, we did not have an outstanding funded debt balance under the Credit Facility. If we borrow under the Credit Facility in the future, we will be exposed to changes in interest rates on our floating rate borrowings under the Credit Facility. Although we do not currently utilize interest rate derivative instruments to reduce interest rate exposure, we may do so in the future.Customer Credit RiskFinancial instruments that potentially subject us to concentrations of credit risk is primarily through cash and cash equivalents, restricted cash and accounts receivable, including unbilled balances. Our liquid assets are trade receivables. invested in cash, with a mix of local and international banks, and highly rated, short-term money market deposits, generally with original maturities of less than 90 days. We monitor the ratings of such investments and mitigate counterparty risks as appropriate.business. International sales also presentbusiness and are thus subject to concentrations of customer credit risk. We have established various risksprocedures to manage our credit exposure, including governmental activities that may limit or disrupt marketscredit evaluations and restrict the movement of funds. We operate in approximately 50 countries and, as a result, our accounts receivables are spread over many countries and customers.53may impactimpacts overall exposure to credit risk either positively or negatively, because our customers may be similarly affected by changes in economic and industry conditions, including sensitivity to commodity prices. While current energy prices are important contributors to positive cash flow for our customers, expectations about future prices and price volatility are generally more important for determining future spending levels. However, any prolonged increase or decreasechanges in oil and natural gas prices affectsprices. We operate in approximately 60 countries and as such, our receivables are spread over many countries and customers. Accounts receivable in Algeria and the levelsU.S. represented approximately 13% and 17%, respectively, of exploration, developmentour net accounts receivable balance at December 31, 2022. No other country accounted for greater than 10% of our accounts receivable balance. Our customer base is comprised of a large number of IOC, NOC, Independents and production activity, as well as the entire health of theservice partners from all major oil and natural gas industrylocations around the world. The majority of our accounts receivable are due for payment in less than 90 days and can therefore negatively impact spending by our customers. Management's Report on Internal Control Over Financial Reporting 2017, 20162022, 2021 and 2015 Income (Loss)Loss for the Years Ended December 31, 2017, 20162022, 2021 and 2015 2021 2020 57 55Management's Report on Internal ControlOver Financial ReportingManagement of the Company, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.We conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017 based on the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on our evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2017.The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.56REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport of Independent Registered Public Accounting FirmSupervisory Directors and Stockholders of Frank’s InternationalExpro Group Holdings N.V.Opinions and Internal Control over Financial ReportingFrank’s InternationalExpro Group Holdings N.V. and its subsidiaries20172022 and 2016,and2021, the related consolidatedstatements of operations, comprehensive income (loss),loss, stockholders’ equity, and cash flows, for each of the three years in the period endedDecember 31, 2017, including2022, and the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”"financial statements").We also have audited the Company's internal control over financial reporting as ofDecember 31, 2017, based on criteria established in Internal Control - Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).consolidatedfinancial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 20172022 and 2016,2021, and the results of itsoperations and its cash flows for each of the three years in the period ended December 31, 20172022, in conformity with accounting principles generally accepted in the United States of America. Alsoour opinion,accordance with the standards of the Public Company maintained, in all material respects, effectiveAccounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017,2022, based on criteria established in -— Integrated Framework(2013)issued by the COSO.Change in Accounting PrincipleAs discussed in Note 1 to the accompanying consolidated financial statements, the Company changed the manner in which it accounts for goodwill impairment in 2017, and changed the impairment testing date for twoCommittee of its reporting units from December 31 to October 31.Basis for OpinionsThe Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessmentSponsoring Organizations of the effectiveness of internal control over financial reporting, included in the accompanyingManagement's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidatedfinancial statementsTreadway Commission and our report dated February 23, 2023, expressed an unqualified opinion on the Company's internal control over financial reportingreporting.Public Company Accounting Oversight Board (United States) ("PCAOB")PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.auditsaudit to obtain reasonable assurance about whether the consolidatedfraud, and whether effective internal control over financial reporting was maintained in all material respects. of the consolidatedfinancial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidatedfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements. We believe that our audits provide a reasonable basis for our opinion.
and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedrisk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provideaudit provides a reasonable basis for our opinions.57(i)(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii)(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii)(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.PricewaterhouseCoopersDeloitte & Touche LLP27, 201823, 2023We have served as the Company’s auditor since 2008. $ 1,279,418 $ 825,762 $ 675,026 (1,057,356 ) (701,165 ) (566,876 ) (58,387 ) (73,880 ) (23,814 ) (139,767 ) (123,866 ) (113,693 ) - - (287,454 ) - 1,000 10,085 (13,620 ) (47,593 ) (1,630 ) (7,825 ) (7,826 ) (13,930 ) (1,276,955 ) (953,330 ) (997,312 ) 2,463 (127,568 ) (322,286 ) 3,149 3,992 3,908 (241 ) (8,795 ) (5,656 ) 5,371 (132,371 ) (324,034 ) 15,731 16,747 13,589 21,102 (115,624 ) (310,445 ) (41,247 ) (16,267 ) 3,400 $ (20,145 ) $ (131,891 ) $ (307,045 ) $ (0.18 ) $ (1.64 ) $ (4.33 ) 109,072,761 80,525,694 70,889,753 FRANK'S INTERNATIONAL N.V. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) December 31, 2017 2016 Assets Current assets: Cash and cash equivalents $ 213,015 $ 319,526 Short-term investments 81,021 — Accounts receivables, net 127,210 167,417 Inventories, net 76,420 139,079 Assets held for sale 3,792 — Other current assets 10,437 14,027 Total current assets 511,895 640,049 Property, plant and equipment, net 469,646 567,024 Goodwill 211,040 211,063 Intangible assets, net 33,895 45,083 Deferred tax assets, net — 79,309 Other assets 35,293 45,533 Total assets $ 1,261,769 $ 1,588,061 Liabilities and Equity Current liabilities: Short-term debt $ 4,721 $ 276 Accounts payable 33,912 16,081 Deferred revenue 4,703 18,072 Accrued and other current liabilities 74,973 64,950 Total current liabilities 118,309 99,379 Deferred tax liabilities 229 20,951 Other non-current liabilities 27,330 156,412 Total liabilities 145,868 276,742 Commitments and contingencies (Note 18) Stockholders' equity: Common stock, €0.01 par value, 798,096,000 shares authorized, 224,228,071 and 223,161,356 shares issued and 223,289,389 and 222,401,427 shares outstanding 2,814 2,802 Additional paid-in capital 1,050,873 1,036,786 Retained earnings 106,923 317,270 Accumulated other comprehensive loss (30,972 ) (32,977 ) Treasury stock (at cost), 938,682 and 759,929 shares (13,737 ) (12,562 ) Total stockholders' equity 1,115,901 1,311,319 Total liabilities and equity $ 1,261,769 $ 1,588,061 $ (20,145 ) $ (131,891 ) $ (307,045 ) 7,440 22,345 (9,356 ) - - 5,510 - (244 ) 104 (249 ) (249 ) - - - (926 ) 7,191 21,852 (4,668 ) $ (12,954 ) $ (110,039 ) $ (311,713 ) The accompanying notes are an integral part of these consolidated financial statements.59 $ 214,788 $ 235,390 3,672 4,457 419,237 319,286 153,718 125,116 2,179 6,386 26,938 20,561 44,975 52,938 865,507 764,134 462,316 478,580 66,038 57,604 229,504 253,053 220,980 179,903 74,856 83,372 9,688 11,531 8,263 26,461 $ 1,937,152 $ 1,854,638 $ 272,704 $ 213,152 37,151 22,999 1,047 1,147 19,057 19,695 107,750 74,213 437,709 331,206 30,419 31,744 11,344 29,120 13,773 15,772 60,847 73,688 97,165 75,537 651,257 557,067 7,911 7,844 (40,870 ) (22,785 ) 1,847,078 1,827,782 27,549 20,358 (555,773 ) (535,628 ) 1,285,895 1,297,571 $ 1,937,152 $ 1,854,638 FRANK'S INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Year Ended December 31, 2017 2016 2015 Revenues: Services $ 364,061 $ 397,369 $ 766,252 Products 90,734 90,162 208,348 Total revenue 454,795 487,531 974,600 Operating expenses: Cost of revenues, exclusive of depreciation and amortization Services 223,222 246,652 384,842 Products 87,200 70,616 129,748 General and administrative expenses 163,704 171,887 174,479 Depreciation and amortization 122,102 114,215 108,962 Severance and other charges 75,354 46,406 35,484 Changes in contingent consideration — — (1,532 ) (Gain) loss on disposal of assets (2,045 ) 1,117 (1,038 ) Operating income (loss) (214,742 ) (163,362 ) 143,655 Other income (expense): Derecognition of the tax receivable agreement liability 122,515 — — Other income, net 1,763 4,170 5,791 Interest income, net 2,309 2,073 341 Mergers and acquisition expense (459 ) (13,784 ) — Foreign currency gain (loss) 2,075 (10,819 ) (6,358 ) Total other income (expense) 128,203 (18,360 ) (226 ) Income (loss) before income tax expense (benefit) (86,539 ) (181,722 ) 143,429 Income tax expense (benefit) 72,918 (25,643 ) 37,319 Net income (loss) (159,457 ) (156,079 ) 106,110 Net income (loss) attributable to noncontrolling interest — (20,741 ) 27,000 Net income (loss) attributable to Frank's International N.V. $ (159,457 ) $ (135,338 ) $ 79,110 Preferred stock dividends — (1 ) (2 ) $ (159,457 ) $ (135,339 ) $ 79,108 Dividends per common share: $ 0.225 $ 0.45 $ 0.60 Income (loss) per common share: Basic $ (0.72 ) $ (0.77 ) $ 0.51 Diluted $ (0.72 ) $ (0.77 ) $ 0.50 Weighted average common shares outstanding: Basic 222,940 176,584 154,662 Diluted 222,940 176,584 209,152 The accompanying notes are an integral part of these consolidated financial statements.5560 $ (20,145 ) $ (131,891 ) $ (307,045 ) - - 287,454 139,767 123,866 113,693 (15,731 ) (16,747 ) (13,589 ) 18,486 54,162 - 1,199 (511 ) - - 174 2,085 - 5,166 - - (1,000 ) (10,085 ) (1,326 ) (737 ) (20,596 ) 6,116 1,407 2,106 (97,758 ) (20,256 ) 38,486 (26,037 ) 906 2,780 4,365 12,683 532 35,491 5,371 (25,161 ) 31,435 (5,981 ) 7,150 10,209 (2,056 ) (4,241 ) 7,283 4,058 3,646 (13,185 ) (12,470 ) (6,824 ) 80,169 16,144 70,391 (81,904 ) (81,511 ) (112,387 ) - 189,739 - (7,967 ) - - 7,279 3,818 15,614 11,386 - - (71,206 ) 112,046 (96,773 ) (70 ) 162 2,271 (7,245 ) (227 ) - (132 ) (5,123 ) (1,095 ) (12,996 ) - - (4,168 ) (818 ) - (1,001 ) (1,170 ) (1,801 ) (25,612 ) (7,176 ) (625 ) (4,738 ) (1,876 ) 631 (21,387 ) 119,138 (26,376 ) 239,847 120,709 147,085 $ 218,460 $ 239,847 $ 120,709 FRANK'S INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Year Ended December 31, 2017 2016 2015 Net income (loss) $ (159,457 ) $ (156,079 ) $ 106,110 Other comprehensive income (loss): Foreign currency translation adjustments 2,345 546 (14,039 ) Marketable securities: Unrealized gain (loss) on marketable securities (103 ) 1,214 (1,500 ) Reclassification to net income (395 ) — — Deferred tax asset / liability change 158 (418 ) 314 Unrealized gain (loss) on marketable securities, net of tax (340 ) 796 (1,186 ) Total other comprehensive income (loss) 2,005 1,342 (15,225 ) Comprehensive income (loss) (157,452 ) (154,737 ) 90,885 — (20,180 ) 23,120 Add: Transfer of Mosing Holdings interest to FINV attributable to comprehensive loss (See Note 13) — (8,203 ) — Comprehensive income (loss) attributable to Frank's International N.V. $ (157,452 ) $ (142,760 ) $ 67,765 The accompanying notes are an integral part of these consolidated financial statements.5661 70,890 $ 585 $ - $ 10,530 $ 1,006,100 $ 3,174 $ (95,839 ) $ 924,550 - - - - - - (853 ) (853 ) - - - - - - (307,045 ) (307,045 ) - - - - - (4,668 ) - (4,668 ) 70,890 $ 585 $ - $ 10,530 $ 1,006,100 $ (1,494 ) $ (403,737 ) $ 611,984 - - - - - - (131,891 ) (131,891 ) - - - - - 21,852 - 21,852 - - - - 54,162 - - 54,162 741 16 - - (16 ) - - - - - - - - - - - (554 ) - (818 ) - - - - (818 ) - (585 ) - - 585 - - - - - - (10,530 ) 10,530 - - - 38,066 7,828 (21,967 ) - 756,421 - - 742,282 109,143 $ 7,844 $ (22,785 ) $ - $ 1,827,782 $ 20,358 $ (535,628 ) $ 1,297,571 - - - - - - (20,145 ) (20,145 ) - - - - - 7,191 - 7,191 - - - - 18,486 - - 18,486 1,013 67 - - 810 - - 877 (1,100 ) - (12,995 ) - - - - (12,995 ) (312 ) - (5,090 ) - - - - (5,090 ) 108,744 $ 7,911 $ (40,870 ) $ - $ 1,847,078 $ 27,549 $ (555,773 ) $ 1,285,895 FRANK'S INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands) Accumulated Additional Other Non- Total Common Stock Paid-In Retained Comprehensive Treasury controlling Stockholders' Shares Value Capital Earnings Income (Loss) Stock Interest Equity Balances at December 31, 2014 154,327 $ 2,033 $ 683,611 $ 545,357 $ (14,210 ) $ (4,801 ) $ 260,546 $ 1,472,536 Net income — — — 79,110 — — 27,000 106,110 Foreign currency translation adjustments — — — — (10,462 ) — (3,577 ) (14,039 ) Unrealized loss on marketable securities — — — — (883 ) — (303 ) (1,186 ) Equity-based compensation expense — — 28,600 — — — — 28,600 Distributions to noncontrolling interest — — — — — — (43,539 ) (43,539 ) Common stock dividends ($0.60 per share) — — — (92,844 ) — — — (92,844 ) Preferred stock dividends — — — (2 ) — — — (2 ) Common shares issued upon vesting of share-based awards 1,070 12 (12 ) — — — — — Common shares issued for employee stock purchase plan (ESPP) 20 — 287 — — — — 287 Treasury shares withheld (271 ) — — — — (4,497 ) — (4,497 ) Balances at December 31, 2015 155,146 $ 2,045 $ 712,486 $ 531,621 $ (25,555 ) $ (9,298 ) $ 240,127 $ 1,451,426 Net loss — — — (135,338 ) — — (20,741 ) (156,079 ) Foreign currency translation adjustments — — — — 165 — 381 546 Unrealized gain on marketable securities — — — — 616 — 180 796 Equity-based compensation expense — — 15,978 — — — — 15,978 Distributions to noncontrolling interest — — — — — — (8,027 ) (8,027 ) Common stock dividends ($0.45 per share) — — — (79,012 ) — — — (79,012 ) Preferred stock dividends — — — (1 ) — — — (1 ) Transfer of Mosing Holdings interest to FINV — — 239,871 — (8,203 ) — (211,920 ) 19,748 Common shares issued on conversion of Series A preferred stock 52,976 597 — — — — — 597 Common shares issued upon vesting of share-based awards 1,644 19 (19 ) — — — — — TRA and associated deferred taxes — — (76,409 ) — — — — (76,409 ) Common shares issued for ESPP 76 1 972 — — — — 973 Blackhawk acquisition 12,804 140 143,907 — — — — 144,047 Treasury shares withheld (245 ) — — — — (3,264 ) — (3,264 ) Balances at December 31, 2016 222,401 $ 2,802 $ 1,036,786 $ 317,270 $ (32,977 ) $ (12,562 ) $ — $ 1,311,319 Net loss — — — (159,457 ) — — — (159,457 ) Foreign currency translation adjustments — — — — 2,345 — — 2,345 Unrealized loss on marketable securities — — — — (340 ) — — (340 ) Equity-based compensation expense — — 13,825 — — — — 13,825 Common stock dividends ($0.225 per share) — — — (50,154 ) — — — (50,154 ) Common shares issued upon vesting of share-based awards 1,017 11 (11 ) — — — — — Common shares issued for ESPP 50 1 523 — — — — 524 Treasury shares issued upon vesting of share-based awards 4 — (84 ) — — 66 — (18 ) Treasury shares issued for ESPP 105 — (166 ) (736 ) — 1,642 — 740 Treasury shares withheld (288 ) — — — — (2,883 ) — (2,883 ) Balances at December 31, 2017 223,289 $ 2,814 $ 1,050,873 $ 106,923 $ (30,972 ) $ (13,737 ) $ — $ 1,115,901 The accompanying notes are an integral part of these consolidated financial statements.5762FRANK'S INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2017 2016 2015 Cash flows from operating activities Net income (loss) $ (159,457 ) $ (156,079 ) $ 106,110 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities Derecognition of the TRA liability (122,515 ) — — Depreciation and amortization 122,102 114,215 108,962 Equity-based compensation expense 13,825 15,978 28,600 Loss on asset write-off and retirements 71,942 29,881 — Amortization of deferred financing costs 267 164 164 Deferred tax provision (benefit) 15,543 (27,536 ) 4,868 Reversal of deferred tax assets associated with the TRA 46,874 — — Provision for bad debts 950 11,581 228 (Gain) loss on disposal of assets (2,045 ) 1,117 (1,038 ) Changes in fair value of investments (2,627 ) (1,123 ) 741 Change in value of contingent consideration — — (1,532 ) Unrealized (gain) loss on derivative 634 64 (210 ) Realized loss on sale of investment 478 — — Other (1,876 ) — (3,909 ) Changes in operating assets and liabilities, net of effects from acquisitions Accounts receivable 21,271 70,388 140,657 Inventories 12,102 27,379 41,502 Other current assets 8,677 4,039 16,981 Other assets 674 (692 ) 1,333 Accounts payable 7,336 (3,485 ) (3,035 ) Deferred revenue (13,373 ) (39,659 ) (18,473 ) Accrued expenses and other current liabilities 8,438 (43,583 ) 3,971 Other noncurrent liabilities (4,446 ) (13,480 ) 1,838 Net cash provided by (used in) operating activities 24,774 (10,831 ) 427,758 Cash flows from investing activities Acquisition of Blackhawk (net of acquired cash) — (150,437 ) — Acquisition of Timco Services, Inc. (net of acquired cash) — — (78,676 ) Purchase of property, plant and equipment (21,905 ) (42,127 ) (99,723 ) Proceeds from sale of assets and equipment 14,030 3,858 4,579 Purchase of investments (123,048 ) (1,003 ) (869 ) Proceeds from sale of investments 53,299 11,101 — Other (85 ) (307 ) — Net cash used in investing activities (77,709 ) (178,915 ) (174,689 ) Cash flows from financing activities Repayments of borrowings (680 ) (7,201 ) (765 ) Proceeds from borrowings — 363 151 Cost of Series A convertible preferred stock conversion to common stock — (595 ) — Dividends paid on common stock (50,154 ) (79,013 ) (92,844 ) Dividends paid on preferred stock — (1 ) (2 ) Distribution to noncontrolling interest — (8,027 ) (43,539 ) Treasury shares withheld (2,901 ) (3,264 ) (4,497 ) Proceeds from the issuance of ESPP shares 1,264 973 287 Net cash used in financing activities (52,471 ) (96,765 ) (141,209 ) Effect of exchange rate changes on cash (1,105 ) 3,678 1,145 Net increase (decrease) in cash (106,511 ) (282,833 ) 113,005 Cash and cash equivalents at beginning of period 319,526 602,359 489,354 Cash and cash equivalents at end of period $ 213,015 $ 319,526 $ 602,359 accompanying notes are an integral partCompany’s portfolio of these consolidated financial statements.63FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 1—Basiscapabilities includes products and services related to well construction, well flow management, subsea well access, and well intervention and integrity. The Company’s portfolio of Presentationproducts and Significant Accounting PoliciesNature of Business("FINV"(“Frank’s”), a and New Eagle Holdings Limited, an exempted company limited liability company organizedby shares incorporated under the laws of the Netherlands, isCayman Islands and a global providerdirect wholly owned subsidiary of highly engineered tubular services, tubular fabricationFrank’s (“Merger Sub”), entered into an Agreement and specialty well constructionPlan of Merger (the “Merger Agreement”) with Expro Group Holdings International Limited (“Legacy Expro”), an exempted company limited by shares incorporated under the laws of the Cayman Islands, providing for the merger of Legacy Expro with and well intervention solutionsinto Merger Sub in an all-stock transaction, with Merger Sub surviving the merger as a direct, wholly owned subsidiary of Frank’s (the “Merger”). The Merger closed on October 1, 2021 (the “Closing Date”), and Frank’s was renamed to Expro Group Holdings N.V. (the “Company”). The Merger was accounted for using the oil and gas industry. FINV provides services to leading exploration and production companies in both offshore and onshore environmentsacquisition method of accounting with a focus on complex and technically demanding wells.Basis of PresentationFINVthe Company reflect the financial position, results of operations and cash flows of only Legacy Expro for all periods prior to the years ended Merger and of the combined company (including activities of Frank’s) for all periods subsequent to the Merger. 2017, 20162022 under the Stock Repurchase Program.2015 includesignificant accounting policiesactivitiesCompany have been prepared in accordance with accounting principles generally accepted in the United States of Frank's International C.V. ("FICV"America (“U.S. GAAP”), Blackhawk Group Holdings, LLC ("Blackhawk".their wholly owned subsidiaries (collectively, "Company," "we," "us" and "our").its subsidiaries. All intercompany accountsbalances and transactions, including unrealized profits arising from them, have been eliminated for purposes of preparing these consolidated financial statements.Our accompanying consolidated financial statements and related financial information Investments in which we do not have been prepared in accordance with generally accepted accounting principles ina controlling interest, but over which we do exercise significant influence, are accounted for under the United Statesequity method of America ("GAAP"). In the opinionaccounting.management, these consolidated financial statements reflect all adjustments consisting solely of normal accruals that are necessary for the fair presentation of financial results as of and for the periods presented.The consolidated financial statements have been prepared on a historical cost basis using the United States dollar as the reporting currency. Our functional currency is primarily the United States dollar.ReclassificationsCertain prior-year amounts have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on our net income (loss), working capital, cash flows or total equity previously reported.Historically, and through December 31, 2016, certain direct and indirect costs related to operations and manufacturing were classified and reported as general and administrative expenses ("G&A"). The historical classification was consistent with the information used by the Company’s chief operating decision maker ("CODM") to assess performanceestimates Company’s segments and make resource allocation decisions, and the classification of such costs within the consolidated statements of income was aligned with the segment presentation. Effective January 1, 2017, the company changed the classification of certain of these costs in its segment reporting disclosures and within the consolidated statements of income to reflect a change in the presentation of the information used by the Company’s CODM.This reclassification of costs between cost of revenue and G&A has no net impact to the consolidated statements of income or to total segment reporting. The change reflects the CODM's philosophy on assessing performance and allocating resources, as well as improves comparability to the Company's peer group. This is a change in costs classification and has been reflected retrospectively for all periods presented.64FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following is a summary of reclassifications to previously reported amounts (in thousands): Year Ended December 31, 2016 Year Ended December 31, 2015 As previously reported Reclassifications As currently reported As previously reported Reclassifications As currently reported Consolidated Statements of Operations Cost of revenues, exclusive of depreciation and amortization Services $ 201,316 $ 45,336 $ 246,652 $ 304,473 $ 80,369 $ 384,842 Products 59,037 11,579 70,616 113,918 15,830 129,748 General and administrative expenses 228,802 (56,915 ) 171,887 270,678 (96,199 ) 174,479 Significant Accounting PoliciesAccounting EstimatesThe preparation of consolidated financial statements in conformityaccordance with accounting principles generally accepted in the United StatesU.S. GAAP requires managementus to make estimates and assumptions that affect the amounts reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date ofin the consolidated financial statements and the reported amountsaccompanying notes. Estimates and assumptions are used for, but are not limited to, determining the following: purchase price allocation on business combinations, valuation of revenuesintangible assets, expected credit losses, inventory valuation reserves, valuation of share warrants, impairment assessment of goodwill, income tax provisions, recovery of deferred taxes, actuarial assumptions to determine costs and expenses duringliabilities related to employee benefit plans and revenue recognition. While we believe that the reporting period. Actualestimates and assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from these estimates.Accounts Receivableestablish an allowancerecognize revenue from rendering of services over a period of time as the customer simultaneously consumes the benefit of the service while it is being rendered reflecting the amount of consideration to which the Company has a right to invoice. As part of rendering of services, the Company also provides rental equipment and personnel. Using practical expedients under Accounting Standards Update (“ASU”) 2014-09, the Company has elected not to separate non-lease components from the associated lease components and account for doubtful accountsthe combined component in accordance with the ASU 2014-09 with recognition over a period of time.various factors including historical experience, the current aging statusrelative selling prices and is recognized on satisfaction of each distinct performance obligation. Further, a small number of our customer accounts, the financial conditioncontracts contain penalty provisions for late delivery and installation of our customers and the business and political environment in which our customers operate. Provisions for doubtful accountsequipment, downtime or other equipment functionality. These penalties are recorded when it becomes probable that customer accounts are uncollectible.Cash and Cash EquivalentsWe consider all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents. Throughout the year, we have cash balances in excess of federally insured limits deposited with various financial institutions. We have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk on cash and cash equivalents.Comprehensive IncomeAccounting standards on reporting comprehensive income require that certain items, including foreign currency translation adjustments and unrealized gains and losses on marketable securities be presented as components of comprehensive income. The cumulative amounts recognized by us under these standards are reflectedtypically percentage reductions in the consolidated balance sheettotal arrangement consideration, capped at a certain amount, or a reduction in the on-going service fee and are assessed as accumulated other comprehensive income,variable consideration in the contract.componentperiod of stockholders’ equity.ContingenciesCertain conditions may exist astime basis, using an input method, which represents the ratio of actual costs incurred to date on the date our consolidated financial statements are issued that may resultproject in relation to total estimated project costs. The estimate of total project costs has a loss to us, but which will only be resolved when one or more future events occur or fail to occur. Our management, with input from legal counsel, assesses such contingent liabilities, and such assessment inherently involves an exercise in judgment. In assessing loss contingencies related to legal proceedings pending against us or unasserted claims that may result in proceedings, our management, with input from legal counsel, evaluatessignificant impact on both the perceived meritsamount of any legal proceedings or unasserted claimsrevenue recognized as well as the perceived merits of the amount of relief sought or expected torelated profit on a project. Revenue and profits on contracts can also be sought therein.65FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSIf the assessment of a contingency indicates it is probable a material loss has been incurredsignificantly affected by change orders and the amount of liability can be estimated, thenclaims. Profits are recognized based on the estimated liability would be accrued in our consolidated financial statements. Ifproject profit multiplied by the assessment indicates a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, thenpercentage complete. Due to the nature of these projects, adjustments to estimates of contract revenue and total contract costs are often required as work progresses. Any expected losses on a project are recorded in full in the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.Loss contingencies considered remote are generally not disclosed unless they involve guarantees,period in which casethey are identified.guarantees wouldtransfer of promised services or goods to customers in an amount that reflects the consideration to which the Company expects to be disclosed.Derivative Financial Instruments When we deem appropriate, we use foreign currency forward derivative contracts to mitigate the risk of fluctuationsentitled in foreign currency exchange rates. We use these instruments to mitigate our exposure to non-local currency working capital.for those services or goods. We do not hold or issue financial instruments for trading or other speculative purposes. We account for include tax amounts collected from customers in sales transactions as a component of revenue.derivative activities undersubsidiaries is the provisions of accounting guidance for derivatives and hedging. Derivatives are recognized on the consolidated balance sheet at fair value. Although the derivative contracts will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts for hedge accounting treatment. Accordingly, any changes in the fair value of the derivative instruments during a period will be included in our consolidated statements of operations.Income (Loss) Per ShareBasic income (loss) per share excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities to issue common stock were exercised or converted to common stock.Fair Value of Financial InstrumentsOur financial instruments consist primarily of cash and cash equivalents, short-term investments, trade accounts receivable, available-for-sale securities, derivative financial instruments, obligations under trade accounts payable and short -term debt. Due to their short-term nature, the carrying values for cash and cash equivalents, short-term investments, trade accounts receivable, trade accounts payable and short-term debt approximate fair value. Refer to Note 10 – Fair Value Measurements for the fair values of our available-for-sale securities, derivative financial instruments, and other obligations.Foreign Currency Translations and TransactionsResults of operations for foreign subsidiaries with functional currencies other than the U.S. dollar are translated using average exchange rates during the period. Assets and liabilities of these foreign subsidiaries are translated using the exchange rates in effect at the balance sheet dates.USD. Gains and losses resulting from these translations are included in accumulated other comprehensive income within stockholders’ equity.For those foreign subsidiaries that have designated the U.S. dollar as the functional currency, gains and losses resulting from balance sheet remeasurement of foreign operationscurrency denominated monetary assets and liabilities are included in the consolidated statements of operations as incurred. Gains and losses resulting from transactions denominated in a foreign currency are also included in the consolidated statements of operations as incurred.itsit’s carrying amount. If it is more likely than not that the fair value of the reporting unit is less66FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe amount of impairment for goodwill is measured as the excess of its carrying value over its fair value.During the fourth quarter of 2017, we elected to change the timing of our annual goodwill impairment testing from December 31 to October 31 for our U.S Services, International Services, Tubular Sales and Manufacturing reporting units. This accounting change is considered to be preferable because it allows for additional time to complete the annual goodwill impairment test, better aligns with our planning process, and synchronizes the testing date for all of our reporting units as October 31, which is the Blackhawk reporting unit's annual impairment testing date. This change did not result in adjustments to previously issued financial statements.No goodwill impairment was recorded for years ended December 31, 2017, 2016 and 2015. Our goodwill is allocated to our operating segments as follows: U.S. Services - approximately $16.2 million; Tubular Sales - approximately $2.4 million; Blackhawk - approximately $192.4 million. The inputs used in the determination of fair value are generally level 3 inputs. See Note 10 – Fair Value Measurements in these Notes to Consolidated Financial Statements for a discussion of fair value measures.Impairment of Long-Lived AssetsLong-lived assets, which include property, plant and equipment, and certain other assets to be held and used by us, are reviewed when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable based on estimated future cash flows. If this assessment indicates that the carrying values will not be recoverable, as determined based on undiscounted cash flows over the remaining useful lives, an impairment loss is recognized based on the fair value of the asset.Income TaxesWe operate under many legal forms in approximately 50 countries. As a result, we are subject to many U.S. and foreign tax jurisdictions and many tax agreements and treaties among the various taxing authorities. Our operations in these different jurisdictions are taxed on various bases such as income before taxes, deemed profits (whichreporting unit is generally determined using a percentage of revenues ratherless than profits), and withholding taxesits carrying value, an impairment loss is recorded based on revenues. Determinationthat difference. We complete our assessment of taxable income in any jurisdiction requires the interpretationgoodwill impairment as of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions, or our level of operations or profitability in October 31 each taxing jurisdiction could have an impact upon the amount of income taxes that we provide during any given year.We provide for income tax expense based on the liability method of accounting for income taxes based on the authoritative accounting guidance. Deferred taxand liabilities are recorded based upon temporary differences between the tax basis of assets and liabilities and their carrying values for financial reporting purposes, and are measured using the tax rates and laws expected to be in effect when the differences are projected to reverse. Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In determining the need for valuation allowances, we have made judgments and estimates regarding future taxable income. These estimates and judgments include some degree of uncertainty, and changes in these estimates and assumptions could require us to adjust the valuation allowances for our deferred tax assets. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income in the applicable taxing jurisdictions. Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities and associated valuation allowances during the period. The impact of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority.67FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSIntangible Assetsassets.assets, ranging from one year to fifteen years. We evaluate impairment of our intangible assets on an asset group basis whenever circumstances indicate that the carrying value may not be recoverable. Intangible assets deemed to be impaired are written down to their fair value using a discounted cash flowsflow model and, if available, comparable market values.The following table provides information related to our Our intangible assets asare primarily associated with trademarks, customer relationships and contracts (“CR&C”), technology, and software.December 31, 2017 and 2016 (in thousands): December 31, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Total Gross Carrying Amount Accumulated Amortization Total Customer relationships $ 39,050 $ (17,577 ) $ 21,473 $ 38,681 $ (11,452 ) $ 27,229 Trade name 11,407 (6,494 ) 4,913 11,733 (3,648 ) 8,085 Intellectual property 9,892 (2,463 ) 7,429 9,748 (379 ) 9,369 Non-compete agreement 1,160 (1,080 ) 80 1,160 (760 ) 400 Total intangible assets $ 61,509 $ (27,614 ) $ 33,895 $ 61,322 $ (16,239 ) $ 45,083 Amortization expenseaccounting for intangibles assets was $11.4 million, $3.5 million and $1.8 million for the years ended December 31, 2017, 2016 and 2015, respectively.As of December 31, 2017, estimated amortization expense for the intangible assets for eachour equity investments where we hold more than 20% of the next five years was as follows (in thousands):Period Amount 2018 $ 10,698 2019 10,111 2020 6,920 2021 5,503 2022 118 Thereafter 545 Total $ 33,895 InventoriesInventoriesownership interests of an investee that does not constitute a controlling interest or where we have the ability to significantly influence the operations or financial decision of the investee. Such equity investments are statedcarried on the consolidated balance sheets at cost plus post-acquisition changes in our share of net income, less dividends received and less any impairments. Our consolidated statements of operations reflect our share of income from the lowerjoint ventures’ results after tax. Any goodwill arising on the acquisition of cost (primarily average cost) or net realizable value. Work in progress and finished goods includea joint venture, representing the excess of the cost of materials, labor,the investment compared to the Company’s share of the net fair value of the acquired identifiable net assets, is included in the carrying amount of the joint venture and manufacturing overhead. Inventory placedis not amortized.servicejoint ventures for potential impairment whenever events or changes in circumstances indicate that there may be a loss in the value of each investment that is eitherother than temporary.or expensed based upon our capitalization policies.Marketable Securitiesnet” and Cash Surrender Value“Finance lease liabilities” on the consolidated balance sheets. Our lease contracts generally do not provide any guaranteed residual values. Payments related to finance leases are apportioned between the reduction of Life Insurance PoliciesOur marketable securitiesthe lease liability and finance expense in publicly traded equity securitiesthe consolidated statement of operations so as an indirect resultto achieve a constant rate of strategic investmentsinterest on the remaining balance of the liability. Leases which do not meet the definition of a finance lease are classified as available-for-saleoperating leases and are reported at fair value. See Note 7 – Other Assets. Unrealized gains and losses are reported as a component of stockholders’ equity.68FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSWe also have cash surrender value of life insurance policies that are held within a Rabbi Trust for the purpose of paying future executive deferred compensation benefit obligations. Unrealized and realized gains and losses on marketable securities are included in other income on our consolidated statements of operations, net when realized. Any impairment loss to reduce an investment’s carrying amount to its fair market value is recognized in income when a decline in the fair market value of an individual security below its cost or carrying value is determined to be other than temporary. Realized gains (losses) on investments were $2.4 million, $1.1 millionOperating lease right-of-use assets and $(0.7) million for the years ended December 31, 2017, 2016 and 2015, respectively.Property, Plant and EquipmentProperty, plant and equipment are stated at cost less accumulated depreciation. Expenditures for significant improvements and betterments are capitalized when they enhance or extend the useful life of the asset. Expenditures for routine repairs and maintenance, which do not improve or extend the life of the related assets, are expensed when incurred. When properties or equipment are sold, retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the books and the resulting gain or loss is recognizedoperating lease liabilities on the consolidated statements of operations.Depreciation on fixed assetsbalance sheets. Lease expense is computed using the straight-line method over the estimated useful lives of the individual assets. Leasehold improvements are amortizedrecognized on a straight-line basis over the shorter of theirthe estimated useful liveslife of the underlying asset or the lease term. Depreciation expense was $110.7 million, $110.7 million$107.2 millionnon-lease components for all classes of leased assets. Also, leases with an initial term of one year or less are not recorded on the consolidated balance sheets.years ended December 31, 2017, 2016effect on the fair value of plan assets of contributions received and 2015, respectively.Revenue RecognitionAll revenue isbenefits paid during the year.when allin the consolidated statement of operations as a component of net pension costs (over the expected remaining working lives of the following criteria have been met: (1) evidenceplan’s active participants or the remaining lives of an arrangement exists; (2) deliveryplan members in the event the plan is no longer active), which is included in “Cost of revenue, excluding depreciation and amortization.”acceptance byin the customer has occurred; (3)case of quoted securities is the pricepublished bid price.customer is fixed or determinable; and (4) collectability is reasonably assured, as follows:Services Revenue. We provide tubular and other well construction services to clients in the oil and gas industry. We perform services either under direct service purchase orders or master service agreements. Service revenue is recognized as services are performed or rendered.International service hours are billed per man hour, per day or similar basis.U.S. services are billed on,i) Offshore - per day or similar basis.ii) Land - per man hour or on a project basis.Blackhawk services are billed primarily on a per day basis for both domestic and international.We design and manufacture a suite of highly technical equipment and products that we use respective plan.providing our services to our customers, including high-end, proprietary tubular handling or well construction equipment. Substantially all equipment has a service element for personnel operating the equipment. We provide our equipment either under direct agreements or with customers with agreements in place. Revenue from equipment agreements is recognized as earned overconsummation of the relevant period.International equipment is billed on a per month or similar basis.U.S. equipment is billed on,i) Offshore - per day or similar basis.ii) Land - on completion of a job or project basis.Blackhawk services are billed on,i) Offshore and Land - per day basis with some minimum days requirements.ii) International - negotiated contracts but are primarily based on monthly rates.69FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor customers contracted under direct service purchase orders and direct agreements, an accrual is recorded in unbilled accounts receivable for revenue earned but not yet invoiced.Tubular Sales and Blackhawk Product Revenue. Revenue on tubular and Blackhawk product sales is recognized whenMerger, the product has shipped and significant risks of ownership have passed to the customer. The sales arrangements typically do not include right of return or other similar provisions or other post-delivery obligations.Some of our tubular sales and well construction customers have requested that we store pipe, connectors and other products purchased from us in our facilities. We considered whether revenue should be recognized on these sales under the “bill and hold” guidance provided by the SEC Staff; however, based upon the assessment performed, revenue recognition on these transactions totaling $4.7 million and $18.1 million was deferred at December 31, 2017 and 2016, respectively.Short‑term investmentsShort‑term investments consist of commercial paper, classified as held-to-maturity and a fund that primarily invests in short-term debt securities. These investments have original maturities of greater than three months but less than twelve months. At December 31, 2017, the carrying amount of our short-term investments was $81.0 million.Stock-Based CompensationOur Company amended its 2013 Long-Term Incentive Plan provides forto the granting ofExpro Group Holdings N.V. Long-Term Incentive Plan, As Amended and Restated. Further, effective May 25, 2022, the Expro Group Holdings N.V. Long-Term Incentive Plan, As Amended and Restated was terminated and the Expro Group Holdings N.V. 2022 Long-Term Incentive Plan (the “2022 LTIP” plan) was adopted and established by the Board and approved by the Company’s stockholders. Pursuant to the 2022 LTIP, stock options, stock appreciation rights, (“SARs”), restricted stock, restricted stock units, ("RSUs"), performance restricted stock units ("PRSUs"), dividend equivalent rights and other types of equity and cash incentive awards may be granted to employees, non-employee directors and service providers. consultants.expenseexpenses in the consolidated statements of operations.Our stock-based compensation currently consists of RSUs and PRSUs. We do not estimate expected forfeitures, but recognize them as they occur.Company'sCompany’s closing stock price as of the day before the grant date usingdate.Monte Carlo simulation.requisite service period remaining as of the Closing Date will be recognized on a straight-line basis over the remaining requisite service period based on the Closing Date fair value.Pronouncements("FASB"(“FASB”) in the form of accounting standards updates ("ASUs")ASUs to the FASB’s Accounting Standards Codification.ASUs.accounting pronouncements; recently issued ASUs not listed below were assessed and were either determined to be not applicable or are expected to have immaterial impact on our consolidated financial position, results of operations orand cash flows.In May 2017, the FASB issued guidance to clarify and reduce both (i) diversity in practice and (ii) cost and complexity when accounting for a change to the terms and conditions of a share-based payment award. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this guidance should be applied prospectively to an award modified on or after the adoption date. We adopted the guidance on January 1, 2018 and the adoption did not have an impact on our consolidated financial statements.In January 2017, the FASB issued guidance that simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the70carrying amountAll other goodwill impairment guidance will remain largely unchanged. The new standardMerger is effective for public companies for their annual or any interim goodwill impairment tests for fiscal years beginning after December 15, 2019. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company has adopted the provisions of this new accounting guidance for the Company's annual goodwill impairment analysis for the year ended December 31, 2017.In January 2017, the FASB issued new accounting guidance for business combinations clarifying the definition of a business. The objective of the guidance is to help companies and other organizations which have acquired or sold a business to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public entities,a reverse merger and Legacy Expro has been identified as the guidance is effectiveacquirer for annual periods beginning after December 15, 2017, including interim periods within those periods. We adopted the guidance on January 1, 2018 and the adoption did not have an impact on our consolidated financial statements.In August 2016, the FASB issued new accounting guidance for classification of certain cash receipts and cash payments in the statement of cash flows. The objective of the guidance is to reduce the existing diversity in practice related to the presentation and classification of certain cash receipts and cash payments. The guidance addresses eight specific cash flow issues including but not limited to, debt prepayment or extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and proceeds from the settlement of corporate-owned life insurance policies. For public entities, the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and is retrospective for all periods presented. We adopted the guidance on December 31, 2017 and the adoption did not have an impact on our consolidated financial statements.In June 2016, the FASB issued new accounting guidance for credit losses on financial instruments. The guidance includes the replacement of the “incurred loss” approach for recognizing credit losses on financial assets, including trade receivables, with a methodology that reflects expected credit losses, which considers historical and current information as well as reasonable and supportable forecasts. For public entities, the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application is permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the provisions of this new accounting guidance, including which period to adopt, and has not determined what impact the adoption will have on our consolidated financial statements.In February 2016, the FASB issued accounting guidance for leases. The main objective of the accounting guidance is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and the new guidance is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The new guidance requires lessees to recognize assets and liabilities arising from leases on the balance sheet and further defines a lease as a contract that conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Control over the use of the identified asset means that the customer has both (1) the right to obtain substantially all of the economic benefit from the use of the asset and (2) the right to direct the use of the asset. The accounting guidance requires disclosures by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. For public entities, the guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; early application is permitted. We are currently evaluating the impact of this accounting standard update on our consolidated financial statements and plan to adopt the new standard effective January 1, 2019.In May 2014, the FASB issued amendments to guidance on the recognition of revenue based upon the entity’s contracts with customers to transfer goods or services. Under the new standard, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard creates a five step model that requires71FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTScompanies to exercise judgment when considering the terms of a contract and all relevant facts and circumstances. The standard allows for two transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presented in the financial statements, including additional disclosures of the standard’s application impact to individual financial statement line items. In July 2015, the FASB deferred the effective date to December 15, 2017 for annual periods, and interim reporting periods within those fiscal years, beginning after that date.We will adopt the new standard effective January 1, 2018 utilizing the modified retrospective method. Based on our ongoing analysis of the impacts of the new standard, we anticipate that recognition of revenue under the new revenue standard is consistent with the previous revenue standard, except for revenues from certain product sales with bill-and-hold arrangements in our Tubular Sales segment. Because of the change in accounting guidance related to bill-and-hold arrangements, we expect to recognize an immaterial increase to the opening balance of retained earnings as of January 1, 2018.Note 2—Noncontrolling InterestWe hold an economic interest in FICV and are responsible for all operational, management and administrative decisions relating to FICV’s business.purposes. As a result, the financial resultsCompany has in accordance with ASC 805,Business Combinations, applied the acquisition method of FICV are consolidated with ours.We recorded a noncontrolling interest on our consolidated balance sheet with respectaccounting to account for Frank’s assets acquired and liabilities assumed. Applying the remaining economic interest in FICV held by Mosing Holdings. Net income (loss) attributable to noncontrolling interest onacquisition method of accounting includes recording the statements of operations represented the portion of earnings or losses attributable to the economic interest in FICV held by Mosing Holdings. The allocable domestic income (loss) from FICV to FINV is subject to U.S. taxation. Effective with the August 2016 conversion of all of Mosing Holdings' Series A preferred stock (see Note 12 – Preferred Stock), Mosing Holdings transferred all its interest in FICV to usidentifiable assets acquired and the noncontrolling interest was eliminated. As a result, the amount included in net income (loss) attributable to noncontrolling interestliabilities assumed at their fair values and recording goodwill for the year ended December 31, 2016 is through August 26, 2016.A reconciliationexcess of the consideration transferred over the net income (loss) attributable to noncontrolling interest is detailed as follows (in thousands): Year Ended December 31, 2016 2015 Net income (loss) $ (156,079 ) $ 106,110 84,541 — (10,414 ) 6,585 23 (6,824 ) Net income (loss) subject to noncontrolling interest (81,929 ) 105,871 25.2 % 25.4 % Net income (loss) attributable to noncontrolling interest $ (20,741 ) $ 27,000 (1)Represents net loss after August 26, 2016 when Mosing Holdings transferred its interest to FINV.(2)Represents income tax expense (benefit) of entities outside of FICV as well as income tax attributable to our proportionate share of the U.S. operations of our partnership interests in FICV as of August 26, 2016.(3)Represents results of operations for entities outside of FICV as of August 26, 2016.(4)Represents the economic interest in FICV held by Mosing Holdings before the preferred stock conversion on August 26, 2016. This percentage changed as additional shares of FINV common stock were issued. Effective August 26, 2016, Mosing Holdings delivered its economic interest in FICV to us.72FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 3—Acquisitionaggregate fair value of the identifiable assets acquired and DivestituresBlackhawk AcquisitionOn November 1, 2016, we completed a transaction to acquire all outstanding shares in Blackhawk, the ultimate parent company of Blackhawk Specialty Tools LLC, pursuant to the terms of a definitive merger agreement ("Merger Agreement") dated October 6, 2016. Blackhawk is a leading provider of well construction and well intervention services and products. In conjunction with the acquisition, FI Tools Holdings, LLC, our newly formed subsidiary, merged with and into Blackhawk with Blackhawk, surviving the Merger as our wholly-owned subsidiary. liabilities assumed.comprised of a combination of $150.4 million of cashbased on hand and 12.8 million shares of our common stock ("Common Stock"), on a cash-free, debt-free basis, for total consideration of $294.6 million (based on ourFrank’s closing share price on October 31, 2016the Closing Date. In a reverse merger involving only the exchange of $11.25 and including working capital adjustments).Accordingly, the results of Blackhawk's operations from November 1, 2016 are included in our consolidated financial statements. For the year ended December 31, 2016, Blackhawk contributed revenue of $10.0 million and operating losses of $7.4 million.In accordance with accounting guidance for business combinations, the unaudited pro forma financial information presented below assumes the acquisition was completed January 1, 2015, the first day of the fiscal year 2015. This unaudited pro forma financial information does not necessarily represent what would have occurred if the transaction had taken place on the date presented and should not be taken as representative of our future consolidated results of operations. The unaudited pro forma financial information includes adjustments for amortization expense for identified intangible assets and depreciation expense based onequity, the fair value of the equity of the accounting acquiree may be used to measure consideration transferred if the value of the accounting acquiree’s equity interests are more reliably measurable than the value of the accounting acquirer’s equity interest. As Legacy Expro was a private company and estimated livesFrank’s was a public company with a quoted and reliable market price, the fair value of acquired property, plant and equipment. In addition,Frank’s equity interests was deemed to be more reliable. Under the acquisition related costs are excluded frommethod of accounting, total consideration exchanged was as follows: 38,066,216 $ 18.90 $ 719,452 7,830 15,000 $ 742,282 unaudited pro forma financial information.Consolidated Financial Statementsshows our unaudited financial information forsets forth the years ended December 31, 2016 and 2015, respectively (in thousands, except per share amounts): Pro Forma (Unaudited) Year Ended December 31, 2016 2015 Revenue $ 544,798 $ 1,109,559 Net income (loss) applicable to common shares $ (161,527 ) $ 68,215 Income (loss) per common share: Basic $ (0.86 ) $ 0.41 Diluted $ (0.86 ) $ 0.42 The Blackhawk acquisition was accounted for as a business combination. As described in Note 10 - Fair Value Measurements,allocation of the purchase price was allocatedmerger consideration exchanged to the fair value of identifiable tangible and intangible assets acquired and liabilities assumed based on a discounted cash flow model andas of the Closing Date, with the recording of goodwill was recognized for the excess of the consideration transferred over the net aggregate fair value of the net assets.73FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS $ 187,178 $ - $ 187,178 2,561 - 2,561 112,234 (1,020 ) 111,214 69,567 (109 ) 69,458 10,061 - 10,061 2,030 - 2,030 23,908 (862 ) 23,046 212,639 (2,479 ) 210,160 154,399 41,077 195,476 104,791 - 104,791 27,406 - 27,406 20,494 (70 ) 20,424 927,268 36,537 963,805 81,959 3,876 85,835 8,344 - 8,344 8,932 9,862 18,794 19,918 12,108 32,026 5,673 - 5,673 19,607 - 19,607 40,553 10,691 51,244 184,986 36,537 221,523 $ 742,282 $ - $ 742,282 following table summarizes the preliminary and final purchase price allocations of the fair valuesvaluation of the assets acquired and liabilities assumed, as partincluding other current liabilities, in the Merger initially resulted in goodwill of $154.4 million. During the third quarter of 2022, the Company finalized the valuation and recorded measurement period adjustments to its preliminary estimates due to additional information received primarily related to accounts payable and accrued liabilities, other current liabilities (please see Note 18 “Commitments and contingencies” for additional information), other non-current liabilities and income taxes. The measurement period adjustments resulted in an increase in goodwill of $41.1 million, for final total goodwill associated with the Merger of $195.5 million. The fair values of identifiable intangible assets were prepared using an income valuation approach, which requires a forecast of expected future cash flows either through the use of the Blackhawk acquisitionrelief-from-royalty method or the multi-period excess earnings method, which are discounted to approximate their current value. The estimated useful lives are based on management’s historical experience and expectations as to the duration of November 1, 2016 as determined in accordance with business combination accounting guidance (in thousands): Preliminary purchase price allocation Measurement period adjustments Final purchase price allocation Current assets, excluding cash $ 23,626 $ — $ 23,626 Property, plant and equipment 45,091 55 45,146 Other long-term assets 3,139 — 3,139 Intangible assets 41,972 153 42,125 Assets acquired $ 113,828 $ 208 $ 114,036 Current liabilities assumed 11,132 185 11,317 Other long-term liabilities 542 — 542 Liabilities assumed $ 11,674 $ 185 $ 11,859 Fair value of net assets acquired 102,154 23 102,177 Total consideration transferred 294,563 — 294,563 Goodwill $ 192,409 $ (23 ) $ 192,386 amount allocated to intangible assets was attributed to the following categories (in thousands): December 31, 2016 Estimated Useful Lives in Years Intellectual property $ 9,741 1-10 Customer relationships 24,024 5 Trade name 8,207 3 $ 41,972 These intangible assets arewill be amortized on a straight-line basis whichover an estimated 10- to 15-year life. We expect annual amortization to be approximately $7.7 million associated with these intangible assets.presentedattributable to planned synergies expected to be achieved from the combined operations of Legacy Expro and Frank’s. Goodwill recorded in depreciationthe Merger is not expected to be deductible for tax purposes.
The Company’s operating results for the period October 1, 2021 through December 31, 2021 include $112.1 million of revenue and amortization $32.9 million of net loss attributable to Frank’s.
Unaudited Pro Forma Financial Information
The following unaudited pro forma consolidated results of operations for the year ended December 31, 2021 and 2020 assume the Merger was completed as of January 1, 2020 (in our consolidated statementsthousands): $ 1,143,356 $ 1,065,384 $ (121,546 ) $ (491,091 ) operations.The intentionthe results that actually would have occurred had the Merger been completed on the date indicated or of this transaction was to augment our tubular services business by providing usfuture operating results.opportunity to diversify our offeringsyear ended December 31, 2022, 2021 and emerge as a leader in a new business line and a significantly larger addressable market. In addition to what we believe is a line of well-regarded, market leading, technically differentiated specialty cementation tools, Blackhawk also provides well intervention products through its line of brute packers and related products, and is continuing its development of products for onshore and offshore applications. In conjunction with2020, the merger, we created a fourth segment, Blackhawk, and recorded goodwill of $192.4Company incurred $13.6 million, in that segment.DivestituresIn March 2017, we sold a fully depreciated aircraft for a total sales price of $1.3$47.6 million and recorded a gain on sale$1.6 million of $1.3 million.In August 2017, we sold an additional aircraft for a net sales pricemerger and integration expense respectively, which consist primarily of $4.9 million and recorded an immaterial loss.In September 2017, we sold a building in the Middle East for a net sales price of $2.7 million and recorded a gain on sale of $0.6 million.74FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSIn December 2017, we sold a building in Canada for a total sales price of $2.4 million and recorded a gain on sale of $0.3 million. We also sold our third and last aircraft for a total sales price of $0.7 million to a related party and recorded a gain on sale of $0.7 million. See Note 13 - Related Party Transactions for additional information.Note 4—Accounts Receivable, netAccounts receivable at December 31, 2017 and 2016 were as follows (in thousands): December 31, 2017 2016 Trade accounts receivable, net of allowance of $4,777 and $14,337, respectively $ 83,482 $ 89,096 Unbilled receivables 25,670 30,882 Taxes receivable 11,305 42,870 716 717 Other receivables 6,037 3,852 Total accounts receivable, net $ 127,210 $ 167,417 (1)Amounts represent expenditures on behalf of non-consolidated affiliates and receivables for aircraft charter income.Note 5—Inventories, netInventories at December 31, 2017 and 2016 were as follows (in thousands): December 31, 2017 2016 Pipe and connectors, net of allowance of $20,064 and $2,108, respectively $ 33,620 $ 102,360 Finished goods, net of allowance of $1,520 and $2,518, respectively 14,541 14,257 Work in progress 9,206 7,099 Raw materials, components and supplies 19,053 15,363 Total inventories, net $ 76,420 $ 139,079 Inventories are required to be stated at the lower of cost or net realizable value. During 2017, we recorded charges of $51.2 million to the financial statement line itemlegal fees, professional fees, integration, severance and other chargescosts directly attributable to the Merger. $ 2,057 $ 2,502 $ 424 $ 617 $ 6,615 $ 12,215 $ (256 ) $ (808 ) $ 34 $ 646 $ 1,707 1,323 (1,675 ) (1,634 ) (458 ) (1,176 ) (7,880 ) (12,823 ) $ 126 $ 60 $ - $ 87 $ 442 $ 715 net realizable value adjustment, which impacted our Tubular Sales segment. The factors that led to these charges included new technology (external and internal), oil and gas prices below levels necessary for our customers to sanction a significant amountmaximum of new offshore projects$1.0 million, contingent upon certain criteria being met in the near-term andfollowing year. No contingent consideration was recognized during the year ended December 31, 2020. Legacy Expro recognized a change in customers' preferencesgain of $10.1 million for newer technologies which significantly impacted the year ended December 31, 2020 net realizableof the carrying value of our connectors inventory during 2017. Please see Note 19 - Severancethe assets transferred of $4.4 million and other charges for further discussion.75FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 6—Property, Plant and EquipmentThe following is a summarycosts directly attributable to the sale of property, plant and equipment at $1.0 million. As of December 31, 2017 and 2016 (in thousands): December 31, Estimated Useful Lives in Years 2017 2016 Land — $ 15,314 $ 15,730 8-15 14,594 9,379 39 119,380 73,211 Rental machinery and equipment 7 898,146 933,667 Machinery and equipment - other 7 55,049 60,182 Furniture, fixtures and computers 5 27,259 19,073 Automobiles and other vehicles 5 29,971 36,796 Aircraft 7 — 16,267 7-15, or lease term if shorter 10,030 8,027 — 61,836 120,937 1,231,579 1,293,269 Less: Accumulated depreciation (761,933 ) (726,245 ) Total property, plant and equipment, net $ 469,646 $ 567,024 (1)See Note 13 - Related Party Transactions for additional information.During 2021, the third quarter of 2017, we committed to sell certain buildings inconditions upon which the Middle East region and determined those assets met the criteria to be classified as held for sale in our consolidated balance sheet.earn-out consideration was contingent were met. As a result, we reclassified the buildings, with a net book value of $4.1 million, from property, plant and equipment to assets held for sale andCompany recognized a $0.3gain of $1.0 million loss.No impairments were recognized duringfor the yearsyear ended December 31, 2017, 2016 or 2015.The following table presents the depreciation and amortization associated with each line for the periods ended December 31, 2017, 2016 and 2015 (in thousands): December 31, 2017 2016 2015 Cost of revenues Services $ 102,212 $ 101,260 $ 95,825 Products 4,971 4,254 4,233 General and administrative expenses 14,919 8,701 8,904 Total $ 122,102 $ 114,215 $ 108,962 76FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 7—Other AssetsOther assets at December 31, 2017 and 2016 consisted of the following (in thousands): December 31, 2017 2016 $ 30,351 $ 36,269 Deposits 2,564 2,343 Other 2,378 6,921 Total other assets $ 35,293 $ 45,533 (1)See Note 10 – Fair Value Measurements.Note 8—Accrued and Other Current LiabilitiesAccrued and other current liabilities at December 31, 2017 and 2016 consisted of the following (in thousands): December 31, 2017 2016 Accrued compensation $ 25,510 $ 10,854 Accrued property and other taxes 16,908 19,740 Accrued severance and other charges 1,444 6,150 Income taxes 8,091 6,857 Accrued purchase orders and other 23,020 21,349 Total accrued and other current liabilities $ 74,973 $ 64,950 Note 9—DebtCredit FacilityWe have a $100.0 million revolving credit facility with certain financial institutions, including up to $20.0 million in letters of credit and up to $10.0 million in swingline loans, which matures in August 2018 (the “Credit Facility”). Subject to the terms of our Credit Facility, we have the ability to increase the commitments to $150.0 million. At December 31, 2017 and 2016, we had no outstanding indebtedness under the Credit Facility. In addition, we had $2.8 million and $3.7 million in letters of credit outstanding as of December 31, 2017 and 2016, respectively. Our borrowing capacity is equal to 2.5x our Adjusted EBITDA less letters of credit outstanding under the Credit Facility. Our borrowing capacity under the Credit Facility could be reduced or eliminated depending on our future Adjusted EBITDA.Borrowings under the Credit Facility bear interest, at our option, at either a base rate or an adjusted Eurodollar rate. Base rate loans under the Credit Facility bear interest at a rate equal to the higher of (i) the prime rate as published in the Wall Street Journal, (ii) the Federal Funds Effective Rate plus 0.50% or (iii) the adjusted Eurodollar rate plus 1.00%, plus an applicable margin ranging from 0.50% to 1.50%, subject to adjustment based on the leverage ratio. Interest is in each case payable quarterly for base-rate loans. Eurodollar loans under the Credit Facility bear interest at an adjusted Eurodollar rate equal to the Eurodollar rate for such interest period multiplied by the statutory reserves, plus an applicable margin ranging from 1.50% to 2.50%. Interest is payable at the end of applicable interest periods for Eurodollar loans, except that if the interest period for a Eurodollar loan is longer than three months, interest is paid at the end of each three-month period. The unused portion of the Credit Facility is subject to a commitment fee ranging from 0.250% to 0.375% based on certain leverage ratios.The Credit Facility contains various covenants that, among other things, limit our ability to grant certain liens, make certain loans and investments, enter into mergers or acquisitions, enter into hedging transactions, change our77lines of business, prepay certain indebtedness, enter into certain affiliate transactions, incur additional indebtedness or engage in certain asset dispositions.The Credit Facility also contains financial covenants, which, among other things, require us, on a consolidated basis, to maintain: (i) a ratio of total consolidated funded debt to adjusted EBITDA (as defined in our credit agreement) of not more than 2.5 to 1.0; and (ii) a ratio of EBITDA to interest expense of not less than 3.0 to 1.0.In addition, the Credit Facility contains customary events of default, including, among others, the failure to make required payments, the failure to comply with certain covenants or other agreements, breach of the representations and covenants contained in the agreements, default of certain other indebtedness, certain events of bankruptcy or insolvency and the occurrence of a change in control.On April 28, 2017, the Company obtained a limited waiver under its Revolving Credit Agreement, dated August 14, 2013, by and among FICV (as borrower), Amegy Bank National Association (as administrative agent), Capital One, National Association (as syndication agent) and the other lenders party thereto (the "Credit Agreement"), of its leverage ratio and interest coverage ratio for the fiscal quarters ending March 31, 2017 and June 30, 2017 (the “Waiver”) in order to not be in default for the first quarter of 2017. The Company agreed to comply with the following conditions during the period from the effective date of the Waiver until the delivery of its compliance certificate with respectNotes to the fiscal quarter ending September 30, 2017: (i) maintain no less than $250.0 million in liquidity; (ii) abide by certain restrictions regarding the issuance of senior unsecured debt; and (iii) pay interest and commitment fees based on the highest “Applicable Margin” (as defined in the Credit Agreement) level. In connection with the Waiver, the Company paid a waiver fee to each lender that executed the Waiver equal to five basis points of the respective lender’s commitment under the Credit Agreement. As of December 31, 2017, we were in compliance with all financial covenants under the Credit Facility.Consolidated Financial StatementsCitibank Credit Facility In 2016, we entered into a three-year credit facility with Citibank N.A., UAE Branch in the amount of $6.0 million for issuance of standby letters of credit and guarantees. The credit facility also allows for open ended guarantees. Outstanding amounts under the credit facility bear interest of 1.25% per annum for amounts outstanding up to one year. Amounts outstanding more than one year bear interest at 1.5% per annum. As of December 31, 2017 and 2016, we had $2.6 million and $2.2 million in letters of credit outstanding.Insurance Notes PayableIn 2017, we entered into three notes to finance our annual insurance premiums totaling $5.1 million. The notes bear interest at an annual rate of 2.3%with a final maturity date in October 2018. At December 31, 2017, the total outstanding balance was $4.7 million.Note 10—Fair Value MeasurementsWe follow fair value measurement authoritative accounting guidance for measuring fair values of assets and liabilities in financial statements. is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that market participants who are independent, knowledgeable, and willing and able to transact would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. We are able to classify fair value balances based on the observability of these inputs. The authoritative guidance for fair value measurements establishes three levels of the fair value hierarchy, defined as follows:Level 1: Unadjusted, quoted prices for identical assets or liabilities in active markets.Level 2: Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly for substantially the full term of the asset or liability.78FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSLevel 3: Significant, unobservable inputs for use when little or no market data exists, requiring a significant degree of judgment.The hierarchy gives the highest priority to Level 1 measurements and the lowest priority to Level 3 measurements. Depending on the particular asset or liability, input availability can vary depending on factors such as product type, longevity of a product in the market and other particular transaction conditions. In some cases, certain inputs used to measure fair value may be categorized into different levels of the fair value hierarchy. For disclosure purposes under the accounting guidance, the lowest level that contains significant inputs used in valuation should be chosen.Financial Assets and Liabilities2017 2022 and 20162021, were as follows (in thousands): (Level 1) (Level 2) (Level 3) Total December 31, 2017 Assets: Investments: Cash surrender value of life insurance policies - deferred compensation plan $ — $ 30,351 $ — $ 30,351 Marketable securities - other 113 — — 113 Liabilities: Derivative financial instruments — 487 — 487 Deferred compensation plan — 26,797 — 26,797 December 31, 2016 Assets: Derivative financial instruments $ — $ 146 $ — $ 146 Investments: Cash surrender value of life insurance policies - deferred compensation plan — 36,269 — 36,269 Marketable securities - other 3,692 — — 3,692 Liabilities: Deferred compensation plan — 30,307 — 30,307 Our derivative financial instruments consist of short-duration foreign currency forward contracts. The fair value of derivative financial instruments is based on quoted market values including foreign exchange forward rates and interest rates. The fair value is computed by discounting the projected future cash flow amounts to present value. At December 31, 2017 and 2016, derivative financial instruments are included in the financial statement line items accrued and other current liabilities and accounts receivable, net, respectively, in our consolidated balance sheets. $ - $ 9,688 - $ 9,688 - 14,820 - 14,820 $ - $ 18,857 $ - $ 18,857 - 11,531 - 11,531 - 9,339 - 9,339 - 16,919 - 16,919 other assets“other non-current assets” on the consolidated balance sheets. The liability associated with our deferred compensation plan at December 31, 2021 is included in other liabilities“other non-current liabilities” on the consolidated balance sheets. During 2022, the Company terminated the executive deferred compensation benefit plan. Please see Note 19 “Post-retirement benefits” for additional information. Our investments changechanged as a result of contributions, payments, and fluctuations in the market. Assets and liabilities, measured using significant observable inputs, are reported at fair value based on third-partythird-party broker statements, which are derived from the fair value of the funds'funds’ underlying investments. We also have marketable securities in publicly traded equity securities79FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSas an indirect result of strategic investments. They are reported at fair value based on the price of the stock and are included in other assets“Other non-current assets” on the consolidated balance sheets.Assets and Liabilities Measured at Fair Value on a (see Note 3 - Acquisition and Divestitures), the purchase price is allocated to the assets acquired and liabilities assumed based on a discounted cash flow model for most intangibles as well as market assumptions for the valuation of equipment and other fixed assets.perform ourhave the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The qualitative assessment for eachdetermines whether it is more likely than not that a reporting unit by comparingunit’s fair value is less than its carrying amount. If it is more likely than not that the estimated fair value of eachthe reporting unit is less than the carrying amount, then a quantitative impairment test is performed. The quantitative goodwill impairment test is used to identify both the reporting unit’s carrying value, including goodwill. We estimate the fair value for each reporting unit using a discounted cash flow analysis based on management’s short-term and long-term forecastexistence of operating performance. This analysis includes significant assumptions regarding discount rates, revenue growth rates, expected profitability margins, forecasted capital expendituresimpairment and the timingamount of expected future cash flows based on market conditions. Ifimpairment loss. The test compares the estimated fair value of a reporting unit exceedswith its carrying amount, goodwillincluding goodwill. If the fair value of the reporting unit is not considered impaired. If theless than its carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is measured and recorded.asset'sasset’s fair value by using a discounted cash flow analysis. These analyses are based on estimates such as management’s short-term and long-term forecast of operating performance, including revenue growth rates and expected profitability margins, estimates of the remaining useful life and service potential of the asset, and a discount rate based on our weighted average cost of capital.chargesexpense in future periods if actual results materially differ from the estimated assumptions utilized in our forecasts. If crude oil prices decline significantly and remain at low levels for a sustained period of time, we could be required to record an impairment of the carrying value of our long-lived assets in the future which could have a material adverse impact on our operating results. Given the unobservable nature of the inputs, the discounted cash flow models are deemed to use Level 3 inputs. $ 191,893 60,394 19,993 15,174 $ 287,454 Other Fair Value Considerationscarrying valuesincome approach estimates the fair value by discounting the reporting unit’s estimated future cash flows using an estimated discount rate, or expected return, that a marketplace participant would have required as of the valuation date. The market approach includes the use of comparative multiples to corroborate the discounted cash flow results and involves significant judgment in the selection of the appropriate peer group companies and valuation multiples. Under the income approach, we utilized third-party valuation advisors to assist us with these valuations. These analyses included significant judgment, including significant Level 3 assumptions related to management’s short-term and long-term forecast of operating performance, discount rates based on our consolidated balance sheetestimated weighted average cost of capital, revenue growth rates, profitability margins and capital expenditures.short-term investments, traderestricted cash, accounts receivable, other current assets, accounts payable and accrued liabilities and interest-bearing loans. The carrying amounts of the Company’s financial instruments other than interest bearing loans approximate fair value due to the short-term nature of the items. The Company does not have any outstanding borrowings on its interest-bearing loans. $ 499,813 $ 193,156 $ 115,738 389,342 300,557 219,534 201,495 171,136 194,033 188,768 160,913 145,721 $ 1,279,418 $ 825,762 $ 675,026 $ 135,236 $ 32,254 $ 54 74,681 53,336 35,393 63,315 56,312 77,296 4,850 33,444 34,976 278,082 175,346 147,719 (87,580 ) (66,153 ) (61,122 ) 15,731 16,747 13,589 (139,767 ) (123,866 ) (113,693 ) - - (287,454 ) (7,825 ) (7,826 ) (13,930 ) (18,486 ) (54,162 ) - - 1,000 10,085 (8,341 ) (4,314 ) (2,261 ) (13,620 ) (47,593 ) (1,630 ) 3,149 3,992 3,908 (241 ) (8,795 ) (5,656 ) $ 21,102 $ (115,624 ) $ (310,445 ) $ 633,644 $ 561,482 444,368 370,638 294,742 358,465 232,812 231,087 331,586 332,966 $ 1,937,152 $ 1,854,638 $ 18,435 $ 6,426 17,574 11,151 27,354 14,553 13,457 19,958 5,084 29,423 $ 81,904 $ 81,511 $ 500,438 $ 112,126 $ - 778,980 713,636 675,026 $ 1,279,418 $ 825,762 $ 675,026 $ 289,235 $ 236,158 $ 139,690 $ 94,659 $ 51,192 $ 17,038 $ 283 $ 216 $ (707 ) 42,308 16,777 17,883 42,591 16,993 17,176 - - - (1,344 ) (726 ) (20,576 ) (1,344 ) (726 ) (20,576 ) $ 41,247 $ 16,267 $ (3,400 ) $ (13,984 ) $ (19,190 ) $ 22,819 19,355 (113,181 ) (346,853 ) $ 5,371 $ (132,371 ) $ (324,034 ) 25.8 % 25.0 % 19.0 % $ 1,387 $ (33,093 ) $ (61,566 ) 12,187 14,123 120,239 (4,024 ) 9,905 (1,754 ) 28,267 28,607 (71,259 ) (2,649 ) (1,014 ) 14 (5,966 ) (5,001 ) 6,150 3,029 1,995 984 694 67 1,216 8,322 678 2,576 $ 41,247 $ 16,267 $ (3,400 ) 768.0 % -12.3 % 1.0 % linesare measured using the tax rates and laws expected to be in effect when the differences are projected to reverse.credit approximateour deferred tax assets and liabilities as of December 31, 2022 and 2021 were as follows (in thousands): $ 771,963 $ 731,315 9,977 12,958 66,300 44,253 44,133 34,734 - �� 51,890 16,197 22,980 (881,286 ) (829,087 ) 27,284 69,043 (13,630 ) (1,935 ) (36,968 ) (42,784 ) (911 ) (48,856 ) (6,194 ) (7,212 ) (57,703 ) (100,787 ) $ (30,419 ) $ (31,744 ) $ 829,087 $ 512,711 $ 443,398 - 187,319 - 146,451 160,299 72,025 (94,252 ) (31,242 ) (2,712 ) $ 881,286 $ 829,087 $ 512,711 valuesmarket value of such corporation’s stock at the time of the ownership change by (ii) a percentage approximately equivalent to the yield on long-term tax-exempt bonds during the month in which the ownership change occurs. Any unused annual limitation may be carried over to later years.their short maturities.the uncertain and complex application of tax legislation, the ultimate resolution of audits may be materially different to our estimates. $ 76,114 $ 35,377 7,259 40,144 8,009 5,774 2,371 5,094 (2,490 ) (2,370 ) (547 ) (5,138 ) (1,525 ) (2,094 ) (1,054 ) (673 ) $ 88,137 $ 76,114 $ 62,471 $ 54,014 3,567 3,590 $ 66,038 $ 57,604 $ 441,605 $ 340,209 (12,680 ) (9,392 ) $ 428,925 $ 330,817 419,237 319,286 9,688 11,531 $ 428,925 $ 330,817 $ 9,392 $ 6,917 $ 6,313 - 992 - 4,096 1,527 965 (808 ) (44 ) (361 ) $ 12,680 $ 9,392 $ 6,917 $ 26,810 $ 34,899 102,395 76,025 24,513 14,192 $ 153,718 $ 125,116 $ - $ 18,857 18,084 19,891 20,727 22,524 1,669 1,599 7,245 7,331 5,513 9,197 $ 53,238 $ 79,399 44,975 52,938 8,263 26,461 $ 53,238 $ 79,399 $ 51,192 $ 17,038 28,557 27,893 58,036 45,741 - 9,339 45,248 32,964 21,882 16,775 $ 204,915 $ 149,750 107,750 74,213 97,165 75,537 $ 204,915 $ 149,750 11— Derivatives19 “Post-retirement benefits” for additional information. Prior to the termination of the executive deferred compensation plan, the impact of cash distributions from the trust for benefits paid pursuant to the executive deferred compensation benefit plan was included in “Proceeds from sale / maturity of investments” on the consolidated statements of cash flows. Loss associated with these policies was included in “Other income, net” on our condensed consolidated statements of operations. Loss on changes in the cash surrender value of life insurance policies was $0.3 million for the year ended December 31, 2022. $ 100,951 $ 84,952 46,935 42,671 32,102 18,666 92,716 66,863 $ 272,704 $ 213,152 $ 22,261 $ 21,580 3,054 3,054 98,490 104,660 789,910 701,400 913,715 830,694 (451,399 ) (352,114 ) $ 462,316 $ 478,580 $ 18,623 $ 18,623 1,275 1,275 19,898 19,898 (9,085 ) (7,733 ) $ 10,813 $ 12,165 enter into short-duration foreign currency forward derivative contractsrecognized impairment expense related to reduceproperty, plant and equipment of $20.0 million for the riskyear ended December 31, 2020, which is included in “Impairment expense” on our consolidated statement of foreign currency fluctuations. We use these instrumentsoperations. Refer to mitigate our exposureNote 4 “Fair value measurements” for further details.non-local currency operating working capital. We record these contracts at fair valuebe classified as held for sale and was reclassified from property plant and equipment, net to assets held for sale on our consolidated balance sheets. Althoughsheet.derivative contracts will serveConsolidated Financial Statements $ 222,200 $ (118,221 ) $ 103,979 $ 222,200 $ (98,271 ) $ 123,929 5.3 57,100 (32,921 ) 24,179 57,100 (29,392 ) 27,708 7.5 170,652 (71,191 ) 99,461 159,458 (60,979 ) 98,479 11.7 11,556 (9,671 ) 1,885 8,754 (5,817 ) 2,937 0.8 $ 461,508 $ (232,004 ) $ 229,504 $ 447,512 $ (194,459 ) $ 253,053 8.3 economic hedgeincrease in intangible assets of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts for hedge accounting treatment. Accordingly, any changes in the fair value of the derivative instruments during a period$11.2 million which will be amortized over a five-year life. The impact of this asset acquisition is included in our“Acquisition of technology” on the consolidated statements of operations.80FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSAs of December 31, 2017 and 2016, we had the following foreign currency derivative contracts outstanding in U.S. dollars (in thousands): December 31, 2017 Notional Contractual Settlement Derivative Contracts Amount Exchange Rate Date Canadian dollar $ 6,226 1.2850 3/15/2018 Euro 5,326 1.1836 3/15/2018 Norwegian krone 6,212 8.3704 3/15/2018 Pound sterling 6,039 1.3419 3/15/2018 December 31, 2016 Notional Contractual Settlement Derivative Contracts Amount Exchange Rate Date Canadian dollar $ 4,553 1.3179 3/14/2017 Euro 4,753 1.0563 3/14/2017 Euro 2,558 1.0659 1/13/2017 Norwegian krone 3,643 8.5101 3/14/2017 Pound sterling 3,908 1.2607 3/14/2017 location and fair value amounts of all derivative contracts inintangible assets which were acquired pursuant to the consolidated balance sheets as of Merger (in thousands): $ 7,000 10.0 17,000 10.0 79,920 15.0 871 1.0 $ 104,791 13.7 2017 2022 and 2016 (in thousands):Derivatives not designated as Hedging Instruments Consolidated Balance Sheet Location December 31, 2017 December 31, 2016 Foreign currency contracts Accounts receivable, net $ — $ 146 Foreign currency contracts Accrued and other current liabilities (487 ) — summarizesummarizes our intangible asset impairment expense by operating segment for the locationyear ended December 31, 2020 (in thousands): $ 10,262 $ 20,616 $ 11,437 $ 42,315 - 6,909 4,070 10,979 - 7,100 - 7,100 $ 10,262 $ 34,625 $ 15,507 $ 60,394 $ 35,467 33,582 33,582 33,582 33,582 59,709 $ 229,504 amountsthe Commonwealth of Independent States, Sub-Saharan Africa, MENA, Asia, North America and Latin America. During 2021, due to the Merger we changed our internal organization and reporting structure and as a result, our operating segments, NLA, ESSA, MENA and APAC, are also our reporting units. The allocation of goodwill by operating segment was as follows (in thousands): $ 118,511 $ 93,608 80,058 66,283 4,218 3,331 18,193 16,681 $ 220,980 $ 179,903 $ 130,949 $ 24,903 $ (37,341 ) $ 118,511 $ 37,341 $ 93,608 $ (37,341 ) $ 93,608 80,761 13,775 (14,478 ) 80,058 28,982 51,779 (14,478 ) 66,283 129,714 887 (126,383 ) 4,218 126,383 3,331 (126,383 ) 3,331 56,794 1,512 (40,113 ) 18,193 51,113 5,681 (40,113 ) 16,681 $ 398,218 $ 41,077 $ (218,315 ) $ 220,980 $ 243,819 $ 154,399 $ (218,315 ) $ 179,903 $ 25,397 - 126,383 40,113 $ 191,893 unrealizedMerger, we entered into a new revolving credit facility (the “New Facility”) with DNB Bank ASA, London Branch, as agent (the “Agent”), with total commitments of $200.0 million, of which $130.0 million was available for drawdowns as loans and realized gains$70.0 million was available for letters of credit. On July 21, 2022, the Company increased the facility available for letters of credit to $92.5 million and lossestotal commitments to $222.5 million. Proceeds of the New Facility may be used for general corporate and working capital purposes.derivativecertain assets of the borrowers and guarantors, including pledges of equity interests in certain of the Company’s subsidiaries, including all of the borrowers and subsidiary guarantors, material operating bank accounts, intercompany loans receivable and, in jurisdictions where customary, including the U.S., the U.K., Australia and the Cayman Islands, substantially all of the assets and property of the borrowers and guarantors incorporated in such jurisdictions, in each case subject to customary exceptions and exclusions. $ 1,352 $ 967 $ 1,649 2,006 2,246 2,386 26,231 21,479 19,870 84,045 54,756 56,156 $ 113,634 $ 79,448 $ 80,061 $ 28,454 $ 25,348 $ 23,134 $ 15,051 $ 8,529 $ 8,917 6.9 7.3 8.5 10.1 11.0 11.7 8.9 % 8.8 % 10.0 % 12.9 % 13.1 % 13.5 % $ 25,486 $ 3,026 19,398 2,759 13,365 2,703 9,331 2,703 8,033 2,680 35,584 13,069 $ 111,197 $ 26,940 (31,293 ) (12,120 ) $ 79,904 $ 14,820 $ 19,057 $ 1,047 60,847 13,773 $ 79,904 $ 14,820 4.7 % 1.8 % 1.3 % 5.6 % 3.2 % 2.7 % 0.1 % 0.1 % 0.1 % of December 31, 2017, 2016 and 2015follows (in thousands): $ (357 ) $ (439 ) $ (539 ) (4,307 ) (3,407 ) (4,551 ) 6,796 5,499 6,064 - - 2,269 249 249 - - 244 (104 ) $ 2,381 $ 2,146 $ 3,139 $ 7,440 $ 22,345 $ (9,356 ) - - 5,510 (249 ) (249 ) - - (244 ) 104 7,191 21,852 (3,742 ) $ 9,572 $ 23,998 $ (603 ) Derivatives not designated as Hedging Instruments Location of gain (loss) recognized in income on derivative contracts December 31, 2017 December 31, 2016 December 31, 2015 Unrealized gain (loss) on foreign currency contracts Other income, net $ (634 ) $ (64 ) $ 210 Realized loss on foreign currency contracts Other income, net (1,699 ) (296 ) — Total net gain (loss) on foreign currency contracts $ (2,333 ) $ (360 ) $ 210 Our derivative transactions are governed through International Swaps and Derivatives Association master agreements. These agreements include stipulations regarding the right of offset in the event that we or our counterparty default on our performance obligations. If a default were to occur, both parties have the right to net amounts payable and receivable into a single net settlement between parties. Our accounting policy is to offset derivative assets and liabilities executed with the same counterparty when a master netting arrangement exists.81followingservice costs have primarily been included in “Cost of revenue, excluding depreciation and amortization” in the consolidated statements of operations. Interest cost, expected return on plan assets and plan curtailment / amendment events have been recognized in “Other income, net” in the consolidated statements of operations.presentsbelow (in thousands): $ (74,332 ) $ 11,378 $ 16,678 81,772 10,967 (26,034 ) $ 7,440 $ 22,345 $ (9,356 ) gross and net fair values of our derivatives as of benefit obligation for the year December 31, 2017 and 2016 (in thousands): Derivative Asset Positions Derivative Liability Positions December 31, December 31, 2017 2016 2017 2016 Gross position - asset / (liability) $ — $ 181 $ (487 ) $ (35 ) Netting adjustment — (35 ) — 35 Net position - asset / (liability) $ — $ 146 $ (487 ) $ — Note 12—Preferred StockOn August 19, 2016, we received notice from Mosing Holdings that it was exercising its right to exchange, for 52,976,000 common shares, each of the following securities: (i) 52,976,000 shares of Preferred Stock and (ii) 52,976,000 units in FICV. On August 26, 2016, we issued 52,976,000 common shares to Mosing Holdings. Each share of Preferred Stock had a liquidation preference equal to its par value of €0.01 per share and was entitled to an annual dividend equal to 0.25% of its par value. Additionally, each share of Preferred Stock entitled its holder to one vote. Preferred stockholders voted with the common stockholders as a single class on all matters presented to FINV's shareholders for their vote.Upon conversion of the Preferred Stock, we had no issued or outstanding convertible preferred shares and the number of common shares of authorized capital was increased by 52,976,000 shares, equal to the number of convertible preferred shares that were converted into common shares. Additionally, upon the exchange of the convertible preferred stock, Mosing Holdings was entitled to receive an amount in cash equal to the nominal value of each convertible preferred share plus any accrued but unpaid dividends with respect to such stock. The cash payment of $0.6 million was paid on September 23, 2016. In conjunction with the conversion, Mosing Holdings delivered its interest in FICV to us and no longer owns any interest in FICV. As a result of the transaction, we have also reallocated the accumulated other comprehensive loss attributable to the noncontrolling interest.Note 13—Related Party TransactionsWe have engaged in certain transactions with other companies related to us by common ownership. We have entered into various operating leases to lease facilities from these affiliated companies. The majority of these lease obligations expire in 2018 and, at our discretion, may be extended for an additional 36 months subject to agreement on pricing of the extension. These leases may be extended or allowed to expire by us depending on operational needs, market prices and the ability for us to negotiate and secure, at our discretion, alternative leases or replacement locations. Rent expense associated with our related party leases was $6.9 million, $8.0 million and $7.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.In certain cases, we have made improvements to properties subject to related party leases referenced above, including the construction of buildings. As of December 31, 2017, the net book value associated with buildings we constructed on properties subject to related party leases was $59.6 million. We are depreciating the costs associated with these buildings over their estimated remaining useful lives of approximately 38 years, which exceeds the remaining lease terms that2022 has arisen primarily expire in 2018. Upon expiration of the leases, leasehold improvements could be construed as becoming the property of the related party lessors. As of December 31, 2017, the net book value associated with other leasehold and land improvements we constructed on properties subject to related party leases was $17.8 million, a portion of which is in construction in progress. We are depreciating the costs associated with these leasehold and land improvements over their estimated remaining lives of approximately 12 years, which exceeds the remaining lease terms that primarily expire in 2018. It is our intent to extend, renew, or replace the related party property leases such that we have unrestricted use of the buildings and improvements throughout their estimated useful lives. Extension, renewal or replacement of the related party property leases is dependent on negotiations with related parties, the failure of which could result in material disputes with the related parties. In the event we do not extend, renew, or replace these related82FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSparty property leases, we will revise the remaining estimated useful lives of the buildings and other improvements accordingly.We were a party to certain agreements relating to the rental of aircraft to Western Airways ("WA"), an entity owned by the Mosing family. The WA agreements reflected both dry lease and wet lease rental, whereby we were charged a flat monthly fee primarily for crew, hangar, maintenance and administration costs in addition to other variable costs for fuel and maintenance. We also earned charter income from third party usage through a revenue sharing agreement. We recorded net charter expense of $1.1 million, $1.3 million and $2.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. In August 2017, we paid WA a $0.2 million commission for brokering the sale of a plane. In December 2017, we sold a plane to Mosing Aviation, LLC, an entity owned by the Mosing family, for $0.7 million. The rental agreements were terminated with WA effective December 29, 2017 upon the sale of our last aircraft.Tax Receivable AgreementMosing Holdings and its permitted transferees converted all of their Preferred Stock into shares of our common stock on a one-for-one basis on August 26, 2016, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications and other similar transactions, by delivery of an equivalent portion of their interests in FICV to us (the “Conversion”). FICV made an election under Section 754 of the Internal Revenue Code. Pursuant to the Section 754 election, the Conversion resulted in an adjustment to the tax basis of the tangible and intangible assets of FICV with respect to the portion of FICV now held by FINV. These adjustments are allocated to FINV. The adjustments to the tax basis of the tangible and intangible assets of FICV described above would not have been available absent this Conversion. The basis adjustments may reduce the amount of tax that FINV would otherwise be required to pay in the future. These basis adjustments may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.The TRA that we entered into with FICV and Mosing Holdings in connection with our initial public offering ("IPO") generally provides for the payment by FINV of 85% of the amount of the actual reductions, if any, in payments of U.S. federal, state and local income tax or franchise tax (which reductions we refer to as “cash savings”) in periods after our IPO as a result of (i)increases in corporate bond yields, offset slightly by a loss relating to recognition of known inflation increases over 2022. The gain on the tax basis increases resulting frombenefit obligation has been further offset by the Conversionlower than expected asset returns over the period which again was primarily caused by the increase in corporate and (ii) imputed interest deemedgovernment bond yields.by us as a resultto our defined benefit plans during the years to December 31, 2032 is set out below (in thousands): $ 5,481 $ 5,691 $ 5,886 $ 6,135 $ 6,416 $ 22,495 payments under the TRA. In addition, the TRA provides for payment by us of interest earned from the due date (without extensions) of the corresponding tax return to the date of payment specified by the TRA. The payments under the TRA will not be conditioned upon a holder of rights under the TRA having a continued ownership interest in either FICV or FINV. We will retain the remaining 15% of cash savings, if any.The estimation of the liability under the TRA is by its nature imprecise and subject to significant assumptions regarding the amount and timing of future taxable income. As of December 31, 2016, our estimated TRA liability was $124.6 million, which was included in other non-current liabilities on our consolidated balance sheet. As of December 31, 2017, FINV has a cumulative loss over the prior 36 month period. Based on this history of losses, as well as uncertainty regarding the timing and amount of future taxable income, we are no longer able to conclude that there will be future cash savings that will lead to additional payouts under the TRA beyond the estimated $2.1 million as of December 31, 2017. Additional TRA liability may be recognized in the future based on changes in expectations regarding the timing and likelihood of future cash savings.The payment obligations under the TRA are our obligations in respect of defined retirement benefit plans and are not obligations of FICV. The term of the TRA will continue until all such taxpost-employment benefits have been utilized or expired, unless FINV elects to exercise its sole right to terminate the TRA early. If FINV elects to terminate the TRA early, which it may do sowas as follows (in thousands): $ (135,182 ) $ (241,808 ) 123,840 212,688 $ (11,342 ) $ (29,120 ) its sole discretion, it would be required to make an immediate payment equal to the present value of defined benefit obligations were as follows (in thousands): $ (241,808 ) $ (261,576 ) (357 ) (439 ) (4,307 ) (3,407 ) 81,772 10,967 23,823 2,378 5,695 10,269 $ (135,182 ) $ (241,808 ) $ 212,688 $ 203,630 (67,536 ) 16,877 (20,776 ) (2,245 ) 5,159 4,695 (5,695 ) (10,269 ) $ 123,840 $ 212,688 $ 6,796 $ 5,499 $ 6,064 (74,332 ) 11,378 16,678 $ (67,536 ) $ 16,877 $ 22,742 $ 134,102 $ 240,644 123,840 212,688 tax benefits payments to members is sensitive to changes in long term interest rates and long-term inflation expectations. Liability driven investment (“LDI”) funds are more sensitive to changes in these factors and therefore provide more efficient hedging than traditional bonds. A small proportion of the assets have therefore been invested in LDI funds to help to reduce the volatility of the U.K. Plan’s funding position. The hedging level is expected to be increased over time as the U.K. Plan’s funding position improves. 7.5 $ 55,633 4.6 $ 123,460 4.0 45,170 1.1 61,163 4.5 21,899 1.8 26,571 1.8 188 1.5 360 2.2 950 1.5 1,134 $ 123,840 $ 212,688 $ 55,633 $ - $ - $ 55,633 45,170 - - 45,170 21,899 - - 21,899 188 - - 188 172 395 383 950 $ 123,062 $ 395 $ 383 $ 123,840 $ 123,460 $ - $ - $ 123,460 61,163 - - 61,163 26,571 - �� - 26,571 360 - - 360 445 329 360 1,134 $ 211,999 $ 329 $ 360 $ 212,688 $ 360 $ 292 6 5 (6 ) 33 23 30 $ 383 $ 360 TRA (based upon certain assumptionsfulfilment of continued service and deemed events set fortha performance condition related to the occurrence of a Liquidity Event as defined in the TRA, includingMIP. Additionally, a portion of the assumption that it has sufficient taxable incomemanagement options are subject to fully utilize such benefitsperformance conditions linked to an internal rate of return. that any FICV interests that Mosing Holdings or its transferees own onoutstanding as of December 31, 2020 under the termination date areMIP. Legacy Expro granted no stock options in 2020.termination date). Any early termination payment may be made significantly in advancepost-reverse stock split Exchange Ratio of 1.2120 to 1. As of the actual realization, if any,modification date, there were 6.9 million MIP stock options issued and outstanding.such future benefits. In addition, payments dueall of the issued and outstanding MIP stock options was determined as of the Closing Date. Compensation expense was immediately recognized upon the Merger closing for all MIP stock options in which the service period was fulfilled. For the stock options in which the service period was not fulfilled, stock-based compensation expense is to be recognized based on the total modification date fair value of the associated awards on a straight-line basis over the remaining service period. 0.04 % 55 % 0.0 % $ 18.90 TRA will be similarly accelerated following certain mergers or other changesMIP were subject to vesting over a three year period. There were 0.1 million outstanding MIP RSUs as of control. In these situations,83FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFINV’s obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. For example, if the TRA were terminated on December 31, 2017,2020. No stock-based compensation expense attributable to the estimated termination paymentMIP RSUs was recognized during the year ended December 31, 2020 as the performance conditions within the agreements were deemed to be improbable. In February 2021, the MIP RSU awards were modified so that upon the closing of the Merger, the MIP RSUs would be approximately $60.7 million (calculated using a discount rateconvert to RSUs of 5.58%). The foregoing number is merely an estimate and the actual payment could differ materially.Because FINV is a holding company with no operations of its own, its ability to make payments under the TRA is dependentCompany based on the abilitypost-reverse stock split Exchange Ratio of FICV1.2120 to make distributions1 and would immediately vest pursuant to it in an amount sufficient to cover FINV’s obligations under such agreements; this ability, in turn, may dependthe terms of the Merger Agreement. As the MIP RSUs were fully vested on the abilityclosing of FICV’s subsidiariesthe Merger, the Company recognized $2.6 million of stock-based compensation expense attributable to provide paymentsthe MIP RSUs during the year ended December 31, 2021 and had no further expenses outstanding to it. The abilitybe recognized for the MIP RSUs as of FICV and its subsidiaries to make such distributions will be subject to, among other things,December 31, 2021 or during the applicable provisions of Dutch law that may limit the amount of funds available for distribution and restrictions in our debt instruments. To the extent that FINV is unable to make payments under the TRA for any reason, except in the case of an acceleration of payments thereunder occurring year ended December 31, 2022.an early terminationthe consummation of the TRA or certain mergers or change of control, such payments will be deferred and will accrue interest until paid, and FINV will be prohibited from paying dividends onMerger, the Company amended its common stock.Note 14—Income (Loss) Per Common ShareBasic income (loss) per common share is determined by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is determined by dividing income (loss) attributable to common stockholders by the weighted average number of common shares outstanding, assuming all potentially dilutive shares were issued.We apply the treasury stock method to determine the dilutive weighted average common shares represented by the unvested restricted stock units and ESPP shares. Through August 26, 2016, the date of the conversion of all of Mosing Holdings' Preferred Stock and Mosing Holdings' transfer of interest in FICV to us, the diluted income (loss) per share calculation assumed the conversion of 100% of our outstanding Preferred Stock on an as if converted basis. Accordingly, the numerator was also adjusted to include the earnings allocated2013 Long-Term Incentive Plan to the noncontrolling interest after taking into account the tax effect of such exchange.84FRANK’S INTERNATIONALExpro Group Holdings N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table summarizes the basic and diluted income (loss) per share calculations (in thousands, except per share amounts): Year Ended December 31, 2017 2016 2015 Numerator - Basic Net income (loss) $ (159,457 ) $ (156,079 ) $ 106,110 Less: Net (income) loss attributable to noncontrolling interest — 20,741 (27,000 ) Less: Preferred stock dividends — (1 ) (2 ) Net income (loss) available to common shareholders $ (159,457 ) $ (135,339 ) $ 79,108 Numerator - Diluted Net income (loss) attributable to common shareholders $ (159,457 ) $ (135,339 ) $ 79,108 — — 24,784 — — 2 Dilutive net income (loss) available to common shareholders $ (159,457 ) $ (135,339 ) $ 103,894 Denominator Basic weighted average common shares 222,940 176,584 154,662 — — 52,976 — — 1,512 — — 2 Diluted weighted average common shares 222,940 176,584 209,152 Income (loss) per common share: Basic $ (0.72 ) $ (0.77 ) $ 0.51 Diluted $ (0.72 ) $ (0.77 ) $ 0.50 (1) Adjusted for the additional tax expense upon the assumed conversion of the Preferred Stock $ — $ — $ 2,216 (2) Approximate number of shares of potentially convertible preferred stock to common stock up until the time of conversion on August 26, 2016, unvested restricted stock units and stock to be issued pursuant to the ESPP have been excluded from the computation of diluted income (loss) per share as the effect would be anti-dilutive when the results from operations are at a net loss. 648 35,556 — Note 15—Stock-Based Compensation2013 Long-Term Incentive Plan,Under our 2013 As Amended and Restated. Further, effective May 25, 2022, the Expro Group Holdings N.V. Long-Term Incentive Plan, As Amended and Restated was terminated and the Expro Group Holdings N.V. 2022 Long-Term Incentive Plan (the “LTIP”),“2022 LTIP” plan) was adopted and established by the Board and approved by the Company’s stockholders. Pursuant to the 2022 LTIP, stock options, SARs,stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and other types of equity and cash incentive awards may be granted to employees, non-employee directors and service providers.consultants. The LTIP expires after 10 years, unless prior to that date the maximum number of shares available for issuance under the plan has been issued or our board of directorsBoard terminates the plan. There are 20,000,000approximately 13.2 million shares of common stock reserved for issuance under the LTIP. As of December 31, 2017, 14,015,4712022, approximately 11.5 million shares remained available for issuance.85FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSUpon completion of the IPO and pursuant to the (“LTIP we began granting restricted stock units. Substantially allRSUs”)Our treasury stock consists of shares that wereShares withheld from employees to settle personal tax obligations that arose as a result of restricted stock unitsRSUs that vested.vested are included in our treasury stock. Certain restricted stock unitRSU awards provide for accelerated vesting for qualifying terminations of employment or service.restricted stock unitRSU is unvested. As such, the grant date fair value of the award is measured by reducing the grant date price of our common stock by the present value of the dividends expected to be paid on the underlying shares during the requisite service period, discounted at the appropriate risk-free interest rate. The weighted average grant date fair value of RSUs granted during the years ended December 31, 2017, 2016 and 2015 was $12.1 million, $11.6 million and $14.6 million, respectively. Compensation expense is recognized ratably over the vesting period. Forfeitures are recorded as they occur.included in generalwas $11.2 million and administrative expenses on the consolidated statements of operations$6.8 million for the years ended December 31, 2017, 2016 2022 and 20152021, respectively. No stock based compensation expense relating to the LTIP RSUs was $12.8 million, $15.6 million and $26.1 million, respectively. recognized for the year ended December 31, 2020. The total fair value of LTIP RSUs vested during the years ended December 31, 2017, 2016 2022 and 20152021 was $9.9 million, $22.6$13.0 million and $17.4$2.0 million respectively. UnamortizedAs of December 31, 2022, unrecognized stock compensation expense as of December 31, 2017 relating to LTIP RSUs totaled approximately $9.5$16.8 million, which will be expensed over a weighted average period of 1.751.0 years.Non-vested RSUs outstanding asDecember 31, 2017RSU information and the changes during the year were as follows: 883,079 $ 21.97 458,258 17.64 (93,688 ) 21.80 (12,549 ) 22.59 1,235,100 20.49 913,034 16.51 (593,037 ) 21.91 (70,899 ) 18.80 1,484,198 $ 17.51 Number of
Shares Weighted Average
Grant Date
Fair ValueNon-vested at December 31, 2016 1,633,478 $ 14.40 Granted 1,368,999 8.83 Vested (995,845 ) 14.66 Forfeited (141,332 ) 9.46 Non-vested at December 31, 2017 1,865,300 $ 10.55 three-year performance cycle with returns to FINV'sthe Company’s shareholders and thereby further motivate the executive leadership team to create sustained value to FINVthe Company shareholders. The design of the PRSU grants effectuates this purpose by placing a material amount of incentive compensation for each executive at risk by offering an extraordinary reward for the attainment of extraordinary results. Design features of the PRSU grant that in furtherance of this purpose include the following: (1)(1) The vesting of the PRSUs is based on total shareholder return ("TSR"(“TSR”) based on a comparison to the returns of a peer group. (2)group, which is the SPDR S&P Oil & Gas Equipment and Services ETF. (2) TSR performance is computed overcalculated separately with respect to three separate one-year achievement periods included in the entire three-yearthree-year Performance Period (using(as defined below), resulting in a 30-day averaging period forweighted average payout at the first 30 calendar days and the last 30 calendar daysend of the three-year Performance Period to mitigate the effect of stock price volatility).Period. The TSR calculation will assume reinvestment of dividends. (3)(3) The ultimate number of shares to be issued pursuant to the PRSU awards will vary in proportion to the actual TSR achieved as a percentile compared to the peer group during the Performance Period as follows: (i) no shares will be issued if the Company'sCompany’s performance falls below the 25th percentile; (ii) 50% of the Target Level (as defined below) if the Company achieves a rank in the 25th percentile (the threshold level); (iii) 100% of the Target Level if the Company achieves a rank in the 50th percentile (the target level); and (iv) 150% of the Target Level if the Company achieves a rank in the 75th percentile; and 200% of the Target Level if the Company achieves a rank in the 90th percentile and above (the maximum level). (4)(4) Unless there is a qualifying termination as defined in the PRSU award agreement, the PRSU'sPRSUs of an executive will be forfeited upon an executive'sexecutive’s termination of employment during the Performance Period.86FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSstock basedstock-based on 50% of historical and 50% of implied volatility weighting commensurate with the expected term of the PRSU. The expected volatility considers factors such as the historical volatility of our share price and our peer group companies, implied volatility of our share price, length of time our shares have been publicly traded, and split- and dividend-adjusted closing stock prices. We assumedforfeiture rate forshares were granted under the PRSUs.2017,2021, we granted 354,275 PRSUs with a fair value of $2.6 million or 293,083 units ("(“Target Level"Level”). The performance period for these grants is a three-yearthe three-year period from either January 1, 2017 2022 to December 31, 2019 or September 27, 2017 2024 (“Performance Period”), but with separate one-year achievement periods from January 1, 2022 to September 26, 2020 ("December 31, 2022, January 1, 2023 to December 31, 2023, and January 1, 2024 to December 31, 2024, resulting in a weighted average payout at the end of the Performance Period").
The weighted average assumptions for the PRSUs granted in 2017 are2021 were as follows: 2017Expected2.923.25 42.1%84.2 1.51%0.54 % 26.8% to 76.0%In 2016, we granted PRSUs with a fair value of $2.8 million or 199,168 units ("Target Level"). The performance period for these grants is a three-year period from January 1, 2016 to December 31, 2018 ("Performance Period").The weighted average assumptions for the PRSUs granted in 2016 are as follows: 201621.2% to 79.5 % Expected term (in years)2.86Expected volatility42.7%Risk-free interest rate0.88%Correlation range24.4% to 71.0%death.event. In the event of involuntary termination except for cause, the Company will may enter into a special vesting agreement with the executive under which the restrictions for forfeiture will not lapse upon such termination. In the event of a termination for any other reason prior to the end of the Performance Period, all PRSUs will be forfeited.included in general and administrative expenses on the consolidated statements of operations for the years ended December 31, 2017 and 2016 was $0.6$3.2 million and $0.8$5.2 million, respectively. We had no stock-based compensation expense related to PRSUsrespectively, for the year ended December 31, 2015. 2022 and December 31, 2021. No stock based compensation expense relating to the PRSUs was recognized for the year ended December 31, 2020. The total fair value of PRSUs vested during the yearyears ended December 31, 20172022 and 2021, was $0.2 million. Unamortized$9.9 million and $0.1 million respectively. As of December 31, 2022, unrecognized stock compensation expense as of December 31, 2017 relating to PRSUs totaled approximately $2.2$5.4 million, which will be expensed over a weighted average period of 2.290.5 years.87Non-vested PRSUs outstanding as of December 31, 2017 and the changes during the year were as follows: Number of
Shares Weighted Average
Grant Date
Fair ValueNon-vested at December 31, 2016 199,168 $ 14.21 Granted 293,083 8.74 Vested (26,126 ) 6.99 Forfeited (81,880 ) 9.60 Non-vested at December 31, 2017 384,245 $ 9.01 340,071 $ 32.38 354,275 23.34 (2,715 ) 29.72 691,631 $ 27.75 (305,119 ) 32.50 386,512 $ 24.00 Frank's InternationalExpro Group Holdings N.V. ESPP,Employee Stock Purchase Program (“ESPP”), eligible employees have the right to purchase shares of common stock at the lesser of (i) 85% of the last reported sale price of our common stock on the last trading date immediately preceding the first day of the option period, or (ii) 85% of the last reported sale price of our common stock on the last trading date immediately preceding the last day of the option period. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. We have reserved 3.0 million500,000 shares of our common stock for issuance under the ESPP, of which 2.7 million133,863 shares were available for issuance as of December 31, 2017. Shares issued to our employees under the ESPP totaled 155,673 in 2017 and 75,974 shares in 2016. 2022. For the years ended December 31, 2017, 2016 2022 and 2015,2021, we recognized $0.4 million, $0.3$0.5 million and $0.2$0.1 million of compensation expense related to stock purchased under the ESPP, respectively.
In January 2017, we issued 50,141 $ (20,145 ) $ (131,891 ) $ (307,045 ) 109,072,761 80,525,694 70,889,753 $ (0.18 ) $ (1.64 ) $ (4.33 ) our commonunvested restricted stock units and stock to our employees under this planbe issued pursuant to satisfy the employee purchase periodESPP have been excluded from July 1, 2016 to the computation of diluted loss per share as the effect would be anti-dilutive for the year ended December 31, 2016,2022.increased our commonshares were issuable for outstanding warrants and stock outstanding.In July 2017, we issued 105,532 shares outoptions were not satisfied as of treasury stock to our employees under this plan to satisfyDecember 31, 2020, assuming the employee purchase period from January 1, 2017 to June 30, 2017.Note 16—Employee Benefit PlansU.S. Benefit Plans401(k) Savings and Investment Plan. Frank's International, LLC administers a 401(k) savings and investment plan (the “Plan”) as partrespective balance sheet date was at the end of the employee benefits package. Employees are required to complete one monthcontingency period, they had not been included in determining the number of service before becoming eligible to participate in the Plan. Under the termsanti-dilutive shares.Plan upConsolidated Financial Statementsthe annual allowable IRS limit. Additionally, the Company provides a 50% match on any employee contributions between 4% to 6% of eligible compensation. Our matching contributions to the Plan totaled $3.7related parties totaling $5.4 million, $3.8$6.8 million and $3.4$13.9 million, respectively. During the year ended December 31, 2022, we received services from related parties totaling $1.0 million.2017, 20162022 and 2015,2021, respectively.Executive Deferred Compensation Plan. In December 2004, we and certain affiliates adopted the Frank’s Executive Deferred Compensation Plan (the “EDC Plan”). The purpose of the EDC Plan is to provide participants with an opportunity to defer receipt of a portion of their salary, bonus, and other specified cash compensation. Participant contributions are immediately vested. Our contributions vest after five years of service. All participant benefits under this EDC Plan shall be paid directly from the general funds of the applicable participating subsidiary or a grantor trust, commonly referred to as a Rabbi Trust, created for the purpose of informally funding the EDC Plan, and other than such Rabbi Trust, no special or separate fund shall be established and no other segregation of assets shall be made to assure payment. The assets of our EDC Plan’s trust are invested in a corporate owned split-dollar life insurance policy and an amalgamation of mutual funds (See Note 7 - Other Assets).We recorded compensation expense related to the vesting of the Company’s contribution of $1.7 million and $1.9 million for20162022, 2021 and 2015,2020, we received dividends from CETS and PVD-Expro totaling $7.3 million, $4.1 million and $3.6 million, respectively. No compensation expense related to the vesting88FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSthe Company's contribution was recorded for the year ended December 31, 2017. The total liability recorded at December 31, 2017 2022 and 2016,2021, amounts receivable from related to the EDC Plan was $26.8parties were $2.4 million and $31.1$1.6 million, respectively, and was included amounts payable to related parties were $0.8 million and $2.1 million as of December 31, 2022 and 2021, respectively.other noncurrent liabilities onconnection with its delivery to Frank’s of all of its interests in Frank’s International C.V. (“FICV”) (the “Conversion”).consolidated balance sheets.Note 17—Income TaxesIncome (loss) beforepayment by Frank’s to Mosing Holdings of 85% of the net cash savings, if any, in U.S. federal, state and local income tax expense (benefit) was comprised ofand franchise tax that Frank’s actually realize (or are deemed to realize in certain circumstances) in periods after the following for the periods indicated (in thousands): Year Ended December 31, 2017 2016 2015 United States $ (167,908 ) $ (128,396 ) $ 30,795 Foreign 81,369 (53,326 ) 112,634 Income (loss) before income tax expense (benefit) $ (86,539 ) $ (181,722 ) $ 143,429 Income taxes have been provided for based upon the tax laws and rates in the countries in which operations are conducted and income is earned. Components of income tax expense (benefit) consist of the following for the periods indicated (in thousands): Year Ended December 31, 2017 2016 2015 Current U.S. federal $ — $ (13,389 ) $ 3,141 U.S. state and local (15 ) 379 (1,424 ) Foreign 10,516 14,903 30,734 Total current 10,501 1,893 32,451 Deferred U.S. federal 56,621 (25,838 ) 8,138 U.S. state and local 2,420 (1,512 ) (3,042 ) Foreign 3,376 (186 ) (228 ) Total deferred 62,417 (27,536 ) 4,868 Total income tax expense (benefit) $ 72,918 $ (25,643 ) $ 37,319 On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. Among the significant changes made by the Act was the reduction of the U.S. federal income tax rate from 35% to 21% as well as the imposition of a one-time repatriation tax on deemed repatriated earnings of certain foreign subsidiaries. US GAAP requires that the impact of the Tax Act be recognized in the period in which the law was enacted. Because of the change in tax rate, the Company recorded a $23.8 million reduction in the value of its deferred tax assets and liabilities. The reduction in value was fully offset by a corresponding change in valuation allowance. The net effect on total tax expense was zero. Due to its legal structure, the Company does not expect to incur any material liability with respect to the repatriation tax. These provisional amounts are the Company’s best estimates based on its current interpretation of the Tax Act and may change as the Company receives additional clarification of the Tax Act and/or guidance on its implementation as part of its 2017 income tax compliance process.89FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSForeign taxes were incurred in the following regions for the periods indicated (in thousands): Year Ended December 31, 2017 2016 2015 Latin America $ 5,469 $ 1,159 $ 6,077 West Africa 3,243 3,687 8,413 Middle East 1,633 1,880 5,474 Europe 1,348 5,132 3,317 Asia Pacific 1,388 1,364 1,454 Other 812 1,495 5,771 Total foreign income tax expense $ 13,893 $ 14,717 $ 30,506 A reconciliation of the differences between the income tax provision computed at the 35% U.S. statutory rate in effect at December 31, 2017 and the reported provision for income taxes for the periods indicated is as follows (in thousands): Year Ended December 31, 2017 2016 2015 Income tax expense (benefit) at statutory rate $ (30,289 ) $ (63,603 ) $ 50,200 Branch profits tax (4,871 ) (3,805 ) 4,654 State taxes, net of federal benefit 2,405 (674 ) (2,758 ) Restricted stock units tax shortfall 1,651 2,758 1,152 Taxes on foreign earnings at less than the U.S. statutory rate (22,464 ) 30,737 (15,367 ) Effect of tax rate change 23,843 — — Tax effect of TRA derecognition 46,874 — — Establishment of valuation allowances 51,911 2,644 2,798 Return-to-provision adjustments 3,551 (1,130 ) (854 ) Noncontrolling interest — 7,367 (2,991 ) Other 307 63 485 Total income tax expense (benefit) $ 72,918 $ (25,643 ) $ 37,319 A reconciliation using the Netherlands statutory rate was not provided as there are no significant operations in the Netherlands.90FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDeferred tax assets and liabilities are recorded for the anticipated future tax effects of temporary differences between the financial statement basis and tax basis of our assets and liabilities and are measured using the tax rates and laws expected to be in effect when the differences are projected to reverse. A valuation allowance is recorded when it is not more likely than not that some or all the benefit from the deferred tax asset will be realized. Significant components of deferred tax assets and liabilities are as follows (in thousands): December 31, 2017 2016 Deferred tax assets Foreign net operating loss $ 13,023 $ 5,442 U.S. net operating loss 52,289 42,578 Research and development credit 297 297 TRA 566 49,775 Intangibles 5,935 6,939 Inventory 1,488 1,161 Investment in partnership 20,248 16,713 Other 419 1,240 Valuation allowance (60,524 ) (5,442 ) Total deferred tax assets 33,741 118,703 Deferred tax liabilities Investment in partnership (23,594 ) (45,022 ) Property and equipment (4,293 ) (7,898 ) Goodwill (5,854 ) (7,147 ) Other (229 ) (278 ) Total deferred liabilities (33,970 ) (60,345 ) Net deferred tax assets (liabilities) $ (229 ) $ 58,358 The valuation allowance increased from $5.4 million to $60.5 million during 2017IPO as a result of accumulated(i) tax losses in bothbasis increases resulting from the U.S.Conversion and various foreign(ii) imputed interest deemed to be paid by Frank’s as a result of, and additional tax jurisdictions. We evaluated all available evidencebasis arising from, payments under the Original TRA. Frank’s retained the benefit of the remaining 15% of these cash savings, if any.determined that it is more likely than not that these losses will not be realized.It is our intention that all cashMosing Holdings entered into the Amended and earnings of our subsidiariesRestated Tax Receivable Agreement, dated as of December 31, 2017 are permanently reinvested and will be used to meet operating cash flow needs. Existing plans do not demonstrate a need to repatriate foreign cash to fund parent company activity, however, should we determine that parent company funding is required, we estimate that any such cash needs may be met without adverse tax consequences.As of both December 31, 2017 and 2016, we had total gross unrecognized tax benefits of $0.2 million. Substantially all of March 10, 2021 (the uncertain tax positions, if recognized in the future, would impact our effective tax rate. We have elected to classify interest and penalties incurred on income taxes as income tax expense. We file income tax returns in the U.S. and various international tax jurisdictions. As of December 31, 2017, our U.S. tax returns remain open to examination for the tax years 2013 through 2016, and the major foreign taxing jurisdictions to which we are subject are open to examination for the tax years 2010 through 2016.91FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 18—Commitments and ContingenciesCommitmentsWe are committed under various noncancelable operating lease agreements primarily related to facilities and equipment that expire at various dates throughout the next several years. Future minimum lease commitments under noncancelable operating leases with initial or remaining terms of one year or more at December 31, 2017, are as follows (in thousands):Year Ending December 31, Amount 2018 $ 10,563 2019 6,175 2020 4,845 2021 4,276 2022 3,606 Thereafter 7,925 Total future lease commitments $ 37,390 Total rent expense incurred under operating leases was $18.7 million, $19.1 million, and $19.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.We also have purchase commitments primarily related to inventory in the amount of $22.1 million. We enter into purchase commitments as needed.ContingenciesWe are the subject of lawsuits and claims arising in the ordinary course of business from time to time. A liability is accrued when a loss is both probable and can be reasonably estimated. We had no material accruals for loss contingencies, individually or in the aggregate, as of December 31, 2017 and December 31, 2016. We believe the probability is remote that the ultimate outcome of these matters would have a material adverse effect on our financial position, results of operations or cash flows.We are conducting an internal investigation of the operations of certain of our foreign subsidiaries in West Africa including possible violations of the U.S. Foreign Corrupt Practices Act, our policies and other applicable laws. In June 2016, we voluntarily disclosed the existence of our extensive internal review“A&R TRA”). Pursuant to the SEC, A&R TRA, on October 1, 2021, the United States DepartmentCompany made a payment of Justice and other governmental entities. It is our intent$15 million to fully cooperate with these agencies and any other applicable authorities in connection with any further investigationsettle the early termination payment obligations that may be conducted in connection with this matter. While our review has not indicated that there has been any material impact on our previously filed financial statements, we have continued to collect information and cooperate with the authorities, but at this time are unable to predict the ultimate resolution of these matters with these agencies. In addition, during the course of the investigation, we discovered historical business transactions (and bids to enter into business transactions) in certain countries that maywould otherwise have been subjectowed to U.S. and other international sanctions. We have disclosed this information to various governmental entities (including those involved in our ongoing investigation), but at this time are unable to predictMosing Holdings under the ultimate resolution of these matters with these agencies, including any financial impact to us.Note 19—Severance and Other ChargesWe recognize severance and other charges for costs associated with workforce reductions, facility closures, exiting or reducing our footprint in certain countries, inventory impairment and the retirement of excess machinery and equipment based on economic utility. AsOriginal TRA as a result of the downturnMerger. As the payment was a condition precedent to effect the Merger, it was included in the industry that begandetermination of Merger consideration exchanged. Refer to Note 3 “Business combinations and dispositions” for more details. The A&R TRA also provides for other contingent payments to be made by the Company to Mosing Holdings in 2015 and its impact on our business outlook, we continue to take actions to adjust our operations and cost structure to reflect current and92expected activity levels. Depending on future market conditions, further actions may be necessary to adjust our operations, which may result in additional charges.Our severance and other charges are summarized below (in thousands): Year Ended December 31, 2017 2016 2015 Severance and other costs $ 2,697 $ 16,525 $ 35,484 Fixed asset retirements and abandonments 6,454 29,881 — Inventory impairment 51,181 — — Accounts receivable write-offs 15,022 — — $ 75,354 $ 46,406 $ 35,484 Severance and other costs: During the year ended December 31, 2015, we incurred costs of $35.5 million due to executing a workforce reduction plan which included closing certain facilities and terminating leases. Also, the then Chairman of the Board of Supervisory Directors (who also held the role of Executive Chairman of our company) transitioned to a non-executive director of the supervisory board effective as of December 31, 2015. During the years ended December 31, 2017 and 2016, we incurred $2.7 million and $16.5 million, respectively, due to a continued effort to adjust our workforce to meet the depressed demand in the industry.Fixed asset retirements and abandonments: During the year ended December 31, 2016, we identified certain equipment that based on specifications and current market conditions no longer had economic utility and therefore had reached the end of its useful life. Accordingly, management decided to retire this equipment, which resulted in charges of $29.9 million. During the year ended December 31, 2017, we retired additional equipment priorNotes to the end of its originally estimated useful lives, as well as abandoned capital projects, which resulted in a charge of $6.5 million.Consolidated Financial StatementsInventory impairment: As further discussed in Note 5 – Inventories, we determined the cost of our connector inventory exceeded its net realizable value, which resulted in a charge of $51.2 million.Accounts receivable write-offs: We have experienced payment delays from certain customers in Nigeria, Angola and Venezuela. During the fourth quarter of 2017 management decided to significantly reduce our footprint in Nigeria and Angola and temporarily cease operations in Venezuela, which we believe will diminish our ability to collect amounts owed. As a result, we wrote off trade accounts receivable of $15.0 million during the year ended December 31, 2017.Note 20— Information $ (33,171 ) $ (20,130 ) $ (21,437 ) (3,851 ) (4,192 ) (2,630 ) (14,721 ) (8,191 ) (9,375 ) - 552,543 - Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands): Year Ended December 31, 2017 2016 2015 Cash paid for interest $ 296 $ 447 $ 180 Cash paid (received) for income taxes, net of refunds (20,732 ) 8,754 20,499 Non-cash transactions: Change in accounts payable related to capital expenditures $ 5,761 $ 1,658 $ (3,534 ) Insurance premium financed by note payable 5,125 — 7,630 Net transfers from inventory to property, plant and equipment 4,689 — — Value of shares issued for Blackhawk Group acquisition — 144,047 — Conversion of Preferred Stock — 55,941 — TRA liability — 124,531 — Deferred tax impact of TRA — 68,590 — 93FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 21—Segment InformationReporting SegmentsOperating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. We are comprised of four reportable segments: International Services, U.S. Services, Tubular Sales and Blackhawk.The International Services segment provides tubular services in international offshore markets and in several onshore international regions. Our customers in these international markets are primarily large exploration and production companies, including integrated oil and gas companies and national oil and gas companies, and other oilfield services companies.The U.S. Services segment provides tubular services in the active onshore oil and gas drilling regions in the U.S., including the Permian Basin, Eagle Ford Shale, Haynesville Shale, Marcellus Shale, Niobrara Shale and Utica Shale, as well as in the U.S. Gulf of Mexico.The Tubular Sales segment designs, manufactures and distributes large outside diameter ("OD") pipe, connectors and casing attachments and sells large OD pipe originally manufactured by various pipe mills. We also provide specialized fabrication and welding services in support of offshore projects, including drilling and production risers, flowlines and pipeline end terminations, as well as long length tubulars (up to 300 feet in length) for use as caissons or pilings. This segment also designs and manufactures proprietary equipment for use in our International and U.S. Services segments.The Blackhawk segment provides well construction and well intervention services and products, in addition to cementing tool expertise, in the U.S. and Mexican Gulf of Mexico, onshore U.S. and other select international locations. Blackhawk’s customer base consists primarily of major and independent oil and gas companies as well as other oilfield services companies.Adjusted EBITDAWe define Adjusted EBITDA as net income (loss) before interest income, net, depreciation and amortization, income tax benefit or expense, asset impairments, gain or loss on disposal of assets, foreign currency gain or loss, equity-based compensation, unrealized and realized gain or loss, the effects of the TRA, other non-cash adjustments and other charges or credits. We review Adjusted EBITDA on both a consolidated basis and on a segment basis. We use Adjusted EBITDA to assess our financial performance because it allows us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), income tax, foreign currency exchange rates and other charges and credits. Adjusted EBITDA has limitations as an analytical tool and should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP.Our CODM uses Adjusted EBITDA as the primary measure of segment reporting performance.94The following table presents a reconciliation of Segment Adjusted EBITDA to net income (loss) (in thousands): Year Ended December 31, 2017 2016 2015 Segment Adjusted EBITDA: International Services $ 30,801 $ 33,264 $ 182,475 (39,357 ) (11,012 ) 95,612 Tubular Sales 3,181 1,741 40,999 Blackhawk 11,090 1,038 — Total 5,715 25,031 319,086 Interest income, net 2,309 2,073 341 Income tax (expense) benefit (72,918 ) 25,643 (37,319 ) Depreciation and amortization (122,102 ) (114,215 ) (108,962 ) Gain (loss) on disposal of assets 2,045 (1,117 ) 1,038 Foreign currency gain (loss) 2,075 (10,819 ) (6,358 ) 122,515 — — (99,096 ) (82,675 ) (61,716 ) Net income (loss) $ (159,457 ) $ (156,079 ) $ 106,110 (1)Amounts previously reported as Corporate and other of $478 and $96 for 2016 and 2015, respectively, have been reclassified to U.S. Services to conform to the current presentation.(2)Please see Note 13 - Related Party Transactions for further discussion.(3)Comprised of Equity-based compensation expense (2017: $13,862; 2016: $15,978; 2015: $26,318), Mergers and acquisition expense (2017: $459; 2016: $13,784; 2015: none), Severance and other charges (2017: $75,354; 2016: $46,406; 2015: $35,484), Changes in value of contingent consideration (2017: none; 2016: none; 2015: $(1,532)), Unrealized and realized losses (2017: $2,791; 2016: $110; 2015: none), Investigation-related matters (2017: $6,143; 2016: $6,397; 2015: $1,446) and Other adjustments (2017: $487; 2016: none; 2015: none).95FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe following table sets forth certain financial information with respect to our reportable segments. Included in “Corporate and Other” are intersegment eliminations (in thousands): Tubular Sales Blackhawk Eliminations Total Year Ended December 31, 2017 Revenue from external customers $ 206,746 $ 118,815 $ 58,210 $ 71,024 $ — $ 454,795 Inter-segment revenues 23 17,071 14,132 129 (31,355 ) — Operating income (loss) (44,199 ) (101,602 ) (51,397 ) (17,544 ) — (214,742 ) Adjusted EBITDA 30,801 (39,357 ) 3,181 11,090 — * Depreciation and amortization 54,873 38,151 3,697 25,381 — 122,102 Property, plant and equipment 197,305 173,501 66,153 32,687 — 469,646 Capital expenditures 7,042 9,618 268 4,977 — 21,905 Year Ended December 31, 2016 Revenue from external customers $ 237,207 $ 152,827 $ 87,515 $ 9,982 $ — $ 487,531 Inter-segment revenues 68 19,590 19,456 — (39,114 ) — Operating income (loss) (41,668 ) (116,603 ) (2,884 ) (2,207 ) — (163,362 ) 33,264 (11,012 ) 1,741 1,038 — * Depreciation and amortization 59,435 47,438 4,087 3,255 — 114,215 Property, plant and equipment 247,913 201,772 73,316 44,023 — 567,024 Capital expenditures 23,461 18,112 540 14 — 42,127 Year Ended December 31, 2015 Revenue from external customers $ 442,107 $ 326,437 $ 206,056 $ — $ — $ 974,600 Inter-segment revenues 754 25,844 35,927 — (62,525 ) — Operating income (loss) 118,235 (10,783 ) 36,203 — — 143,655 182,475 95,612 40,999 — — * Depreciation and amortization 58,163 46,548 4,251 — — 108,962 Property, plant and equipment 288,089 248,153 88,717 — — 624,959 Capital expenditures 42,772 28,881 28,070 — — 99,723 (1)Amounts previously reported as Corporate and other of $478 and $96 for 2016 and 2015, respectively, have been reclassified to U.S. Services to conform to the current presentation.* Non-GAAP financial measure not disclosed. The CODM does not review total assets by segment as part of the financial information provided; therefore, no asset information is provided in the above table.96FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSWe are a Netherlands based company and we derive our revenue from services and product sales to clients primarily in the oil and gas industry. For the years ended December 31, 2017 and 2016, one customer accounted for 10% and 13% of our revenues, respectively. In both years, all four of our segments generated revenue from this customer. No single customer accounted for more than 10% of our revenue for the year ended December 31, 2015.Geographic Areas Year Ended December 31, 2017 2016 2015 Revenue: United States $ 244,684 $ 247,864 $ 530,133 Europe/Middle East/Africa 138,304 160,651 314,173 Latin America 33,131 35,390 56,515 Asia Pacific 20,573 30,325 55,995 Other countries 18,103 13,301 17,784 $ 454,795 $ 487,531 $ 974,600 The revenue generated in the Netherlands was immaterial for the years ended December 31, 2017, 2016 and 2015. Other than the United States, no individual country represented more than 10% of our revenue for the years ended December 31, 2017 and December 31, 2016. For the year ended December 31, 2015, the United States as well as the United Arab Emirates, which had revenues of $140.4 million, represented more than 10% of our revenue. Revenue is based on the location where services are provided and products are sold. December 31, 2017 2016 Long-Lived Assets (PP&E) United States $ 272,342 $ 319,111 International 197,304 247,913 $ 469,646 $ 567,024 Based on the unique nature of our operating structure, revenue generating assets are interchangeable between two categories: (i) offshore and (ii) onshore. In addition, some onshore assets can only be used in the U.S. based upon certification. Long-lived assets in the Netherlands were insignificant in each of the years presented.97FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote 22—Quarterly Financial Data (Unaudited)Summarized quarterly financial data for the years ended December 31, 2017 and 2016 is set forth below (in thousands, except per share data). First Second Third Fourth Quarter Quarter Quarter Quarter Total 2017 Revenue $ 110,731 $ 117,659 $ 108,083 $ 118,322 $ 454,795 8,827 11,811 9,411 7,141 37,190 (36,610 ) (33,966 ) (35,080 ) (109,086 ) (214,742 ) (26,663 ) (25,950 ) 2,296 (109,140 ) (159,457 ) Basic and diluted $ (0.12 ) $ (0.12 ) $ 0.01 $ (0.49 ) $ (0.72 ) 2016 Revenue $ 153,486 $ 120,946 $ 105,114 $ 107,985 $ 487,531 41,945 10,168 6,919 5,717 64,749 Operating loss (2,882 ) (50,678 ) (48,932 ) (60,870 ) (163,362 ) Net loss (2,408 ) (45,287 ) (42,198 ) (66,186 ) (156,079 ) Net loss attributable to Frank's International N.V. common shareholders (772 ) (31,398 ) (36,982 ) (66,186 ) (135,338 ) Basic and diluted $ — $ (0.20 ) $ (0.21 ) $ (0.30 ) $ (0.77 ) (1)Gross profit is defined as total revenue less cost of revenues less depreciation and amortization attributed to cost of revenues.(2)Fourth quarter includes inventory impairments of $51.2 million and accounts receivable write-offs of $15.0 million. Please see Note 19 – Severance and Other Charges in these Notes to Consolidated Financial Statements.(3)Third quarter includes the impact of the derecognition of the TRA liability. Please see Note 13 – Related Party Transactions in these Notes to Consolidated Financial Statements.(4)The sum of the individual quarterly income (losses) per share amounts may not agree with year-to-date net income (loss) per common share as each quarterly computation is based on the weighted average number of common shares outstanding during that period.98FRANK’S INTERNATIONAL N.V.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSOur financial statements for the periods ended September 30, June 30 and March 31, 2017 will be revised to correct for immaterial misclassifications resulting in a decrease cost of revenues, services and increase cost of revenues, products by the following amounts associated with Blackhawk product cost. While the revisions do impact two financial statement line items, the revisions had no impact on our net income (loss), working capital, cash flows or total equity previously reported (in thousands). The 2017 quarterly revisions will be effected in connection with the 2018 unaudited interim financial statements filings on Form 10-Q. Three Months Ended Six Months Ended Nine Months Ended March 31, 2017 June 30, 2017 September 30, 2017 June 30, 2017 September 30, 2017 Cost of revenues, exclusive of depreciation and amortization Services, as previously reported $ 57,107 $ 60,777 $ 60,981 $ 117,884 $ 178,865 Blackhawk adjustment (5,424 ) (5,460 ) (5,480 ) (10,884 ) (16,364 ) Services, as revised 51,683 55,317 55,501 107,000 162,501 Products, as previously reported $ 16,845 $ 17,567 $ 10,750 $ 34,412 $ 45,162 Blackhawk adjustment 5,424 5,460 5,480 10,884 16,364 Products, as revised 22,269 23,027 16,230 45,296 61,526 99principal executive officerCEO and principal financial officer,CFO, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-K. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officerCEO and principal financial officer,CFO, as appropriate, to allow timely decisions regarding required disclosure, and such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officerCEO and principal financial officerCFO have concluded that our disclosure controls and procedures were effective as of December 31, 20172022, at the reasonable assurance level. Report Regarding Internal ControlSee Management’s Report on Internal Control Over Financial ReportingControls Part II, Item 8, "Financial Statementsthe Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and Supplementary Data"the preparation of this Form 10-K."Financial“Financial Statements and Supplementary Data"Data” of this Form 10-K.There2017,2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.1002017.2017.2017.2017.2017.101"Financial“Financial Statements and Supplementary Data"Data” of this Form 10-K. For a listing of these statements and accompanying footnotes, see "Index“Index to Consolidated Financial Statements"Statements” at page 55.Schedule II - Valuation and Qualifying AccountsFinancial statement schedules are listed on page 103. above have been omitted because they are not applicable or not required or the information required to be set forth therein is included in Item 8, "Financial“Financial Statements and Supplementary Data"Data” or notes thereto.Exhibitslisted in the exhibit index beginning on page 104.Item 16. Form 10-K SummaryNone.102 FRANK'S INTERNATIONAL N.V. Schedule II - Valuation and Qualifying Accounts (In thousands) Deductions Other Year Ended December 31, 2017 Allowance for doubtful accounts $ 14,337 $ 346 $ (9,725 ) $ (181 ) $ 4,777 Allowance for excess and obsolete inventory 4,626 19,727 (2,769 ) — 21,584 Allowance for deferred tax assets 5,442 53,399 (1,125 ) — 57,716 Year Ended December 31, 2016 Allowance for doubtful accounts $ 2,528 $ 10,374 $ (761 ) $ 2,196 $ 14,337 2,200 1,762 (1,855 ) 2,519 4,626 Allowance for deferred tax assets 2,798 2,644 — — 5,442 Year Ended December 31, 2015 Allowance for doubtful accounts $ 2,477 $ 570 $ (751 ) $ 232 $ 2,528 5,005 1,312 (703 ) (3,414 ) 2,200 Allowance for deferred tax assets — 2,798 — — 2,798 (1)"Other" includes allowances acquired through business combinations and reductions in the allowance credited to expense.103Exhibit Index10.210.10Indemnification10.310.11Indemnification Agreement† 10.410.12IndemnificationService Agreement, dated August 14, 2013, by and among Frank's International N.V. and Sheldon Erikson (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K (File No. 001-36053), filed on August 19, 2013).†10.5Indemnification Agreement dated August 14, 2013, by and among Frank's International N.V. and Steven B. Mosing (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K (File No. 001-36053), filed on August 19, 2013).†10.6Indemnification Agreement dated November 6, 2013,as of September 29, 2021, by and between Frank’s International N.V.Expro North Sea Ltd and Michael C. KearneyJohn McAlister (incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K (File No. 001-36053), filed on March 6, 2015)8, 2022).10.710.13†10.8Indemnification Agreement dated February 3, 2014, by and among Frank's International N.V. and Burney J. Latiolais, Jr. (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K (File No. 001-36053), filed on March 4, 2014).†10.9Indemnification Agreement dated December 1, 2014, by and between Frank’s International N.V. and Jeffrey J. Bird (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-36053), filed on December 1, 2014).†10.10Indemnification Agreement dated January 23, 2015, by and between Frank’s International N.V. and William B. Berry (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-36053), filed on January 27, 2015).†10.11Indemnification Agreement dated May 4, 2015, by and between Frank's International N.V. and Daniel A. Allinger (incorporated by reference to Exhibit 10.12 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 29, 2016).†10.12Indemnification Agreement dated August 4, 2015, by and between Frank's International N.V. and Alejandro Cestero (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 29, 2016).†10.13Indemnification Agreement dated October 19, 2015, by and between Frank's International N.V. and Ozong E. Etta (incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 29, 2016).Indemnification Agreement dated May 20, 2016, by and between Frank's International N.V. and Michael E. McMahon.Indemnification Agreement dated May 20, 2016, by and between Frank's International N.V. and Alexander Vriesendorp.104†10.16Indemnification Agreement dated November 15, 2016, by and between Frank's International N.V. and Douglas Stephens (incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 24, 2017)March 8, 2022).† 10.1710.14IndemnificationForm of Director Confidentiality Agreement dated March 2, 2017, by and between Frank's International N.V. and Kyle McClure (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-36053), filed on August 7, 2017)4, 2022).10.1810.15Indemnification Agreement dated March 19, 2017, byIndemnification Agreement dated February 19, 2018, by and between Frank's International N.V. and Scott A. McCurdy.Employee Confidentiality and Restrictive Covenant Agreement dated October 4, 2016 between Burney J. Latiolais, Jr. and Frank's International, LLC.†10.21Employment Offer for Burney J. Latiolais, Jr. effective as of October 5, 2016 (incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 24, 2017).†10.22Separation, Consulting, and General Release Agreement by and between Gary P. Luquette, Frank’s International, LLC and Frank’s International N.V., effective as of November 11, 2016 (incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 24, 2017).†10.23Separation Agreement and Release dated as of January 25, 2017 and effective as of January 25, 2017, by and between Frank's International, LLC and Daniel Allinger (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-36053), filed on May 2, 2017).†10.24Employment Offer Letter for Douglas Stephens effective as of November 15, 2016 (incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 24, 2017).†10.25Employment Offer Letter for Kyle McClure effective as of June 5, 2017 (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 001-36053), filed on August 7, 2017).†10.26Separation Agreement by and between Douglas G. Stephens, Frank's International, LLC and Frank's International NV, dated October 5, 2017 (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 01-36053), filed on November 2, 2017).†10.26Employment Offer Letter for Michael C. Kearney effective as of September 26, 2017 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File no. 001-36053), filed on November 2, 2017).†10.28Frank's International N.V. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-8 (File No. 333-190607), filed on August 13, 2013).†10.29Frank's International N.V.Restated Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.6 to the Registration Statement on Form S-8 (File No. 333-190607), filed on August 13, 2013).†10.30First Amendment to Frank's International N.V. Employee Stock Purchase Plan effective as of December 31, 2013 (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K (File No. 001-36053), filed on March 4, 2014)8, 2022).10.3110.16Second Amendment to Frank's International10.3210.17Third Amendment to Frank's10.3310.18Frank's105†10.34Frank's International N.V. 2013 Long-Term Incentive Plan Restricted Stock Unit Agreement (Non-Employee Director Form) (incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K (File No. 001-36053), filed on March 4, 2014).†10.35Frank's International N.V. 2013 Long-Term Incentive Plan Restricted Stock Unit Agreement (Employee Form) (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1/A (File No. 333-188536), filed on July 16, 2013).†10.36First Amendment to the Frank's International N.V. 2013 Long-Term Incentive Plan Restricted Stock Unit Agreement (Employee Form) (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q (File No. 001-36053), filed on November 7, 2014).†10.37Frank's International N.V. 2013 Long-Term Incentive Plan Restricted Stock Unit Agreement (Employee(2020 Performance Based Form) (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K (File No. 001-36053), filed on March 4, 2014)8, 2022).10.3810.20Frank's10.3910.2110.4010.24Amendment to Frank's International10.4110.25Frank's International N.V. 2013 Long-Term Incentive Plan Employee†10.27 Expro Group Holdings N.V. 2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registration on Form S-8 (File No. 333-266018), filed on July 5, 2022). †10.28 Expro Group Holdings N.V. 2022 Long-Term Incentive Plan Restricted Stock Unit Agreement (Non-Executive Director Form) (incorporated by reference to Exhibit 10.3610.2 to the Quarterly Report on Form 10-Q (File No. 001-36053) filed on November 3, 2022).10.4210.30Frank's10.4310.32Frank's†10.44Frank's International N.V. 2013 Long-Term Incentive Plan Employee Restricted Stock Unit Agreement (Special Incentives and Retention Form) (incorporated by reference to Exhibit 10.3710.31 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 24, 2017)March 8, 2022).† 10.4510.33Frank'sFrank’s International N.V. 2013 Long-Term IncentiveU.S. Executive Retention and Severance Plan, Employee Restricted Stock Unit Agreement (Supplemental Grant Form)dated January 21, 2019 (incorporated by reference to Exhibit 10.110.54 to the QuarterlyAnnual Report on Form 10-Q10-K (Filed No. 001-36053), filed on February 25, 2019).10.46Frank's International N.V. Executive Change-in-Control Severance Plan, dated May 20, 2015 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-36053), filed on May 27, 2015).10.4710.48Frank's10.49Tax Receivable10.50Registration Rights Agreement, dated August 14, 2013, by and among Frank's International N.V., Mosing Holdings, Inc. and FWW B.V. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-36053), filed on August 19, 2013).10610.51Form of Limited Waiver of Registration Rights to that certain Registration Rights Agreement, dated as of August 14, 2013, with Mosing Holdings, LLC, FWW B.V., and the other parties thereto (incorporated by reference to Exhibit 10.4310.55 to the Annual Report on Form 10-K (File No. 001-36053), filed on February 24, 2017)27, 2018).10.52Registration Rights Agreement, dated as of November 1, 2016, among Frank's International N.V., the Bain Capital Investors and certain other investors named therein (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-3 (File No. 333-214509), filed on November 8, 2016).10.53Global Transaction Agreement, dated July 22, 2013, by and among Frank's International N.V. and Mosing Holdings, Inc. (incorporated by reference to Exhibit 10.11 to the Registration Statement on Form S-1/A (File No. 333-188536), filed on July 24, 2013).10.54Voting Agreement, dated July 22, 2013, by and among Ginsoma Family C.V., FWW B.V., Mosing Holdings, Inc., and certain other parties thereto (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form S-1/A (File No. 333-188536), filed on July 24, 2013).Amendment No. 10 to the Limited Partnership Agreement of Frank's International C.V., effective as of December 1, 2017.10.56Limited Waiver of Financial Covenants by and among Frank's International C.V. (as Borrower), Amegy Bank National Association (as Administrative Agent), Capital One, National Association (as Syndication Agent) and the other lenders party thereto (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-36053), filed on May 2, 2017).Preferability Letter from PricewaterhouseCoopers LLPList of Subsidiaries of Frank's InternationalExpro Group Holdings N.V.101.INS101.1XBRL Instance Document.101.SCH104Taxonomy Extension Schema Document.document).*101.CALXBRL Taxonomy Calculation Linkbase Document.*101.DEFXBRL Taxonomy Definition Linkbase Document.*101.LABXBRL Taxonomy Extension Label Linkbase Document.*101.PREXBRL Taxonomy Extension Presentation Linkbase Document.†Represents management contract or compensatory plan or arrangement.#Pursuant to Item 601(b)(2) of Regulation S-K, the registrant agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.*Filed herewith.**Furnished herewith.107By:Frank's International N.V. (Registrant) Date: February 27, 2018By:/s/ Kyle McClure Kyle McClure 27, 2018. C. KearneyJardon Chairman, C. KearneyJardon Kyle McClureQuinn P. Fanning Senior Vice President and Kyle McClure Ozong E. EttaMichael Bentham Vice President, ChiefPrincipal Accounting OfficerOzong E. Etta (Principal Accounting Officer) William B. BerryMichael C. Kearney Supervisory Lead DirectorWilliam B. Berry /s/ Robert W. DrummondAlan Schrager Supervisory Robert W. DrummondAlan Schrager /s/ Michael E. McMahonLisa L. Troe Supervisory Michael E. McMahonLisa L. Troe /s/ D. Keith MosingBrian Truelove Supervisory D. Keith MosingBrian Truelove Kirkland D. MosingEileen G. Whelley Supervisory Kirkland D. Mosing /s/ S. Brent MosingSupervisory DirectorS. Brent Mosing/s/ Alexander VriesendorpSupervisory DirectorAlexander Vriesendorp108