UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON~~Washington D.C. 20549

FORM 10-Q

(Mark One)

~~[X]~~☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

~~FOR THE QUARTERLY PERIOD ENDED~~For the quarterly period ended SEPTEMBER 30, ~~2018~~2019

~~[ ]~~☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to.

~~FOR THE TRANSITION PERIODFROM~~ TO.Commission File Number 1-13455

~~COMMISSION FILE NUMBER 1-13455~~

TETRA Technologies, Inc.

(Exact name of registrant as specified in its charter)



Delaware	74-2148293
(State or Other Jurisdiction of ~~incorporation)~~Incorporation or Organization)	(I.R.S. Employer Identification No.)

24955 Interstate 45 North
The Woodlands,
Texas	77380
(Address of ~~principal executive offices)~~Principal Executive Offices)	(~~zip code)~~Zip Code)

~~(281)~~ (281) 367-1983

(Registrant’s ~~telephone number, including area code)~~Telephone Number, Including Area Code)

_______________________________________________________________________

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	TTI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ~~[ X ]~~☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ~~[ X ]~~☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. ~~(Check One):~~



Large accelerated filer ~~[ ]~~	☐	Accelerated filer ~~[ X ]~~	☒
Non-accelerated filer ~~[ ]~~	☐	Smaller reporting company ~~[ ]~~	☐
		Emerging growth company ~~[ ]~~	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ~~[ ]~~☐ No ~~[ X ]~~☒

As ofNovember ~~8, 2018,~~6, 2019, there were~~125,710,418~~125,540,626 shares outstanding of the Company’s Common Stock, $0.01 par value per share.



TETRA Technologies, Inc. and Subsidiaries
Table of Contents
	Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations	1
Consolidated Statements of Comprehensive Income (Loss)	2
Consolidated Balance Sheets	3
Consolidated Statements of ~~Cash Flows~~Equity	5
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	68
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3324
Item 3. Quantitative and Qualitative Disclosures about Market Risk	5739
Item 4. Controls and Procedures	5740

PART II—OTHER INFORMATION
Item 1. Legal Proceedings	5840
Item 1A. Risk Factors	5840
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5842
Item 3. Defaults Upon Senior Securities	5943
Item 4. Mine Safety Disclosures	5943
Item 5. Other Information	5943
Item 6. Exhibits	5944
SIGNATURES	6045

~~Table of Contents~~

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Revenues:
Product sales	$	102,070		$	72,566		$	285,136		$	226,724		$	93,377		$	102,070		$	320,508		$	285,136
Services	154,781			111,111			431,168			296,293			152,570			154,781			457,963			431,168
Total revenues	256,851			183,677			716,304			523,017			245,947			256,851			778,471			716,304
Cost of revenues:
Cost of product sales	81,817			49,999			228,146			161,348			71,957			81,817			254,798			228,146
Cost of services	101,304			67,437			283,224			193,931			98,356			101,304			298,911			283,224
Depreciation, amortization, and accretion	29,460			25,942			84,880			78,250			30,867			29,460			93,312			84,880
Impairments of long-lived assets	2,940			—			2,940			—
Impairments and other charges													849			2,940			3,306			2,940
Insurance recoveries	—			(2,352		)	—			(2,352		)	(1,042		)	—			(1,392		)	—
Total cost of revenues	215,521			141,026			599,190			431,177			200,987			215,521			648,935			599,190
Gross profit	41,330			42,651			117,114			91,840			44,960			41,330			129,536			117,114
General and administrative expense	34,446			29,685			98,866			85,896			34,926			34,446			105,498			98,866
Interest expense, net	18,894			14,654			52,246			42,749			18,146			18,894			55,054			52,246
Warrants fair value adjustment (income) expense	(179		)	(47		)	22			(11,568		)	78			(179		)	(1,035		)	22
CCLP Series A Preferred Units fair value adjustment (income) expense	498			(1,137		)	1,344			(4,340		)	—			498			1,309			1,344
Litigation arbitration award income	—			—			—			(12,816		)
Other (income) expense, net	619			(425		)	7,203			811			(690		)	619			(1,014		)	7,203
Loss before taxes and discontinued operations	(12,948		)	(79		)	(42,567		)	(8,892		)	(7,500		)	(12,948		)	(30,276		)	(42,567		)
Provision (benefit) for income taxes	(96		)	778			3,474			4,176			1,579			(96		)	5,678			3,474
Loss before discontinued operations	(12,852		)	(857		)	(46,041		)	(13,068		)	(9,079		)	(12,852		)	(35,954		)	(46,041		)
Discontinued operations:
Income (loss) from discontinued operations (including 2018 loss on disposal of $33.8 million), net of taxes	796			(481		)	(40,931		)	(14,141		)	(9,130		)	796			(9,901		)	(40,931		)
Net loss	(12,056		)	(1,338		)	(86,972		)	(27,209		)	(18,209		)	(12,056		)	(45,855		)	(86,972		)
Loss attributable to noncontrolling interest	5,120			4,483			20,423			16,900
Income (loss) attributable to TETRA stockholders	$	(6,936	)	$	3,145		$	(66,549	)	$	(10,309	)
Basic net income (loss) per common share:
Income (loss) before discontinued operations attributable to TETRA stockholders	$	(0.06	)	$	0.03		$	(0.21	)	$	0.03
Income (loss) from discontinued operations attributable to TETRA stockholders	$	0.00		$	0.00		$	(0.33	)	$	(0.12	)
Net income (loss) attributable to TETRA stockholders	$	(0.06	)	$	0.03		$	(0.54	)	$	(0.09	)
Less: loss attributable to noncontrolling interest													2,378			5,120			12,273			20,423
Net loss attributable to TETRA stockholders													$	(15,831	)	$	(6,936	)	$	(33,582	)	$	(66,549	)
Basic net loss per common share:
Loss before discontinued operations attributable to TETRA stockholders													$	(0.06	)	$	(0.06	)	$	(0.19	)	$	(0.21	)
Loss from discontinued operations attributable to TETRA stockholders													$	(0.07	)	$	0.00		$	(0.08	)	$	(0.33	)
Net loss attributable to TETRA stockholders													$	(0.13	)	$	(0.06	)	$	(0.27	)	$	(0.54	)
Average shares outstanding	125,689			114,563			123,557			114,375			125,568			125,689			125,620			123,557
Diluted net income (loss) per common share:
Income (loss) before discontinued operations attributable to TETRA stockholders	$	(0.06	)	$	0.03		$	(0.21	)	$	0.03
Income (loss) from discontinued operations attributable to TETRA stockholders	$	0.00		$	0.00		$	(0.33	)	$	(0.12	)
Net income (loss) attributable to TETRA stockholders	$	(0.06	)	$	0.03		$	(0.54	)	$	(0.09	)
Diluted net loss per common share:
Loss before discontinued operations attributable to TETRA stockholders													$	(0.06	)	$	(0.06	)	$	(0.19	)	$	(0.21	)
Loss from discontinued operations attributable to TETRA stockholders													$	(0.07	)	$	0.00		$	(0.08	)	$	(0.33	)
Net loss attributable to TETRA stockholders													$	(0.13	)	$	(0.06	)	$	(0.27	)	$	(0.54	)
Average diluted shares outstanding	125,689			114,569			123,557			114,375			125,568			125,689			125,620			123,557

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
Net loss $ (12,056 ) $ (1,338 ) $ (86,972 ) $ (27,209 )
Foreign currency translation adjustment (581 ) 2,620
(8,547 ) 7,781
Comprehensive income (loss) (12,637 ) 1,282
(95,519 ) (19,428 )
Comprehensive income (loss) attributable to noncontrolling interest 5,025
4,670
22,467
17,271
Comprehensive income (loss) attributable to TETRA stockholders $ (7,612 ) $ 5,952
$ (73,052 ) $ (2,157 )



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net loss	$	(18,209	)	$	(12,056	)	$	(45,855	)	$	(86,972	)
Foreign currency translation adjustment, net of taxes of $0 in 2019 and 2018	(3,742		)	(581		)	(3,300		)	(8,547		)
Comprehensive loss	(21,951		)	(12,637		)	(49,155		)	(95,519		)
Less: Comprehensive loss attributable to noncontrolling interest	2,358			5,025			11,994			22,467
Comprehensive loss attributable to TETRA stockholders	$	(19,593	)	$	(7,612	)	$	(37,161	)	$	(73,052	)

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands)


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	53,899		$	26,128		$	35,918		$	40,038
Restricted cash	69			261			61			64
Trade accounts receivable, net of allowances of $2,193 in 2018 and $1,286 in 2017	188,830			144,051
Trade accounts receivable, net of allowances of $4,466 in 2019 and $2,583 in 2018							170,168			187,592
Inventories	150,638			115,438			142,406			143,571
Assets of discontinued operations	1,301			34,879			16			1,354
Notes receivable							—			7,544
Prepaid expenses and other current assets	19,725			17,597			22,563			20,528
Total current assets	414,462			338,354			371,132			400,691
Property, plant, and equipment:
Land and building	78,764			78,559			75,206			78,746
Machinery and equipment	1,221,746			1,167,680			1,316,661			1,265,732
Automobiles and trucks	36,406			34,744			33,163			35,568
Chemical plants	188,072			186,790			189,416			188,641
Construction in progress	62,162			31,566			50,055			44,419
Total property, plant, and equipment	1,587,150			1,499,339			1,664,501			1,613,106
Less accumulated depreciation	(741,969		)	(689,907		)	(803,109		)	(759,175		)
Net property, plant, and equipment	845,181			809,432			861,392			853,931
Other assets:
Goodwill	22,197			6,636			25,784			25,859
Patents, trademarks and other intangible assets, net of accumulated amortization of $75,972 in 2018 and $71,114 in 2017	80,963			47,405
Patents, trademarks and other intangible assets, net of accumulated amortization of $85,911 in 2019 and $80,401 in 2018							76,225			82,184
Deferred tax assets, net	10			10			19			13
Notes receivable	7,540			44
Long-term assets of discontinued operations	—			86,255
Operating lease right-of-use assets							57,848			—
Other assets	21,886			20,478			23,300			22,849
Total other assets	132,596			160,828			183,176			130,905
Total assets	$	1,392,239		$	1,308,614		$	1,415,700		$	1,385,527

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Amounts)


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
	(Unaudited)						(Unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable	$	70,756		$	70,847		$	97,142		$	80,279
Unearned income	38,263			18,701			26,896			26,695
Accrued liabilities	69,867			58,478
Accrued liabilities and other							87,127			89,232
Liabilities of discontinued operations	3,570			25,688			1,907			4,145
Total current liabilities	182,456			173,714			213,072			200,351
Long-term debt, net	822,905			629,855			858,272			815,560
Deferred income taxes	3,348			4,404			3,729			3,242
Asset retirement obligations	12,014			11,738			12,603			12,202
CCLP Series A Preferred Units	36,944			61,436			—			27,019
Warrants liability	13,224			13,202			1,038			2,073
Long-term liabilities of discontinued operations	—			48,225
Operating lease liabilities							45,993			—
Other liabilities	15,159			13,479			7,465			12,331
Total long-term liabilities	903,594			782,339			929,100			872,427
Commitments and contingencies
Equity:
TETRA stockholders' equity:
Common stock, par value $0.01 per share; 250,000,000 shares authorized at September 30, 2018 and December 31, 2017; 128,434,431 shares issued at September 30, 2018 and 118,515,797 shares issued at December 31, 2017	1,284			1,185
Common stock, par value $0.01 per share; 250,000,000 shares authorized at September 30, 2019 and December 31, 2018; 128,363,817 shares issued at September 30, 2019 and 128,455,134 shares issued at December 31, 2018							1,284			1,285
Additional paid-in capital	459,123			425,648			465,615			460,680
Treasury stock, at cost; 2,710,581 shares held at September 30, 2018, and 2,638,093 shares held at December 31, 2017	(18,936		)	(18,651		)
Treasury stock, at cost; 2,823,191 shares held at September 30, 2019, and 2,717,569 shares held at December 31, 2018							(19,164		)	(18,950		)
Accumulated other comprehensive income (loss)	(50,270		)	(43,767		)	(55,242		)	(51,663		)
Retained earnings (deficit)	(222,884		)	(156,335		)
Retained deficit							(248,691		)	(217,952		)
Total TETRA stockholders' equity	168,317			208,080			143,802			173,400
Noncontrolling interests	137,872			144,481			129,726			139,349
Total equity	306,189			352,561			273,528			312,749
Total liabilities and equity	$	1,392,239		$	1,308,614		$	1,415,700		$	1,385,527

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Equity

(In Thousands)



	Common Stock Par Value			Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Noncontrolling Interest			Total Equity
	Common Stock Par Value			Additional Paid-In Capital			Treasury Stock			Currency Translation			Retained Earnings			Noncontrolling Interest			Total Equity

Balance at December 31, 2018	$	1,285		$	460,680		$	(18,950	)	$	(51,663	)	$	(217,952	)	$	139,349		$	312,749
Net loss for first quarter 2019	—			—			—			—			(10,838		)	(8,262		)	(19,100		)
Translation adjustment, net of taxes of $0	—			—			—			(582		)	—			176			(406		)
Comprehensive loss	—			—			—			—			—			—			(19,506		)
Distributions to public unitholders	—			—			—			—			—			(307		)	(307		)
Equity award activity	(1		)	—			—			—			—			—			(1		)
Treasury stock activity, net	—			—			(155		)	—			—			—			(155		)
Equity compensation expense	—			1,628			—			—			—			311			1,939
Conversions of CCLP Series A Preferred	—			—			—			—			—			2,539			2,539
Cumulative effect adjustment	—			—			—			—			2,843			—			2,843
Other	—			(67		)	—			—			—			76			9
Balance at March 31, 2019	$	1,284		$	462,241		$	(19,105	)	$	(52,245	)	$	(225,947	)	$	133,882		$	300,110
Net loss for second quarter 2019	—			—			—			—			(6,913		)	(1,633		)	(8,546		)
Translation adjustment, net of taxes of $0	—			—			—			765			—			83			848
Comprehensive loss	—			—			—			—			—			—			(7,698		)
Distributions to public unitholders	—			—			—			—			—			(308		)	(308		)
Treasury stock activity, net	—			—			(11		)	—			—			—			(11		)
Equity compensation expense	—			2,100			—			—			—			567			2,667
Other	—			(36		)	—			—			—			(33		)	(69		)
Balance at June 30, 2019	$	1,284		$	464,305		$	(19,116	)	$	(51,480	)	$	(232,860	)	$	132,558		$	294,691
Net loss for third quarter 2019	—			—			—			—			(15,831		)	(2,378		)	(18,209		)
Translation adjustment, net of taxes of $0	—			—			—			(3,762		)	—			20			(3,742		)
Comprehensive loss	—			—			—			—			—			—			(21,951		)
Distributions to public unitholders	—			—			—			—			—			(309		)	(309		)
Treasury stock activity, net	—			—			(48		)	—			—			—			(48		)
Equity compensation expense	—			1,316			—			—			—			(211		)	1,105
Other	—			(6		)	—			—			—			46			40
Balance at September 30, 2019	$	1,284		$	465,615		$	(19,164	)	$	(55,242	)	$	(248,691	)	$	129,726		$	273,528

See Notes to Consolidated Financial Statements



	Common Stock Par Value		Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Noncontrolling Interest			Total Equity
	Common Stock Par Value		Additional Paid-In Capital			Treasury Stock			Currency Translation			Retained Earnings			Noncontrolling Interest			Total Equity

Balance at December 31, 2017	$	1,185	$	425,648		$	(18,651	)	$	(43,767	)	$	(156,335	)	$	144,481		$	352,561
Net loss for first quarter 2018	—		—			—			—			(53,648		)	(9,115		)	(62,763		)
Translation adjustment, net of taxes of $0	—		—			—			1,668			—			(385		)	1,283
Comprehensive loss	—		—			—			—			—			—			(61,480		)
Distributions to public unitholders	—		—			—			—			—			(4,358		)	(4,358		)
Equity award activity	20		—			—			—			—			—			20
Treasury stock activity, net	—		—			(170		)	—			—			—			(170		)
Issuance of common stock for business combination	77		28,135			—			—			—			—			28,212
Equity compensation expense	—		1,434			—			—			—			(655		)	779
Conversions of CCLP Series A Preferred	—		—			—			—			—			10,103			10,103
Other	—		(171		)	—			—			—			(35		)	(206		)
Balance at March 31, 2018	$	1,282	$	455,046		$	(18,821	)	$	(42,099	)	$	(209,983	)	$	140,036		$	325,461
Net loss for second quarter 2018	—		—			—			—			(5,965		)	(6,188		)	(12,153		)
Translation adjustment, net of taxes of $0	—		—			—			(7,495		)	—			(1,754		)	(9,249		)
Comprehensive loss	—		—			—			—			—			—			(21,402		)
Distributions to public unitholders	—		—			—			—			—			(4,624		)	(4,624		)
Equity award activity	1		—			—			—			—			—			1
Treasury stock activity, net	—		—			(44		)	—			—			—			(44		)
Equity compensation expense	—		1,905			—			—			—			358			2,263
Conversions of CCLP Series A Preferred	—		—			—			—			—			9,272			9,272
Other	—		131			—			—			—			4			135
Balance at June 30, 2018	$	1,283	$	457,082		$	(18,865	)	$	(49,594	)	$	(215,948	)	$	137,104		$	311,062
Net loss for third quarter 2018	—		—			—			—			(6,936		)	(5,120		)	(12,056		)
Translation adjustment, net of taxes of $0	—		—			—			(676		)	—			95			(581		)
Comprehensive loss	—		—			—			—			—			—			(12,637		)
Distributions to public unitholders	—		—			—			—			—			(4,946		)	(4,946		)
Equity award activity	1		251						—			—			—			252
Treasury stock activity, net	—		—			(71		)	—			—			—			(71		)
Equity compensation expense	—		1,798			—			—			—			367			2,165
Conversions of CCLP Series A Preferred	—		—			—			—			—			10,294			10,294
Other	—		(8		)	—			—			—			78			70
Balance at September 30, 2018	$	1,284	$	459,123		$	(18,936	)	$	(50,270	)	$	(222,884	)	$	137,872		$	306,189

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
Operating activities:
Net loss	$	(86,972	)	$	(27,209	)	$	(45,855	)	$	(86,972	)
Reconciliation of net loss to cash provided by operating activities:
Depreciation, amortization, and accretion	86,965			87,298			93,364			86,965
Impairment of long-lived assets	2,940			—
Impairment and other charges							3,306			2,940
Benefit for deferred income taxes	(837		)	(431		)	545			(837		)
Equity-based compensation expense	5,692			7,242			6,260			5,692
Provision for doubtful accounts	1,566			1,333			3,351			1,566
Non-cash loss on disposition of business	32,369			—			7,500			32,369
Amortization of deferred financing costs	3,188			3,491			2,890			3,188
Insurance recoveries associated with damaged equipment	—			(2,352		)
Debt financing cost expense	398			—			—			398
CCLP Series A Preferred redemption premium							1,283			—
CCLP Series A Preferred accrued paid in kind distributions	3,933			5,606			982			3,933
CCLP Series A Preferred fair value adjustment	1,344			(4,340		)	1,309			1,344
Warrants fair value adjustment	22			(11,568		)	(1,035		)	22
Contingent consideration liability fair value adjustment	3,700			—			(800		)	3,700
Expense for unamortized finance costs and other non-cash charges and credits	3,919			(221		)	1,649			3,919
Acquisition and transaction financing fees							75			—
Gain on sale of assets	(454		)	(605		)	(1,583		)	(454		)
Changes in operating assets and liabilities:
Accounts receivable	(7,708		)	(34,187		)	13,309			(7,708		)
Inventories	(35,920		)	(13,394		)	(6,847		)	(35,920		)
Prepaid expenses and other current assets	(2,995		)	(1,659		)	(1,831		)	(2,995		)
Trade accounts payable and accrued expenses	(6,776		)	28,368			10,344			(6,776		)
Decommissioning liabilities	—			(550		)
Other	(2,741		)	12			(3,234		)	(2,741		)
Net cash provided by operating activities	1,633			36,834			84,982			1,633
Investing activities:
Purchases of property, plant, and equipment, net	(107,080		)	(28,587		)	(89,192		)	(107,080		)
Acquisition of businesses, net of cash acquired	(42,002		)	—			(12,024		)	(42,002		)
Proceeds from disposal of business	3,121			—			—			3,121
Proceeds on sale of property, plant, and equipment	774			786			2,152			774
Insurance recoveries associated with damaged equipment	—			2,352
Other investing activities	(293		)	(6,175		)	(890		)	(293		)
Net cash used in investing activities	(145,480		)	(31,624		)	(99,954		)	(145,480		)
Financing activities:
Proceeds from long-term debt	747,887			297,100			246,090			747,887
Principal payments on long-term debt	(544,962		)	(301,250		)	(204,718		)	(544,962		)
CCLP distributions	(13,928		)	(14,815		)	(924		)	(13,928		)
Proceeds from exercise of stock options	251			—			—			251
Redemptions of CCLP Series A Preferred							(28,049		)	—
Tax remittances on equity based compensation	(708		)	(624		)	(571		)	(708		)
Debt issuance costs	(17,932		)	(1,573		)
Net cash provided by (used in) financing activities	170,608			(21,162		)
Debt issuance costs and other financing activities							(373		)	(17,932		)
Net cash provided by financing activities							11,455			170,608
Effect of exchange rate changes on cash	818			533			(606		)	818
Increase (decrease) in cash and cash equivalents	27,579			(15,419		)	(4,123		)	27,579
Cash and cash equivalents and restricted cash at beginning of period	26,389			36,531			40,102			26,389
Cash and cash equivalents and restricted cash at end of period	$	53,968		$	21,112		$	35,979		$	53,968


Supplemental cash flow information:
Interest paid	$	24,651		$	39,919		$	49,073		$	24,651
Income taxes paid	3,954			5,217			6,226			3,954

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A – ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES

Organization

We are a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback, production well testing and offshore rig cooling services, and compression services and equipment. We were incorporated in Delaware in 1981. ~~Following the acquisition and disposition transactions that closed during the three month period ended March 31, 2018, we reorganized our reporting segments and~~We are ~~now~~ composed of ~~three~~3 divisions – Completion Fluids & Products, Water & Flowback Services, and Compression. Unless the context requires otherwise, when we refer to “we,” “us,” and “our,” we are describing TETRA Technologies, Inc. and its consolidated subsidiaries on a consolidated basis.

Presentation

Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The information furnished reflects all normal recurring adjustments, which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods. Operating results for the period ended September 30, ~~2018~~2019 are not necessarily indicative of results that may be expected for the twelve months ended December 31, ~~2018.~~2019.

We consolidate the financial statements of CSI Compressco LP and its subsidiaries ("CCLP") as part of our Compression Division, as we determined that CCLP is a variable interest entity and we are the primary beneficiary. We control the financial interests of CCLP and have the ability to direct the activities of CCLP that most significantly impact its economic performance through our ownership of its general partner. The share of CCLP net assets and earnings that is not owned by us is presented as noncontrolling interest in our consolidated financial statements. Our cash flows from our investment in CCLP are limited to the quarterly distributions we receive on our CCLP common units and general partner interest (including incentive distribution rights) and the amounts collected for services we perform on behalf of CCLP, as TETRA's capital structure and CCLP's capital structure are separate, and do not include cross default provisions, cross collateralization provisions, or cross guarantees.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities and Exchange Commission ("SEC") and do not include all information and footnotes required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, ~~2017,~~2018 and notes thereto included in our Annual Report on Form 10-K, whichwe filed with the SEC on March ~~5, 2018.~~4, 2019.

Significant Accounting Policies

We have added policies for the recording of leases in conjunction with the adoption of the new lease standard discussed in our "Leases" and "New Accounting Pronouncements" sections below. Other than the additional lease policies described herein, there have been no significant changes in our accounting policies or the application of these policies.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and impairments during the reporting period. Actual results could differ from those estimates, and such differences could bematerial.

~~Reclassifications~~Impairments and Other Charges

~~Certain previously reported financial information has been reclassified~~During the second quarter of 2019, our Compression Division recorded impairments of $2.3 million on certain units of its low-horsepower compression fleet, reflecting the decision to ~~conform~~dispose of these units upon management's determination that refurbishing this equipment was not economic given limited current and forecasted demand for such equipment. A recoverability analysis was performed on the remaining low-horsepower fleet and it was concluded that the remaining fleet was recoverable from estimated future cash flows. During the third quarter of 2019, we recorded a charge of $0.8 million for the carrying value of a compressor unit that was written off due to being destroyed by fire.

Goodwill

Our Water & Flowback Services Division consists of 2 reporting units, Production Testing and Water Management. During the third quarter of 2019, as part of our internal long-term outlook for each of these reporting units, we updated our assessment of the Water Management reporting unit and determined that the current decreased energy industry outlook was an indicator requiring further analysis for impairment of goodwill. As part of the first step of goodwill impairment testing for our Water Management reporting unit, the only reporting unit with goodwill as of September 30, 2019, we updated our assessment of the future cash flows, applying expected long-term growth rates, discount rates, and terminal values that we consider reasonable for the reporting unit. We calculated a present value of the cash flows for the Water Management reporting unit to arrive at an estimate of fair value using a combination of the income approach and the market approach. Based on these assumptions, we determined that the fair value of the Water Management reporting unit exceeded its carrying value, which includes approximately $25.8 million of goodwill, by approximately 17%. Specific uncertainties affecting the estimated fair value of our Water Management reporting unit includes the impact of competition, prices of oil and natural gas, and future overall activity levels in the regions in which it operates, the activity levels of our significant customers, and other factors affecting the rate of future growth of this reporting unit. These factors will continue to be reviewed and assessed going forward. Negative developments with regard to these factors could have a further negative effect on the fair value of the Water Management reporting unit.

Leases

As a lessee, unless the lease meets the criteria of short-term and is excluded per our policy election described below, we initially recognize a lease liability and related right-of-use asset on the commencement date. The right-of-use asset represents our right to use an underlying asset and the lease liability represents our obligation to make lease payments to the ~~current period’s presentation. For~~lessor over the lease term.

Long-term operating leases are included in operating lease right-of-use assets, accrued liabilities and other, and operating lease liabilities in our consolidated balance sheet as of September 30, 2019. Long-term finance leases are not material. We determine whether a ~~discussion~~contract is or contains a lease at inception of the ~~reclassification of~~contract. Where we are a lessee in a contract that includes an option to extend or terminate the ~~financial presentation of~~lease, we include the extension period or exclude the period covered by the termination option in our ~~Offshore Division as discontinued operations, see Note E - "Discontinued Operations."~~lease term, if it is reasonably certain that we would exercise the option.

~~Cash Equivalents~~

~~We consider all highly liquid cash investments~~As an accounting policy election, we do not include short-term leases on our balance sheet. Short-term leases include leases with a ~~maturity~~term of ~~three~~12 months or less, ~~when purchased~~inclusive of renewal options we are reasonably certain to ~~be cash equivalents.~~

~~Restricted Cash~~

~~Restricted cash is classified~~exercise. The lease payments for short-term leases are included as operating lease costs on a ~~current asset when it is expected to be repaid or settled~~straight-line basis over the lease term in ~~the next twelve month period.~~

~~Inventories~~

~~Inventories are stated at the lower of cost or net realizable value. Except for work in progress inventory, cost is determined using the weighted average method. The~~ cost of ~~work~~revenues or general and administrative expense based on the use of the underlying asset. We recognize lease costs for variable lease payments not included in ~~progress is determined using the specific identification method.~~

~~Impairments of Long-Lived Assets~~

~~Impairments of long-lived assets, including identified intangible assets, are determined periodically when indicators of impairment are present. If such indicators are present,~~ the determination of a lease liability in the ~~amount of impairment~~period in which an obligation is incurred.

As allowed by U.S. GAAP, we do not separate nonlease components from the associated lease component for our compression services contracts and instead account for those components as a single component based on the accounting treatment of the predominant component. In our ~~judgments as~~evaluation of whether Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 842 "Leases" or ASC 606 "Revenue from Contracts with Customers" is applicable to the ~~future undiscounted operating cash flows to be generated from these assets throughout theirremainingestimated useful lives. If these undiscounted cash flows are less than~~combined component based on the ~~carrying amount~~predominant component, we determined the services nonlease component is predominant, resulting in the ongoing recognition of ~~the related asset, an impairment is recognized for the excess of the carrying value over its fair value.~~our compression services contracts following ASC 606.

~~During~~Our operating and finance leases are recognized at the ~~three month period ended September 30, 2018, as a result~~present value of ~~decreased expected future cash flows from a specific customer contract,~~lease payments over the lease term. When the implicit discount rate is not readily determinable, we ~~recorded a~~use our incremental borrowing rate to calculate the discount rate used to determine the present value of lease payments. Consistent with other long-lived assets or asset groups that are held and used, we test for impairment of ~~$2.9 million of an identified intangible asset.~~our right-of-use assets when impairment indicators are present.

Foreign Currency Translation

~~We have designated the euro, the British pound, the Norwegian krone, the Canadian dollar, theBrazilian real, and the~~Mexican peso as the functional currencies for our operations in Finland and Sweden, the United Kingdom, Norway, Canada, Brazil, and certain of our operations in Mexico, respectively. The U.S. dollar is the designated functional currency for all of our other foreign operations. The cumulative translation effects of translating the applicable accounts from the functional currencies into the U.S. dollar at current exchange rates are included as a separate component ofequity. Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled ~~$0.4~~$(1.7) millionand ~~$0.1~~$(2.2) millionduring the three and nine ~~month periods~~months ended September 30, ~~2018~~2019, respectively, and ~~$0.3~~$(0.1) million and ~~$1.5~~$(0.4) million during the three and nine ~~month periods ended September 30, 2017, respectively.~~

On June 30, 2018, we determined the economy in Argentina to be highly inflationary. As a result of this determination and in accordance with U.S. GAAP, on July 1, 2018, the functional currency of our operations in Argentina was changed from the Argentine peso to the U.S. dollar. The remeasurement did not have a material impact on our consolidated financial position or results of operations.

~~Income Taxes~~

Our consolidated provision for income taxes is primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the three month periodmonths ended September 30, 2018, was 0.7%. Our consolidated effective tax rate for the nine month period ended September 30, 2018 of negative 8.2% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.respectively.

The Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. At September 30, 2018 and December 31, 2017, we had not completed our accounting for the tax effects of enactment of the Tax Reform Act; however, in certain cases, as described below, we made reasonable estimates of the effects and recorded provisional amounts. We will continue to make and refine our calculations as additional analysis is completed. The accounting for the tax effects of the Tax Reform Act will be completed in 2018 as provided by the SEC’s Staff Accounting Bulletin ("SAB") No. 118, ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act~~

("SAB 118"). We recognized an income tax expense of $54.1 million in the fourth quarter of 2017 associated with the impact of the Tax Reform Act, which was fully offset by a decrease in the valuation allowance previously recorded on our net deferred tax assets. As such, the Tax Reform Act resulted in no net tax expense in the fourth quarter of 2017. We have considered in our estimated annual effective tax rate for 2018, the impact of the statutory changes enacted by the Tax Reform Act, including reasonable estimates of those provisions effective for the 2018 tax year. Our estimate on Global Intangible Low Taxed Income (“GILTI”), Foreign Derived Intangible Income (“FDII”), Base Erosion and Anti-Abuse Tax (“BEAT”), and IRC Section 163(j) interest limitation do not impact our effective tax rate for the three and nine month periods ended September 30, 2018.

~~Asset Retirement Obligations~~

We operate facilities in various U.S. and foreign locations that are used in the manufacture, storage, and sale of our products, inventories, and equipment. These facilities are a combination of owned and leased assets. We are required to take certain actions in connection with the retirement of these assets. The values of our asset retirement obligations for these properties were $12.0 million and $11.7 million as of September 30, 2018 and December 31, 2017, respectively. Asset retirement obligations are recorded in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 410, "Asset Retirement and Environmental Obligations," whereby the estimated fair value of a liability for asset retirement obligations is recognized in the period in which it is incurred and in which a reasonable estimate can be made. Such estimates are based on relevant assumptions that we believe are reasonable. We have reviewed our obligations in this regard in detail and estimated the cost of these actions. The associated asset retirement costs are capitalized as part of the carrying amount of these long-lived assets and are depreciated on a straight-line basis over the life of the assets.

~~The changes in the values of our asset retirement obligations during the three and nine month period ended September 30, 2018, are as follows:~~

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
(In Thousands)
Beginning balance for the period, as reported $ 12,073
$ 11,738
Activity in the period:
Accretion of liability 96
405
Revisions in estimated cash flows (156 ) (130 )
Settlement of retirement obligations (35 ) (35 )
Ending balance $ 12,014
$ 12,014

~~We review the adequacy of our asset retirement obligation liabilities whenever indicators suggest that the estimated cash flows underlying the liabilities have changed.~~

~~Fair Value Measurements~~

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized on a recurring basis in the determination of the carrying values of the liabilities for the warrants to purchase 11.2 million shares of our common stock (the "Warrants") and the CCLP Preferred Units (as defined in Note G). We also utilize fair value measurements on a recurring basis in the accounting for our foreign currency derivative contracts. Refer to Note H - "Fair Value Measurements" for further discussion.

Fair value measurements are also utilized on a nonrecurring basis in certain circumstances, such as in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets and goodwill (a Level 3 fair value measurement), the initial recording of our asset retirement obligations, and for the impairment of long-lived assets, including goodwill (a Level 3 fair value measurement).

New Accounting Pronouncements

Standards adopted in ~~2018~~2019

In ~~May 2014,~~February 2016, the FASB issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers". This ASU supersedes the revenue recognition requirements in ASC 605, "Revenue Recognition," and most industry-specific guidance. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those years, under either full or modified retrospective adoption.

On January 1, 2018, we adopted ASU 2014-09 and all related amendments ("ASU 2014-09"). We utilized the modified retrospective method of adoption. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The core principle of ASU 2014-09 is that 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. ASU 2014-09 also provides a five-step model for determining revenue recognition for arrangements that are within the scope of the standard: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of ASU 2014-09, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for revenues, see Note L - "Revenue from Contracts with Customers".

The impact from the adoption of ASU 2014-09 to our January 1, 2018 consolidated balance sheet, our September 30, 2018 consolidated balance sheet, and our consolidated results of operations for the three and nine month periods ended September 30, 2018 was immaterial. The adoption of ASU 2014-09 had no impact to cash provided by operating, financing, or investing activities in our consolidated statement of cash flows. We do not expect the adoption of the new revenue standard to have a material impact to our net income on an ongoing basis.

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" to reduce diversity in practice in classification of certain transactions in the statement of cash flows. The ASU is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted, under a retrospective transition adoption. We adopted this ASU during the three month period ended March 31, 2018, with no impact to our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory," which requires companies to account for the income tax effects of intercompany transfers of assets other than inventory when the transfer occurs. We adopted this ASU during the three month period ended March 31, 2018. The adoption of this standard did not have a material impact to our consolidated financial statements.

Additionally, in November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. We adopted this ASU during the three month period ended March 31, 2018, resulting in restricted cash, if any, being classified with cash and cash equivalents in our consolidated statement of cash flows.

In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting" to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. We adopted this ASU during the three month period ended March 31, 2018, with no impact to our consolidated financial statements.

~~Standards not yet adopted~~

~~In February 2016, the FASB issued ASU~~ 2016-02, "Leases (Topic 842)" to increase comparability and transparency among different organizations. Organizations are required to recognize right-of-use lease assets and lease liabilities in the balance sheet related to the right to use the underlying asset for the lease term.In addition, through improved disclosure requirements, ~~the ASU~~ASC 842 will enable users of financial statements to further understand the amount, timing, and uncertainty of cash flows arising from leases. We adopted the standard effective January 1, 2019. The ~~ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. In July 2018,~~standard had a material impact on our consolidated balance sheet, specifically, the ~~FASB provided an additional~~reporting of our operating leases. The impact in the reporting of our finance leases was insignificant.

We chose to transition ~~method allowing~~using a modified retrospective approach which allows for the recognition of a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. ~~We plan to adopt Topic 842 on January 1, 2019 using the optional transition method.~~ Comparative information ~~will continue to be~~is reported under the accounting standards that were in effect for those periods. In addition, upon transition, we elected the package of practical expedients, which allows us to continue to apply historical lease classifications to existing contracts. Upon adoption, we recognized $60.6 million in operating right-of-use assets, $12.0 million in accrued liabilities and other, and $50.7 million in operating lease liabilities in our consolidated balance sheet. In addition, we also recognized a $2.8 million cumulative effect adjustment to increase retained earnings, primarily as a result of a deferred gain from a previous sale and leaseback transaction on our corporate headquarters facility that was accounted for as an operating lease. Refer to Note K - “Leases” for further information on our leases.

In February 2018, the FASB issued ASU 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220)" that gives entities the option to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. This was effective for us on January 1, 2019, however, as we do not have associated tax effects in accumulated other comprehensive income, there was no impact.

In June 2018, the FASB issued ASU 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” to align the measurement and classification guidance for share-based payments to nonemployees with the guidance currently applied to employees, with certain exceptions. We adopted this ASU during the three months ended March 31, 2019, with no material impact to our consolidated financial statements.

Standards not yet adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. Credit impairment will be accounted for as an allowance for credit losses deducted from the amortized cost basis at each reporting date. We are continuing to ~~assess other transition practical expedients available to us. We are currently~~work through our implementation plan which includes evaluating ~~our portfolio of real estate, vehicle, and equipment leases for consideration of the accounting impact. Lease data is being loaded into a software solution that will assist in the calculation of~~ the impact on ~~the consolidated balance sheet~~our

allowance for doubtful accounts methodology, identifying new reporting requirements, and ~~facilitate the creation of disclosures. We are concurrently evaluating~~implementing changes to business processes, systems, and ~~developing internal policies necessary~~controls to ~~implement the standard. Based on our preliminary assessment, upon~~support adoption of the standard. Upon adoption, the allowance for doubtful accounts is expected to increase with an offsetting adjustment to retained earnings. Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense. ASU ~~we will record significant right-to-use assets and lease obligations pursuant~~2016-13 has an effective date of the first quarter of fiscal 2020. We continue to assess the ~~new requirements.~~potential effects of these changes to our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. The ASU is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods, with early adoption permitted, under a prospective adoption. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In ~~June~~August 2018, the FASB issued ASU ~~2018-07, “Compensation-Stock Compensation (Topic 718)~~2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): ~~Improvements to Nonemployee Share-Based Payment Accounting” to align~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." ASU 2018-15 clarifies the ~~measurement and classification guidance~~accounting for ~~share-based payments to nonemployees with the guidance currently applied to employees, with certain exceptions. The~~implementation costs in cloud computing arrangements. ASU 2018-15 is effective for interim and annual reporting periods beginning after December 15, ~~2018,~~2019, and ~~interim periods within those annual periods, with~~ early adoption is permitted. We are currently assessing the potential effects of these changes to our consolidated financial ~~statements and do not expect the adoption of this standard to have a material impact on our consolidated financial~~ statements.

NOTE B – INVENTORIES

Components of inventories as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 are as follows:



	September 30, 2019		December 31, 2018
	(In Thousands)
Finished goods	$	69,326	$	69,762
Raw materials	3,043		3,503
Parts and supplies	46,815		47,386
Work in progress	23,222		22,920
Total inventories	$	142,406	$	143,571

September 30, 2018 December 31, 2017
(In Thousands)
Finished goods $ 67,926
$ 66,377
Raw materials 3,740
4,027
Parts and supplies 45,671
33,632
Work in progress 33,301
11,402
Total inventories $ 150,638
$ 115,438

Finished goods inventories include newly manufactured clear brine fluids as well as used brines that are repurchased from certain customers for recycling. Work in progress inventory consists primarily of new compressor packages located in the CCLP fabrication facility in Midland, Texas.

NOTE C -– NET INCOME (LOSS) PER SHARE

The following is a reconciliation of the weighted average number of common shares outstanding with the number of shares used in the computations of net income (loss) per common and common equivalent share:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
	(In Thousands)
Number of weighted average common shares outstanding	125,568	125,689	125,620	123,557
Assumed exercise of equity awards and warrants	—	—	—	—
Average diluted shares outstanding	125,568	125,689	125,620	123,557

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
(In Thousands)
Number of weighted average common shares outstanding 125,689
114,563
123,557
114,375
Assumed exercise of equity awards and warrants —
6
—
—
Average diluted shares outstanding 125,689
114,569
123,557
114,375

For thethree and nine month periods ended September 30, ~~2018~~2019 and ~~nine month period ended~~ September 30, ~~2017,~~2018, the average diluted shares outstanding excludes the impact of all outstanding equity awards and warrants, as the inclusion of these shares would have been anti-dilutive due to the net losses recorded during the periods. In addition, for the three and nine month periods ended September 30, ~~2018~~2019 and September 30, ~~2017,~~2018, the calculation of diluted earnings per common share excludes the impact of the ~~CCLP~~CSI Compressco LP Series A Convertible Preferred Units ~~(as defined in Note G)~~(the "CCLP Preferred Units"), as the inclusion of the impact from conversion of the CCLP Preferred Units into CCLP common units would have been anti-dilutive.

NOTE D – ~~ACQUISITIONS AND DISPOSITIONS~~

~~Acquisition of SwiftWater Energy Services~~

On February 28, 2018, pursuant to a purchase agreement dated February 13, 2018 (the "SwiftWater Purchase Agreement"), we purchased all of the equity interests in SwiftWater Energy Services, LLC ("SwiftWater"), which is engaged in the business of providing water management and water solutions to oil and gas operators in the Permian Basin market of Texas. Strategically, the acquisition of SwiftWater enhances our position as one of the leading integrated water management companies, providing water transfer, storage, and treatment services, along with proprietary automation technology and numerous other water-related services.

Under the terms of the SwiftWater Purchase Agreement, consideration of $42.0 million of cash, subject to a working capital adjustment, and 7,772,021 shares of our common stock (valued at $28.2 million) were paid at closing. Subsequent to closing, in August 2018, a working capital adjustment of approximately $1.0 million was paid. The sellers will also have the right to receive contingent consideration payments, in an aggregate amount of up to $15.0 million, calculated on EBITDA and revenue (each as defined in the SwiftWater Purchase Agreement) of the water management business of SwiftWater and all of our pre-existing operations in the Permian Basin in respect of the period from January 1, 2018 through December 31, 2019. The contingent consideration may be paid in cash or shares of our common stock, at our election.

~~As of September 30, 2018, our allocation of the SwiftWater purchase price is as follows (in thousands):~~

Current assets $ 16,880
Property and equipment 11,631
Intangible assets 41,960
Goodwill 15,560
Total assets acquired 86,031

Current liabilities 7,189
Total liabilities assumed 7,189
Net assets acquired $ 78,842

The above allocation of the purchase price to the SwiftWater net tangible assets and liabilities considers approximately $7.6 million of the initial estimated fair value for the liabilities associated with the contingent purchase

price consideration. The fair value of the obligation to pay the contingent purchase price consideration was calculated based on the anticipated EBITDA and revenue as of the closing date for the operations of SwiftWater and our pre-existing operations in the Permian Basin and could increase (to $15.0 million) or decrease (to $0) depending on the actual earnings from these operations going forward. Increases or decreases in the value of the anticipated contingent purchase price consideration liability due to changes in the amounts paid or expected to be paid will be charged or credited to earnings in the period in which such changes occur. During the period from the closing date to September 30, 2018, the estimated fair value for the liabilities associated with the contingent purchase price consideration increased to $11.3 million, resulting in $(0.6) million and $3.7 million being (credited) charged to other (income) expense, net, during the three and nine month periods ended September 30, 2018, respectively.

The allocation of the purchase price to the SwiftWater net tangible assets and liabilities and identifiable intangible assets, as well as the initial estimated fair value for the liabilities associated with the contingent purchase price consideration, as of February 28, 2018, is final and adjustments to the purchase price allocation have been reflected in the accompanying consolidated balance sheets as of September 30, 2018. The allocation of purchase price includes approximately $15.6 million of deductible goodwill allocated to our Water & Flowback Services segment, and is supported by the strategic benefits discussed above and expected to be generated from the acquisition. The acquired property and equipment is stated at fair value, and depreciation on the acquired property and equipment is computed using the straight-line method over the estimated useful lives of each asset. Machinery and equipment is depreciated using useful lives of 3 to 15 years and automobiles and trucks are depreciated using useful lives of 3 to 4 years. The acquired intangible assets include $3.3 million for the trademark/tradename, $37.2 million for customer relationships, and $1.5 million of other intangible assets that are stated at estimated fair value and are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 16 years. These identified intangible assets are recorded net of $1.7 million of accumulated amortization as of September 30, 2018.

Subsequent to the February 28, 2018 acquisition closing date, we have continued to integrate the acquired SwiftWater operations into our existing Water & Flowback Services Division in the Permian Basin in order to better serve our customers through seamless combined service offerings. With the addition of SwiftWater services, such as water treatment, we are now able to offer integrated water management services to both TETRA and SwiftWater customers that would have not been possible prior to the acquisition. Moreover, services performed for certain pre-acquisition SwiftWater customers have utilized TETRA employees and equipment. Similarly, certain pre-SwiftWater acquisition TETRA customers have utilized SwiftWater employees, equipment, and services. We have also added to SwiftWater's fleet of operating equipment through additional capital expenditures. As a result of the combined operations, the distinction of the revenue originating from SwiftWater versus TETRA is a subjective estimate. Due to these limitations, we have considered the $65.0 million of revenues for services performed for pre-acquisition SwiftWater customers subsequent to the closing on February 28, 2018 as the estimate of the impact from the SwiftWater acquisition on our consolidated revenues for the nine month period ended September 30, 2018.

As a result of our focus since the date of the acquisition on integrating and managing SwiftWater services with our pre-existing operations in the Permian Basin, quantifying the financial impact on our consolidated earnings of the operations specific to SwiftWater is impracticable. SwiftWater acquisition-related costs of approximately $0.4 million were incurred during the nine month period ended September 30, 2018, consisting of external legal fees, transaction consulting fees, and due diligence costs. These costs have been recognized in general and administrative expenses in the consolidated statement of operations.

The pro forma information presented below has been prepared to give effect to the SwiftWater acquisition as if the transaction had occurred at the beginning of the periods presented. The pro forma information includes the impact from the allocation of the acquisition purchase price on depreciation and amortization. The pro forma information also excludes the SwiftWater acquisition-related costs charged to earnings during the 2018 period. The pro forma information is presented for illustrative purposes only and is based on estimates and assumptions we deemed appropriate. The following pro forma information is not necessarily indicative of the historical results that would have been achieved if the acquisition transaction had occurred in the past, and our operating results may have been different from those reflected in the pro forma information below. Therefore, the pro forma information should not be relied upon as an indication of the operating results that we would have achieved if the transaction had occurred at the beginning of the periods presented or the future results that we will achieve after the transaction.

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(In Thousands)
Revenues $ 256,851
$ 198,894
$ 730,454
$ 561,718
Depreciation, amortization, and accretion $ 29,460
$ 27,307
$ 85,857
$ 82,256
Gross profit $ 41,330
$ 46,335
$ 120,586
$ 100,837

Net income (loss) from continuing operations $ (12,852 ) $ 1,255
$ (43,840 ) $ (8,028 )
Net income (loss) attributable to TETRA stockholders $ (6,936 ) $ 5,257
$ (64,348 ) $ (5,269 )

~~Sale of Offshore Division~~

On March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division. Pursuant to an Asset Purchase and Sale Agreement (the "Maritech Asset Purchase Agreement") with Orinoco Natural Resources, LLC ("Orinoco"), Orinoco purchased certain remaining offshore oil, gas and mineral leases and related assets of Maritech (the "Maritech Properties"). Immediately thereafter, we closed the transactions contemplated by a Membership Interest Purchase and Sale Agreement (the "Maritech Equity Purchase Agreement") with Orinoco, whereby Orinoco purchased all of the equity interests of Maritech (the "Maritech Equity Interests"). Immediately thereafter, we closed the transactions contemplated by an Equity Interest Purchase Agreement (the "Offshore Services Purchase Agreement") with Epic Offshore Specialty, LLC, an affiliate of Orinoco ("Epic Offshore"), whereby Epic Offshore (the "Offshore Services Sale") purchased all of the equity interests in the wholly owned subsidiaries that comprised our Offshore Services segment operations (the "Offshore Services Equity Interests").

Under the terms of the Maritech Asset Purchase Agreement, the Maritech Equity Purchase Agreement, and the Offshore Services Purchase Agreement, the consideration delivered by Orinoco and Epic Offshore for the Maritech Properties, the Maritech Equity Interests and the Offshore Services Equity Interests consisted of (i) the assumption by Orinoco of substantially all of the liabilities and obligations relating to the ownership, operation and condition of the Maritech Properties and the provision of certain indemnities by Orinoco to us under the Maritech Asset Purchase Agreement, (ii) the assumption by Orinoco of substantially all of the liabilities of Maritech and the provision of certain indemnities by Orinoco under the Maritech Equity Purchase Agreement, (iii) the assumption by Epic Offshore of substantially all of the liabilities of the Offshore Services Equity Interests relating to the periods following the closing of the Offshore Services Sale and the provision of certain indemnities by Epic Offshore under the Offshore Services Purchase Agreement, (iv) cash in the amount $3.1 million, (v) a promissory note in the original principal amount of $7.5 million payable by Epic Offshore to us in full, together with interest at a rate of 1.52% per annum, on December 31, 2019, (vi) performance by Orinoco under a Bonding Agreement executed in connection with the Maritech Asset Purchase Agreement and the Maritech Equity Purchase Agreement whereby Orinoco provided at closing non-revocable performance bonds in an amount equal to $46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech, and (vii) the delivery of a personal guaranty agreement from Thomas M. Clarke and Ana M. Clarke guaranteeing the payment obligations of Orinoco under the Bonding Agreement (collectively, the "Transaction Consideration"). Pursuant to the Bonding Agreement, Orinoco is required to replace, within 90 days following the closing, the initial bonds delivered at closing with non-revocable performance bonds, meeting certain requirements, in the aggregate sum of $47.0 million. Orinoco has not delivered such replacement bonds and we are seeking to enforce the terms of the Bonding Agreement. The non-revocable performance bonds delivered at the closing remain in effect.

As a result of these transactions, we have effectively exited the businesses of our Offshore Services and Maritech segments, and these operations are reflected as discontinued operations in our consolidated financial statements. See Note E - "Discontinued Operations" for further discussion. Our consolidated pre-tax results of operations for the nine month period ending September 30, 2018 included a loss on the disposal of our Offshore Division of $33.8 million, net of tax, including transaction costs of $1.4 million.

~~NOTE E –~~ DISCONTINUED OPERATIONS

~~As discussed in Note D - "Acquisitions and Dispositions," on~~On March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division. As a result, we have accounted for our Offshore Division, consisting of our Offshore Services and Maritech segments, as discontinued operations and have revised prior period financial statements to exclude these businesses from continuing operations. During the three months ended September 30, 2019, as a result of the bankruptcy filing of Epic Companies, LLC, we recorded a reserve for the full amount of certain other receivables of discontinued operations in the amount of $1.5 million and for the full amount of a $7.5 million promissory note, including accrued interest, that we received as part of the consideration for the sale. See Note H - "Commitments and Contingencies" for further discussion. A summary of financial information related to our discontinued operations is as follows:

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations

(in thousands)



	Three Months Ended September 30, 2019								Three Months Ended September 30, 2018
	Offshore Services			Maritech		Total			Offshore Services			Maritech		Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	—		$	—	$	—		$	—		$	—	$	—
Cost of revenues	(273		)	—		(273		)	125			—		125
Depreciation, amortization, and accretion	52			—		52			—			—		—
General and administrative expense	1,734			—		1,734			192			—		192
Other (income) expense, net	117			—		117			(1,113		)	—		(1,113		)
Pretax income (loss) from discontinued operations	(1,630		)	—		(1,630		)	796			—		796
Pretax loss on disposal of discontinued operations						(7,500		)						—
Total pretax income (loss) from discontinued operations						(9,130		)						796
Income tax expense						—								—
Total income (loss) from discontinued operations						$	(9,130	)						$	796



	Nine Months Ended September 30,								Nine Months Ended September 30,
	Offshore Services			Maritech		Total			Offshore Services			Maritech			Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	—		$	—	$	—		$	4,487		$	187		$	4,674
Cost of revenues	(251		)	—		(251		)	11,013			139			11,152
Depreciation, amortization, and accretion	52			—		52			1,873			212			2,085
General and administrative expense	2,483			—		2,483			1,729			187			1,916
Other (income) expense, net	117			—		117			(1,035		)	—			(1,035		)
Pretax loss from discontinued operations	(2,401		)	—		(2,401		)	(9,093		)	(351		)	(9,444		)
Pretax loss on disposal of discontinued operations						(7,500		)							(33,813		)
Total pretax loss from discontinued operations						(9,901		)							(43,257		)
Income tax benefit						—									(2,326		)
Total loss from discontinued operations						$	(9,901	)							$	(40,931	)

Three Months Ended
September 30, 2018 Three Months Ended
September 30, 2017
Offshore Services Maritech Total Offshore Services Maritech Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue $ —
$ —
$ —
$ 32,667
$ 21
$ 32,688
Cost of revenues 125
—
125
28,190
386
28,576
Depreciation, amortization, and accretion —
—
—
2,886
372
3,258
General and administrative expense 192
—
192
1,345
177
1,522
Other (income) expense, net (1,113 ) —
(1,113 ) (206 ) —
(206 )
Pretax income (loss) from discontinued operations 796
—
796
452
(914 ) (462 )
Income tax expense —
19
Total income (loss) from discontinued operations $ 796
$ (481 )

Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
Offshore Services Maritech Total Offshore Services Maritech Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue $ 4,487
$ 187
$ 4,674
$ 69,290
$ 427
$ 69,717
Cost of revenues 11,013
139
11,152
66,862
987
67,849
Depreciation, amortization, and accretion 1,873
212
2,085
7,932
1,115
9,047
General and administrative expense 1,729
187
1,916
4,408
588
4,996
Other (income) expense, net (1,035 ) —
(1,035 ) 2,417
(565 ) 1,852
Pretax loss from discontinued operations (9,093 ) (351 ) (9,444 ) (12,329 ) (1,698 ) (14,027 )
Pretax loss on disposal of discontinued operations (33,813 )

—
Total pretax loss from discontinued operations (43,257 ) (14,027 )
Income tax (benefit) expense (2,326 ) 114
Total loss from discontinued operations $ (40,931 ) $ (14,141 )

Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Statement of Financial Position

(in thousands)



	September 30, 2019						December 31, 2018
	Offshore Services		Maritech		Total		Offshore Services		Maritech		Total
Carrying amounts of major classes of assets included as part of discontinued operations
Trade receivables	$	16	$	—	$	16	$	—	$	1,340	$	1,340
Other current assets	—		—		—		14		—		14
Assets of discontinued operations	$	16	$	—	$	16	$	14	$	1,340	$	1,354

Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables	$	901	$	—	$	901	$	740	$	—	$	740
Accrued liabilities	885		121		1,006		1,330		2,075		3,405
Liabilities of discontinued operations	$	1,786	$	121	$	1,907	$	2,070	$	2,075	$	4,145

September 30, 2018 December 31, 2017
Offshore Services Maritech Total Offshore Services Maritech Total
Carrying amounts of major classes of assets included as part of discontinued operations
Trade receivables $ (53 ) $ 1,341
$ 1,288
$ 27,385
$ 1,542
$ 28,927
Inventories —
—
—
4,616
—
4,616
Other Current Assets 13
—
13
1,292
44
1,336
Current assets of discontinued operations (40 ) 1,341
1,301
33,293
1,586
34,879
Property, plant, and equipment —
—
—
85,873
—
85,873
Other assets —
—
—
382
—
382
Long-term assets of discontinued operations $ —
$ —
$ —
$ 86,255
$ —
$ 86,255
Total major classes of assets of the discontinued operations $ (40 ) $ 1,341
$ 1,301
$ 119,548
$ 1,586
$ 121,134

Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables —
—
—
13,942
87
14,029
Accrued liabilities 1,495
2,075
3,570
8,904
2,278
11,182
Current portion of decommissioning liability —
—
—
—
477
477
Current liabilities of discontinued operations 1,495
2,075
3,570
22,846
2,842
25,688
Decommissioning and other asset retirement obligations —
—
—
—
46,185
46,185
Other liabilities —
—
—
2,040
—
2,040
Long-term liabilities of discontinued operations —
—
—
2,040
46,185
48,225
Total major classes of liabilities of the discontinued operations $ 1,495
$ 2,075
$ 3,570
$ 24,886
$ 49,027
$ 73,913

NOTE FE – LONG-TERM DEBT AND OTHER BORROWINGS

We believe our capital structure, excluding CCLP, ("TETRA") and CCLP's capital structure should be considered separately, as there are no cross default provisions, cross collateralization provisions, or cross guarantees between CCLP's debt and TETRA's debt.

Consolidated long-term debt as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, consists of the following:



		September 30, 2019		December 31, 2018
		(In Thousands)
TETRA	Scheduled Maturity
Asset-based credit agreement (presented net of unamortized deferred financing costs of $1.4 million as of September 30, 2019)	September 2023	$	8,585	$	—
Term credit agreement (presented net of the unamortized discount of $6.6 million as of September 30, 2019 and $7.2 million as of December 31, 2018 and net of unamortized deferred financing costs of $9.8 million as of September 30, 2019 and $10.2 million as of December 31, 2018)	September 2025	204,112		182,547
TETRA total debt		212,697		182,547
Less current portion		—		—
TETRA total long-term debt		$	212,697	$	182,547

CCLP
CCLP asset-based credit agreement (presented net of unamortized deferred financing costs of $0.9 million as of September 30, 2019)	June 2023	10,559		—
CCLP 7.25% Senior Notes (presented net of the unamortized discount of $1.8 million as of September 30, 2019 and $2.2 million as of December 31, 2018 and net of unamortized deferred financing costs of $3.1 million as of September 30, 2019 and $3.9 million as of December 31, 2018)	August 2022	291,028		289,797
CCLP 7.50% Senior Secured Notes (presented net of unamortized deferred financing costs of $6 million as of September 30, 2019 and $6.8 million as of December 31, 2018)	April 2025	343,988		343,216
CCLP total debt		645,575		633,013
Less current portion		—		—
CCLP total long-term debt		$	645,575	$	633,013
Consolidated total long-term debt		$	858,272	$	815,560

September 30, 2018 December 31, 2017
(In Thousands)
TETRA Scheduled Maturity
Asset-based credit agreement (presented net of unamortized deferred financing costs of $1.7 million as of September 30, 2018) September 10, 2023 $ 8,301
$ —
Term credit agreement (presented net of the unamortized discount of $7.4 million as of September 30, 2018 and net of unamortized deferred financing costs of $10.5 million as of September 30, 2018) September 10, 2025 182,124
—
Bank revolving line of credit facility, terminated September 10, 2018
—
—
11.0% Senior Note, Series 2015 (presented net of the unamortized discount of $3.9 million as of December 31, 2017 and net of unamortized deferred financing costs of $3.4 million as of December 31, 2017), terminated September 10, 2018
—
117,679
TETRA total debt 190,425
117,679
Less current portion —
—
TETRA total long-term debt $ 190,425
$ 117,679

CCLP
CCLP Bank Credit Facility (presented net of the unamortized deferred financing costs of $4.0 million as of December 31, 2017), terminated March 22, 2018
—
223,985
CCLP New Credit Agreement June 29, 2023 —
—
CCLP 7.25% Senior Notes (presented net of the unamortized discount of $2.4 million as of September 30, 2018 and $2.8 million as of December 31, 2017 and net of unamortized deferred financing costs of $4.2 million as of September 30, 2018 and $5.0 million as of December 31, 2017) August 15, 2022 289,391
288,191
CCLP 7.50% Senior Secured Notes (presented net of unamortized deferred financing costs of $6.9 million as of September 30, 2018) April 1, 2025 343,089
—
CCLP total debt 632,480
512,176
Less current portion —
—
Consolidated total long-term debt $ 822,905
$ 629,855

As of September 30, ~~2018,~~2019, TETRA had a $10.0 million outstanding balance and$~~6.1~~6.9 million in letters of creditagainst its asset-based credit agreement ("ABL Credit ~~Agreement (as defined below)~~Agreement"). As of September 30, ~~2018,~~2019, subject to compliance with the covenants, borrowing base, and other provisions of the agreement that may limit borrowings, TETRA had an availability of ~~$47.4~~$41.6 million under this agreement. There was noan $11.5 million balance outstanding ~~under~~and$3.0 million in letters of creditagainst the CCLP ~~New~~asset-based credit agreement ("CCLP Credit ~~Agreement (as defined below)~~Agreement") as of September 30, ~~2018.~~2019. On June 26, 2019, CCLP entered into an amendment of the CCLP Credit Agreement that, among other things, revised and increased the borrowing base, including adding the value of certain CCLP inventory in the determination of the borrowing base. As of September 30, ~~2018,~~2019, and subject to compliance

with the covenants, borrowing base, and other provisions of the agreements that may limit borrowings under the CCLP ~~New~~ Credit Agreement, CCLP had availability of ~~$23.3~~$7.8 million.

~~As described below,~~TETRA and CCLP credit and senior note agreements contain certain affirmative and negative covenants, including covenants that restrict the ability to pay dividends or other restricted payments. TETRA and CCLP are both in compliance with all covenants of their respective credit and senior note agreements as of September 30, ~~2018.~~

~~TETRA Long-Term Debt~~2019.

~~Asset-Based Credit Agreement~~

On September 10, 2018, TETRA, as borrower, and certain of its subsidiaries, as loan parties and guarantors, entered into an asset-based lending Credit Agreement (the “ABL Credit Agreement”) with a syndicate of lenders, including JPMorgan Chase Bank, N.A., as administrative agent (collectively, the "ABL Lenders"). The ABL Credit Agreement provides for a senior secured revolving credit facility of up to $100 million, subject to a borrowing base to be determined by reference to the value of TETRA’s and any other borrowers’ inventory and accounts receivable, and contains within the facility a letter of credit sublimit of $20.0 million and a swingline loan sublimit of $10.0 million.

Borrowings under the ABL Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) London InterBank Offering Rate (“LIBOR”) (adjusted to reflect any required bank reserves) for an interest period equal to one, two, three or six months (as selected by TETRA) plus a margin based upon a fixed charge coverage ratio or (ii) a base rate plus a margin based on a fixed charge coverage ratio. The base rate is determined by reference to the highest of (a) the prime rate of interest as announced from time to time by JPMorgan Chase Bank, N.A. (b) the Federal Funds Effective Rate (as defined in the ABL Credit Agreement) plus 0.5% per annum and (c) LIBOR (adjusted to reflect any required bank reserves) for a one-month period on such day plus 1.0% per annum. Initially, from September 10, 2018 until the delivery of the financial statements for the fiscal quarter ending September 30, 2018, LIBOR-based loans have an applicable margin of 2.00% per annum and base-rate loans have an applicable margin of 1.0% per annum. Thereafter, the applicable margin will range between 1.75% and 2.25% per annum for LIBOR-based loans and 0.75% to 1.25% per annum for base-rate loans, based upon the applicable fixed charge coverage ratio. In addition to paying interest on the outstanding principal under the ABL Credit Agreement, TETRA is required to pay a commitment fee in respect of the unutilized commitments at an applicable rate ranging from 0.375% to 0.5% per annum, paid monthly in arrears based on utilization of the commitments under the ABL Credit Agreement. TETRA will also be required to pay a customary letter of credit fee equal to the applicable margin on LIBOR-based loans and fronting fees.

The revolving loans under the ABL Credit Agreement may be voluntarily prepaid, in whole or in part, without premium or penalty, subject to applicable breakage fees. The maturity date of the ABL Facility is September 10, 2023.

The ABL Credit Agreement contains certain affirmative and negative covenants, including covenants that restrict the ability of TETRA and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, engaging in mergers and other fundamental changes, the making of investments, entering into transactions with affiliates, the payment of dividends and other restricted payments, the prepayment of other indebtedness, and the sale of assets. The ABL Credit Agreement also contains a provision that may require a fixed charge coverage ratio (as defined in the ABL Credit Agreement) of not less than 1.00 to 1.00 in the event that certain conditions associated with outstanding borrowings and cash availability occur. As of September 30, 2018, such conditions have not occurred. All obligations under the ABL Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the ABL Lenders on substantially all of the personal property of TETRA and certain of its subsidiaries, the equity interests in certain domestic subsidiaries, including CCLP, and a maximum of 65% of the equity interests issued by certain foreign subsidiaries.

The ABL Credit Agreement includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments, and change of control.

other general corporate purposes, including acquisitions. The ABL Credit Agreement replaced TETRA's previous Bank Credit Agreement, as defined and discussed in further detail below. In connection with the execution of the ABL Credit Agreement, $1.3 million of financing costs were incurred, and deferred against the carrying value of the amount outstanding.

~~Term Credit Agreement~~

On September 10, 2018, TETRA, as borrower, entered into a credit agreement (the “Term Credit Agreement”) with a syndicate of lenders (collectively, the “Term Lenders”) and Wilmington Trust, National Association, as administrative agent. The Term Credit Agreement provides an initial loan in the amount of $200 million (the “Initial Term Loan”) and the availability of additional loans, subject to the terms of the Term Credit Agreement, up to an aggregate amount of $75 million (the “Additional Term Loans,” and together with the Initial Term Loan, the “Term Loan”).

Borrowings under the Term Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) LIBOR (adjusted to reflect any required bank reserves) for an interest period equal to one, three or six months (as selected by TETRA) plus a margin of 6.25% per annum or (ii) a base rate plus a margin of 5.25% per annum. The base rate is determined by reference to the highest of (a) the rate of interest as set forth in the print edition of The Wall Street Journal as the base rate on corporate loans posted by at least 70% of the largest U.S. banks announced from time to time by The Wall Street Journal as its prime rate, (b) the Federal Funds Rate (as defined in the Term Credit Agreement) plus 0.5% per annum and (c) LIBOR (adjusted to reflect any required bank reserves) for a one-month period on such day plus 1.0% per annum. In addition to paying interest on the outstanding principal under the Term Credit Agreement, TETRA is required to pay a commitment fee in respect of the unutilized commitments at the rate of 1.0% per annum, paid quarterly in arrears based on utilization of the commitments under the Term Credit Agreement.

The Term Credit Agreement contains certain affirmative and negative covenants, including covenants that restrict the ability of TETRA and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, engaging in mergers and other fundamental changes, the making of investments, entering into transactions with affiliates, the payment of dividends and other restricted payments, the prepayment of other indebtedness, and the sale of assets. The Term Credit Agreement also contains a requirement that the borrowers comply at the end of each fiscal quarter with a minimum Interest Coverage Ratio (as defined in the Term Credit Agreement) of 1.00 to 1.00. As of September 30, 2018, TETRA is in compliance with the Interest Coverage Ratio requirement.

All obligations under the Term Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the Term Lenders on substantially all of the personal property of TETRA and certain of its subsidiaries, the equity interests in certain domestic subsidiaries, including CCLP, and a maximum of 65% of the equity interests issued by certain foreign subsidiaries.

The Term Credit Agreement includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control.

Proceeds from the Initial Term Loan, net of a 2% discount in the amount of $4.0 million, were used to prepay the outstanding indebtedness under the $125.0 million 11.00% Senior Secured Notes due November 5, 2022 (the “11.0% Senior Notes”) and indebtedness of TETRA under its existing Bank Credit Agreement. Proceeds of any Additional Term Loans may be used for acquisitions, subject to the terms of the Term Credit Agreement. The loans under the Term Credit Agreement may be voluntarily prepaid, in whole or in part, subject to applicable breakage fees. Any prepayment prior to the one-year anniversary is subject to a “make-whole” payment as set forth in the Term Credit Agreement. Thereafter, any prepayment during the period commencing after the one-year anniversary and ending on the two-year anniversary will have a premium of 3.0% and during the period commencing after the two-year anniversary and ending on the three-year anniversary, a premium of 1.0%. The maturity date of the Term Credit Agreement is September 10, 2025. There is no prepayment premium required after the third anniversary. In connection with the issuance of the Term Credit Agreement, TETRA incurred $1.0 million of financing costs, $0.4 million of which was charged to other (income) expense during the three months ended September 30, 2018 and $0.6 million of lender fees were deferred against the carrying value of the amount

~~outstanding. These deferred financing costs, along with the 2% discount, are amortized over the term of the Term Credit Agreement.~~

~~Bank Credit Agreement~~

On September 10, 2018, in connection with the closing of the above-described loans, TETRA repaid all outstanding borrowings and obligations under its then existing Credit Agreement dated as of January 27, 2006, as previously amended (the "Bank Credit Agreement") with a portion of the net proceeds from the above-described loans, and terminated the existing Bank Credit Agreement. As a result of the termination of the Bank Credit Agreement, during the three month period ended September 30, 2018, associated unamortized deferred financing costs of $0.5 million were charged to other (income) expense, net, and $0.4 million were deferred and will be amortized over the term of the ABL Credit Agreement. Certain ABL Lenders were lenders under the existing Bank Credit Agreement and, accordingly, received a portion of the proceeds from the above-described loans in connection with the repayment of the outstanding borrowings under the Bank Credit Agreement.

~~11% Senior Note~~

On September 10, 2018, in connection with the closing of the above-described loans, TETRA repaid all outstanding indebtedness under the 11% Senior Note with a portion of the proceeds from the above-described loans, terminating its obligations under the 11% Senior Note and related note purchase agreement. Affiliates of certain Term Lenders were holders of the 11% Senior Note and, accordingly, received a portion of the proceeds from the Term Credit Agreement in connection with the repayment of the outstanding indebtedness under the 11% Senior Note. In connection with the early termination of the 11% Senior Note, TETRA paid a $7.0 million "make-whole" prepayment fee in accordance with the terms of the 11% Senior Note. This prepayment fee, along with $3.4 million of unamortized discount and $2.9 million of unamortized deferred financing costs associated with the 11% Senior Note, has been deferred and is being amortized over the term of the new Term Credit Agreement.

~~CCLP Long-Term Debt~~

~~CCLP Senior Secured Notes~~

On March 8, 2018, CCLP, and its wholly owned subsidiary, CSI Compressco Finance Inc. (together with CCLP, the "CCLP Issuers") entered into the Purchase Agreement (the “Purchase Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated as representative of the initial purchasers listed in Schedule A thereto (collectively, the “Initial Purchasers”), pursuant to which the CCLPIssuers agreed to issue and sell to the Initial Purchasers $350 million aggregate principal amount of the CCLP Issuers’ 7.50% Senior Secured First Lien Notes due 2025 (the "CCLP Senior Secured Notes") (the "CCLP Offering") pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act").

The CCLP Issuers closed the Offering on March 22, 2018. The CCLP Senior Secured Notes were issued at par for net proceeds of approximately $342.7 million, after deducting certain financing costs. CCLP used a portion of the net proceeds to repay in full and terminate its existing CCLP Bank Credit Facility and plans to use the remainder for general partnership purposes, including the expansion of its compression fleet. The CCLP Senior Secured Notes~~are jointly and severally, and fully and unconditionally, guaranteed (the "Guarantees" and, together with the CCLP Senior Secured Notes, the "CCLP Senior Secured Note Securities")~~on a senior secured basis initially by each of CCLP's domestic restricted subsidiaries (other than CSI Compressco Finance Inc., certain immaterial subsidiaries and certain other excluded domestic subsidiaries) and are secured by a first-priority security interest in substantially all of the CCLP Issuers' and the Guarantors' assets (other than certain excluded assets) (the "Collateral") as collateral security for their obligations under the CCLP Senior Secured Notes, subject to certain permitted encumbrances and exceptions. On the closing date, CCLP entered into an indenture (the "Indenture") by and among the Obligors and U.S. Bank National Association, as trustee with respect to the Securities. The CCLP Senior Secured Notesaccrue interest at a rate of 7.50% per annum. Interest on the CCLP Senior Secured Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning October 1, 2018. The CCLP Senior Secured Notes are scheduled to mature on April 1, 2025. During the nine months ended September 30, 2018, CCLP incurred total financing costs of $7.4 million related to the~~CCLP Senior Secured Notes. These costs are deferred, netting against the carrying value of the amount outstanding.~~

On and after April 1, 2021, CCLP may redeem all or a part of the CCLP Senior Secured Notes, from time to time, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest thereon to, but not including, the applicable redemption date, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the 12-month period beginning on April 1 of the years indicated below:

Date Price
2021 105.625 %
2022 103.750 %
2023 101.875 %
2024 100.000 %

In addition, at any time and from time to time before April 1, 2021, CCLP may, at its option, redeem all or a portion of the CCLP Senior Secured Notes at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium (as defined in the Indenture) with respect to the CCLP Senior Secured Notes plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date, subject to the rights of holders of the CCLP Senior Secured Notes on the relevant record date to receive interest due on the relevant interest payment date.

Prior to April 1, 2021, CCLP may on one or more occasions redeem up to 35% of the principal amount of the CCLP Senior Secured Notes with an amount of cash not greater than the amount of the net cash proceeds from one or more equity offerings at a redemption price equal to 107.500% of the principal amount of the CCLP Senior Secured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date, provided that (a) at least 65% of the aggregate principal amount of the CCLP Senior Secured Notes originally issued on the issue date (excluding notes held by CCLP and its subsidiaries) remains outstanding after each such redemption; and (b) the redemption occurs within 180 days after the date of the closing of the equity offering.

If CCLP experiences certain kinds of changes of control, each holder of the CCLP Senior Secured Notes will be entitled to require CCLP to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of that holder’s CCLP Senior Secured Notes pursuant to an offer on the terms set forth in the Indenture. CCLP will offer to make a cash payment equal to 101% of the aggregate principal amount of the CCLP Senior Secured Notes repurchased plus accrued and unpaid interest, if any, on the CCLP Senior Secured Notes repurchased to the date of repurchase, subject to the rights of holders of the CCLP Senior Secured Notes on the relevant record date to receive interest due on the relevant interest payment date.

The Indenture contains customary covenants restricting CCLP's ability and the ability of CCLP restricted subsidiaries to: (i) pay distributions on, purchase or redeem CCLP common units or purchase or redeem any CCLP subordinated debt; (ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities; (iii) create or incur certain liens securing indebtedness; (iv) sell assets, including dispositions of the Collateral; (v) consolidate, merge or transfer all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) enter into agreements that restrict distributions or other payments from its restricted subsidiaries to CCLP. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting CCLP, subject to the satisfaction of certain conditions, to transfer assets to certain of CCLP's unrestricted subsidiaries. Moreover, if the CCLP Senior Secured Notes receive an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the Indenture, many of the restrictive covenants in the Indenture will be terminated. The Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding CCLP Senior Secured Notes may declare all of the CCLP Senior Secured Notes to be due and payable immediately.

~~the proceeds of all of its liens upon the Collateral for the benefit of the current and future holders of the CCLP Senior Secured Notes and any future priority lien obligations, if any.~~

~~CCLP Bank Credit Facilities.~~

On March 22, 2018, in connection with the closing of the CCLP Offering, CCLP repaid all outstanding borrowings and obligations under its then existing CCLP Bank Credit Facility with a portion of the net proceeds from the CCLP Offering, and terminated the CCLP Bank Credit Facility. As a result of the termination of the CCLP Bank Credit Facility, associated unamortized deferred financing costs of $3.5 million were charged to other (income) expense, net, during the three month period ended March 31, 2018.

On June 29, 2018, CCLP and two of its wholly owned subsidiaries (collectively the "CCLP Borrowers"), and certain of its wholly owned subsidiaries named therein as guarantors (the "CCLP New Credit Agreement Guarantors"), entered into a Loan and Security Agreement (the "CCLP New Credit Agreement") with the lenders thereto (the "Lenders"), and Bank of America, N.A., in its capacity as administrative agent, collateral agent, letter of credit issuer, and swing line lender. All of the CCLP Borrowers' obligations under the CCLP New Credit Agreement are guaranteed by certain of their existing and future domestic subsidiaries. The CCLP New Credit Agreement includes a maximum credit commitment of $50.0 million available for loans, letters of credit with a sublimit of $25.0 million and swingline loans with a sublimit of $5.0 million, subject to a borrowing base to be determined by reference to the value of CCLP’s and any other borrowers’ accounts receivable. Such maximum credit commitment may be increased by $25.0 million in accordance with the terms and conditions of the CCLP New Credit Agreement.

The CCLP Borrowers may borrow funds under the CCLP New Credit Agreement to pay fees and expenses related to the CCLP New Credit Agreement and for the Borrower's ongoing working capital needs and for general business purposes. The revolving loans under the CCLP New Credit Agreement may be voluntarily prepaid, in whole or in part, without premium or penalty, subject to breakage or similar costs. The maturity date of the CCLP New Credit Agreement is June 29, 2023. As of September 30, 2018, no balance was outstanding under the CCLP New Credit Agreement. Because there was no outstanding balance on the CCLP New Credit Agreement, associated deferred financing costs of $1.2 million as of September 30, 2018, were classified as other assets on the accompanying consolidated balance sheet.

Borrowings under the CCLP New Credit Agreement will bear interest at a rate per annum equal to, at the option of the CCLP Borrowers, either (i) London InterBank Offered Rate (“LIBOR”) (adjusted to reflect any required bank reserves) for an interest period equal to 30, 60, 90, 180 or 360 days (as selected by the CCLP Borrowers, subject to availability and with the consent of the Lenders for 360 days) plus a margin based on average daily excess availability or (ii) a base rate plus a margin based on average daily excess availability; such base rate shall be determined by reference to the highest of (a) the prime rate of interest announced from time to time by Bank of America, N.A., (b) the Federal Funds Rate (as defined in the CCLP New Credit Agreement) rate plus 0.5% per annum and (c) LIBOR (adjusted to reflect any required bank reserves) for a 30-day interest period on such day plus 1.0% per annum. Initially, from June 29, 2018 until the delivery of the financial statements for the fiscal quarter ending December 31, 2018, LIBOR-based loans will have an applicable margin of 2.00% per annum and base-rate loans will have an applicable margin of 1.00% per annum; thereafter, the applicable margin will range between 1.75% and 2.25% per annum for LIBOR-based loans and 0.75% and 1.25% per annum for base-rate loans, according to average daily excess availability when financial statements are delivered. In addition to paying interest on outstanding principal under the CCLP New Credit Agreement, the CCLP Borrowers will be required to pay a commitment fee in respect of the unutilized commitments thereunder, initially at the rate of 0.375% per annum until the delivery of the financial statements for the fiscal quarter ending September 30, 2018 and thereafter at the applicable rate ranging from 0.250% to 0.375% per annum, paid quarterly in arrears based on utilization of the commitments under the CCLP New Credit Agreement. The CCLP Borrowers will also be required to pay a customary letter of credit fee equal to the applicable margin on revolving credit LIBOR loans and fronting fees.

The CCLP New Credit Agreement contains certain affirmative and negative covenants, including covenants that restrict the ability of the CCLP Borrowers, the CCLP New Credit Agreement Guarantors and certain of their subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, the making of investments, entering into transactions with affiliates, the payment of dividends and the sale of assets. The CCLP New Credit Agreement also contains a provision that may require a fixed charge coverage ratio (as defined in the CCLP New Credit Agreement) of not less than 1.0 to 1.0 in the event that certain conditions associated with outstanding borrowings and cash availability occur. As of September 30, 2018, such conditions have not occurred.

All obligations under the CCLP New Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a first priority security interest for the benefit of the Lenders in the CCLP Borrowers’ and the CCLP New Credit Agreement Guarantors’ present and future accounts receivable, inventory and related assets and proceeds of the foregoing.

NOTE GF – CCLP SERIES A CONVERTIBLE PREFERRED UNITS

~~During 2016,~~In January 2019, CCLP ~~entered into Series A~~began redeeming CCLP Preferred ~~Unit Purchase Agreements (the “CCLP Unit Purchase Agreements”) with certain purchasers to issue and sell~~Units for cash, resulting in ~~two private placements (the "Initial Private Placement" and "Subsequent Private Placement," respectively)~~2,660,569 CCLP Preferred Units being redeemed during the nine months ended September 30, 2019 for an aggregate of 6,999,126 of CSI Compressco LP Series A Convertible Preferred Units representing limited partner interests in CCLP (the “CCLP Preferred Units”) for a cash purchase price of $11.43 per CCLP Preferred Unit (the “Issue Price”), resulting in total 2016 net proceeds to CCLP, after deducting certain offering expenses, of $77.3 million. We purchased 874,891 of the CCLP Preferred Units in the Initial Private Placement at the aggregate Issue Price of $10.0 million.

~~We and the other holders of CCLP Preferred Units (each, a “CCLP Preferred Unitholder”) receive quarterly distributions,~~$28.0 million, which are paid in kind in additional CCLP Preferred Units, equal to an annual rate of 11.00% of the Issue Price ($1.2573 per unit annualized), subject to certain adjustments. The rights of the CCLP Preferred Units include certain anti-dilution adjustments, including adjustments for economic dilution resulting from the issuance of CCLP common units in the future below a set price.

A ratable portion of the CCLP Preferred Units has been, and will continue to be, converted into CCLP common units on the eighth day of each month over a period of thirty months that began in March 2017 (each, a “Conversion Date”), subject to certain provisions of the Second Amended and Restated CCLP Partnership Agreement that may delay or accelerate all or a portion of such monthly conversions. On each Conversion Date, a portion of the CCLP Preferred Units will convert into CCLP common units representing limited partner interests in CCLP in an amount equal to, with respect to each CCLP Preferred Unitholder, the number of CCLP Preferred Units held by such CCLP Preferred Unitholder divided by the number of Conversion Dates remaining, subject to adjustment described in the Second Amended and Restated CCLP Partnership Agreement, with the conversion price (the "Conversion Price") determined by the trading prices of the common units over the prior month, among other factors, and as otherwise impacted by the existence of certain conditions related to the CCLP common units. Based on the number of CCLP Preferred Units outstanding as of September 30, 2018, the maximum aggregate number of CCLP common units that could be required to be issued pursuant to the conversion provisions of the CCLP Preferred Units isincludes approximately 20.7 million CCLP common units; however, CCLP may, at its option, pay cash, or a combination of cash and common units, to the CCLP Preferred Unitholders instead of issuing common units on any Conversion Date, subject to certain restrictions as described in the Second Amended and Restated CCLP Partnership Agreement. The total number of CCLP Preferred Units outstanding as of September 30, 2018 was 3,623,950, of which we held 455,127.

Because the CCLP Preferred Units may be settled using a variable number of CCLP common units, the total fair value of the CCLP Preferred Units of $42.3 million, net of the fair value of the units we purchased of $5.3 million, is classified as long-term liabilities on our consolidated balance sheet in accordance with ASC 480 "Distinguishing Liabilities and Equity." The net fair value of the CCLP Preferred Units as of September 30, 2018 was $36.9 million. During the three and nine month period ended September 30, 2018, changes in the fair value during each period resulted in $0.5 million and $1.3 million ~~being~~of redemption premium that was paid and charged to ~~earnings, respectively,~~other (income) expense, net in the accompanying consolidated statements of operations. During the three and nine month period ended September 30, 2017, changes in the fair value resulted in $1.1 million and $4.3 million being credited to earnings, respectively, in the accompanying consolidated statements of operations.

~~Based on the conversion provisions~~The last redemption of the ~~CCLP Preferred Units, and using the Conversion Price calculated as of September 30, 2018, the theoretical number of CCLP common units that would be issued if all of the~~remaining outstanding CCLP Preferred Units, ~~were converted~~along with a final cash payment made in lieu of paid-in-kind units, occurred on ~~September 30, 2018 on the same basis as the monthly conversions would be approximately 8.4 million CCLP common units, with~~August 8, 2019, for an aggregate ~~market value~~cash payment of ~~$43.2 million. A $1 decrease in the Conversion Price would result in the issuance~~$5.0 million, of ~~2.1~~which $0.6 million ~~additional CCLP common units pursuant~~was paid to ~~these conversion provisions.~~us.

NOTE HG – FAIR VALUE MEASUREMENTS

Fair value is defined as “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” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that may differ from the transaction price or market price of the asset or liability.

Under U.S. GAAP, the fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value. Fair value measurements should maximize the use of observable inputs and minimize the use of unobservable inputs, where possible. Observable inputs are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs may be needed to measure fair value in situations where there is little or no market activity for the asset or liability at the measurement date and are developed based on the best information available in the circumstances, which could include the reporting entity’s own judgments about the assumptions market participants would utilize in pricing the asset or liability.

Financial Instruments

~~CCLP Preferred Units~~Warrants

The ~~CCLP Preferred Units~~Warrants are valued using a lattice modeling technique that, among a number of lattice structures, includes significant unobservable items (a Level 3 fair value measurement). These unobservable items include (i) the volatility of the trading price of CCLP's common units compared to a volatility analysis of equity prices of CCLP's comparable peer companies, (ii) a yield analysis that utilizes market information related to the debt yields of comparable peer companies, and (iii) a future conversion price analysis. The fair valuation of the CCLP Preferred Units liability is increased by, among other factors, projected increases in CCLP's common unit price and by increases in the volatility and decreases in the debt yields of CCLP's comparable peer companies. Increases (or decreases) in the fair value of CCLP Preferred Units will increase (decrease) the associated liability and result in future adjustments to earnings for the associated valuation losses (gains). During the three and nine month periods ended September 30, 2018, the changes in the fair value of the CCLP Preferred Units resulted in $0.5 million and $1.3 million charged to earnings, respectively, in the consolidated statement of operations.

~~Warrants~~

~~The Warrants are valued either by using their traded market prices (a Level 1 fair value measurement) or, for periods when market prices are not available, by using the~~ Black Scholes option valuation model that includes ~~estimates of the~~implied volatility of the ~~Warrants implied by their~~ trading ~~prices~~price (a Level 3 fair value measurement). ~~As of September 30, 2018~~and December 31, 2017, the fair valuation methodology utilized for the Warrants was a Level 3 fair value measurement, as there were no available traded market prices to value the Warrants. The fair valuation of the Warrants liability is increased by, among other factors, increases in our common stock price, and by increases in the volatility of our common stock price. Increases (or decreases) in the fair value of the Warrants will increase (decrease) the associated liability and result in future adjustments to earnings for the associated valuation losses (gains). During the three and nine month periods ended September 30, 2018, the changes in the fair value of the Warrants liability resulted in $0.2 million being credited to earnings and $0.02 million being charged to earnings, respectively, in the consolidated statement of operations.

~~Stock Appreciation Rights~~

During the third quarter of 2017 and the first quarter of 2018, we issued stand-alone, cash-settled stock appreciation rights awards to an executive officer. These awards are valued by using the Black Scholes option valuation model (a Level 3 fair value measurement) and such fair value is recognized based on the portion of the requisite service period satisfied as of each valuation date. The fair valuation of the stock appreciation rights liability is increased by, among other factors, increases in our common stock price, and by increases in the volatility of our common stock price. These stock appreciation rights awards are reflected as an accrued liability in our consolidated balance sheet. Increases (or decreases) in the fair value of the stock appreciation rights awards will increase (decrease) the associated liability and result in future adjustments to earnings for the associated valuation losses (gains). During the nine months ended September 30, 2018, the fair value of the stock appreciation rights increased $0.3 million, which was charged to earnings in the consolidated statement of operations.

~~SwiftWater~~ Contingent Consideration

As part of the purchase agreement of SwiftWater during the first quarter of 2018, the sellers have the right to receive contingent consideration payments, in an aggregate amount of up to $15.0 million, calculated on EBITDA and revenue of the combined water management business of SwiftWater and our pre-existing operations in the Permian Basin in respect of the period from January 1, 2018 through December 31, 2019. The contingent consideration may be paid in cash or shares of our common stock, at our election. The fair value of the remaining contingent consideration associated with the February 2018 acquisition of SwiftWater Energy Services, LLC ("SwiftWater") is based on a probability simulation utilizing forecasted revenues and EBITDA of the water management business of SwiftWater and all of our pre-existing operations in the Permian Basin (a Level 3 fair value measurement). ~~During the period from the closing date to~~At September 30, ~~2018,~~2019, based on a forecast of SwiftWater 2019 revenues and EBITDA, the estimated fair value for the ~~liabilities~~liability associated with the remaining contingent purchase price consideration ~~increased to $11.3~~was $0.2 million, resulting in ~~$(0.6) million and $3.7~~$0.8 million being ~~(credited) charged~~credited to other (income) expense, net, during the ~~three and~~ nine ~~month periods~~months ended September 30, 2019. During the nine months ended September 30, 2019, the sellers received a payment of $10.0 million based on SwiftWater's performance during 2018. In addition, as part of the purchase of JRGO Energy Services LLC ("JRGO") during December 2018, ~~respectively.~~the sellers were paid contingent consideration of $1.4 million during the nine month period ended September 30, 2019, based on JRGO's performance during the fourth quarter of 2018.

Derivative Contracts

We are exposed to financial and market risks that affect our businesses. We have concentrations of credit risk as a result of trade receivables owed to us by companies in the energy industry. We have currency exchange rate risk exposure related to transactions denominated in foreign currencies as well as to investments in certain of our international operations. As a result of our variable rate bank credit facility, we face market risk exposure related to changes in applicable interest rates. Our financial risk management activities may at times involve, among other measures, the use of derivative financial instruments, such as swap and collar agreements, to hedge the impact of market price risk exposures. For these fair value measurements, we utilize the quoted value as determined by our counterparty financial institution (a Level 2 fair value measurement).

We and CCLP each enter into ~~30-day~~short term foreign currency forward derivative contracts with third parties as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. As of September 30, ~~2018,~~2019, we and CCLP had the following foreign currency derivative contracts outstanding relating to portions of our foreign operations:



Derivative Contracts	US Dollar Notional Amount		Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	$	9,472	1.12	12/19/2019
Forward purchase Euro	8,687		1.11	10/18/2019
Forward sale pounds sterling	1,867		1.24	10/18/2019
Forward purchase Mexican peso	774		19.38	10/18/2019
Forward purchase Norwegian krone	5,063		8.89	10/18/2019
Forward sale Mexican peso	8,844		19.56	10/18/2019

Derivative Contracts US Dollar Notional Amount Traded Exchange Rate Settlement Date

(In Thousands)

Forward purchase Euro $ 2,818
1.17 10/18/2018
Forward sale pounds sterling 3,928
1.31 10/18/2018
Forward sale Canadian dollar 5,419
1.29 10/18/2018
Forward purchase Mexican peso 1,747
18.89 10/18/2018
Forward sale Norwegian krone 679
8.11 10/18/2018
Forward sale Mexican peso 6,352
18.89 10/18/2018



Derivative Contracts	British Pound Notional Amount	Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	2,316	0.89	10/18/2019



Derivative Contracts	Swedish Krona Notional Amount	Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	15,980	10.65	10/18/2019

Derivative Contracts British Pound Notional Amount Traded Exchange Rate Settlement Date
(In Thousands)
Forward purchase Euro 982
0.89 10/18/2018

Derivative Contracts Swedish Krona Notional Amount Traded Exchange Rate Settlement Date
(In Thousands)
Forward purchase Euro 23,791
10.34 10/18/2018

Under this program, we and CCLP may enter into similar derivative contracts from time to time. Although contracts pursuant to this program will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts or qualify for hedge accounting treatment.

Accordingly, any change in the fair value of these derivative ~~instruments~~contracts during a period will be included in the determination of earnings for that period.

The fair values of foreign currency derivative ~~instruments~~contracts are based on quoted market values ~~as reported to us by our counterparty~~ (a Level 2 fair value measurement). The fair values of our and CCLP's foreign currency derivative ~~instruments~~contracts as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, are as follows:



Foreign currency derivative contracts	Balance Sheet Location	Fair Value at September 30, 2019			Fair Value at December 31, 2018
		(In Thousands)
Forward purchase contracts	Current assets	$	12		$	41
Forward sale contracts	Current assets	122			76
Forward sale contracts	Current liabilities	—			(126		)
Forward purchase contracts	Current liabilities	(504		)	(168		)
Net asset (liability)		$	(370	)	$	(177	)

Foreign currency derivative instruments Balance Sheet Location Fair Value at September 30, 2018 Fair Value at December 31, 2017

(In Thousands)
Forward purchase contracts Current assets $ 12
$ 111
Forward sale contracts Current assets 14
130
Forward sale contracts Current liabilities (45 ) (255 )
Forward purchase contracts Current liabilities (34 ) (113 )
Net asset (liability) $ (53 ) $ (127 )

None of ~~the~~our foreign currency derivative contracts contain credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the three and nine month periods ended September 30, ~~2018,~~2019, we recognized ~~$(0.6)~~$1.0 million and ~~$0.1~~$1.8 millionof net ~~gains (losses)~~(gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program. During the three and nine ~~month periods~~months ended September 30, ~~2017,~~2018, we recognized ~~$0.1~~$0.6 million and ~~$1.2~~$(0.1) million of net ~~gains (losses)~~(gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program.

~~A summary of these recurring~~Recurring fair value measurements by valuation hierarchy as of September 30, ~~2018~~2019 and December 31, ~~2017, is~~2018, are as follows:


				Fair Value Measurements Using											Fair Value Measurements Using
	Total as of			Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs			Significant Unobservable Inputs			Total as of			Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs			Significant Unobservable Inputs
Description	September 30, 2018			(Level 1)		(Level 2)			(Level 3)			September 30, 2019			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)											(In Thousands)
CCLP Series A Preferred Units	$	(36,944	)	$	—	$	—		$	(36,944	)
Warrants liability	(13,224		)	—		—			(13,224		)	$	(1,038	)	$	—	$	—		$	(1,038	)
Cash-settled stock appreciation rights	(392		)	—		—			(392		)
Asset for foreign currency derivative contracts	26			—		26			—			134			—		134			—
Liability for foreign currency derivative contracts	(79		)	—		(79		)	—			(504		)	—		(504		)	—
Acquisition contingent consideration liability	(11,300		)	—		—			(11,300		)	(200		)	—		—			(200		)
Net liability	$	(61,913	)									$	(1,608	)


				Fair Value Measurements Using											Fair Value Measurements Using
	Total as of			Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs			Significant Unobservable Inputs			Total as of			Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs			Significant Unobservable Inputs
Description	December 31, 2017			(Level 1)		(Level 2)			(Level 3)			December 31, 2018			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)											(In Thousands)
CCLP Series A Preferred Units	$	(61,436	)	$	—	$	—		$	(61,436	)	$	(27,019	)	$	—	$	—		$	(27,019	)
Warrants liability	(13,202		)	—		—			(13,202		)	(2,073		)	—		—			(2,073		)
Cash-settled stock appreciation rights	(97		)	—		—			(97		)
Asset for foreign currency derivative contracts	241			—		241			—			117			—		117			—
Liability for foreign currency derivative contracts	(378		)	—		(378		)	—			(294		)	—		(294		)	—
Acquisition contingent consideration liability												(12,452		)	—		—			(12,452		)
Net liability	$	(74,872	)									$	(41,721	)

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to TETRA's ABL Credit Agreement and Term Credit Agreement, and the CCLP ~~New~~ Credit Agreement approximate their carrying amounts. The fair value of our long-term 11% Senior Note at December 31, 2017 was approximately $130.8 million, based on current interest rates on that date, which was different from the stated interest rate on the 11% Senior Note. This fair value compares to the face amount of the 11% Senior Note of $125.0 million at December 31, 2017. The fair values of the publicly traded CCLP 7.25% Senior Notes ~~(as herein defined)~~ at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, were approximately ~~$276.0~~$269.2 million and ~~$279.7~~$266.3 million, respectively. Those fair values compare to the face amount of $295.9 million both at September 30, ~~2018~~2019 and December 31, ~~2017.~~2018. The fair ~~value~~values of the ~~publicly traded~~ CCLP 7.50% Senior Secured Notes at September 30, 2019 and December 31, 2018 ~~was~~were approximately ~~$358.3 million. This~~$344.8 million and $332.5 million, respectively. These fair ~~value compares~~values compare to aggregate principal amount of such notes at both September 30, 2019 and December 31, 2018, of $350.0 million. ~~We calculated the fair values of our 11% Senior Note as of December 31, 2017 internally, using current market conditions and average cost of debt (a Level 2 fair value measurement).~~ We based the fair values of the CCLP 7.25% Senior Notes and the CCLP 7.50% Senior Secured Notes as of September 30, ~~2018~~2019 on recent trades for these notes. ~~See Note F - "Long-Term Debt and Other Borrowings," for a complete discussion of our debt.~~

NOTE ~~I – EQUITY~~

~~Changes in equity for the three and nine month periods ended~~ ~~September 30, 2018~~ ~~and 2017 are as follows:~~

Three Months Ended September 30,
2018 2017
TETRA Non-
controlling
Interest Total TETRA Non-
controlling
Interest Total
(In Thousands)
Beginning balance for the period $ 173,958
$ 137,104
$ 311,062
$ 228,673
$ 155,054
$ 383,727
Net income (loss) (6,936 ) (5,120 ) (12,056 ) 3,145
(4,483 ) (1,338 )
Foreign currency translation adjustment (676 ) 95
(581 ) 2,807
(187 ) 2,620
Comprehensive Income (loss) (7,612 ) (5,025 ) (12,637 ) 5,952
(4,670 ) 1,282
Exercise of common stock options 251
—
251
—
—
—
Conversions of CCLP Series A Preferred —
10,294
10,294
—
—
—
Distributions to CCLP public unitholders —
(4,946 ) (4,946 ) —
(3,871 ) (3,871 )
Equity-based compensation 1,798
367
2,165
1,537
45
1,582
Treasury stock and other (78 ) 78
—
(188 ) (22 ) (210 )
Ending balance as of September 30 $ 168,317
$ 137,872
$ 306,189
$ 235,974
$ 146,536
$ 382,510

Nine Months Ended September 30,
2018 2017
TETRA Non-
controlling
Interest Total TETRA Non-
controlling
Interest Total
(In Thousands)
Beginning balance for the period $ 208,080
$ 144,481
$ 352,561
$ 233,523
$ 166,943
$ 400,466
Net income (loss) (66,549 ) (20,423 ) (86,972 ) (10,309 ) (16,900 ) (27,209 )
Foreign currency translation adjustment (6,503 ) (2,044 ) (8,547 ) 8,152
(371 ) 7,781
Comprehensive Income (loss) (73,052 ) (22,467 ) (95,519 ) (2,157 ) (17,271 ) (19,428 )
Exercise of common stock options 251
—
251
—
—
—
Issuance of stock for business combination and other 28,117
—
28,117
(16 ) —
(16 )
Conversions of CCLP Series A Preferred —
29,669
29,669
—
10,020
10,020
Distributions to CCLP public unitholders —
(13,928 ) (13,928 ) —
(14,815 ) (14,815 )
Equity-based compensation 5,137
70
5,207
5,089
1,784
6,873
Treasury stock and other (216 ) 47
(169 ) (465 ) (125 ) (590 )
Ending balance as of September 30 $ 168,317
$ 137,872
$ 306,189
$ 235,974
$ 146,536
$ 382,510

~~Activity within the foreign currency translation adjustment account during the periods includes no reclassifications to net income (loss).~~

~~NOTE J~~H – COMMITMENTS AND CONTINGENCIES

Litigation

We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.

Contingencies of Discontinued Operations

In early 2018, we closed the Maritech Asset Purchase Agreement with Orinoco Natural Resources, LLC ("Orinoco") that provided for the purchase by Orinoco of Maritech's remaining oil and gas properties and related assets. Also in early 2018, we closed the Maritech Membership Interest Purchase Agreement with Orinoco that provided for the purchase by Orinoco of all of the outstanding membership interests in Maritech. As a result of these transactions, we have effectively exited the business of our Maritech segment.

Under the Maritech Asset Purchase Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase Agreement, Orinoco assumed all other liabilities of Maritech, including the decommissioning liabilities associated with the oil and gas properties previously sold by Maritech (the “Legacy Liabilities”), subject to certain limited exceptions unrelated to the decommissioning liabilities. To the extent that Maritech or Orinoco fails to satisfy decommissioning liabilities associated with any of the Orinoco Lease Liabilities or the Legacy Liabilities, we may be required to satisfy such liabilities under third party indemnity agreements and corporate guarantees that we previously provided to the US Department of the Interior and other parties, respectively.

~~On March 18, 2011,~~Pursuant to a Bonding Agreement entered into as part of these transactions (the "Bonding Agreement"), Orinoco provided non-revocable performance bonds in an aggregate amount of $46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace, within 90 days following the closing, the Initial Bonds with other non-revocable performance bonds, meeting certain requirements, in the aggregate sum of $47.0 million (collectively, the “Interim Replacement Bonds”). Orinoco further agreed to replace, within 180 days following the closing, the Interim Replacement Bonds with a maximum of three non-revocable performance bonds in the aggregate sum of $47.0 million, meeting certain requirements (the “Final Bonds”). Among the other requirements of the Final Bonds was that they must provide coverage for all of the asset retirement obligations of Maritech instead of only relating to specific properties. In the event Orinoco does not provide the Interim Replacement Bonds or the Final Bonds, Orinoco is required to make certain cash escrow payments to us.

The payment obligations of Orinoco under the Bonding Agreement were guaranteed by Thomas M. Clarke and Ana M. Clarke pursuant to a separate guaranty agreement (the “Clarke Bonding Guaranty Agreement”). Orinoco has not delivered such replacement bonds and it has not made any of the agreed upon cash escrow payments and we filed a lawsuit against Orinoco and the Clarkes to enforce the terms of the Bonding Agreement and the Clarke Bonding Guaranty Agreement. A summary judgment was granted in favor of Orinoco and the Clarkes which dismissed our present claims against Orinoco under the Bonding Agreement and against the Clarkes under the Clarke Bonding Guaranty Agreement. We believe this judgment should not have been granted and have begun the process of appealing it. The Initial Bonds, which are non-revocable, remain in effect.

If we become liable in the ~~Circuit Court~~future for any decommissioning liability associated with any property covered by either an Initial Bond or an Interim Replacement Bond while such bonds are outstanding and the payment made to us under such bond is not sufficient to satisfy such liability, the Bonding Agreement provides that Orinoco will pay us an amount equal to such deficiency and if Orinoco fails to pay any such amount, such amount must be paid by the Clarkes under the Clarke Bonding Guaranty Agreement. However, if the Final Bonds or the full amount of ~~Union County, Arkansas, asserting claims~~the escrowed cash have been provided, neither Orinoco nor the Clarkes would be liable to pay us for any such deficiency. Our financial condition and results of ~~professional negligence, breach~~operations may be negatively affected if Orinoco is unable to cover any such deficiency or if we become liable for a significant portion of ~~contract~~the decommissioning liabilities.

In early 2018, we also closed the sale of our Offshore Division to Epic Companies, LLC (“Epic Companies,” formerly known as Epic Offshore Specialty, LLC). Part of the consideration we received was a promissory note of Epic Companies in the original principal amount of $7.5 million (the “Epic Promissory Note”) payable to us in full, together with interest at a rate of 1.52% per annum, on December 31, 2019, along with a personal guaranty agreement from Thomas M. Clarke and Ana M. Clarke guaranteeing the payment obligations of Epic Companies pursuant to the Epic Promissory Note (the “Clarke Promissory Note Guaranty Agreement”). Additionally, pursuant to the Equity Interest Purchase Agreement (the “Offshore Services Purchase Agreement”) and other ~~claims against~~agreements with Epic Companies, certain other amounts relating to the ~~engineering firm~~Offshore Division totaling approximately $1.5 million were payable to us. At the end of August 2019, Epic Companies filed for bankruptcy. Although the Epic Promissory Note is not currently due and is guaranteed by the Clarke Promissory Note Guaranty Agreement, we ~~hired~~recorded a reserve of $7.5 million for engineering design, equipment, procurement, advisory, testing and startup services for our El Dorado, Arkansas chemical production facility. The engineering firm disputed our claims and promptly filed a motion to compel the matter to arbitration. After a lengthy procedural dispute in Arkansas state court, arbitration proceedings were initiated on November 15, 2013. Ultimately, on December 16, 2016, the arbitration panel ruled in our favor, declared us as the prevailing party, and awarded us a total netfull amount of ~~$12.8 million. We received full payment of~~ the ~~$12.8 million final award on January 5, 2017,~~promissory note including accrued interest, and ~~this amount was credited to earnings~~certain other receivables in the ~~accompanying consolidated statement~~amount of ~~operations for the nine months ended~~$1.5 million at September 30, ~~2017.~~2019. We continue to monitor this matter and seek to vigorously pursue our rights to collect all amounts payable to us, including the amounts owed under the Epic Promissory Note when due, including by enforcing our rights under the Clarke Promissory Note Guaranty Agreement.

NOTE KI – INDUSTRY SEGMENTS

~~Following the transactions closed during the three month period ended March 31, 2018, we reorganized our reporting segments and now~~We manage our operations through ~~three~~3 Divisions: Completion Fluids & Products, Water & Flowback Services, and Compression. Our Completion Fluids & Products Division was previously reported as our Fluids Division, and included our water management services operations. Following the acquisition of SwiftWater in February 2018, our expanded water management operations are now included with our production testing operations as part of our Water & Flowback Services Division. The operations of our previous Offshore Division, consisting of our previous Offshore Services and Maritech segments, are now reported as discontinued operations following their disposal in March 2018.

~~Our~~ ~~Completion Fluids & Products Division~~ manufactures and markets clear brine fluids ("CBF"), additives, and associated products and services to the oil and gas industry for use in well drilling, completion, and workover operations in the United States and in certain countries in Latin America, Europe, Asia, the Middle East, and Africa. The division also markets liquid and dry calcium chloride products manufactured at its production facilities or purchased from third-party suppliers to a variety of markets outside the energy industry.

~~Our~~ ~~Water & Flowback Services Division~~ provides domestic onshore oil and gas operators with comprehensive water management services. The division also provides frac flowback, production well testing, offshore rig cooling, and other associated services in many of the major oil and gas producing regions in the United States, Mexico, and Canada, as well as in basins in certain regions in South America, Africa, Europe, the Middle East, and Australia.

The Compression Division is a provider of compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage. The Compression Division's equipment sales business includes the fabrication and sale of standard compressor packages, custom-designed compressor packages, and oilfield pump systems designed and fabricated at the division's facilities. The Compression Division's aftermarket services business provides compressor package reconfiguration and maintenance services as well as providing compressor package parts and components manufactured by third-party suppliers. The Compression Division provides its services and equipment to a broad base of natural gas and oil exploration and production, midstream, transmission, and storage companies operating throughout many of the onshore producing regions of the United States as well as in a number of foreign countries, including Mexico, Canada, and Argentina.

We generally evaluate the performance of and allocate resources to our segments based on profit or loss from their operations before income taxes and nonrecurring charges, return on investment, and other criteria. Transfers between segments and geographic areas are priced at the estimated fair value of the products or services as negotiated between the operating units. “Corporate Overhead” includes corporate general and administrative expenses, corporate depreciation and amortization, interest income and expense, and other income and expense.

Summarized financial information concerning the business segments is as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
	(In Thousands)												(In Thousands)
Revenues from external customers
Product sales
Completion Fluids & Products Division	$	58,050		$	58,049		$	181,394		$	177,568		$	55,444		$	58,050		$	185,578		$	181,394
Water & Flowback Services Division	941			143			1,617			6,401			100			941			831			1,617
Compression Division	43,079			14,374			102,125			42,755			37,833			43,079			134,099			102,125
Consolidated	$	102,070		$	72,566		$	285,136		$	226,724		$	93,377		$	102,070		$	320,508		$	285,136

Services
Completion Fluids & Products Division	$	5,027		$	13,262		$	11,344		$	23,965		$	3,896		$	5,027		$	15,110		$	11,344
Water & Flowback Services Division	77,572			40,612			221,342			102,601			72,741			77,572			223,812			221,342
Compression Division	72,182			57,237			198,482			169,727			75,933			72,182			219,041			198,482
Consolidated	$	154,781		$	111,111		$	431,168		$	296,293		$	152,570		$	154,781		$	457,963		$	431,168

Interdivision revenues
Completion Fluids & Products Division	$	(4	)	$	12		$	(5	)	$	13		$	—		$	(4	)	$	—		$	(5	)
Water & Flowback Services Division	55			293			330			1,311			—			55			—			330
Compression Division	—			—			—			—			—			—			—			—
Interdivision eliminations	(51		)	(305		)	(325		)	(1,324		)	—			(51		)	—			(325		)
Consolidated	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

Total revenues
Completion Fluids & Products Division													$	59,340		$	63,073		$	200,688		$	192,733
Water & Flowback Services Division													72,841			78,568			224,643			223,289
Compression Division													113,766			115,261			353,140			300,607
Interdivision eliminations													—			(51		)	—			(325		)
Consolidated													$	245,947		$	256,851		$	778,471		$	716,304

Income (loss) before taxes
Completion Fluids & Products Division													$	11,318		$	8,713		$	32,118		$	21,143
Water & Flowback Services Division													2,578			5,809			7,269			20,668
Compression Division													(3,464		)	(7,844		)	(14,748		)	(30,517		)
Interdivision eliminations													(1		)	5			6			9
Corporate Overhead⁽¹⁾													(17,931		)	(19,631		)	(54,921		)	(53,870		)
Consolidated													$	(7,500	)	$	(12,948	)	$	(30,276	)	$	(42,567	)

Total revenues

Completion Fluids & Products Division $ 63,073
$ 71,323
$ 192,733
$ 201,546
Water & Flowback Services Division 78,568
41,048
223,289
110,313
Compression Division 115,261
71,611
300,607
212,482
Interdivision eliminations (51 ) (305 ) (325 ) (1,324 )
Consolidated $ 256,851
$ 183,677
$ 716,304
$ 523,017

Income (loss) before taxes

Completion Fluids & Products Division $ 8,713
$ 21,398
$ 21,143
$ 57,486
Water & Flowback Services Division 5,809
2,088
20,668
(3,098 )
Compression Division (7,844 ) (7,014 ) (30,517 ) (27,527 )
Interdivision eliminations 5
—
9
(161 )
Corporate Overhead⁽¹⁾
(19,631 ) (16,551 ) (53,870 ) (35,592 )
Consolidated $ (12,948 ) $ (79 ) $ (42,567 ) $ (8,892 )

September 30, 2018 December 31, 2017
(In Thousands)
Total assets

Completion Fluids & Products Division $ 306,752
$ 293,507
Water & Flowback Services Division 221,762
139,771
Compression Division 886,737
784,745
Corporate Overhead and eliminations (24,313 ) (30,543 )
Assets of discontinued operations 1,301
121,134
Consolidated $ 1,392,239
$ 1,308,614


(1)	Amounts reflected include the following general corporate expenses:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In Thousands)
General and administrative expense	$	12,573		$	13,037		$	39,012		$	37,506
Depreciation and amortization	167			172			507			487
Interest expense	5,495			5,268			16,533			14,152
Warrants fair value adjustment (income) expense	78			(179		)	(1,035		)	22
Other general corporate (income) expense, net	(382		)	1,333			(96		)	1,703
Total	$	17,931		$	19,631		$	54,921		$	53,870

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
(In Thousands)
General and administrative expense $ 13,037
$ 12,277
$ 37,506
$ 33,883
Depreciation and amortization 172
129
487
338
Interest expense 5,268
3,899
14,152
11,913
Warrants fair value adjustment (income) expense (179 ) (47 ) 22
(11,568 )
Other general corporate (income) expense, net 1,333
293
1,703
1,026
Total $ 19,631
$ 16,551
$ 53,870
$ 35,592

NOTE LJ – REVENUE FROM CONTRACTS WITH CUSTOMERS

Performance Obligations.Revenue is generally recognized when ~~performance obligations under the terms of a contract with our customer are satisfied. Generally this occurs with the~~we transfer of control of our products or services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or providing services to our customers. ~~For~~We receive cash equal to the invoice price for most sales of product and services and payment terms typically range from 30 to 60 days from the date we invoice our customer. Since the period between when we deliver products or services and when the customer pays for such products or services is not expected to exceed one year, we have elected not to calculate or disclose a ~~general discussion~~financing component for our customer contracts.

Depending on the terms of the ~~nature~~arrangement, we may also defer the recognition of revenue for a portion of the ~~goods~~consideration received because we have to satisfy a future performance obligation. For example, consideration received from customers during the fabrication of new compressor packages is typically deferred until control of the compressor package is transferred to our customer.

For any arrangements with multiple performance obligations, we use management's estimated selling price to determine the stand-alone selling price for separate performance obligations. For revenue associated with mobilization of service equipment as part of a service contract arrangement, such revenue, if significant, is deferred and ~~services that we provide, see Note K - "Industry Segments."~~amortized over the estimated service period.

Product Sales. Product sales revenues are generally recognized ~~at a point in time when we transfer control of our product offerings to our customers, generally~~ when we ship products from our facility to our customer. The product sales for our Completion Fluid & Products Division consist primarily of ~~CBF,~~clear brine fluids ("CBFs"), additives, and associated manufactured products. Product sales for our Water & Flowback Services Division are typically attributed to specific performance obligations within certain production testing service arrangements. Parts and equipment sales comprise the product sales for the Compression Division.

Services. Service revenues represent revenue recognized over time, as our customer arrangements typically provide agreed upon day-rates (monthly service rates for compression services) and we recognize service revenue based upon the number of days services have been performed. Service revenue recognized over time is associated with a majority of our Water & Flowback Services Division arrangements, compression service and aftermarket service contracts within our Compression Division, and a small portion of Completion Fluids & Products Division revenue that is associated with completion fluid service arrangements. With the exception of the initial terms of the compression services contracts for medium- and high-horsepower compressor packages of our Compression Division, our customer contracts are generally for terms of one year or less. The majority of the service arrangements in the Water & Flowback Services Division are for a period of 90 days or less. ~~Within our Compression Division service revenue,~~ ~~most aftermarket service revenues are recognized at a point in time when we transfer control of our products and complete the delivery of services to our customers.~~

~~We receive cash equal to the invoice price for most product sales and services and payment terms typically range from 30 to 60 days from the date we invoice our customer.~~ Since the period between when we deliver products or services and when the customer pays for products or services are not expected to exceed one year, we have elected not to calculate or disclose a financing component for our customer contracts.

Depending on the terms of the arrangement, we may also defer the recognition of revenue for a portion of the consideration received because we have to satisfy a future performance obligation. For example, consideration received from customers during the fabrication of new compressor packages is typically deferred until control of the compressor package is transferred to our customer. For any arrangements with multiple performance obligations, we use management's estimated selling price to determine the stand-alone selling price for separate performance obligations. For revenue associated with mobilization of service equipment as part of a service contract arrangement, such revenue, if significant, is deferred and amortized over the estimated service period. As of September 30, ~~2018,~~2019, we had ~~$16.5~~$69.9 million of remaining contractual performance obligations ~~related to our~~for compression ~~service contracts.~~ services. As a practical expedient, this amount does not reflect revenue for compression service contracts whose original expected duration is less than 12twelve months andand does not consider the effects of the time value of ~~money. The remaining performance obligations are expected~~money. Expected revenue to be recognized ~~through 2022~~ in the future for completion of performance obligations of compression service contracts are as ~~follows (in thousands):~~

follows:



	2019		2020		2021		2022		2023		Total
	(In Thousands)
Compression service contracts remaining performance obligations	$	18,830	$	37,710	$	11,834	$	1,551	$	—	$	69,925

2018 2019 2020 2021 2022 Total
(In Thousands)
Compression service contracts remaining performance obligations $ 2,552
$ 9,451
$ 3,865
$ 552
$ 76
$ 16,496

Sales taxes, value added taxes, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We have elected to recognize the cost for freight and shipping costs as part of cost of product sales when control over our products (i.e. delivery) has transferred to the customer.

Use of Estimates. C~~ontracts where the amount of revenue that will ultimately be realized is subject to uncertainties not fully known as of the time revenue is recognized are known as variable consideration arrangements.~~ In recognizing revenue for ~~these~~variable consideration arrangements, the amount of variable consideration recognized is limited so that it is probable that significant amounts of revenues will not be reversed in future periods when the

uncertainty is resolved. For products returned by the customer, we estimate the expected returns based on an analysis of historical experience. For volume discounts earned by the customer, we estimate the discount (if any) based on our estimate of the total expected volume of products sold or services to be provided to the customer during the discount period. In certain contracts for the sale of CBF, we may agree to issue credits for the repurchase of reclaimable used fluids from certain customers at an agreed price that is based on the condition of the fluids. For sales of CBF, we adjust the revenue recognized in the period of shipment by the

estimated amount of the credit expected to be issued to the customer, and this estimate is based on historical experience. As of September 30, ~~2018,~~2019, the amount of remaining credits expected to be issued for the repurchase of reclaimable used fluids was ~~$1.7~~$2.1 million that were recorded in inventory (right of return asset) and accounts payable. There were no material differences between amounts recognized during the three and nine month ~~period~~periods ended September 30, ~~2018,~~2019, compared to estimates made in a prior period from these variable consideration arrangements.

Contract Assets and Liabilities. ~~Contract~~ We consider contract assets ~~arise when we transfer products or perform services in fulfillment of a contract obligation but must perform other performance obligations before being entitled~~ to ~~payment. Generally, once we have transferred products or performed services for the customer pursuant to a contract, we recognize revenue and~~be trade accounts receivable aswhen we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain instances, particularly those requiring customer specific documentation prior to invoicing, our invoicing of the customer is delayed until certain documentation requirements are met. In those cases, we recognize a contract asset rather than a billed trade accounts receivable until we are ~~entitled~~able to ~~payment that is unconditional. Any~~invoice the customer. Our contract asset balances, primarily associated with these documentation requirements, were $33.0 million and $44.2 million as of September 30, 2019 and December 31, 2018, respectively. Contract assets, along with billed ~~and unbilled~~trade accounts receivable, are included in ~~Trade Accounts Receivable~~trade accounts receivable in our consolidated balance sheets.Contract liabilities arise when we receive consideration, or consideration is unconditionally due, from a customer prior to transferring products or services to the customer under the terms of a sales contract.

We classify contract liabilities as ~~Unearned Income~~unearned income in our consolidated balance sheets. Such deferred revenue typically results from advance payments received on orders for new compressor equipment prior to the time such equipment is completed and transferred to the customer in accordance with the customer contract.New equipment sales orders generally take less than twelve months to build and deliver.

~~As of September 30, 2018 and December 31, 2017, contract assets were immaterial.~~ The following table reflects the changes in our contract liabilities ~~during~~for the ~~nine month period ended September 30, 2018:~~periods indicated:



	Nine Months Ended September 30,
	2019			2018
	(In Thousands)
Unearned Income, beginning of period	$	25,333		$	17,050
Additional unearned income	106,744			101,887
Revenue recognized	(105,486		)	(82,050		)
Unearned income, end of period	$	26,591		$	36,887

September 30, 2018
(In Thousands)
Unearned Income, beginning of period $ 17,050
Additional unearned income 101,887
Revenue recognized (82,050 )
Unearned income, end of period $ 36,887

~~Bad debt expense on accounts receivables and contract assets was $1.0 million~~ ~~and $1.3 million du~~ring the three and nine month periods ended September 30, 2018, respectively, and $0.1 million and $1.0 million during the three and nine month periods ended September 30, 2017, respectively. During the three month period ended September 30, 2018, contract liabilities increased due to unearned income for consideration received on new compressor equipment being fabricated. During the nine month period ended September 30, ~~2018,~~ ~~$82.1 million of unearned income was~~2019, we recognized asin product sales revenue ~~primarily associated with deliveries~~ of ~~new compression equipment.~~$24.6 million from unearned income that was deferred as of December 31, 2018. During the nine months ended September 30, 2018, we recognized in product sales revenue of $16.2 million from unearned income that was deferred as of our adoption of ASC 606 on January 1, 2018.

Contract Costs. When costs are incurred to obtain contracts, such as professional fees and sales bonuses, such costs are deferred and amortized over the expected period of benefit. Costs of mobilizing service equipment necessary to perform under service contracts, if significant, are deferred and amortized over the estimated service period, which is generally a few weeks. As of September 30, ~~2018, such~~2019, contract costs were immaterial. Where applicable, we establish provisions for estimated obligations pursuant to product warranties by accruing for estimated future product warranty cost in the period of the product sale. Such estimates are based on historical warranty loss experience. Major components of fabricated compressor packages have manufacturer warranties that we pass through to the customer.

Disaggregation of Revenue. We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our three reportable segments in Note K.I. In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.



	Three months ended September 30,			Nine months ended September 30,
	2019	2018		2019		2018
	(In Thousands)
Completion Fluids & Products
U.S.	31,480	35,426		$	100,622	$	97,446
International	27,860	27,647		100,066		95,287
	59,340	63,073		200,688		192,733
Water & Flowback Services
U.S.	68,052	71,579		209,663		189,457
International	4,789	6,989		14,980		33,832
	72,841	78,568		224,643		223,289
Compression
U.S.	105,153	105,655		324,792		273,563
International	8,613	9,606		28,348		27,044
	113,766	115,261		353,140		300,607
Interdivision eliminations
U.S.	—	4		—		4
International	—	(55	)	—		(329		)
	—	(51	)	—		(325		)
Total Revenue
U.S.	204,685	212,664		635,077		560,470
International	41,262	44,187		143,394		155,834
	245,947	256,851		$	778,471	$	716,304

NOTE K – LEASES

We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. We have finance leases for certain storage tanks and equipment rentals. These finance leases are not material to our financial statements. Our leases have remaining lease terms ranging from 1 to 16 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. The office space, warehouse space, operating location leases, and machinery and equipment leases generally require us to pay all maintenance and insurance costs. We do not have leases that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Variable rent expense was not material.

Our corporate headquarters facility located in The Woodlands, Texas, was sold on December 31, 2012, pursuant to a sale and leaseback transaction. As a condition to the consummation of the purchase and sale of the facility, the parties entered into a lease agreement for the facility having an initial lease term of 15 years, which is classified as an operating lease. Under the terms of the lease agreement, we have the ability to extend the lease for five successive five-year periods at base rental rates to be determined at the time of each extension.

Components of lease expense, included in either cost of revenues or general and administrative expense based on the use of the underlying asset, are as follows (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less):



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	(In Thousands)
Operating lease expense	$	5,075	$	15,106
Short-term lease expense	9,556		30,269
Total lease expense	$	14,631	$	45,375

Supplemental cash flow information:



	Nine Months Ended September 30, 2019
	(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	14,868

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	7,631

Supplemental balance sheet information:

Three months ended September 30, Nine months ended September 30,
2018 2017 2018 2017
(In Thousands)
Completion Fluids & Products
U.S. 35,426
42,537
97,446
124,209
International 27,647
28,786
95,287
77,337
63,073
71,323
192,733
201,546
Water & Flowback Services
U.S. 71,579
31,802
189,457
80,219
International 6,989
9,246
33,832
30,094
78,568
41,048
223,289
110,313
Compression
U.S. 105,655
63,697
273,563
190,553
International 9,606
7,914
27,044
21,929
115,261
71,611
300,607
212,482
Interdivision eliminations
U.S. 4
(12 ) 4
(13 )
International (55 ) (293 ) (329 ) (1,311 )
(51 ) (305 ) (325 ) (1,324 )
Total Revenue
U.S. 212,664
138,024
560,470
394,968
International 44,187
45,653
155,834
128,049
256,851
183,677
716,304
523,017



	September 30, 2019
	(In Thousands)
Operating leases:
Operating lease right-of-use assets	$	57,848

Accrued liabilities and other	$	14,071
Operating lease liabilities	45,993
Total operating lease liabilities	$	60,064

Additional operating lease information:



	September 30, 2019
Weighted average remaining lease term:
Operating leases	6.60 Years

Weighted average discount rate:
Operating leases	9.39	%

Future minimum lease payments by year and in the aggregate, under non-cancelable operating leases with terms in excess of one year consist of the following at September 30, 2019:



		Operating Leases
	(In Thousands)

Remainder of 2019		$	4,870
2020		17,721
2021		12,798
2022		9,591
2023		7,871
Thereafter		29,440
Total lease payments		82,291
Less imputed interest		(22,227		)
Total lease liabilities		$	60,064

At September 30, 2019, future minimum rental receipts under a non-cancelable sublease for office space in one of our locations totaled $5.7 million. For the three and nine months ended September 30, 2019, we recognized sublease income of $0.2 millionand$0.7 million, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and accompanying notes included in this Quarterly Report.In addition, the following discussion and analysis also should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 filed with the SEC on March ~~5, 2018.~~4, 2019 ("2018 Annual Report"). This discussion includes forward-looking statements that involve certain risks and uncertainties.

Business Overview

AsWe are a geographically diversified oil and ~~natural~~ gas ~~pricing continued to improve during the third quarter of 2018, the demand for many of our~~services company, focused on completion fluids and associated products and services, ~~remained strong. This increased demand is particularly reflected in the operating results of our~~water management, frac flowback, production well testing, and compression services and equipment. We operate through three reporting segments organized into three Divisions - Completion Fluids & Products, Water & Flowback Services, ~~Division~~ and our Compression Division, resulting in consolidated revenues during the three months ended September 30, 2018 increasing by 39.8% compared to the corresponding prior year quarter. Water & Flowback Services Division revenues included the impactCompression.

Demand for products and services of our February 2018 acquisition of SwiftWater Energy Services, LLC ("SwiftWater") along with strong growth in our existing operations. Increased completion activity in key onshore markets has driven the improved operating results. The contribution from SwiftWater on Water & Flowback Services Division revenues and earnings is expected to continue going forward as we capture additional operating and administrative efficiencies with the acquired operations. Our Compression Division also reported increased revenues, as increased demand for compression services has resulted in increased utilization and customer contract pricing. New compressor equipment sales have also increased, and new orders for equipment have exceeded the increased sales recognized, further increasing the new equipment sales backlog to $140.2 million. Our Completion Fluids & Products Division ~~reported a decrease~~has remained fairly consistent despite continued volatility in ~~revenues, as offshore activity levels remain challenged,~~pricing for oil and ~~earnings decreased compared to~~uncertainty in many of the ~~prior year quarter due to~~markets where we operate, which affects the ~~completion~~plans of ~~a TETRA CS Neptune~~^(R)~~completion fluid project during 2017. Despite increased consolidated operating~~many of our oil and ~~administrative expenses and the working capital challenges accompanying our growing~~gas operations ~~we anticipate continuing improved revenues and increasing operating cash flows during the remainder of 2018.~~

~~Following the strategic transactions that closed during the first quarter of 2018, we have continued to grow our core businesses to capitalize on the improving~~customers. Recent oil price volatility has particularly affected domestic onshore demand ~~for our products and services. While continuing to~~

consider suitable acquisition opportunities, we have grown organically through an increased capital expenditure program for our core businesses in selected markets. Our Compression Division increased its growth capital expenditure levels during the first nine months of 2018 compared to the corresponding prior year period, as it continues to increase its compression equipment fleet to meet the increasing customer demand for compression services. In addition, we have also increased capital expenditure levels for our Water & Flowback Services Division ~~as we selectively grow our~~services, resulting in increased customer contract pricing pressure. The construction of infrastructure to alleviate current takeaway capacity in certain markets. As a result, growth capital expenditures have increased significantly during the first nine months of 2018 compared to the prior year period. During the third quarter of 2018, we enhanced our debt structure, entering into aconstraints that are limiting production and new ~~credit agreement (the “Term Credit Agreement”) which provided an initial loan~~drilling in the ~~amount of $200 million~~Permian Basin has continued to contribute to increased demand for compressor equipment and ~~the availability of additional loans, subject~~services through our Compression Division. This growth in demand continues to the terms of the Term Credit Agreement, up to an aggregate amount of $75 million. In addition, during the third quarter of 2018, we entered into an asset-based lending Credit Agreement (the “ABL Credit Agreement”) that provides for a senior secured revolving credit facility of up to $100 million, subject to a borrowing base,drive increases in our compression services revenues, through increased activity and that contains within the facility a letter of credit sublimit of $20.0 million and a swingline loan sublimit of $10.0 million. Proceeds from both the Term Credit Agreement and ABL Credit Agreement were used to repaycustomer contract pricing.

We are aggressively managing our 11% Senior Note and repay all outstanding borrowings and obligations under our existing Bank Credit Agreement. Both the note-purchase agreement related to the 11% Senior Note and the existing Bank Credit Agreement were terminated. To fund its growth, during the first half of 2018, our CSI Compressco LP ("CCLP") subsidiary enhanced its long-term debt structure. Following the March 2018 repayment of its previous bank credit facility and the issuance of the 7.50% Senior Secured First Lien Notes due 2025 (the "CCLP Senior Secured Notes"), in June 2018, CCLP entered into that certain Loan and Security Agreement (the "CCLP New Credit Agreement"), which provides up to $50.0 million to fund ongoing working capital and letter of credit needs and for general business purposes. CCLP also had $26.2 million of available cash as of September 30, 2018, which is available to fund additional Compression Division growth capital expenditures.

Approximately $632.5 million of our consolidated debt balance carrying value is owed by CCLP, serviced by CCLP's existing cash balances and cash provided by CCLP's operations (less its capital expenditures), and $343.1 million of which is secured by certain assets of CCLP. The following table provides condensed consolidating balance sheet information reflecting TETRA's net assets and CCLP's net assets that service and secure TETRA's and CCLP's respective capital structures.

September 30, 2018
Condensed Consolidating Balance Sheet TETRA CCLP Eliminations Consolidated
(In Thousands)
Cash, excluding restricted cash $ 27,713
$ 26,186
$ —
$ 53,899
Affiliate receivables 4,376
—
(4,376 ) —
Other current assets 209,770
150,793
—
360,563
Property, plant and equipment, net 212,482
632,699
—
845,181
Other assets, including investment in CCLP 34,953
34,545
63,098
132,596
Total assets $ 489,294
$ 844,223
$ 58,722
$ 1,392,239

Affiliate payables $ —
$ 4,376
$ (4,376 ) $ —
Other current liabilities 87,760
94,696
—
182,456
Long-term debt, net 190,425
632,480
—
822,905
CCLP Series A Preferred Units —
42,250
(5,306 ) 36,944
Warrants liability 13,224
—
—
13,224
Other non-current liabilities 29,568
953
—
30,521
Total equity 168,317
69,468
68,404
306,189
Total liabilities and equity $ 489,294
$ 844,223
$ 58,722
$ 1,392,239

Consolidated cash provided by operating activities for the nine months ended September 30, 2018 was $1.6 million compared to $36.8 million for the nine months ended September 30, 2017, a decrease of $35.2 million, despite improved operating profitability. The decrease was primarily due to cash utilized for working capital due to timing of payments of accounts payable and increased inventory. Consolidated capital expenditures, net of sales proceeds, were $106.3 million during the nine months ended September 30, 2018, and included $78.2 million of capital expenditures by our Compression Division, primarily for growth capital expenditures. Corresponding prior year period consolidated capital expenditures, net of sales proceeds, were $27.8 million, including $13.7 million by our Compression Division. Although our capital expenditure ~~levels are expected to continue to be increased going~~

~~forward, we defer or reduce capital expenditure projects where possible~~needs in order to ~~conserve cash. Key objectives associated with~~maximize our ~~capital~~liquidity in the current environment. In addition, we continue to review our expectations of the demand for the products and services we provide in each of the markets where we operate. We intend to manage our flexible cost structure ~~(excluding the capital structure of CCLP) include the ongoing management of amounts outstanding~~to proactively respond to changing market conditions and available under the new Term Credit Agreement and ABL Credit Agreement. CCLP also continues to carefully monitor its 2018 capital expenditure program in order to conserve its cash. During the first nine months of 2018, we received $9.0 million from CCLP as our share of CCLP common unit and general partner distributions. As part of long-term strategic growth plans, we and CCLP evaluate opportunities to acquire businesses and assets that may require the payment of cash. Such acquisitions may be funded with existing cash balances, funds under credit facilities, or cash generated from the issuance of equity or debt securities. If it isexecute on actions necessary to ~~issue additional equity to fund our capital needs, additional dilution to our common stockholders will occur.~~

manage through these conditions, some of which could result in impairments or restructuring charges in future periods.

Critical Accounting Policies and Estimates

There have been no material changes or developments in the evaluation of the accounting estimates and

the underlying assumptions or methodologies pertaining to our Critical Accounting Policies and Estimates disclosed

in our 2018 Annual Report. In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. ~~We base these estimates on historical experience, available information, and various other assumptions that we believe are reasonable.~~We periodically evaluate these estimates and judgments, including those related to potential impairments of long-lived assets (including goodwill), the collectability of accounts receivable, the current cost of future asset retirement obligations, and the allocation of acquisition purchase price. The fair values of portions of our total assets and liabilities are measured using significant unobservable inputs. The combination of these factors forms the basis for judgments made about the carrying values of assets and liabilities that are not readily apparent from other sources. These judgments and estimates may change as new events occur,

as new information is acquired, and as changes in our operating environments are encountered. Actual results are likely to differ from our current estimates, and those differences may be material.

~~Acquisition Purchase Price Allocations~~

We account for acquisitions of businesses using the purchase method, which requires the allocation of the purchase price based on the fair values of the assets and liabilities acquired. We estimate the fair values of the assets and liabilities acquired using accepted valuation methods, and, in many cases, such estimates are based on our judgments as to the future operating cash flows expected to be generated from the acquired assets throughout their estimated useful lives.Following the February 28, 2018 acquisition of SwiftWater, we have accounted for the various assets (including intangible assets) and liabilities acquired based on our estimate of their fair values. Goodwill represents the excess of acquisition purchase price over the estimated fair values of the net assets acquired. Our estimates and judgments of the fair value of acquired businesses are imprecise, and the use of inaccurate fair value estimates could result in the improper allocation of the acquisition purchase price to acquired assets and liabilities, which could result in asset impairments,~~the~~recording of previously unrecorded liabilities, and other financial statement adjustments. The difficulty in estimating the fair values of acquired assets and liabilities is increased during periods of economic uncertainty.

~~Impairment of Long-Lived Assets~~

The determination of impairment of long-lived assets, including identified intangible assets, is conducted periodically whenever indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on our judgments as to the future operating cash flows to be generated from these assets throughout their estimated useful lives. If an impairment of a long-lived asset is warranted, we estimate the fair value of the asset based on a present value of these cash flows or the value that could be realized from disposing of the asset in a transaction between market participants. The oil and gas industry is cyclical, and our estimates of the amount of future cash flows, the period over which these estimated future cash flows will be generated, as well as the fair value of an impaired asset, are imprecise. Our failure to accurately estimate these future operating cash flows or fair values could result in certain long-lived assets being overstated, which could result in impairment charges in periods subsequent to the time in which the impairment indicators were first present. Alternatively, if our estimates of future operating cash flows or fair values are understated, impairments might be recognized unnecessarily or in excess of the appropriate amounts. During the three month period ended September 30, 2018, as a result of decreased expected future cash flows from a specific customer contract, we recorded a long-lived asset impairment of an identified intangible asset of $2.9 million. During periods of economic uncertainty, the likelihood of additional material impairments of long-lived assets is higher due to the possibility of decreased demand for our products and services.

Results of Operations

Three months ended September 30, ~~2018~~2019 compared with three months ended September 30, ~~2017~~2018.

Consolidated Comparisons


	Three Months Ended September 30,						Period to Period Change					Three Months Ended September 30,						Period to Period Change
	2018			2017			2018 vs 2017			% Change		2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	256,851		$	183,677		$	73,174		39.8	%	$	245,947		$	256,851		$	(10,904	)	(4.2	)%
Gross profit	41,330			42,651			(1,321		)	(3.1	)%	44,960			41,330			3,630			8.8	%
Gross profit as a percentage of revenue	16.1		%	23.2		%						18.3		%	16.1		%
General and administrative expense	34,446			29,685			4,761			16.0	%	34,926			34,446			480			1.4	%
General and administrative expense as a percentage of revenue	13.4		%	16.2		%						14.2		%	13.4		%
Interest expense, net	18,894			14,654			4,240			28.9	%	18,146			18,894			(748		)	(4.0	)%
Warrants fair value adjustment (income) expense	(179		)	(47		)	(132		)			78			(179		)	257
CCLP Series A Preferred Units fair value adjustment (income) expense	498			(1,137		)	1,635					—			498			(498		)
Other (income) expense, net	619			(425		)	1,044					(690		)	619			(1,309		)
Loss before taxes and discontinued operations	(12,948		)	(79		)	(12,869		)			(7,500		)	(12,948		)	5,448			42.1	%
Loss before taxes and discontinued operations as a percentage of revenue	(5.0		)%	—		%						(3.0		)%	(5.0		)%
Provision (benefit) for income taxes	(96		)	778			(874		)			1,579			(96		)	1,675
Loss before discontinued operations	(12,852		)	(857		)	(11,995		)			(9,079		)	(12,852		)	3,773
Discontinued operations:
Income (loss) from discontinued operations, net of taxes	796			(481		)	1,277					(9,130		)	796			(9,926		)
Net loss	(12,056		)	(1,338		)	(10,718		)			(18,209		)	(12,056		)	(6,153		)
Loss attributable to noncontrolling interest	5,120			4,483			637					2,378			5,120			(2,742		)
Net income (loss) attributable to TETRA stockholders	$	(6,936	)	$	3,145		$	(10,081	)			$	(15,831	)	$	(6,936	)	$	(8,895	)

Consolidated revenues during the current year quarter decreased compared to the prior year quarter due to decreases in product sales and activity. See Divisional Comparisons section below for additional discussion.

Consolidated gross profit during the current year quarter increased compared to the prior year quarter primarily due to ~~a $43.7 million increase in Compression Division revenues. The increase in Compression Division revenues was primarily driven by~~ increased new compressor equipment sales activity. Our Water & Flowback Services Division also reported increased revenues of $37.5 million, primarily due to increased activity in certain domestic and international markets and the February 28, 2018 acquisition of SwiftWater. See Divisional Comparisons section below for additional discussion.

~~Consolidated~~ gross profit ~~decreased compared to the prior year quarter primarily due to the lower gross profit resulting~~ from ~~the mix of products and services provided by~~ our Completion Fluids & Products ~~Division.~~and Compression Divisions. This ~~decrease~~increase was ~~largely~~partially offset, however, by ~~increased~~the lower gross profit ~~from~~of our Water & Flowback ~~and Compression Divisions.~~Services Division. Despite ~~the improvement in the activity levels of certain of our businesses, offshore activity levels remain flat and~~efforts to reduce operating costs whenever possible, the impact of pricing pressures ~~continues to impact~~hampered profitability in certain ~~onshore~~ markets. Operating expenses reflect the increase in consolidated revenues, although we remain aggressive in managing operating costs and minimizing increased headcount, despite the increased operating activities.

Consolidated general and administrative expenses increased during the ~~third~~current year quarter ~~of 2018~~ compared to the prior year quarter primarily due to increased provision for bad debt of $1.3 million, offset by decreased salary and employee expenses of ~~$3.0~~$0.6 million, ~~increased~~decreased professional services fees of $0.1 million, and decreased insurance and other general expenses of ~~$0.6 million, increased provision for bad debt of $0.9 million, as well as increased professional services fees of~~ $0.2 million. Increased general and administrative expenses were driven primarily by our Compression and Water & Flowback Services Divisions. Due to the increased consolidated revenues discussed above, general and administrative expense as a percentage of revenues decreased compared to the prior year quarter.

Consolidated interest expense, net, ~~increased~~decreased during the ~~third~~current year quarter ~~of 2018~~ compared to the prior year quarter primarily due to decreased Compression Division interest expense partially offset by increased Corporate interest expense. Compression Division interest expense ~~increased~~

decreased due to ~~higher CCLP outstanding debt balances and a higher interest rate on~~ the ~~CCLP Senior Secured Notes issued in March 2018, a portion~~completion of the ~~proceeds~~redemption of ~~which were used to repay the balance~~CCLP Preferred Units outstanding ~~under the previous CCLP Bank Credit Facility. Interest expense is expected to remain increased compared to prior year periods.~~on August 8, 2019. Corporate interest expense ~~also~~ increased due to additional borrowings under the TETRA Term Credit Agreement and ABL Credit ~~Agreement.~~Agreement during the current year period. Interest expense during the ~~2018~~current and ~~2017 quarterly periods~~prior year quarters includes ~~$1.1~~$1.0 million and ~~$1.2~~$1.1 million, respectively, of finance cost amortization.

The Warrants are accounted for as a derivative liability in accordance with ASC 815 and therefore they are classified as a long-term liability on our consolidated balance sheet at their fair value. Increases (or decreases) in the fair value of the Warrants are generally associated with increases (or decreases) in the trading price of our common stock, resulting in adjustments to earnings for the associated valuation losses (gains), and resulting in future volatility of our earnings during the period the Warrants are outstanding.

The CCLP Preferred Units may be settled using a variable number of CCLP common units, and therefore the fair value of the CCLP Preferred Units is classified as a long-term liability on our consolidated balance sheet in accordance with ASC 480. Because the CCLP Preferred Units are convertible into CCLP common units at the option of the holder, the fair value of the CCLP Preferred Units will generally increase or decrease with the trading price of the CCLP common units, and this increase (decrease) in CCLP Preferred Unit fair value will be charged (credited) to earnings, as appropriate, resulting in future volatility of our earnings during the period the CCLP Preferred Units are outstanding.

Consolidated other (income) expense, net, was ~~$0.6~~$0.7 million of other ~~expense~~income during the current year quarter compared to ~~$0.4~~$0.6 million of other ~~income~~expense during the prior year quarter primarily due to $0.9 million of ~~increased~~decreased loan fees associated with new TETRA credit agreements in the prior year quarter and ~~$0.6~~$1.3 million of decreased ~~other income~~foreign currency losses, offset by increased expense of $0.4 million associated with ~~insurance proceeds~~a redemption premium incurred in connection with the redemption of CCLP Preferred Units for cash in the ~~prior year. These increased expenses were offset by $0.6 million of other income associated with the measurement of the contingent purchase price consideration for SwiftWater.~~current year quarter.

Our consolidated provision for income taxes during the three month period ended September 30, 2019 is ~~generally~~ attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the three month period ended September 30, 2018 was 0.7%. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.

The Tax Reform Act was enacted on December 22, 2017. At September 30, 2018 and December 31, 2017, we had not completed our accounting for the tax effects of enactment of the Tax Reform Act; however, in certain cases, as described below, we made reasonable estimates of the effects and recorded provisional amounts. We will continue to make and refine our calculations as additional analysis is completed. The accounting for the tax effects of the Tax Reform Act will be completed in 2018 as provided by SAB 118. We recognized an income tax expense of $54.1 million in the fourth quarter of 2017 associated with the impact of the Tax Reform Act, which was fully offset by a decrease in the valuation allowance previously recorded on our net deferred tax assets. As such, the Tax Reform Act resulted in no net tax expense in the fourth quarter of 2017. We have considered in our estimated annual effective tax rate for 2018 the impact of the statutory changes enacted by the Tax Reform Act, including reasonable estimates of those provisions effective for the 2018 tax year. Our estimate on GILTI, FDII, BEAT, and IRC Section 163(j) interest limitation do not impact our effective tax rate for the three months ended September 30, 2018.

~~Divisional Comparisons~~

~~Completion Fluids & Products Division~~

Three Months Ended
September 30, Period to Period Change
2018 2017 2018 vs 2017 % Change
(In Thousands, Except Percentages)
Revenues $ 63,073
$ 71,323
$ (8,250 ) (11.6 )%
Gross profit 13,129
26,415
(13,286 ) (50.3 )%
Gross profit as a percentage of revenue 20.8 % 37.0 %

General and administrative expense 4,909
5,003
(94 ) (1.9 )%
General and administrative expense as a percentage of revenue 7.8 % 7.0 %

Interest (income) expense, net (70 ) (8 ) (62 )
Other (income) expense, net (423 ) 22
(445 )
Income before taxes $ 8,713
$ 21,398
$ (12,685 ) (59.3 )%
Income before taxes as a percentage of revenue 13.8 % 30.0 %

~~The $8.2 million~~decrease in Completion Fluids & Products Division revenues during the current year quarter compared to the prior year quarter was primarily due to decreased offshore completion fluids activity compared to the prior year, including the impact of completion services activity associated with the 2017 TETRA CS Neptune completion fluid project. This decrease was partially offset by increased sales of manufactured products compared to the prior year period.

Completion Fluids & Products Division gross profit during the current year quarter decreased compared to the prior year quarter primarily due to the decreased revenues and profitability associated with the mix of CBF products and services, including the prior year impact of the TETRA CS Neptune completion fluid project discussed above. Completion Fluids & Products Division profitability in future periods will continue to be affected by the mix of its products and services, including the timing of TETRA CS Neptune~~completion fluid projects.~~

The Completion Fluids & Products Division reported a decrease in pretax earnings during the current year quarter compared to the prior year quarter primarily due to decreased gross profit discussed above. Completion Fluids & Products Division administrative cost levels decreased compared to the prior year quarter, with $0.7 million of decreased salary and employee related expenses offset by $0.5 million of increased bad debt expense and $0.1 million of increased legal and professional fees. The Completion Fluids & Products Division continues to review opportunities to further reduce its administrative costs. Other income increased primarily due to foreign currency gains.

~~Water & Flowback Services Division~~

Three Months Ended
September 30, Period to Period Change
2018 2017 2018 vs 2017 % Change
(In Thousands, Except Percentages)
Revenues $ 78,568
$ 41,048
$ 37,520
91.4 %
Gross profit 11,522
5,348
6,174

Gross profit as a percentage of revenue 14.7 % 13.0 %

General and administrative expense 5,919
3,726
2,193
58.9 %
General and administrative expense as a percentage of revenue 7.5 % 9.1 %

Interest (income) expense, net 5
(47 ) 52

Other (income) expense, net (211 ) (419 ) 208

Income before taxes $ 5,809
$ 2,088
$ 3,721

Income before taxes as a percentage of revenue 7.4 % 5.1 %

Water & Flowback Services Division revenues increased during the current year quarter compared to the prior year quarter, primarily due to increased water management services activities. Water management and flowback services activity increased $36.7 million resulting from the impact of increased demand, reflecting the growth in onshore completion activity. The majority of the water management increase was generated from the operations of SwiftWater, which was acquired on February 28, 2018.

The Water & Flowback Services Division reflected increased gross profit during the current year quarter compared to the prior year quarter, due to the increase in revenues and improving customer pricing levels. However, customer pricing continues to be challenging due to excess availability of equipment in certain markets. The increase in gross profit during the current year period was despite the impact of a $2.9 million long-lived asset impairment. The Water & Flowback Services Division continues to monitor its cost structure, minimizing increased costs despite increasing activity levels, and looking to capture additional synergies following the SwiftWater acquisition.

The Water & Flowback Services Division reported increased pretax income during the current year quarter compared to the prior year quarter, primarily due to the improvement in gross profit described above. General and administrative expenses levels increased compared to the prior year quarter, primarily due to the acquisition of SwiftWater, increased salary and employee related expenses of $1.8 million, increased insurance and other general expenses of $0.3 million, and increased bad debt expense of $0.2 million. Due to increased foreign currency losses, other income decreased despite increased income of $0.6 million associated with the remeasurement of the contingent purchase price consideration for SwiftWater.

~~Compression Division~~

Three Months Ended
September 30, Period to Period Change
2018 2017 2018 vs 2017 % Change
(In Thousands, Except Percentages)
Revenues $ 115,261
$ 71,611
$ 43,650
61.0 %
Gross profit 16,847
11,015
5,832
52.9 %
Gross profit as a percentage of revenue 14.6 % 15.4 %

General and administrative expense 10,580
8,679
1,901
21.9 %
General and administrative expense as a percentage of revenue 9.2 % 12.1 %

Interest expense, net 13,690
10,811
2,879

CCLP Series A Preferred fair value adjustment income 498
(1,137 ) 1,635

Other (income) expense, net (77 ) (324 ) 247

Loss before taxes $ (7,844 ) $ (7,014 ) $ (830 ) (11.8 )%
Loss before taxes as a percentage of revenue (6.8 )% (9.8 )%

Compression Division revenues increased during the current year quarter compared to the prior year quarter, primarily due to a $28.7 million increase in product sales revenues, due to a higher number of new compressor equipment sales compared to the prior year quarter. Demand for new compressor equipment continues to improve, and the current new equipment sales backlog has increased significantly compared to the prior year quarter. In addition, current year revenues reflect a $14.9 million increase in service revenues from compression and aftermarket services operations. This increase in service revenues was primarily due to increasing demand for compression services, as reflected by increased compressor fleet utilization rates. Overall utilization of the Compression Division's compressor fleet has improved sequentially over the past two years, led by increased utilization of the high- and medium-horsepower fleet.

Compression Division gross profit increased during the current year quarter compared to the prior year quarter due to increased revenues discussed above. Higher compressor fleet utilization rates have led to increases in customer contract pricing.

The Compression Division recorded an increased pretax loss during the current year quarter compared to the prior year quarter despite increased gross profit discussed above. Interest expense increased compared to the prior year period, primarily due to higher CCLP outstanding debt balances and a higher interest rate on the CCLP Senior Secured Notes, which were issued in March 2018, compared to the interest rate on the previous CCLP Bank

Credit Facility. Increased interest expense is expected to continue compared to the prior year periods. General and administrative expense levels increased compared to the prior year quarter, due to increased salary and employee-related expenses, including equity compensation, of $1.3 million, increased other general expenses of $0.5 million and increased bad debt expense of $0.4 million. These increases were offset by decreased legal and professional fees of $0.2 million. The CCLP Preferred Units fair value adjustment resulted in a $1.6 million decreased credit to earnings in the current year quarter compared to the prior year period. Other (income) expense, net, reflected decreased income primarily due to decreased income associated with insurance proceeds in the prior period offset by increased foreign currency gains.

~~Corporate Overhead~~

Three Months Ended
September 30, Period to Period Change
2018 2017 2018 vs 2017 % Change
(In Thousands, Except Percentages)
Gross profit (loss) (depreciation expense) $ (172 ) $ (129 ) $ (43 ) (33.3 )%
General and administrative expense 13,037
12,277
760
6.2 %
Interest (income) expense, net 5,268
3,899
1,369

Warrants fair value adjustment (income)/expense (179 ) (47 ) (132 )
Other (income) expense, net 1,333
293
1,040

Loss before taxes $ (19,631 ) $ (16,551 ) $ (3,080 ) (18.6 )%

Corporate Overhead pretax loss increased during the current year quarter compared to the prior year quarter, primarily due to increased interest expense resulting from increased borrowings. Corporate general and administrative expense increased due to $0.6 million of increased salary, incentives and employee related expenses, and $0.4 million of increased professional service fees, offset by $0.1 million of decreased other general expenses and $0.1 million of decreased consulting marketing fees. In addition, other expense, net, increased primarily due to $0.9 million of debt issuance fees related to the new ABL Credit Agreement and the new Term Credit Agreement. The fair value of the outstanding Warrants liability resulted in a $0.2 million credit to earnings during 2018 compared to a $0.05 million credit to earnings in the prior year quarter.

~~Results of Operations~~

~~Nine months ended September 30, 2018 compared with nine months ended September 30, 2017.~~

~~Consolidated Comparisons~~

Nine Months Ended September 30, Period to Period Change
2018 2017 2018 vs 2017 % Change
(In Thousands, Except Percentages)
Revenues $ 716,304
$ 523,017
$ 193,287
37.0 %
Gross profit 117,114
91,840
25,274
27.5 %
Gross profit as a percentage of revenue 16.3 % 17.6 %

General and administrative expense 98,866
85,896
12,970
15.1 %
General and administrative expense as a percentage of revenue 13.8 % 16.4 %

Interest expense, net 52,246
42,749
9,497
22.2 %
Warrants fair value adjustment (income) expense 22
(11,568 ) 11,590

CCLP Series A Preferred Units fair value adjustment (income) expense 1,344
(4,340 ) 5,684

Litigation arbitration award income —
(12,816 ) 12,816

Other (income) expense, net 7,203
811
6,392

Loss before taxes and discontinued operations (42,567 ) (8,892 ) (33,675 ) (378.7 )%
Loss before taxes and discontinued operations as a percentage of revenue (5.9 )% (1.7 )%

Provision (benefit) for income taxes 3,474
4,176
(702 )
Loss before discontinued operations (46,041 ) (13,068 ) (32,973 )
Discontinued operations:
Income (loss) from discontinued operations (including 2018 loss on disposal of $33.8 million), net of taxes (40,931 ) (14,141 ) (26,790 )
Net loss (86,972 ) (27,209 ) (59,763 )
Loss attributable to noncontrolling interest 20,423
16,900
3,523

Net loss attributable to TETRA stockholders $ (66,549 ) $ (10,309 ) $ (56,240 )

~~Consolidated revenues~~for 2018 increased compared to the prior year period, primarily due to increased Water & Flowback Services Division revenues, which increased by $113.0 million. The increase in Water & Flowback Services Division revenues was primarily driven by increased activity in certain domestic and international markets and the February 28, 2018 acquisition of SwiftWater. Our Compression Division reported increased revenues of $88.1 million, primarily due to increased new compressor equipment sales activity. See Divisional Comparisons section below for additional discussion.

Consolidated gross profit increased during the current year period compared to the prior year period primarily due to the increased revenues of our Water & Flowback Services Division and Compression Division. The increased gross profit from these divisions more than offset the lower gross profit of our Completion Fluids & Products Division, which resulted from the mix of products and services compared to the prior year period. Despite the improvement in activity levels of certain of our businesses, offshore activity levels remain flat and the impact of pricing pressures continues to challenge profitability in certain onshore markets. Operating expenses reflect the increase in consolidated revenues, although we remain aggressive in managing operating costs and minimizing increased headcount, despite the increased operations.

~~Consolidated general and administrative expenses increased during the current year period~~compared to the prior year period, primarily due to $5.7 million of increased salary related expenses, $3.3 million of increased professional services fees, $2.9 million of insurance and other general expenses and $1.1 million of increased consulting and other expenses. Increased general and administrative expenses were driven primarily by our Compression and Water & Flowback Services Divisions. Due to the increased consolidated revenues discussed

~~above, general and administrative expense as a percentage of revenues decreased compared to the prior year period.~~

Consolidated interest expense, net, increased in the current year period primarily due to Compression Division interest expense. Compression Division interest expense increased due to higher CCLP outstanding debt balances and a higher interest rate on the CCLP Senior Secured Notes, a portion of the proceeds of which were used to repay the balance outstanding under the previous CCLP Bank Credit Facility. Increased interest expense is expected to continue compared to prior year periods. Corporate interest expense also increased due to the TETRA Term Credit Agreement and ABL Credit Agreement. Interest expense during 2018 and 2017 includes $3.2 million and $3.5 million, respectively, of finance cost amortization.

In January 2017, our Completion Fluids & Products Division collected $12.8 million from a legal arbitration award, resulting in a credit to earnings. See Commitments and Contingencies - Litigation section below for additional discussion.

Consolidated other (income) expense, net, was $7.2 million of expense during the current year period compared to $0.8 million of expense during the prior year period, primarily due to $3.7 million of increased expense associated with the remeasurement of the contingent purchase price consideration for SwiftWater and

$3.5 million of increased expense related to the unamortized deferred financing costs charged to earnings as a result of the termination of the CCLP Bank Credit Facility. In addition, other expense, net, increased approximately $1.0 million due to corporate debt issuance fees pursuant to the new debt agreements. Increased foreign currency gains partially offset these increases.

Our consolidated provision for income taxes during the first nine months of 2018 is primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the nine month period ended September 30, 20182019 of negative ~~8.2%~~21.1% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.

Divisional Comparisons

Completion Fluids & Products Division


	Nine Months Ended September 30,						Period to Period Change					Three Months Ended September 30,						Period to Period Change
	2018			2017			2018 vs 2017			% Change		2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	192,733		$	201,546		$	(8,813	)	(4.4	)%	$	59,340		$	63,073		$	(3,733	)	(5.9	)%
Gross profit	34,211			60,104			(25,893		)	(43.1	)%	16,181			13,129			3,052			23.2	%
Gross profit as a percentage of revenue	17.8		%	29.8		%						27.3		%	20.8		%
General and administrative expense	14,011			14,935			(924		)	(6.2	)%	4,865			4,909			(44		)	(0.9	)%
General and administrative expense as a percentage of revenue	7.3		%	7.4		%						8.2		%	7.8		%
Interest (income) expense, net	(434		)	32			(466		)			(216		)	(70		)	(146		)
Litigation arbitration award income	—			(12,816		)	12,816
Other (income) expense, net	(509		)	467			(976		)			214			(423		)	637
Income before taxes	$	21,143		$	57,486		$	(36,343	)	(63.2	)%	$	11,318		$	8,713		$	2,605		29.9	%
Income before taxes as a percentage of revenue	11.0		%	28.5		%						19.1		%	13.8		%

The decrease in Completion Fluids & Products Division revenues during the current year ~~period~~quarter compared to the prior year ~~period~~quarter was primarily due to ~~$12.6~~$2.6 million of decreased ~~service revenues, due to a reduction in completion services activity associated with a 2017 TETRA CS Neptunecompletion fluid project. This decrease was offset by $3.8 million of increased~~ product sales revenue ~~attributed~~due to ~~increased manufactured products sales, partially offset by reduced~~decreased CBF product ~~sales~~and manufactured product sales. Additionally, service revenues decreased $1.1 milliondue to reduced activity in engineering and filtration services compared to the ~~U.S. Gulf of Mexico.~~prior year quarter.

Completion Fluids & Products Division gross profit during the current year ~~period decreased significantly~~quarter increased compared to the prior year ~~period~~quarter despite decreased revenues primarily due to ~~the~~higher margins on sales of manufactured products as well as increased profitability associated with ~~the mix of~~higher margin CBF products ~~and services, particularly for offshore completion fluids products.~~during the current year quarter when compared to the prior year quarter. Completion Fluids & Products Division profitability in future periods will continue to be affected by the mix of its products and services, including the timing of TETRA CS Neptune^(R)completion fluid projects.

The Completion Fluids & Products Division reported an increase in pretax earnings during the current year quarter compared to the prior year quarter primarily due to increased gross profit discussed above. Completion Fluids & Products Division general and administrative expense levels remained flat compared to prior year quarter. Other expense increased primarily due to increased foreign currency losses.

Water & Flowback Services Division



	Three Months Ended September 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)
Revenues	$	72,841		$	78,568		$	(5,727	)	(7.3	)%
Gross profit	8,236			11,522			(3,286		)	(28.5	)%
Gross profit as a percentage of revenue	11.3		%	14.7		%
General and administrative expense	5,957			5,919			38			0.6	%
General and administrative expense as a percentage of revenue	8.2		%	7.5		%
Interest (income) expense, net	(2		)	5			(7		)	(140.0	)%
Other (income) expense, net	(297		)	(211		)	(86		)	40.8	%
Income before taxes	$	2,578		$	5,809		$	(3,231	)	(55.6	)%
Income before taxes as a percentage of revenue	3.5		%	7.4		%

Water & Flowback Services Division revenues decreased during the current year quarter primarily due to a reduction in commodity prices driving our customers' capital spending decisions and resulting in decreased activity and pricing levels when compared to prior year quarter.

The Water & Flowback Services Division reflected decreased gross profit during the current year quarter compared to the prior year quarter primarily due to the decreased revenues resulting from the decreased activity and pricing levels described above. In addition, our cost structure, specifically labor expense, does not always decrease proportionately with revenues due to a tight labor market for the services we provide.

The Water & Flowback Services Division reported decreased pretax income during the current year quarter compared to the prior year quarter primarily due to the reduction in gross profit described above. General and administrative expense levels remained flat compared to the prior year quarter. Other income increased as compared to prior year quarter due to increased foreign currency gains of $0.5 million and increased gains on the disposal of assets of $0.2 million, offset by decreased income of $0.6 million associated with the remeasurement of the contingent purchase price consideration for SwiftWater in the prior year.

Compression Division



	Three Months Ended September 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)
Revenues	$	113,766		$	115,261		$	(1,495	)	(1.3	)%
Gross profit	20,710			16,847			3,863			22.9	%
Gross profit as a percentage of revenue	18.2		%	14.6		%
General and administrative expense	11,530			10,580			950			9.0	%
General and administrative expense as a percentage of revenue	10.1		%	9.2		%
Interest expense, net	12,869			13,690			(821		)	(6.0	)%
CCLP Series A Preferred fair value adjustment (income) expense	—			498			(498		)	(100.0	)%
Other (income) expense, net	(225		)	(77		)	(148		)	192.2	%
Loss before taxes	$	(3,464	)	$	(7,844	)	$	4,380		55.8	%
Loss before taxes as a percentage of revenue	(3.0		)%	(6.8		)%

Compression Division revenues decreased during the current year quarter compared to the prior year quarter primarily due to a $5.2 million decrease in product sales revenues, due to the timing of when customer projects were completed, partially offset with a $3.8 million increase in service revenues. This increase in service revenues was primarily due to increasing demand for compression services, which is also reflected by increased compression fleet utilization rates.

Compression Division gross profit increased during the current year quarter compared to the prior year quarter due to improved customer contract pricing, labor efficiencies, reduced maintenance costs, and improved inventory management.

The Compression Division recorded a decreased pretax loss during the current year quarter compared to the prior year quarter due to increased gross profit discussed above. Interest expense decreased compared to the prior year quarter, primarily due to the conversion and redemption of CCLP Preferred Units outstanding. General and administrative expense levels increased compared to the prior year quarter, primarily due to increased bad debt expense of $1.5 million mainly associated with the bankruptcy of a single customer, partially offset by decreased employee expenses of $0.9 million. The CCLP Preferred Units fair value adjustment resulted in a $0.5 million charge to earnings in the prior year period with no corresponding impact in the current year quarter, as the last remaining outstanding Preferred Units were redeemed for cash on August 8, 2019. Other (income) expense, net, reflected increased income primarily due to increased foreign currency gains of $0.5 million offset by $0.4 million of redemption premium incurred in connection with the redemption of the CCLP Preferred Units for cash.

Corporate Overhead



	Three Months Ended September 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)
Depreciation and amortization	$	167		$	172		$	(5	)	2.9	%
General and administrative expense	12,573			13,037			(464		)	(3.6	)%
Interest (income) expense, net	5,495			5,268			227
Warrants fair value adjustment (income) expense	78			(179		)	257
Other (income) expense, net	(382		)	1,333			(1,715		)	(128.7	)%
Loss before taxes	$	(17,931	)	$	(19,631	)	$	1,700		8.7	%

Corporate Overhead pretax loss decreased during the current year quarter compared to the prior year quarter, primarily due to decreased other expense and decreased general and administrative expense. Other expense, net, decreased primarily due to a $0.9 million decrease of debt issuance fees related to the ABL Credit Agreement and the new Term Credit Agreement that were entered into during the prior year quarter and decreased foreign currency losses of $0.7 million in the current year quarter compared to the prior year quarter. Corporate general and administrative expense decreased primarily due to decreased professional service fees of $0.6 million in the current year quarter compared to the prior year quarter. The fair value of the outstanding Warrants liability resulted in a $0.1 million charge to earnings during the current year quarter compared to a $0.2 million credit to earnings in the prior year quarter. Interest expense increased resulting from increased borrowings.

Results of Operations

Nine months ended September 30, 2019 compared with nine months ended September 30, 2018.

Consolidated Comparisons



	Nine Months Ended September 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)
Revenues	$	778,471		$	716,304		$	62,167		8.7	%
Gross profit	129,536			117,114			12,422			10.6	%
Gross profit as a percentage of revenue	16.6		%	16.3		%
General and administrative expense	105,498			98,866			6,632			6.7	%
General and administrative expense as a percentage of revenue	13.6		%	13.8		%
Interest expense, net	55,054			52,246			2,808			5.4	%
Warrants fair value adjustment (income) expense	(1,035		)	22			(1,057		)
CCLP Series A Preferred Units fair value adjustment (income) expense	1,309			1,344			(35		)
Other (income) expense, net	(1,014		)	7,203			(8,217		)
Loss before taxes and discontinued operations	(30,276		)	(42,567		)	12,291			28.9	%
Loss before taxes and discontinued operations as a percentage of revenue	(3.9		)%	(5.9		)%
Provision (benefit) for income taxes	5,678			3,474			2,204
Loss before discontinued operations	(35,954		)	(46,041		)	10,087
Discontinued operations:
Income (loss) from discontinued operations (including 2018 loss on disposal of $33.8 million), net of taxes	(9,901		)	(40,931		)	31,030
Net loss	(45,855		)	(86,972		)	41,117
Loss attributable to noncontrolling interest	12,273			20,423			(8,150		)
Net loss attributable to TETRA stockholders	$	(33,582	)	$	(66,549	)	$	32,967

Consolidated revenuesfor the current year period increased compared to the prior year period primarily due to increased Compression Division and Completion Fluids & Products Division revenues, which increased by $52.5 millionand $8.0 million, respectively. The increased revenues of the Compression Division were primarily due to increased new compressor equipment sales activity. The increase in revenues for the Completion Fluids & Products Division was primarily due to increased international product sales. See Divisional Comparisons section below for additional discussion.

Consolidated gross profit increased during the current year period compared to the prior year period primarily due to the increased profitability of our Compression Division and our Completion Fluids & Products Division. The increased gross profit from these divisions more than offset the lower gross profit of our Water & Flowback Services Division, which experienced increased costs and challenging customer pricing in competitive markets compared to the prior year period. Despite the improvement in activity levels of certain of our businesses, onshore and offshore U.S. Gulf of Mexico activity levels remain flat and the impact of pricing pressures continues to challenge profitability in certain markets. Operating expenses reflect the increase in consolidated revenues, although we remain aggressive in managing operating costs and minimizing increased headcount, despite the increased operations.

Consolidated general and administrative expenses increased during the current year periodcompared to the prior year period primarily due to increased salary related expenses of $6.0 million, inclusive of executive transition costs of $1.8 million, and increased bad debt expense of $1.9 million, offset by decreased consulting and other expenses of $0.8 million and decreased professional services fees of $0.4 million. Increased general and administrative expenses were driven primarily by our Compression and Corporate Divisions. Due to the increased consolidated revenues discussed above, general and administrative expense as a percentage of revenues decreased compared to the prior year period.

Consolidated interest expense, net, increased in the current year period primarily due to Corporate and Compression Division interest expense. Corporate interest expense increased due to additional borrowings under the TETRA Term Credit Agreement and ABL Credit Agreement in the current period. Compression Division interest expense increased due to higher CCLP outstanding debt balances and higher interest rates compared to the prior year period. Interest expense during the current year period and the prior year period includes $2.9 million and $3.2 million, respectively, of finance cost amortization.

Consolidated other (income) expense, net, was $1.0 million of income during the current year period compared to $7.2 million of expense during the prior year period. The decrease in expense is primarily due to $4.5 million of decreased expense associated with the remeasurement of the contingent purchase price consideration for the SwiftWater acquisition, $3.5 million decreased expense related to the unamortized deferred financing costs charged to earnings during the prior year period as a result of the termination of the CCLP Bank Credit Facility, and $1.0 million of decreased loan fees associated with new TETRA credit agreements that were issued in the prior year. These decreases were offset by increased expense of $1.5 million associated with a redemption premium incurred in connection with the redemption of CCLP Preferred Units for cash and increased foreign currency losses.

Our consolidated provision for income taxes for the current year period is primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the nine month period ended September 30, 2019 of negative 18.8% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.

Divisional Comparisons

Completion Fluids & Products Division



	Nine Months Ended September 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)
Revenues	$	200,688		$	192,733		$	7,955		4.1	%
Gross profit	46,653			34,211			12,442			36.4	%
Gross profit as a percentage of revenue	23.2		%	17.8		%
General and administrative expense	14,792			14,011			781			5.6	%
General and administrative expense as a percentage of revenue	7.4		%	7.3		%
Interest (income) expense, net	(553		)	(434		)	(119		)
Other (income) expense, net	296			(509		)	805
Income before taxes	$	32,118		$	21,143		$	10,975		51.9	%
Income before taxes as a percentage of revenue	16.0		%	11.0		%

The increase in Completion Fluids & Products Division revenues during the current year period compared to the prior year period was primarily due to $4.2 million of increased product sales revenue primarily due to increased international CBF product sales and domestic manufactured products sales, partially offset by reduced CBF product sales revenues in the U.S. Gulf of Mexico. Additionally, service revenues increased$3.8 million, primarily due to increased international completion services activity. Offshore U.S. Gulf of Mexico activity levels remain challenged, and the impact of pricing pressures continues to hamper profitability.

Completion Fluids & Products Division gross profit during the current year period increased significantly compared to the prior year period primarily due to the profitability associated with the increased manufactured products and international CBF sales revenues. Completion Fluids & Products Division profitability in future periods will be affected by the mix of its products and services, including the timing of TETRA CS Neptunecompletion fluid projects.

The Completion Fluids & Products Division reported a significant ~~decrease~~increase in pretax earnings during the current year period compared to the prior year period due to the ~~reduction~~increase in gross profit discussed ~~above and due to the collection of an arbitration award of $12.8 million during January 2017 that was credited to earnings.~~above. Completion Fluids & Products Division administrative cost levels ~~decreased~~increased compared to the prior year period, as ~~$1.6 million of decreased salary and employee related expenses, were partially offset by $0.4 million of~~ increased legal and professional fees of $0.7 million and ~~$0.2~~increased general expenses of $0.5 million ~~of increased~~were partially offset by decreased bad debt expense. The Completion Fluids & Products Division continues to review opportunities to further reduce its administrative costs. Other income increased during the current year compared to the prior year. This increase was primarily due to $0.8 millionand other sales and marketing expenses of ~~contract income recorded during the current year period.~~$0.4 million.

Water & Flowback Services Division


	Nine Months Ended September 30,						Period to Period Change				Nine Months Ended September 30,						Period to Period Change
	2018			2017			2018 vs 2017		% Change		2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)										(In Thousands, Except Percentages)
Revenues	$	223,289		$	110,313		$	112,976	102.4	%	$	224,643		$	223,289		$	1,354		0.6	%
Gross profit	41,556			7,350			34,206				24,577			41,556			(16,979		)	(40.9	)%
Gross profit as a percentage of revenue	18.6		%	6.7		%					10.9		%	18.6		%
General and administrative expense	17,641			11,408			6,233		54.6	%	18,528			17,641			887			5.0	%
General and administrative expense as a percentage of revenue	7.9		%	10.3		%					8.2		%	7.9		%
Interest (income) expense, net	(10		)	(294		)	284				(6		)	(10		)	4			(40.0	)%
Other (income) expense, net	3,257			(666		)	3,923				(1,214		)	3,257			(4,471		)	(137.3	)%
Income (loss) before taxes	$	20,668		$	(3,098	)	$	23,766	767.1	%
Income (loss) before taxes as a percentage of revenue	9.3		%	(2.8		)%
Income before taxes											$	7,269		$	20,668		$	(13,399	)	64.8	%
Income before taxes as a percentage of revenue											3.2		%	9.3		%

Water & Flowback Services Division revenues increased slightly during the current year period compared to the prior year period ~~primarily~~ due to increased water management services activity. Water management and flowback services revenues increased ~~$117.8~~$2.1 million during the current year period compared to the prior year period primarily resulting from the ~~acquisition~~impact of ~~SwiftWater and increased demand in completion activity. We estimate that approximately $65.0 million~~a full nine months of ~~the water management services revenue increase was generated~~revenues from ~~the operations of~~ SwiftWater, which was acquired on February 28, ~~2018.~~2018, and the impact of the December 2018 acquisition of JRGO. Product sales revenue decreased by ~~$4.8~~$0.8 million, due to andecreased international equipment ~~sale in the prior period.~~sales activity.

The Water & Flowback Services Division reflected ~~increased~~decreased gross profit during the current year period compared to the prior year period, despite increased revenues, due to a shift in revenue mix away from smaller, capital constrained customers towards larger operators with stronger balance sheets. The costs to demobilize from one customer to mobilize for another within the ~~increase in~~same period had a meaningful impact on profitability. In addition, we reflected decreased revenues and ~~improving customer pricing levels. However, customer pricing continues to be challenging due to excess availability of equipment in~~profit from certain ~~markets. The increase in gross profit~~high-margin projects performed during the ~~current~~prior year ~~period was despite the impact of a $2.9 million long-lived asset impairment. The Water & Flowback Services Division continues to monitor its cost structure, minimizing increased~~period. We also experienced high maintenance costs ~~despite increasing activity levels, and looking to capture additional synergies~~on our flowback service equipment following the ~~SwiftWater acquisition.~~significant activity experienced in the fourth quarter of 2018, which was our highest flowback service revenue quarter in over three years.

The Water & Flowback Services Division reported decreased pretax income compared to ~~a pretax loss during~~ the prior year period, primarily due to the ~~improvement~~decrease in gross profit described above. General and administrative expenses increased primarily due to ~~the acquired SwiftWater operations, with~~increased bad debt expense of $0.5 million, increased wage and benefit related expenses of ~~$5.1~~$0.4 million, and increased general expenses of ~~$0.6~~$0.2 million, ~~and increased~~offset by decreased professional fees of $0.3 million. ~~Other expense,~~The Water & Flowback Services Division reported other income, net, ~~was recorded~~ during the current year period compared to other expense during the prior year period primarily due to ~~$3.7~~$0.8 million of ~~increased expense~~current year period income associated with the remeasurement of the contingent purchase price consideration for SwiftWater ~~and increased foreign currency losses of $0.2 million.~~compared to a corresponding $3.7 million expense during the prior year period.

Compression Division


	Nine Months Ended September 30,						Period to Period Change					Nine Months Ended September 30,						Period to Period Change
	2018			2017			2018 vs 2017			% Change		2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	300,607		$	212,482		$	88,125		41.5	%	$	353,140		$	300,607		$	52,533		17.5	%
Gross profit	41,820			24,711			17,109			69.2	%	58,804			41,820			16,984			40.6	%
Gross profit as a percentage of revenue	13.9		%	11.6		%						16.7		%	13.9		%
General and administrative expense	29,708			25,670			4,038			15.7	%	33,166			29,708			3,458			11.6	%
General and administrative expense as a percentage of revenue	9.9		%	12.1		%						9.4		%	9.9		%
Interest expense, net	38,538			31,098			7,440					39,079			38,538			541			1.4	%
CCLP Series A Preferred fair value adjustment	1,344			(4,340		)	5,684
CCLP Series A Preferred fair value adjustment (income) expense												1,309			1,344			(35		)	(2.6	)%
Other (income) expense, net	2,747			(190		)	2,937					(2		)	2,747			(2,749		)	(100.1	)%
Income (loss) before taxes	$	(30,517	)	$	(27,527	)	$	(2,990	)	(10.9	)%
Income (loss) before taxes as a percentage of revenue	(10.2		)%	(13.0		)%
Loss before taxes												$	(14,748	)	$	(30,517	)	$	15,769		51.7	%
Loss before taxes as a percentage of revenue												(4.2		)%	(10.2		)%

Compression Division revenues increased during the current year period compared to the prior year period ~~primarily~~ due to a ~~$59.4~~$32.0 million increase in product sales revenues ~~due to~~and a higher number of new compressor equipment sales compared to the prior year period. Demand for new compressor equipment continues to improve, and the current equipment sales backlog has increased significantly compared to the prior year period. Cumulative new equipment sales orders added to our backlog during the nine month period ended September 30, 2018 were $169 million. New equipment sales orders generally take less than 12 months to build and deliver. In addition, current year revenues reflect a $28.8$20.6 million increase in service revenues from compression and aftermarket services operations. ~~This~~Demand for new compressor equipment remains strong, although the current equipment sales backlog has decreased compared to the prior year period, due to significant sales orders recorded in the prior year period. Changes in our new equipment sales backlog are a function of additional customer orders less completed orders that result in equipment sales revenues. The increase in service revenues was primarily due to increasing demand for compression services, as reflected by increased ~~compressor~~compression fleet utilization rates. Overall utilization of the Compression Division's ~~compressor~~compression fleet has improved sequentially for the past two year period, led by increased utilization of the high- and medium-horsepower fleet.

Compression Division gross profit increased during the current year period compared to the prior year due to increased revenues discussed above. This increase was despite a $3.3 million charge for the impairment and other charges on certain low-horsepower compressor equipment and associated inventory and damage caused by fire to a certain compressor package during the current year period. The increased ~~compressor~~compression fleet utilization rates have led to increases in customer contract pricing.

The Compression Division recorded ~~an increased~~less pretax loss ~~despite~~in the current year period compared to the prior year period primarily due to the increased gross profit discussed above. Interest expense increased compared to the prior year period due to higher CCLP outstanding ~~CCLP~~ debt balances and a higher interest rate ~~from~~on the CCLP Senior Secured Notes, ~~issued in March 2018, when compared~~a portion of the proceeds of which were used to repay the balance outstanding under the previous CCLP Bank Credit Facility. Increased interest expense is expected to continue compared to the prior year periods. In addition, other (income) expense, net, reflected an increased expense primarily due to $3.5 million of unamortized deferred financing costs charged to earnings as a result of the termination of the previous CCLP Bank Credit Facility. In addition, the Series A Preferred fair value adjustment resulted in a charge to earnings during the current year period compared to abank credit ~~to earnings in the prior year period.~~facility. General and administrative expense levels increased compared to the prior year period, due to increased bad debt expense of $1.5 million andincreased salary and employee-related expenses, including the impact of increased headcount, incentives and equity compensation of ~~$2.3~~$1.3 million, and increased ~~other~~professional services of $0.9 million. These increases were offset by decreased general expenses of $0.2 million. In addition, other expense decreased $2.7 million compared to prior year period. This decrease in expense is primarily due to $3.5 million of unamortized deferred financing costs charged to other expense as a result of the termination of the previous credit agreement in the prior year period and decreased foreign currency losses of $0.6 million. These decreases in expense were offset by increased expense of $1.5 million ~~and $0.2 million~~ of ~~increased sales and marketing expenses.~~redemption premium incurred in connection with the redemption of CCLP Preferred Units for cash. The last remaining outstanding CCLP Preferred Units were redeemed for cash on August 8, 2019.

Corporate Overhead


	Nine Months Ended September 30,						Period to Period Change					Nine Months Ended September 30,						Period to Period Change
	2018			2017			2018 vs 2017			% Change		2019			2018			2019 vs 2018			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Gross profit (loss) (depreciation expense)	$	(487	)	$	(338	)	$	(149	)	(44.1	)%
Depreciation and amortization												$	507		$	487		$	20		(4.1	)%
General and administrative expense	37,506			33,883			3,623			10.7	%	39,012			37,506			1,506			4.0	%
Interest expense, net	14,152			11,913			2,239					16,533			14,152			2,381			17.7	%
Warrants fair value adjustment (income)/expense	22			(11,568		)	11,590
Warrants fair value adjustment (income) expense												(1,035		)	22			(1,057		)
Other (income) expense, net	1,703			1,026			677					(96		)	1,703			(1,799		)
Loss before taxes	$	(53,870	)	$	(35,592	)	$	(18,278	)	(51.4	)%	$	(54,921	)	$	(53,870	)	$	(1,051	)	(2.0	)%

Corporate Overhead pretax loss increased during the current year period compared to the prior year period primarily due to ~~the adjustment of the fair value of the outstanding Warrants liability that resulted in a $0.02 million charge to earnings compared to an $11.6 million credit to earnings during the prior year period.~~increased interest expense resulting from increased borrowings. Corporate general and administrative expense increased primarily due to ~~$2.6~~increased salary related expense of $4.4 million, which included $1.8 million of ~~increased~~executive transition costs. This increase was offset by $1.7 million of decreased professional fees, ~~including $0.9~~$0.5 million of ~~transaction costs, $0.7 million of increased~~decreased general expenses, and ~~$0.4~~$0.6 million of ~~increased~~decreased consulting fees. The fair value of the outstanding Warrants liability resulted in a $1.0 million credit to earnings compared to an $22,000 charge to earnings during the prior year period. In addition, ~~interest~~other income of $0.1 million was recorded during the current year period, compared to $1.7 million of expense ~~increased due to increased borrowings. Other expense increased,~~during the prior year period primarily ~~due to $0.9 million of~~associated with debt issuance fees ~~pursuant~~related to the new ABL Credit Agreement and the new Term Credit ~~Agreement.~~

Agreement entered into in the prior year period and foreign currency losses.

Liquidity and Capital Resources

We reported a decrease in consolidated cash flows provided by operating activities during the first nine months of 2018 compared to the corresponding prior year period. This decrease occurred despite the improved profitability of our operations, due to increased working capital needs largely due to the timing of payments of accounts payable. CCLP generated $6.5 million of our consolidated operating cash flows during the nine months ended September 30, 2018 compared to $24.6 million during the prior year period. We received $9.0 million of cash distributions from CCLP during the nine months ended September 30, 2018 compared to $11.3 million during the corresponding prior year period. We believe that the capital structure steps we have taken during the past three years continue to support our ability to meet our financial obligations and fund future growth as needed, despite current uncertain operating conditions and financial markets. WeAs of September 30, 2019, we and CCLP are in compliance with all covenants of our respective debt agreements. Information about the terms and covenants of debt agreements ~~as of September 30, 2018.~~can be found in our 2018 Annual Report.

~~Our consolidated sources and uses of cash during the nine months ended September 30, 2018 and 2017 are as follows:~~

Nine months ended September 30,
2018 2017
(In Thousands)
Operating activities $ 1,633
$ 36,834
Investing activities (145,480 ) (31,624 )
Financing activities 170,608
(21,162 )

Because of the level of consolidated debt, we believe it is important to consider our capital structure and CCLP's capital structure separately, as there are no cross default provisions, cross collateralization provisions, or cross guarantees between CCLP's debt and TETRA's debt. ~~(See Financing Activities section below for a discussion of the terms of our and CCLP's respective debt arrangements.)~~ Our consolidated debt outstanding has a carrying value of approximately ~~$822.9~~$858.3 million as of September 30, ~~2018.~~2019. However, approximately ~~$632.5~~$645.6 million of this consolidated debt balance is owed by CCLP and is serviced from the existing cash balances and cash flows of CCLP, ~~$343.1~~and $354.5 million of which is secured by certain of CCLP's assets. Through our common unit ownership interest in CCLP, which was approximately ~~36%~~34% as of September 30, ~~2018,~~2019, and ownership of an ~~approximately 1.5%~~approximate 1.4% general partner interest, we receive our share of the distributable cash flows of CCLP through its quarterly cash distributions. Approximately ~~$26.2~~$15.3 million of the ~~$53.9~~$35.9 million of the cash balance reflected on our consolidated

balance sheet is owned by CCLP and is not accessible by us. ~~On September 10, 2018, we entered into the ABL Credit Agreement~~The following table provides condensed consolidating balance sheet information reflecting TETRA's net assets and ~~Term Credit Agreement. In connection with the closing of these loans, we used a portion of the proceeds to repay all outstanding borrowings~~CCLP's net assets that service and ~~obligations under our then existing Bank Credit Agreement~~secure TETRA's and ~~all outstanding indebtedness under the 11% Senior Note.~~ CCLP's respective capital structures.



	September 30, 2019
Condensed Consolidating Balance Sheet	TETRA		CCLP		Eliminations			Consolidated
	(In Thousands)
Cash, excluding restricted cash	$	20,642	$	15,276	$	—		$	35,918
Affiliate receivables	11,659		—		(11,659		)	—
Other current assets	197,790		137,424		—			335,214
Property, plant and equipment, net	206,600		654,792		—			861,392
Long-term affiliate receivables	13,270		—		(13,270		)	—
Other assets, including investment in CCLP	62,037		42,437		78,702			183,176
Total assets	$	511,998	$	849,929	$	53,773		$	1,415,700

Affiliate payables	$	—	$	11,659	$	(11,659	)	$	—
Other current liabilities	91,720		121,352		—			213,072
Long-term debt, net	212,697		645,575		—			858,272
CCLP Series A Preferred Units	—		—		—			—
Warrants liability	1,038		—		—			1,038
Long-term affiliate payable	—		13,270		(13,270		)	—
Other non-current liabilities	62,741		7,049		—			69,790
Total equity	143,802		51,024		78,702			273,528
Total liabilities and equity	$	511,998	$	849,929	$	53,773		$	1,415,700

As of September 30, ~~2018,~~2019, subject to compliance with the covenants, borrowing base, and other provisions of the agreement that may limit borrowings, we had ~~$47.4~~$41.6 million of availability under the ABL Credit Agreement. See TETRA Long-Term Debt section below for further discussion. Following the issuance of the CCLP Senior Secured Notes, CCLP used a portion of the proceeds to repay the borrowings outstanding under CCLP's previous bank revolving credit facility, which was then terminated. In June 2018, CCLP entered into the CCLP New Credit Agreement. As of September 30, ~~2018,~~2019, and subject to compliance with the covenants, borrowing base, and other provisions of the agreement that may limit borrowings under the CCLP ~~New~~ Credit Agreement, CCLP had availability of ~~$23.3~~$7.8 million. ~~See CCLP Financing Activities below for further discussion.~~

Our consolidated sources (uses) of cash during the nine months ended September 30, 2019 and 2018 are as follows:



	Nine months ended September 30,
	2019			2018
	(In Thousands)
Operating activities	$	84,982		$	1,633
Investing activities	(99,954		)	(145,480		)
Financing activities	11,455			170,608

Operating Activities

Consolidated cash flowsprovidedby operating activities~~totaled $1.6~~increasedby $83.3 million. CCLP generated $67.8 million of our consolidated cash flows provided by operating activities during the ~~first~~ nine months ~~of 2018~~ended September 30, 2019 compared to ~~$36.8~~$6.5 million during the ~~corresponding~~ prior year ~~period, a decreaseof $35.2 million.~~period. Operating cash flows ~~decreased despite~~increased due to improved operating profitability and due to ~~the use of cash for~~ working capital ~~changes,~~management, particularly related to the management of inventory levels, collections of accounts receivable, and the timing of payments of accounts payable. ~~We have taken steps to aggressively manage working capital, including increased collection efforts.~~ We continue to monitor customer credit risk in the current environment and ~~have historically focused~~focus on serving larger capitalized oil and gas operators and national oil companies.

Demand for the vast majority of our products and services is driven by oil and gas industry activity, which is impacted by oil and natural gas commodity prices. With the increase in crude oil prices in early 2018, operating plans and capital expenditure levels of many of our oil and natural gas customers have increased, benefiting certain of our operating segments with improved revenues and cash flows. The acquisition of SwiftWater provided additional revenues and operating cash flows during the nine months ended September 30, 2018 and is expected to continue to do so going forward. Growth in completion activity compared to early 2017 has resulted in improved cash provided by operating activities of our Water & Flowback Services Division. The increased capital expenditure activity of our Compression Division customers has resulted in increased demand for compression services and equipment, and increased revenues of our Compression Division. However, oil and natural gas prices are expected to continue to be volatile in the future, and if oil and gas industry activity levels decrease in the future, we expect that our levels of operating cash flows will be negatively affected. During early 2018, and despite increasing activity levels, our goal has been to minimize growth to our operating and administrative headcount and continue to maintain a low cost structure for our businesses.

As part of the sale of our Offshore Division in March 2018, Orinoco assumed all liabilities and obligations currently associated with our former Maritech subsidiary, including but not limited to all current and future decommissioning obligations related to properties owned or formerly owned by our Maritech subsidiary prior to its purchase by Orinoco.

Investing Activities

~~During the first~~ ~~nine~~ months of 2018, the total amount of our net cash utilized for investing activities was $145.5 million. The acquisition of SwiftWater included initial cash purchase consideration of $42.0 million, plus $1.0 million which was subsequently paid in August 2018 as a working capital adjustment. Total cashcapital expenditures during the first nine months of ~~2018~~2019 were ~~$107.1~~$89.2 million. Our Completion Fluids & Products Division spent ~~$3.0~~$5.2 million on capital expenditures, ~~during the first~~ ~~nine~~ ~~months of~~ ~~2018~~, the majority of which related to plant and facility additions. Our Water & Flowback Services Division spent ~~$23.6~~$22.4 million on capital expenditures, primarily to add to its water management equipment fleet. Our Compression Division spent ~~$77.0~~$61.3 million, primarily for growth capital expenditure projects to increase its compression fleet.

Generally, a majority of our planned capital expenditures has been related to identified opportunities to grow and expand certain of our existing businesses. However, certain of these planned expenditures have been,

and may continue to be, postponed or canceled as we are reviewing all capital expenditure plans carefully in an effort to conserve cash. We currently have no long-term capital expenditure commitments. The deferral of capital projects could affect our ability to expand our operations in the future. Excluding our Compression Division, we expect to spend approximately ~~$40~~$25.0 million to ~~$50~~$30.0 million during ~~2018~~2019 on capital expenditures, primarily to expand our

~~water management services~~ Water & Flowback Services Division equipment fleet.

Our Compression Division expects to spend approximately ~~$110~~$80.0 million to ~~$120~~$85.0 million on capital expenditures during ~~2018~~2019 primarily to expand its ~~compressor~~compression fleet in response to increased demand for compression services. ~~The level~~Our Compression Division, through the separate capital structure of ~~future~~CCLP, expects to fund 2019 growth capital expenditures ~~depends on forecasted demand~~ for ~~our products~~new compression services equipment through CCLP available cash, operating cash flows, and ~~services.~~ up to $15.0 million of new compression services equipment that is being purchased by us, and leased to CCLP. Approximately $14.6 million of the $15.0 million has been funded as of September 30, 2019.

If the forecasted demand for our products and services ~~during 2018~~ increases or decreases, the amount of planned expenditures on growth and expansion may be adjusted.

Financing Activities

During the first nine months of ~~2018,~~2019, the total amount of consolidated cash provided by financing activities was ~~$170.6~~$11.5 million, consisting primarily of ~~the proceeds from the issuance of long-term debt. We entered into the~~borrowings under our ABL Credit Agreement and our Term Credit Agreement, a portion of which were used to repay all outstanding borrowings and obligations under our then existing Bank Credit Agreement and all outstanding indebtedness under the 11% Senior Notes and will fund future capital and working capital requirements. Prior to it being terminated as part of the September 2018 debt restructuring, borrowings under our Bank Credit Agreement were primarily used to fund the purchase of SwiftWater. CCLP issued the CCLP Senior Secured Notes, a portion of which was used to repay the CCLP Bank Credit Facility and will provide additional funding for future capital expenditures.Agreement. We and CCLP may supplement our existing cash balances and cash flow from operating activities with short-term borrowings, long-term borrowings, ~~leases,~~ issuances of equity and debt securities, and other sources of capital. CCLP expects to meet its growth capital expenditure requirements during the remainder of 2019 without having to access additional available borrowings under its credit agreement (the "CCLP Credit Agreement") and without having to access the current debt and equity markets. CCLP may also seek to expand its compression fleet through finance or operating leases with third parties. We and CCLP are aggressively managing our working capital and capital expenditure needs in ~~compliance with all covenants of~~order to maximize our ~~respective credit and debt agreements as of September 30, 2018.~~liquidity in the current environment.

~~See CCLP Financing Activities below for discussion of the CCLP Preferred Units and CCLP's long-term debt.~~

TETRA Long-Term Debt

Asset-Based Credit Agreement. On September 10, 2018, TETRA, as borrower, and certain of its subsidiaries, as loan parties and guarantors, entered into an asset-based lending Credit Agreement (the “ABL Credit Agreement”) with a syndicate of lenders, including JPMorgan Chase Bank, N.A., as administrative agent (collectively, the "ABL Lenders"). The ABL Credit Agreement provides for a senior secured revolving credit facility of up to $100 million, subject to a borrowing base to be determined by reference to the value of TETRA’s and any other borrowers’ inventory and accounts receivable, and contains within the facility a letter of credit sublimit of $20.0 million and a swingline loan sublimit of $10.0 million. The ABL Credit Agreement is scheduled to mature on September 10, 2023. As of November ~~7, 2018,~~6, 2019, we have ~~$15.0~~$27.0 million outstanding under our ABL Credit Agreement and ~~$6.1~~$6.8 million letters of ~~credit.~~credit, resulting in $30.0 million of availability.

fundamental changes, the making of investments, entering into transactions with affiliates, the payment of dividends and other restricted payments, the prepayment of other indebtedness, and the sale of assets. The ABL Credit Agreement also contains a provision that may require a fixed charge coverage ratio (as defined in the ABL Credit Agreement) of not less than 1.00 to 1.00 in the event that certain conditions associated with outstanding borrowings and cash availability occur. As of September 30, 2018, such conditions have not occurred. All obligations under the ABL Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the ABL Lenders on substantially all of the personal property of TETRA and certain subsidiaries, the equity interests in certain domestic subsidiaries, including CCLP, and a maximum of 65% of the equity interests issued by certain foreign subsidiaries.

Proceeds of loans under the ABL Credit Agreement were used to pay certain debt of TETRA existing on the effective date of the ABL Credit Agreement and may be used for working capital needs, capital expenditures and other general corporate purposes, including acquisitions. The ABL Credit Agreement replaced our previous Bank Credit Agreement, as defined and discussed in further detail below.

Term Credit Agreement

On September 10, 2018, TETRA, as borrower, entered into a credit agreement (the “Term Credit Agreement”) with a syndicate of lenders (collectively, the “Term Lenders”) and Wilmington Trust, National Association, as administrative agent.. The Term Credit Agreement provides for an initial loan in the amount of $200 million ~~(the “Initial Term Loan”)~~ and the availability of additional loans, subject to the terms of the Term Credit Agreement, up to an aggregate amount of $75 ~~million (the “Additional~~million. The Term ~~Loans,” and together with the Initial Term Loan, the “Term Loan”).~~Credit Agreement is scheduled to mature on September 10, 2025. As of November ~~7, 2018, $200.0~~6, 2019, $220.5 million in aggregate principal amount of our Term Credit Agreement is outstanding.

All obligations under the Term Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the Term Lenders on substantially all of the personal property of TETRA and certain subsidiaries, the equity interests in certain domestic subsidiaries, including CCLP, and a maximum of 65% of the equity interests issued by certain foreign subsidiaries.

indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control.

Proceeds from the Initial Term Loan, net of a 2% discount in the amount of $4.0 million, were used to prepay the outstanding indebtedness under the $125,000,000 11.00% Senior Secured Notes due November 5, 2022 (the “11.0% Senior Notes”) and indebtedness of TETRA under our existing Bank Credit Agreement discussed below. Proceeds of any Additional Term Loans may be used for acquisitions, subject to the terms of the Term Credit Agreement. The loans under the Term Credit Agreement may be voluntarily prepaid, in whole or in part, subject to applicable breakage fees. Any prepayment prior to the one-year anniversary is subject to a “make-whole” payment as set forth in the Term Credit Agreement. Thereafter, any prepayment during the period commencing after the one-year anniversary and ending on the two-year anniversary will have a premium of 3.0% and during the period commencing after the two-year anniversary and ending on the three-year anniversary, a premium of 1.0%. The maturity date of the Term Credit Agreement is September 10, 2025. There is no prepayment premium required after the third anniversary.

~~Bank Credit Agreement~~

On September 10, 2018, in connection with the closing of the above-described loans, TETRA repaid all outstanding borrowings and obligations under our then existing Bank Credit Agreement with a portion of the net proceeds from the above-described loans, and terminated the existing Bank Credit Agreement. Certain ABL Lenders were lenders under the existing Bank Credit Agreement and, accordingly, received a portion of the proceeds from the above-described loans in connection with the repayment of the outstanding borrowings under the existing Bank Credit Agreement.

~~11% Senior Note~~

On September 10, 2018, in connection with the closing of the above-described loans, TETRA repaid all outstanding indebtedness under the 11% Senior Note with a portion of the proceeds from the above-described loans, terminating its obligations under the 11% Senior Note. Affiliates of certain Term Lenders were holders of the 11% Senior Note and, accordingly, received a portion of the proceeds from the Term Credit Agreement in connection with the repayment of the outstanding indebtedness under the 11% Senior Note. In connection with the early termination of the 11% Senior Note, TETRA paid $7.0 million of "make-whole" prepayment fee in accordance with the terms of the 11% Senior Note.

CCLP Financing Activities

In March 2018, CCLP issued an aggregate $350.0 million of its CCLP Senior Secured Notes, and the net proceeds of $342.7 million were partially used to repay the remaining outstanding balance of $258.0 million under the CCLP Bank Credit Facility, which was then terminated. See below for a further discussion of the CCLP Senior Secured Notes. The remaining proceeds are being used to fund CCLP capital expenditures, including the increasing capital expenditures mentioned above that are needed in order to grow and maintain the capacity of CCLP's compressor and equipment fleet, as well as for general partnership needs.

CCLP Preferred Units. ~~On August 8, 2016 and September 20, 2016,~~In January 2019, CCLP entered into Series A Preferred Unit Purchase Agreements (the “Unit Purchase Agreements”) with certain purchasers with regard to its issuance and sale in two private placements (the "Initial Private Placement" and "Subsequent Private Placement," respectively) of an aggregate of 6,999,126 of CSI Compressco LP Series A Convertible Preferred Units representing limited partner interests in CCLP (the “CCLP Preferred Units”) for a cash purchase price of $11.43 per CCLP Preferred Unit (the “Issue Price”), resulting in total 2016 net proceeds, after deducting certain offering expenses, of approximately $77.3 million. We purchased 874,891 ofbegan redeeming the remaining CCLP Preferred Units atfor cash, resulting in 2,660,569 Preferred Units being redeemed during the ~~aggregate Issue Price~~nine months ended September 30, 2019 for $31.9 million, which includes approximately $1.5 million of ~~$10.0 million.~~

~~In connection with the closing~~redemption premium that was paid. The last redemption of the Initial Private Placement, CSI Compressco GP Inc (our wholly owned subsidiary) executed the Second Amended and Restated CCLP Partnership Agreement to, among other things, authorize and establish the rights and preferences of the CCLP Preferred Units. The CCLP Preferred Units are a new class of equity security that rank senior to all classes or series of equity securities of CCLP with respect to distribution rights and rights upon liquidation. We and the other holders of CCLP Preferred Units (each, a “CCLP

Preferred Unitholder”) receive quarterly distributions, which are paid in kind in additional CCLP Preferred Units, equal to an annual rate of 11.00% of the Issue Price ($1.2573 per unit annualized) of theremaining outstanding CCLP Preferred Units, subject to certain adjustments. The rights of the CCLP Preferred Units include certain anti-dilution adjustments, including adjustments for economic dilution resulting from the issuance of common units in the future below a set price.

A ratable portion of the CCLP Preferred Units has been, and will continue to be, converted into CCLP common units on the eighth day of each month over a period of thirty months that began in March 2017 (each, a “Conversion Date”), subject to certain provisions of the Second Amended and Restated CCLP Partnership Agreement that may delay or accelerate all or a portion of such monthly conversions. On each Conversion Date, a portion of the CCLP Preferred Units will convert into CCLP common units representing limited partner interests in CCLP in an amount equal to, with respect to each CCLP Preferred Unitholder, the number of CCLP Preferred Units held by such CCLP Preferred Unitholder divided by the number of Conversion Dates remaining, subject to adjustment described in the Second Amended and Restated CCLP Partnership Agreement, with the conversion price (the "Conversion Price") determined by the trading prices of the common units over the prior month, among other factors, and as otherwise impacted by the existence of certain conditions related to the CCLP common units. The maximum aggregate number of CCLP common units that could be required to be issued pursuant to the conversion provisions of the CCLP Preferred Units is potentially unlimited; however, CCLP may, at its option, pay cash, or a combination of cash and CCLP common units, to the CCLP Preferred Unitholders instead of issuing CCLP common units on any Conversion Date, subject to certain restrictions as described in the Second Amended and Restated CCLP Partnership Agreement and the CCLP New Credit Agreement (defined below). Including the impact of paid in kind distributions of CCLP Preferred Units and conversions of CCLP Preferred Units into CCLP common units, the total number of CCLP Preferred Units outstanding as of September 30, 2018 was 3,623,950, of which we held 455,127.

Because the CCLP Preferred Units may be settled using a variable number of CCLP common units, the fair value of the CCLP Preferred Units is classified as a long-term liability on our consolidated balance sheet in accordance with ASC 480 "Distinguishing Liabilities and Equity." The fair value of the CCLP Preferred Units as of September 30, 2018 was $36.9 million. Changes in the fair value during each quarterly period, if any, are charged or credited to earnings in the accompanying consolidated statements of operations. Charges or credits to earnings for changes in the fair value of the CCLP Preferred Units, along with ~~the interest expense for the accrual and~~a final cash payment made in lieu of paid-in-kind ~~distributions associated with the CCLP~~ Preferred Units ~~are non-cash charges and credits associated with the CCLP Preferred Units.~~occurred on August 8, 2019.

In addition, the CCLP Unit Purchase Agreements include certain provisions regarding change of control, transfer of CCLP Preferred Units, indemnities, and other matters. The CCLP Unit Purchase Agreements contain customary representations, warranties and covenants of CCLP and the purchasers.

CCLP Bank Credit Facilities. ~~On June 29, 2018,~~The CCLP ~~and two of its wholly owned subsidiaries (collectively the "CCLP Borrowers"), and certain of its wholly owned subsidiaries named therein as guarantors (the "CCLP New~~ Credit Agreement, ~~Guarantors"), entered into a Loan and Security Agreement (the "CCLP New Credit Agreement") with the lenders thereto (the "Lenders"), and Bank of America, N.A., in its capacity~~ as administrative agent, collateral agent, letter of credit issuer, and swing line lender. All of the CCLP Borrowers' obligations under the CCLP New Credit Agreement are guaranteed by certain of their existing and future domestic subsidiaries. The CCLP New Credit Agreementamended, includes a maximum credit commitment of $50.0 million available for loans, letters of credit (with a sublimit of $25.0 million) and swingline loans (with a sublimit of $5.0 million), subject to a borrowing base to be determined by reference to the value of CCLP’s and any other borrowers’ accounts ~~receivable.~~receivable and the value of certain CCLP inventory. Such maximum credit commitment may be increased by $25.0 million in accordance with the terms and conditions of the CCLP ~~New~~ Credit Agreement.

~~The~~ As of September 30, 2019, CCLP ~~Borrowers may borrow funds under~~had $11.5 million outstanding balance and had $3.0 million in letters of credit against the CCLP ~~New~~ Credit ~~Agreement to pay fees and expenses related to the~~Agreement. The CCLP New Credit Agreement and for the Borrower's ongoing working capital needs and for general partnership purposes. The revolving loans under the CCLP New Credit Agreement may be voluntarily prepaid, in whole or in part, without premium or penalty, subject to breakage or similar costs. The maturity date of the CCLP New Credit Agreement is scheduled to mature on June 29, 2023. As of ~~September 30, 2018, no balance was outstanding under the CCLP New Credit Agreement. As of~~ November ~~7, 2018,~~5, 2019, CCLP has no$5.5 million balance outstanding under the CCLP ~~New~~ Credit Agreement and ~~$5.7~~

$3.1 million in letters of credit, ~~leaving~~resulting in $14.4 million of availability, ~~under the CCLP New Credit Agreement of $17.6 million.~~

Borrowings under the CCLP New Credit Agreement will bear interest at a rate per annum equal to, at the option of the CCLP Borrowers, either (i) London InterBank Offered Rate (“LIBOR”) (adjusted to reflect any required bank reserves) for an interest period equal to 30, 60, 90, 180 or 360 days (as selected by the CCLP Borrowers, subject to availability and with the consent of the Lenders for 360 days) plus a margin based on average daily excess availability or (ii) a base rate plus a margin based on average daily excess availability; such base rate shall be determined by referencereflecting recent increases to the highest of (a) the prime rate of interest announced from time to time by Bank of America, N.A., (b) the Federal Funds Rate (as defined in the CCLP New Credit Agreement) rate plus 0.5% per annum and (c) LIBOR (adjusted to reflect any required bank reserves) for a 30-day interest period on such day plus 1.0% per annum. Initially, from June 29, 2018 until the delivery of the financial statements for the fiscal quarter ending December 31, 2018, LIBOR-based loans will have an applicable margin of 2.00% per annum and base-rate loans will have an applicable margin of 1.00% per annum; thereafter, the applicable margin will range between 1.75% and 2.25% per annum for LIBOR-based loans and 0.75% and 1.25% per annum for base-rate loans, according to average daily excess availability when financial statements are delivered. In addition to paying interest on outstanding principal under the CCLP New Credit Agreement, the CCLP Borrowers are required to pay a commitment fee in respect of the unutilized commitments thereunder, initially at the rate of 0.375% per annum until the delivery of the financial statements for the fiscal quarter ending September 30, 2018 and thereafter at the applicable rate ranging from 0.250% to 0.375% per annum, paid quarterly in arrears based on utilization of the commitments under the CCLP New Credit Agreement. The CCLP Borrowers are also required to pay a customary letter of credit fee equal to the applicable margin on revolving credit LIBOR loans and fronting fees.borrowing base.

The CCLP New Credit Agreement contains certain affirmative and negative covenants, including covenants that restrict the ability of the CCLP Borrowers, the CCLP New Credit Agreement Guarantors, and certain of their subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, the making of investments, entering into transactions with affiliates, the payment of dividends, and the sale of assets. The CCLP New Credit Agreement also contains a provision that may require a fixed charge coverage ratio (as defined in the CCLP New Credit Agreement) of not less than 1.0 to 1.0 in the event that certain conditions associated with outstanding borrowings and cash availability occur. As of September 30, 2018, such conditions have not occurred.

CCLP Senior Secured Notes. On March 8, 2018, CCLP entered into the Purchase Agreement (the “Purchase Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated as representative of the initial purchasers listed in Schedule A thereto (collectively, the “Initial Purchasers”), pursuant to which the CCLP Issuers agreed to issue and sell to the Initial Purchasers $350.0 million aggregate principal amount of the CCLP Issuers’ 7.50% Senior Secured First Lien Notes due 2025 (the "CCLP Senior Secured Notes") (the "CCLP Offering") pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). As of November ~~7, 2018,~~5, 2019, $350.0 million in aggregate principal ~~amount of our 7.50% Senior Secured Notes are~~was outstanding.

The CCLP Issuers closed the Offering on March 22, 2018. The CCLP Senior Secured Notes were issued at par for net proceeds of approximately $342.7 million, after deducting certain financing costs. CCLP used a portion of the net proceeds to repay in full and terminate CCLP's existing bank Credit Agreement and plans to use the remainder for general partnership purposes, including the expansion of its compression fleet. The CCLP Senior Secured Notes are jointly and severally, and fully and unconditionally, guaranteed (the "Guarantees" and, together with the CCLP Senior Secured Notes, the "CCLP Senior Secured Note Securities") on a senior secured basis initially by each of CCLP's domestic restricted subsidiaries (other than CSI Compressco Finance Inc., certain immaterial subsidiaries and certain other excluded domestic subsidiaries) and are secured by a first-priority security interest in substantially all of the CCLP Issuers' and the Guarantors' assets (other than certain excluded assets, including the collateral of the CCLP New Credit Agreement) (the "Collateral") as collateral security for their obligations under the CCLP Senior Secured Notes, subject to certain permitted encumbrances and exceptions. On the closing date, we entered into an indenture (the "Indenture") by and among the Obligors and U.S. Bank National Association, as trustee with respect to the CCLP Senior Secured Note Securities. The CCLP Senior Secured Notes accrue interest at a rate of 7.50% per ~~annum. Interest on the CCLP Senior Secured Notes are payable semi-annually in arrears on April 1~~annum and ~~October 1 of each year, beginning October 1, 2018. The CCLP Senior Secured~~

~~Notes~~ are scheduled to mature on April 1, 2025. In connection with the CCLP Offering, CCLP incurred total financing costs of $7.4 million related to the CCLP Senior Secured Notes. These costs are deferred, netting against the carrying value of the amount outstanding.

Date Price
2021 105.625%
2022 103.750%
2023 101.875%
2024 100.000%

If CCLP experiences certain kinds of changes of control, each holder of CCLP Senior Secured Notes will be entitled to require us to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of that holder’s CCLP Senior Secured Notes pursuant to an offer on the terms set forth in the Indenture. CCLP will offer to make a cash payment equal to 101% of the aggregate principal amount of the CCLP Senior Secured Notes repurchased plus accrued and unpaid interest, if any, on the CCLP Senior Secured Notes repurchased to the date of repurchase, subject to the rights of holders of the CCLP Senior Secured Notes on the relevant record date to receive interest due on the relevant interest payment date.

The Indenture contains customary covenants restricting CCLP ability and the ability of CCLP restricted subsidiaries to: (i) pay distributions on, purchase or redeem CCLP common units or purchase or redeem any CCLP subordinated debt; (ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities; (iii) create or incur certain liens securing indebtedness; (iv) sell assets, including dispositions of the Collateral; (v) consolidate, merge or transfer all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) enter into agreements that restrict distributions or other payments from its restricted subsidiaries to CCLP. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting CCLP, subject to the satisfaction of certain conditions, to transfer assets to certain of CCLP unrestricted subsidiaries. Moreover, if the CCLP Senior Secured Notes receive an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the Indenture, many of the restrictive covenants in the Indenture will be terminated. The Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding CCLP Senior Secured Notes may declare all of the CCLP Senior Secured Notes to be due and payable immediately.

On March 22, 2018, CCLP, the grantors named therein, the Trustee and U.S. Bank National Association, as the collateral trustee (the “Collateral Trustee”), entered into a collateral trust agreement (the “Collateral Trust Agreement”) pursuant to which the Collateral Trustee will receive, hold, administer, maintain, enforce and distribute the proceeds of all of its liens upon the Collateral for the benefit of the current and future holders of the CCLP Senior Secured Notes and any future priority lien obligations, if any.

CCLP Senior Notes. The obligations under the CCLP 7.25% Senior Notes (the "CCLP Senior Notes") are jointly and severally and fully and unconditionally, guaranteed on a senior unsecured basis by each of CCLP’s domestic restricted subsidiaries (other than CSI Compressco Finance) that guarantee CCLP’s other indebtedness (the "Guarantors" and together with the Issuers, the "Obligors"). The CCLP Senior Notes and the subsidiary guarantees thereof (together, the "CCLP Senior Note Securities") were issued pursuant to an indenture described below. As of November ~~7, 2018,~~5, 2019, $295.9 million in aggregate principal amount ~~of the CCLP Senior Notes are~~was outstanding.

The Obligors issued the CCLP Senior Note Securities pursuant to the Indenture dated as of August 4, 2014 (the "CCLP Senior Note Indenture") by and among the Obligors and U.S. Bank National Association, as trustee (the "Trustee"). The CCLP Senior Notes accrue interest at a rate of 7.25% per ~~annum. Interest on the CCLP Senior Notes is payable semi-annually in arrears on February 15~~annum and ~~August 15 of each year. The CCLP Senior Notes~~ are scheduled to mature on August 15, 2022.

The CCLP Senior Note Indenture contains customary covenants restricting CCLP’s ability and the ability of its restricted subsidiaries to: (i) pay dividends and make certain distributions, investments and other restricted payments; (ii) incur additional indebtedness or issue certain preferred shares; (iii) create certain liens; (iv) sell assets; (v) merge, consolidate, sell or otherwise dispose of all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) designate its subsidiaries as unrestricted subsidiaries under the CCLP Senior Note Indenture. The CCLP Senior Note Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the CCLP Senior Note Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the CCLP Senior Notes then outstanding may declare all amounts owing under the CCLP Senior Notes to be due and payable. CCLP is in compliance with all covenants of the CCLP Senior Note Purchase Agreement as of September 30, 2018.

Other Sources and Uses

In addition to the various aforementioned credit facilities and senior notes, we and CCLP fund our respective short-term liquidity requirements primarily from cash generated by our respective operations ~~leases,~~ and from short-term vendor financing. Should additional capital be required, ~~we believe that we have~~ the ability to raise such capital through the issuance of additional debt or equity ~~securities. However, instability~~securities may currently be limited. Instability or volatility in the capital markets at the times we need to access capital may also affect the cost of capital and the ability to raise capital for an indeterminable length of time.

TETRA's ABL Credit Agreement matures in September 2023, TETRA's Term Credit Agreement matures in September 2025, the CCLP Senior Notes mature in August 2022, the CCLP Senior Secured Notes mature in March 2025, and the CCLP New Credit Agreement matures in June 2023. The replacement of these capital sources at similar or more favorable terms is not certain. If it is necessary to issue additional equity to fund our capital needs, additional dilution to our common stockholders will occur.

Although near-term growth plans pursuant to our long-term growth strategy have resumed, they are being reviewed carefully and are subject to our continuing efforts to conserve cash. CCLP has also increased its growth capital expenditure activity in response to increased demand for compression services. CCLP's long-term growth objectives are funded from its available cash, other borrowings, and cash generated from the issuance of equity or debt securities.

On ~~March 23, 2016,~~April 11, 2019, we filed a universal shelf Registration Statement on Form S-3 with the SEC. On ~~April 13, 2016,~~May 1, 2019, the Registration Statement on Form S-3 was declared effective by the SEC. Pursuant to this registration statement, we have the ability to sell debt or equity securities in one or more public offerings up to an aggregate public offering price of ~~$164.4 million.~~$464.1 million, inclusive of $64.1 million of our common stock issuable upon conversion of our currently outstanding warrants. This shelf registration statement currently provides us additional flexibility with regard to potential financings that we may undertake when market conditions permit or our financial condition may require.

As part of long-term strategic growth plans, we and CCLP evaluate opportunities to acquire businesses and assets that may require the payment of cash. Such acquisitions may be funded with existing cash balances, borrowings under credit facilities, or cash generated from the issuance of equity or debt securities.

The Second Amended and Restated Partnership Agreement of CCLP requires that within 45 days after the end of each quarter, CCLP distribute all of its available cash, as defined in the Second Amended and Restated Partnership Agreement, to its common unitholders of record on the applicable record date. During the nine months ended September 30, ~~2018~~,2019, CCLP distributed ~~$22.9~~$1.4 million in cash, including ~~$13.9~~$0.9 million to its public ~~unitholders. The amount of~~unitholders, reflecting the reduction in quarterly distributions ~~is determined based on a variety of factors, including estimates of CCLP's cash needs to fund its future operating, investing, and debt services requirements.~~announced previously by CCLP in December 2018. There can be no assurance that quarterly distributions from CCLP will increase from this amount per unit ~~or that there will not be future decreases in the amount of distributions~~ going forward.

Off Balance Sheet Arrangements

As of September 30, ~~2018~~,2019, we had no “off balance sheet arrangements” that may have a current or future material effect on our consolidated financial condition or results of operations.

Recently Adopted Accounting Guidance

We adopted the new lease accounting standard on January 1, 2019. The new lease standard had a material impact to our consolidated financial statements, resulting from the inclusion of operating lease right-of-use assets and operating lease liabilities in our consolidated balance sheet. Refer to Part I, Item 1. Financial Statements- Note A - "Organization, Basis of Presentation and Significant Accounting Policies" and Note K - “Leases” for further discussion.

Commitments and Contingencies

Litigation

~~On March 18, 2011, we filed a lawsuit in the Circuit Court~~Contingencies of Union County, Arkansas, asserting claims of professional negligence, breach of contract and other claims against the engineering firm we hired for engineering design, equipment, procurement, advisory, testing and startup services for our El Dorado, Arkansas chemical production facility. The engineering firm disputed our claims and promptly filed a motion to compel the matter to arbitration. After a lengthy procedural dispute in Arkansas state court, arbitration proceedings were initiated on November 15, 2013. Ultimately, on December 16, 2016, the arbitration panel ruled in our favor, declared us as the prevailing party, and awarded us a total net amount of $12.8 million. We received full payment of the $12.8 million final award on January 5, 2017.Discontinued Operations

~~Other Contingencies~~

During 2011, in connection with the sale of a significant majority of Maritech's oil and gas producing properties, the buyers of the properties assumed the associated decommissioning liabilities pursuant to the purchase and sale agreements. In ~~March~~early 2018, we closed the Maritech Asset Purchase Agreement with Orinoco Natural Resources, LLC ("Orinoco") that provided for the purchase by Orinoco of Maritech's remaining oil and gas properties and related assets. Also in early 2018, we closed the Maritech Membership Interest Purchase Agreement with Orinoco that provided for the purchase by Orinoco of ~~the Maritech Properties. Also in March 2018, we finalized the Maritech Equity Purchase Agreement with Orinoco that provided for the purchase by Orinoco~~all of the ~~Maritech Equity Interests.~~outstanding membership interests in Maritech. As a result of these transactions, we have effectively exited the ~~businesses~~business of our ~~Offshore Services and~~ Maritech ~~segments and~~segment.

Under the Maritech Asset Purchase Agreement, Orinoco assumed all of ~~Maritech's remaining abandonment~~Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase Agreement, Orinoco assumed all other liabilities of Maritech, including the decommissioning ~~obligations. For further discussion, see Note D - "Acquisitions~~liabilities associated with the oil and ~~Dispositions,"~~gas properties previously sold by Maritech (the “Legacy Liabilities”), subject to certain limited exceptions unrelated to the decommissioning liabilities. To the extent that Maritech or Orinoco fails to satisfy decommissioning liabilities associated with any of the Orinoco Lease Liabilities or the Legacy Liabilities, we may be required to satisfy such liabilities under third party indemnity agreements and corporate guarantees that we previously provided to the US Department of the Interior and other parties, respectively.

Pursuant to a Bonding Agreement entered into as part of these transactions (the "Bonding Agreement"), Orinoco provided non-revocable performance bonds in an aggregate amount of $46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace, within 90 days following the closing, the Initial Bonds with other non-revocable performance bonds, meeting certain requirements, in the ~~Notes~~aggregate sum of $47.0 million (collectively, the “Interim Replacement Bonds”). Orinoco further agreed to ~~Consolidated Financial Statements.~~replace, within 180 days following the closing, the Interim Replacement Bonds with a maximum of three non-revocable performance bonds in the aggregate sum of $47.0 million, meeting certain requirements (the “Final Bonds”). Among the other requirements of the Final Bonds was that they must provide coverage for all of the asset retirement obligations of Maritech instead of only relating to specific properties. In the event Orinoco does not provide the Interim Replacement Bonds or the Final Bonds, Orinoco is required to make certain cash escrow payments to us.

If we become liable in the future for any decommissioning liability associated with any property covered by either an Initial Bond or an Interim Replacement Bond while such bonds are outstanding and the payment made to us under such bond is not sufficient to satisfy such liability, the Bonding Agreement provides that Orinoco will pay us an amount equal to such deficiency and if Orinoco fails to pay any such amount, such amount must be paid by the Clarkes under the Clarke Bonding Guaranty Agreement. However, if the Final Bonds or the full amount of the escrowed cash have been provided, neither Orinoco nor the Clarkes would be liable to pay us for any such deficiency. Our financial condition and results of operations may be negatively affected if Orinoco is unable to cover any such deficiency or if we become liable for a significant portion of the decommissioning liabilities.

the amount of $1.5 million at September 30, 2019. We continue to monitor this matter and seek to vigorously pursue our rights to collect all amounts payable to us, including the amounts owed under the Epic Promissory Note when due, including by enforcing our rights under the Clarke Promissory Note Guaranty Agreement.

Contractual Obligations

Our contractual obligations and commitments principally include obligations associated with our outstanding

indebtedness and obligations under operating leases. The table below summarizes our consolidated contractual cash obligations as of September 30, 2019:


	Payments Due														Payments Due
	Total		2018		2019		2020		2021		2022		Thereafter		Total		2019		2020		2021		2022		2023		Thereafter
	(In Thousands)														(In Thousands)
Long-term debt - TETRA	$	210,000	$	—	$	—	$	—	$	—	$	—	$	210,000	$	230,500	$	—	$	—	$	—	$	—	$	10,000	$	220,500
Long-term debt - CCLP	645,930		—		—		—		—		295,930		350,000		657,430		—		—		—		295,930		11,500		350,000
Interest on debt - TETRA	115,956		4,177		16,708		16,708		16,708		16,708		44,947		107,766		4,522		18,088		18,088		18,088		17,993		30,987
Interest on debt - CCLP	253,980		11,883		47,532		47,532		47,532		40,438		59,063		209,158		12,066		48,264		48,264		41,156		26,595		32,813
Purchase obligations	106,320		2,370		9,450		9,450		9,450		9,450		66,150		96,875		2,375		9,500		9,500		9,500		9,500		56,500
Decommissioning and other asset retirement obligations	12,014		—		—		—		—		—		12,014
Operating and capital leases	78,440		4,202		12,022		10,548		8,517		6,358		36,793
Asset retirement obligations⁽¹⁾															12,603		—		—		—		—		—		12,603
Operating leases															82,291		4,870		17,721		12,798		9,591		7,871		29,440
Total contractual cash obligations⁽¹⁾⁽²⁾	$	1,422,640	$	22,632	$	85,712	$	84,238	$	82,207	$	368,884	$	778,967	$	1,396,623	$	23,833	$	93,573	$	88,650	$	374,265	$	83,459	$	732,843


⁽¹⁾	We have estimated the timing of these paymentsfor asset retirement obligation liabilities based upon our plans. The amounts shown represent the discounted obligation as of September 30, 2019.

⁽²⁾

Amounts exclude other long-term liabilities reflected in our Consolidated Balance Sheet that do not have known payment streams. These excluded amounts include approximately$~~1.2~~0.8 million of liabilities under FASB Codification Topic 740, “Accounting for Uncertainty in Income Taxes,” as we are unable to reasonably estimate the ultimate amount or timing of ~~tax~~ settlements. ~~These excluded amounts also include approximately~~$36.9 million of liabilities related to the CCLP Series A Convertible Preferred Units. The preferred units are expected to be serviced and satisfied with non-cash paid-in-kind distributions and conversions to CCLP common units. See "Note G – CCLP Series A Convertible Preferred Units," in the Notes to Consolidated Financial Statements for further discussion.

For additional information about our contractual obligations as of December 31, ~~2017,~~2018, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2018 Annual Report on Form ~~10-K for the year ended December 31, 2017.~~

10-K.

Cautionary Statement for Purposes of Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this Quarterly Report are identifiable by the use of the following words, the negative of such words, and other similar words: “anticipates", "assumes", “believes,” "budgets", “could,” “estimates,” "expects", "forecasts", "goal", "intends", "may", "might", "plans", "predicts", "projects", "schedules", "seeks", "should", "targets", "will", and "would".

Such forward-looking statements reflect our current views with respect to future events and financial performance and are based on assumptions that we believe to be reasonable, but such forward-looking statements are subject to numerous risks, and uncertainties, including, but not limited to:

economic and operating conditions that are outside of our control, including the supply, demand, and prices of ~~crude~~ oil and natural gas;

the availability of adequate sources of capital to us;

the levels of competition we encounter;

the activity levels of our customers;

our operational performance;

the availability of raw materials and labor at reasonable prices;

risks related to acquisitions and our growth strategy;

~~our ability to comply with the financial covenants in~~restrictions under our debt agreements and the consequences of any failure to comply with ~~such financial~~debt covenants;

~~the availability of adequate sources of capital to us;~~

the effect and results of litigation, regulatory matters, settlements, audits, assessments, and contingencies;

risks related to our foreign operations;

information technology risks including the risk from cyberattack, and


•	other risks and uncertainties under “Item 1A. Risk Factors” in our 2018 Annual Report, and as included in our other filings with the SEC, which are available free of charge on the SEC website at www.sec.gov.

other risks and uncertainties under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, and as included in our other filings with the SEC, which are available free of charge on the SEC website at www.sec.gov.

The risks and uncertainties referred to above are generally beyond our ability to control and we cannot predict all the risks and uncertainties that could cause our actual results to differ from those indicated by the forward-looking statements. If any of these risks or uncertainties materialize, or if any of the underlying assumptions prove incorrect, actual results may vary from those indicated by the forward-looking statements, and such variances may be material.

All subsequent written and oral forward-looking statements made by or attributable to us or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements we may make, except as may be required by law.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Market risk is the risk of loss arising from adverse changes in market rates and prices. Fora discussion of our indirect exposure to fluctuatingcommodityprices, please read “Risk Factors —CertainBusinessRisks” in our 2018 Annual Report ~~on Form 10-K filed with the SEC on March 5, 2018.~~.We depend on U.S. and international demand for and production ofoil andnatural gas, and a reduction in this demand or production could adversely affect the demand or the prices we charge for our services, which could cause our revenuesand operating cash flows to decreasein thefuture.We do notcurrently hedge, and do notintend to hedge,our indirect exposure to fluctuating commodity prices.

Interest Rate Risk

As of September 30, ~~2018, due to borrowings made during the period then ended,~~2019, we had ~~a balance~~balances outstanding under the Term Credit Agreement, ~~and~~ ABL Credit Agreement, and ~~such borrowings~~CCLP Credit Agreement that bear interest at variable ~~rates of interest (currently 8.2%).~~

rates.


	Expected Maturity Date																Fair Market Value		Expected Maturity Date																				Fair Market Value
($ amounts in thousands)	2018		2019		2020		2021		2022			Thereafter			Total		Fair Market Value		2019			2020			2021			2022			2023			Thereafter			Total		Fair Market Value
September 30, 2018
September 30, 2019
U.S. dollar variable rate - TETRA	$	—	$	—	$	—	$	—	$	—		$	210,000		$	210,000	$	210,000	$	—		$	—		$	—		$	—		$	10,000		$	220,500		$	230,500	$	230,500
Weighted average interest rate (variable)																			—		%	—		%	—		%	—		%	3.81		%	8.29		%
U.S. dollar variable rate - CCLP																			$	—		$	—		$	—		$	—		$	11,500		$	—		$	11,500	$	11,500
Weighted average interest rate (variable)																			—		%	—		%	—		%	—		%	6.00		%	—		%
U.S. dollar fixed rate - CCLP	$	—	$	—	$	—	$	—	$295,930			$	350,000		$	645,930	$	634,300	$	—		$	—		$	—		$	295,930		$	—		$	350,000		$	645,930	$	614,000
Weighted average interest rate (fixed)	—		—		—		—		7.25		%	7.50		%	—				—		%	—		%	—		%	7.25		%	—		%	7.50		%

Exchange Rate Risk

As of September 30, ~~2018,~~2019, there have been no material changes pertaining to our exchange rate exposures as disclosed in our ~~Form 10-K for the year ended December 31, 2017.~~2018 Annual Report.

Item 4. Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, ~~2018,~~2019, the end of the period covered by this quarterly report.

As discussed above in this Quarterly Report on Form 10-Q, on February 28, 2018, we completed the acquisition of SwiftWater. We are currently integrating SwiftWater into our internal control over financial reporting processes. In executing this integration, we are analyzing, evaluating, and, where necessary, making changes in controls and procedures related to the SwiftWater business, which we expect to be completed in fiscal year 2019.

~~We expect to exclude SwiftWater from our assessment of internal control over financial reporting as of December 31, 2018.~~

~~Other than the changes described above, there~~There were no changes in our internal control over financial reporting that occurred during the ~~fiscal~~ quarter ended September 30, ~~2018,~~2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.

Environmental Proceedings

One of our subsidiaries, TETRA Micronutrients, Inc. ("TMI"), previously owned and operated a production facility located in Fairbury, Nebraska. TMI is subject to an Administrative Order on Consent issued to American Microtrace, Inc. (n/k/a/ TETRA Micronutrients, Inc.) in the proceeding styledIn the Matter of American Microtrace Corporation, EPA I.D. No. NED00610550, Respondent, Docket No. VII-98-H-0016, dated September 25, 1998 (the "Consent Order"), with regard to the Fairbury facility. TMI is liable for ongoing environmental monitoring at the Fairbury facility under the Consent Order; however, the current owner of the Fairbury facility is responsible for costs associated with the closure of that facility.While the outcome cannot be predicted with certainty, management does not consider it reasonably possible that a loss in excess of any amounts accrued has been incurred or is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.

Item 1A. Risk Factors.

We have described in the 2018 Annual Report significant risk factors and periodically update those risks for material developments. Provided below is an update to our risk factors as previously disclosed in the 2018 Annual Report.

We have continuing exposure to decommissioning liabilities associated with oil and gas properties previously owned by Maritech.

From 2001 to 2012, Maritech sold various oil and gas producing properties in numerous transactions to different buyers. In connection with those sales, the buyers generally assumed the decommissioning liabilities associated with the properties sold (the "Legacy Liabilities") and generally became the successor operator. In some cases, Maritech retained certain liabilities and we provided guaranties of Maritech’s retained liabilities. Some buyers of these Maritech properties subsequently sold certain of these properties to other buyers, who also assumed the financial responsibilities associated with the properties' operations, including decommissioning liabilities, and these buyers also typically became the successor operator of the properties. To the extent that a buyer of these properties fails to perform the decommissioning work required, a previous owner, including Maritech, may be required to perform operations to satisfy the decommissioning liabilities. As a result of the third-party indemnity agreements and corporate guaranties we have previously provided to the US Department of the Interior and to other private third-parties as the former parent company of Maritech, we may be responsible for satisfying these decommissioning obligations if they are not satisfied by the current owners and operators of the properties or by Maritech. Significant decommissioning liabilities that were assumed by the buyers of the Maritech properties in these previous sales remain unperformed. If oil and natural gas pricing levels continue to be depressed or further deteriorate, one or more of these buyers may be unable to perform the decommissioning work required on a property previously owned by Maritech. If these buyers, or any successor owners of the Maritech properties, are unable to satisfy and extinguish their decommissioning liabilities due to bankruptcy or other liquidity issues, the US Department of the Interior may seek to impose those decommissioning obligations on Maritech and on us due to our third party

~~There~~indemnity agreements, and contractual commitments and guaranties issued from time to time by us to the US Department of the Interior and various third parties. The amount of cash necessary to satisfy these obligations could be significant and could adversely affect our business, results of operations, financial condition, and cash flows.

In March 2018, pursuant to a series of transactions, Maritech sold the remaining offshore leases held by Maritech to Orinoco Natural Resources, LLC ("Orinoco") and, immediately thereafter, we sold all equity interest in Maritech to Orinoco. The assignments for six of the offshore leases conveyed to Orinoco have not been approved by the US Department of the Interior and Maritech remains an owner of record for these leases. Maritech also remains a recognized operator of a portion of four other offshore properties. Under the Maritech Asset Purchase Agreement, Orinoco assumed all of Maritech's decommissioning liabilities related to the leases conveyed to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase Agreement, Orinoco assumed all other liabilities of Maritech, including the Legacy Liabilities, subject to limited exceptions unrelated to the decommissioning liabilities. Pursuant to a Bonding Agreement executed in connection with such purchase agreements, Orinoco provided non-revocable bonds in the aggregate amount of approximately $46.8 million to secure the performance of certain of Maritech’s decommissioning obligations related to the Orinoco Lease Liabilities and certain of Maritech’s remaining current decommissioning obligations (not including the Legacy Liabilities). Orinoco was required to replace, within 90 days and then 180 following the closing, the initial bonds delivered at closing with other non-revocable performance bonds, meeting certain additional requirements, in the aggregate sum of $47.0 million or make cash escrow payments. Among the other requirements of the final replacement bonds was that they must provide coverage for all of the asset retirement obligations of Maritech instead of only relating to specific properties. The payment obligations of Orinoco under the Bonding Agreement are guaranteed by Thomas M. Clarke and Ana M. Clarke pursuant to a separate guaranty agreement (the “Clarke Bonding Guaranty Agreement”). Orinoco has not delivered such replacement bonds and neither it nor the Clarkes has made any of the escrow payments required pursuant to the terms of the Bonding Agreement. We filed a lawsuit against Orinoco and the Clarkes to enforce the terms of the Bonding Agreement and the Clarke Bonding Guaranty Agreement. A summary judgment was granted in favor of Orinoco and the Clarkes which has the effect of dismissing our present claims for the replacement bonds and the escrow payments provided for in the Bonding Agreement. We believe this judgment should not have been ~~no material~~granted and we have begun the process of appealing it. The non-revocable performance bonds delivered at the closing remain in effect.

If in the future we become liable for decommissioning liabilities associated with any property covered by either an initial bond or stage 1 permanent bond, the Bonding Agreement provides that if we call any of the initial bonds or the stage 1 permanent bonds to satisfy such liability and the amount of the bond payment is not sufficient to pay for such liability, Orinoco will pay us for the additional amount required. To the extent Orinoco is unable to cover any such deficiency or we become liable for a significant portion of the Legacy Liabilities, our financial condition and results of operations may be negatively affected.

Possible changes in the ~~information~~US Department of Interior's supplemental bonding and financial assurance requirements may increase our risks associated with the decommissioning obligations pertaining to ~~our Risk Factors as disclosed~~oil and gas properties previously owned by Maritech.

Recent and additional anticipated changes to the supplemental bonding and financial assurance program managed by the US Department of the Interior could require all oil and gas owners and operators with infrastructure in ~~our Form 10-K~~the Gulf of Mexico to provide additional supplemental bonds or other acceptable financial assurance for decommissioning liabilities. These changes have the potential to adversely impact the financial condition of lease owners and operators in the Gulf of Mexico and increase the number of such owners and operators seeking bankruptcy protection, given current oil and gas prices. In July 2016, the US Department of the Interior issued a Notice to Lessees and Operators (“2016 NTL”) that strengthened requirements for the ~~year ended December 31, 2017.~~posting of additional financial assurance by offshore lease owners and operators to assure that sufficient security is available to satisfy and extinguish decommissioning obligations with respect to offshore wells, platforms, pipelines and other facilities. The 2016 NTL, which became effective in September 2016, eliminated the past practice of waiving supplemental bonding requirements where lease owners or operators, or their guarantors, could demonstrate a certain level of financial strength. Instead, under the 2016 NTL, the US Department of the Interior will allow lease owners and operators to "self-insure," but only up to 10% of their "tangible net worth," which is defined as the difference between a company’s total assets and the value of all liabilities and intangible assets. It is unclear how this self-insurance allowance relates to lease owners or operators with a guarantor presently in place. In addition, the 2016 NTL is being held in abeyance by the US Department of the Interior, which creates additional and significant uncertainty for Gulf of Mexico lease owners and operators and for us through the third party indemnity agreements

we have provided for Maritech liabilities to the US Department of the Interior and/or to third parties through our private guarantees.

The US Department of the Interior also recently increased its estimates for decommissioning liabilities in the Gulf of Mexico, causing the potential need for additional supplemental bonding and/or other financial assurances to be dramatically increased. When coupled with the volatile and currently low prices of oil and gas, it is difficult to predict the impact of the rule and regulatory changes already promulgated and as may be forthcoming by the US Department of the Interior relating to financial assurance for decommissioning liabilities. The US Department of the Interior's revisions to its supplemental bonding process could result in demands for the posting of increased financial assurances by owners and operators in the Gulf of Mexico, including Maritech, Orinoco and the other entities to whom Maritech divested its Gulf of Mexico assets, but such demands cannot be directly placed on us due to the fact that we are only a former parent company of Maritech and are only a guarantor as opposed to an actual lease owner or operator. This may force lease owners and operators of leases and other infrastructure in the Gulf of Mexico to obtain surety bonds or other forms of financial assurance, the costs of which could be significant. Moreover, recent and anticipated changes to the bonding and financial assurance program for the Gulf of Mexico are likely to result in the loss of supplemental bonding waivers for a large number of lease owners and operators of infrastructure in the Gulf of Mexico, which will in turn force these owners and operators to seek additional surety bonds which could exceed the surety bond market’s ability to provide such additional financial assurance. Lease owners and operators who have already leveraged their assets could face difficulty obtaining surety bonds because of concerns the surety may have about the priority of their liens on their collateral as well as the creditworthiness of such lease owners and operators. Consequently, anticipated changes to the bonding and financial assurance program could result in additional lease owners and operators in the Gulf of Mexico initiating bankruptcy proceedings, which in turn could result in the US Department of the Interior seeking to impose decommissioning costs on predecessors in interest and providers of third party indemnity agreements in the event that the current lease owners and/or operators cannot meet their decommissioning obligations. As a result, this could increase the risk that we may be required to step in and satisfy remaining decommissioning liabilities of Maritech and any buyer of the Maritech properties, including Orinoco, through our third party indemnity agreements and private guarantees, which obligations could be significant and could adversely affect our business, results of operations, financial condition and cash flows.

We are exposed to significant credit risks.

We face credit risk associated with the significant amounts of accounts receivable we have with our customers in the energy industry. Many of our customers, particularly those associated with our onshore operations, are small- to medium-sized oil and gas operators that may be more susceptible to declines in oil and gas commodity prices or generally increased operating expenses than larger companies. Our ability to collect from our customers is impacted by the current volatile oil and natural gas price environment.

As discussed in the preceding risk factors, we face the risk of having to satisfy decommissioning liabilities on properties presently or formerly owned by Maritech. Continued decreased oil and natural gas prices have resulted in reduced revenues and cash flows for oil and gas lease owners and operators, including companies that have purchased Maritech properties or are joint-owners in properties presently and formerly owned by Maritech and from whom Maritech is entitled to receive payments upon satisfaction of certain decommissioning obligations. Consequently, we face credit risk associated with the ability of these companies to satisfy their decommissioning liabilities. If these companies are unable to satisfy their obligations, it will increase the possibility that we will become liable for such decommissioning obligations in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) None.

(b) None.

Period
Total Number
of Shares Purchased

Average
Price
Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾

Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Publicly Announced Plans or Programs⁽¹⁾
July 1 – July 31, 2018 —
(2) $ —
—
$ 14,327,000
August 1 – August 31, 2018 12,906
(2) 4.60
—
14,327,000
September 1 – September 30, 2018 154
(2) 4.51
—
14,327,000
Total 13,060

—
$ 14,327,000



Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾	Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Publicly Announced Plans or Programs⁽¹⁾
July 1 – July 31, 2019	2,169	(2)	$	1.50	—	$	14,327,000
August 1 – August 31, 2019	29,126	(2)	1.51		—	14,327,000
September 1 – September 30, 2019	154	(2)	2.01		—	14,327,000
Total	31,449				—	$	14,327,000


(1)	In January 2004, our Board of Directors authorized the repurchase of up to $20 million of our common stock.Purchases will be made from time to time in open market transactions at prevailing market prices. The repurchase program may continue until the authorized limit is reached, at which time the Board of Directors may review the option of increasing the authorized limit.


(2)	Shares we received in connection with the exercise of certain employee stock options or the vesting of certain shares of employee restricted stock. These shares were not acquired pursuant to the stock repurchase program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4.Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibits:



~~4.1~~10.1	~~Credit~~Amended and Restated Change of Control Agreement ~~date September 10, 2018, among~~dated October 24, 2019 by and between TETRA Technologies, Inc. and ~~JPMorgan Chase Bank (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on September 13, 2018 (SEC File No. 001-13455).~~
~~4.2~~	Credit Agreement, date September 10, 2018, among TETRA Technologies, Inc. and Wilmington Trust, National Association (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on September 13, 2018 (SEC File No. 001-13455).
~~4.3~~	Intercreditor Agreement, date September 10, 2018 ,among TETRA Technologies, Inc., JPMorgan Chase Bank, and Wilmington Trust, National Association (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on September 13, 2018 (SEC File No. 001-13455).Brady M. Murphy.
31.1*	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101.INS+~~	~~XBRL Instance Document.~~
101.SCH+	XBRL Taxonomy Extension Schema Document.
101.CAL+	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB+	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE+	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF+	XBRL Taxonomy Extension Definition Linkbase Document.


*	Filed with this report.


**	Furnished with this report.

Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and nine month periods ended September 30, ~~2018~~2019 and ~~2017~~2018; (ii) Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 30, ~~2018~~2019 and ~~2017~~2018; (iii) Consolidated Balance Sheets as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018; (iv) Consolidated Statements of Cash Flows for the nine month periods ended September 30, ~~2018~~2019 and ~~2017~~2018; and (v) Notes to Consolidated Financial Statements for the nine months ended September 30, ~~2018~~2019.

A statement of computation of per share earnings is included in Note A of the Notes to Consolidated Financial Statements included in this report and is incorporated by reference into Part II of this report.

SIGNATURES

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.



		TETRA Technologies, Inc.

Date:	November ~~8, 2018~~7, 2019	By:	/s/~~Stuart~~Brady M. ~~Brightman~~Murphy
			~~Stuart~~Brady M. ~~Brightman~~Murphy
			President
			Chief Executive Officer

Date:	November ~~8, 2018~~7, 2019	By:	/s/Elijio V. Serrano
			Elijio V. Serrano
			Senior Vice President
			Chief Financial Officer ~~and Principal Accounting Officer~~

Date:	November 7, 2019	By:	/s/Richard D. O'Brien
			Richard D. O'Brien
			Vice President – Finance and Global Controller
			Principal Accounting Officer

6045



	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
	(In Thousands)
Beginning balance for the period, as reported	$	12,073		$	11,738
Activity in the period:
Accretion of liability	96			405
Revisions in estimated cash flows	(156		)	(130		)
Settlement of retirement obligations	(35		)	(35		)
Ending balance	$	12,014		$	12,014



Current assets	$	16,880
Property and equipment	11,631
Intangible assets	41,960
Goodwill	15,560
Total assets acquired	86,031

Current liabilities	7,189
Total liabilities assumed	7,189
Net assets acquired	$	78,842



	Three Months Ended September 30, 2018								Three Months Ended September 30, 2017
	Offshore Services			Maritech		Total			Offshore Services			Maritech			Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	—		$	—	$	—		$	32,667		$	21		$	32,688
Cost of revenues	125			—		125			28,190			386			28,576
Depreciation, amortization, and accretion	—			—		—			2,886			372			3,258
General and administrative expense	192			—		192			1,345			177			1,522
Other (income) expense, net	(1,113		)	—		(1,113		)	(206		)	—			(206		)
Pretax income (loss) from discontinued operations	796			—		796			452			(914		)	(462		)
Income tax expense						—									19
Total income (loss) from discontinued operations						$	796								$	(481	)



	Nine Months Ended September 30, 2018									Nine Months Ended September 30, 2017
	Offshore Services			Maritech			Total			Offshore Services			Maritech			Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	4,487		$	187		$	4,674		$	69,290		$	427		$	69,717
Cost of revenues	11,013			139			11,152			66,862			987			67,849
Depreciation, amortization, and accretion	1,873			212			2,085			7,932			1,115			9,047
General and administrative expense	1,729			187			1,916			4,408			588			4,996
Other (income) expense, net	(1,035		)	—			(1,035		)	2,417			(565		)	1,852
Pretax loss from discontinued operations	(9,093		)	(351		)	(9,444		)	(12,329		)	(1,698		)	(14,027		)
Pretax loss on disposal of discontinued operations							(33,813		)							—
Total pretax loss from discontinued operations							(43,257		)							(14,027		)
Income tax (benefit) expense							(2,326		)							114
Total loss from discontinued operations							$	(40,931	)							$	(14,141	)



Foreign currency derivative instruments	Balance Sheet Location	Fair Value at September 30, 2018			Fair Value at December 31, 2017
		(In Thousands)
Forward purchase contracts	Current assets	$	12		$	111
Forward sale contracts	Current assets	14			130
Forward sale contracts	Current liabilities	(45		)	(255		)
Forward purchase contracts	Current liabilities	(34		)	(113		)
Net asset (liability)		$	(53	)	$	(127	)