UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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 ~~JUNE~~June 30, ~~2019~~2020

~~[ ]~~☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to.

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 or Organization)	(I.R.S. Employer Identification No.)

24955 Interstate 45 North
The Woodlands,
Texas	77380
(Address of Principal Executive Offices)	(Zip Code)

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

(Registrant’s 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.



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 ofAugust ~~7, 2019,~~6, 2020, there were~~125,583,460~~125,838,030 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 Equity	5
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2425
Item 3. Quantitative and Qualitative Disclosures about Market Risk	4042
Item 4. Controls and Procedures	4042

PART II—OTHER INFORMATION
Item 1. Legal Proceedings	4042
Item 1A. Risk Factors	4042
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4143
Item 3. Defaults Upon Senior Securities	4144
Item 4. Mine Safety Disclosures	4144
Item 5. Other Information	4144
Item 6. Exhibits	4245
SIGNATURES	4346

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 June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues:
Product sales	$	135,350		$	107,687		$	227,131		$	183,066		$	98,173		$	135,350		$	183,206		$	227,131
Services	153,446			152,385			305,393			276,387			94,268			153,446			232,177			305,393
Total revenues	288,796			260,072			532,524			459,453			192,441			288,796			415,383			532,524
Cost of revenues:
Cost of product sales	108,253			86,115			182,841			146,329			75,004			108,253			133,971			182,841
Cost of services	98,049			97,177			200,205			181,920			58,888			98,049			148,615			200,205
Depreciation, amortization, and accretion	31,817			28,979			62,445			55,420			29,842			31,817			59,302			62,445
Impairments and other charges	2,311			—			2,457			—			8,977			2,311			14,348			2,457
Insurance recoveries													(591		)	—			(591		)	—
Total cost of revenues	240,430			212,271			447,948			383,669			172,120			240,430			355,645			447,948
Gross profit	48,366			47,801			84,576			75,784			20,321			48,366			59,738			84,576
General and administrative expense	36,295			33,617			70,572			64,420			34,014			36,295			64,551			70,572
Interest expense, net	18,529			18,379			36,908			33,352			17,586			18,529			35,442			36,908
Warrants fair value adjustment (income) expense	(1,520		)	2,195			(1,113		)	201			11			(1,520		)	(327		)	(1,113		)
CCLP Series A Preferred Units fair value adjustment (income) expense	146			(512		)	1,309			846			—			146			—			1,309
Other (income) expense, net	627			3,808			(324		)	6,584			3,839			627			4,278			(324		)
Loss before taxes and discontinued operations	(5,711		)	(9,686		)	(22,776		)	(29,619		)	(35,129		)	(5,711		)	(44,206		)	(22,776		)
Provision for income taxes	2,490			2,446			4,099			3,570			2,001			2,490			3,155			4,099
Loss before discontinued operations	(8,201		)	(12,132		)	(26,875		)	(33,189		)	(37,130		)	(8,201		)	(47,361		)	(26,875		)
Discontinued operations:
Loss from discontinued operations (including 2018 loss on disposal of $31.5 million), net of taxes	(345		)	(21		)	(771		)	(41,727		)
Income (loss) from discontinued operations, net of taxes													163			(345		)	18			(771		)
Net loss	(8,546		)	(12,153		)	(27,646		)	(74,916		)	(36,967		)	(8,546		)	(47,343		)	(27,646		)
Less: loss attributable to noncontrolling interest	1,633			6,188			9,895			15,303			15,712			1,633			24,537			9,895
Net loss attributable to TETRA stockholders	$	(6,913	)	$	(5,965	)	$	(17,751	)	$	(59,613	)	$	(21,255	)	$	(6,913	)	$	(22,806	)	$	(17,751	)
Basic net loss per common share:
Loss before discontinued operations attributable to TETRA stockholders	$	(0.06	)	$	(0.05	)	$	(0.13	)	$	(0.14	)	$	(0.17	)	$	(0.06	)	$	(0.18	)	$	(0.13	)
Loss from discontinued operations attributable to TETRA stockholders	$	0.00		$	0.00		$	(0.01	)	$	(0.33	)
Income (loss) from discontinued operations attributable to TETRA stockholders													$	0.00		$	0.00		$	0.00		$	(0.01	)
Net loss attributable to TETRA stockholders	$	(0.06	)	$	(0.05	)	$	(0.14	)	$	(0.47	)	$	(0.17	)	$	(0.06	)	$	(0.18	)	$	(0.14	)
Average shares outstanding	125,612			122,474			125,646			125,553			125,886			125,612			125,736			125,646
Diluted net loss per common share:
Loss before discontinued operations attributable to TETRA stockholders	$	(0.06	)	$	(0.05	)	$	(0.13	)	$	(0.14	)	$	(0.17	)	$	(0.06	)	$	(0.18	)	$	(0.13	)
Loss from discontinued operations attributable to TETRA stockholders	$	0.00		$	0.00		$	(0.01	)	$	(0.33	)
Income (loss) from discontinued operations attributable to TETRA stockholders													$	0.00		$	0.00		$	0.00		$	(0.01	)
Net loss attributable to TETRA stockholders	$	(0.06	)	$	(0.05	)	$	(0.14	)	$	(0.47	)	$	(0.17	)	$	(0.06	)	$	(0.18	)	$	(0.14	)
Average diluted shares outstanding	125,612			122,474			125,646			125,553			125,886			125,612			125,736			125,646

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Net loss	$	(8,546	)	$	(12,153	)	$	(27,646	)	$	(74,916	)	$	(36,967	)	$	(8,546	)	$	(47,343	)	$	(27,646	)
Foreign currency translation adjustment, net of taxes of $0 in 2019 and 2018	848			(9,249		)	442			(7,966		)
Foreign currency translation adjustment, net of taxes of $0 in 2020 and 2019													1,095			848			(5,372		)	442
Comprehensive loss	(7,698		)	(21,402		)	(27,204		)	(82,882		)	(35,872		)	(7,698		)	(52,715		)	(27,204		)
Less: Comprehensive loss attributable to noncontrolling interest	1,550			7,942			9,636			17,442			15,597			1,550			24,651			9,636
Comprehensive loss attributable to TETRA stockholders	$	(6,148	)	$	(13,460	)	$	(17,568	)	$	(65,440	)	$	(20,275	)	$	(6,148	)	$	(28,064	)	$	(17,568	)

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands)


	June 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	25,979		$	40,038		$	56,722		$	17,704
Restricted cash	66			64			58			64
Trade accounts receivable, net of allowances of $2,261 in 2019 and $2,583 in 2018	195,424			187,592
Trade accounts receivable, net of allowances of $10,223 in 2020 and $5,262 in 2019							114,306			175,918
Inventories	138,424			143,571			115,506			136,510
Assets of discontinued operations	—			1,354
Notes receivable	7,627			7,544
Prepaid expenses and other current assets	25,326			20,528			22,395			21,158
Total current assets	392,846			400,691			308,987			351,354
Property, plant, and equipment:
Land and building	75,423			78,746			57,766			60,586
Machinery and equipment	1,294,944			1,265,732			1,356,238			1,335,157
Automobiles and trucks	35,381			35,568			27,350			31,681
Chemical plants	190,325			188,641			58,990			57,692
Construction in progress	50,016			44,419			9,869			34,393
Total property, plant, and equipment	1,646,089			1,613,106			1,510,213			1,519,509
Less accumulated depreciation	(785,654		)	(759,175		)	(796,629		)	(760,872		)
Net property, plant, and equipment	860,435			853,931			713,584			758,637
Other assets:
Goodwill	25,784			25,859
Patents, trademarks and other intangible assets, net of accumulated amortization of $84,387 in 2019 and $80,401 in 2018	78,272			82,184
Patents, trademarks and other intangible assets, net of accumulated amortization of $91,458 in 2020 and $88,422 in 2019							70,175			74,199
Deferred tax assets, net	20			13			41			24
Operating lease right-of-use assets	57,924			—			75,524			68,131
Other assets	23,905			22,849			20,283			19,577
Total other assets	185,905			130,905			166,023			161,931
Total assets	$	1,439,186		$	1,385,527		$	1,188,594		$	1,271,922

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Amounts)


	June 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable	$	85,757		$	80,279		$	52,423		$	88,917
Unearned income	32,200			26,695			13,127			9,831
Accrued liabilities and other	86,995			89,232			79,904			87,877
Liabilities of discontinued operations	2,510			4,145			1,873			2,098
Total current liabilities	207,462			200,351			147,327			188,723
Long-term debt, net	856,482			815,560			843,292			842,871
Deferred income taxes	3,809			3,242			3,245			2,988
Asset retirement obligations	12,468			12,202			12,862			12,762
CCLP Series A Preferred Units	7,894			27,019
Warrants liability	960			2,073			123			449
Operating lease liabilities	47,398			—			60,693			53,919
Other liabilities	8,022			12,331			8,366			7,384
Total long-term liabilities	937,033			872,427			928,581			920,373
Commitments and contingencies
Equity:
TETRA stockholders' equity:
Common stock, par value $0.01 per share; 250,000,000 shares authorized at June 30, 2019 and December 31, 2018; 128,381,046 shares issued at June 30, 2019 and 128,455,134 shares issued at December 31, 2018	1,284			1,285
Common stock, par value $0.01 per share; 250,000,000 shares authorized at June 30, 2020 and December 31, 2019; 128,773,914 shares issued at June 30, 2020 and 128,304,354 shares issued at December 31, 2019							1,288			1,283
Additional paid-in capital	464,305			460,680			469,777			466,959
Treasury stock, at cost; 2,791,742 shares held at June 30, 2019, and 2,717,569 shares held at December 31, 2018	(19,116		)	(18,950		)
Treasury stock, at cost; 2,908,217 shares held at June 30, 2020, and 2,823,191 shares held at December 31, 2019							(19,434		)	(19,164		)
Accumulated other comprehensive income (loss)	(51,480		)	(51,663		)	(57,441		)	(52,183		)
Retained deficit	(232,860		)	(217,952		)	(385,328		)	(362,522		)
Total TETRA stockholders' equity	162,133			173,400			8,862			34,373
Noncontrolling interests	132,558			139,349			103,824			128,453
Total equity	294,691			312,749			112,686			162,826
Total liabilities and equity	$	1,439,186		$	1,385,527		$	1,188,594		$	1,271,922

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, 2019	$	1,283	$	466,959		$	(19,164	)	$	(52,183	)	$	(362,522	)	$	128,453		$	162,826
Net loss for first quarter 2020	—		—			—			—			(1,551		)	(8,825		)	(10,376		)
Translation adjustment, net of taxes of $0	—		—			—			(6,238		)	—			(229		)	(6,467		)
Comprehensive loss	—		—			—			—			—			—			(16,843		)
Distributions to public unitholders	—		—			—			—			—			(309		)	(309		)
Equity award activity	4		—			—			—			—			—			4
Treasury stock activity, net	—		—			(89		)	—			—			—			(89		)
Equity compensation expense	—		1,145			—			—			—			228			1,373
Other	—		(16		)	—			—			—			(15		)	(31		)
Balance at March 31, 2020	$	1,287	$	468,088		$	(19,253	)	$	(58,421	)	$	(364,073	)	$	119,303		$	146,931
Net loss for second quarter 2020	—		—			—			—			(21,255		)	(15,712		)	(36,967		)
Translation adjustment, net of taxes of $0	—		—			—			980			—			115			1,095
Comprehensive loss	—		—			—			—			—			—			(35,872		)
Distributions to public unitholders	—		—			—			—			—			(311		)	(311		)
Equity award activity	1		—			—			—			—			—			1
Treasury stock activity, net	—		—			(181		)	—			—			—			(181		)
Equity compensation expense	—		1,685			—			—			—			449			2,134
Other	—		4			—			—			—			(20		)	(16		)
Balance at June 30, 2020	$	1,288	$	469,777		$	(19,434	)	$	(57,441	)	$	(385,328	)	$	103,824		$	112,686



	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

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

Currency
Translation

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

~~See Notes to~~ ~~Consolidated~~ ~~Financial Statements~~

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


	Six Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2020			2019
Operating activities:
Net loss	$	(27,646	)	$	(74,916	)	$	(47,343	)	$	(27,646	)
Reconciliation of net loss to cash provided by (used in) operating activities:
Reconciliation of net loss to net cash provided by operating activities:
Depreciation, amortization, and accretion	62,445			57,505			59,302			62,445
Impairment and other charges	2,457			—			14,348			2,457
Benefit for deferred income taxes	550			(280		)	467			550
Equity-based compensation expense	4,932			3,422			2,896			4,932
Provision for doubtful accounts	922			665			5,504			922
Non-cash loss on disposition of business	—			32,369
Amortization of deferred financing costs	1,900			2,133
CCLP Series A Preferred redemption premium	941			—
CCLP Series A Preferred accrued paid in kind distributions	928			2,838
CCLP Series A Preferred fair value adjustment	1,309			846
Amortization and expense of financing costs							2,755			2,644
Insurance recoveries associated with damaged equipment							(591		)	—
Equipment received in lieu of cash							725			—
Debt exchange expenses							4,754			—
CCLP Series A Preferred Unit distributions and adjustments							—			3,178
Warrants fair value adjustment	(1,113		)	201			(326		)	(1,113		)
Contingent consideration liability fair value adjustment	(800		)	4,300			—			(800		)
Expense for unamortized finance costs and other non-cash charges and credits	669			3,616
Acquisition and transaction financing fees	75			—
Gain on sale of assets	(872		)	(65		)	(2,019		)	(872		)
Changes in operating assets and liabilities:
Accounts receivable	(7,075		)	(46		)	54,827			(7,075		)
Inventories	(92		)	(18,398		)	10,733			(92		)
Prepaid expenses and other current assets	(4,327		)	(2,434		)	(3,038		)	(4,327		)
Trade accounts payable and accrued expenses	4,766			(23,246		)	(42,853		)	4,766
Other	(1,592		)	(637		)	246			(1,592		)
Net cash provided by (used in) operating activities	38,377			(12,127		)
Net cash provided by operating activities							60,387			38,377
Investing activities:
Purchases of property, plant, and equipment, net	(60,604		)	(67,441		)	(19,608		)	(60,604		)
Acquisition of businesses, net of cash acquired	(11,417		)	(42,002		)	—			(11,417		)
Proceeds from disposal of business	—			3,121
Proceeds on sale of property, plant, and equipment	1,214			307			5,311			1,214
Insurance recoveries associated with damaged equipment							591			—
Other investing activities	(447		)	(332		)	(357		)	(447		)
Net cash used in investing activities	(71,254		)	(106,347		)	(14,063		)	(71,254		)
Financing activities:
Proceeds from long-term debt	194,090			508,250			338,343			194,090
Principal payments on long-term debt	(154,217		)	(325,300		)	(341,364		)	(154,217		)
CCLP distributions	(615		)	(8,982		)	(620		)	(615		)
Redemptions of CCLP Series A Preferred	(19,760		)	—			—			(19,760		)
Tax remittances on equity based compensation	(458		)	(593		)	(341		)	(458		)
Debt issuance costs and other financing activities	(325		)	(7,881		)	(2,504		)	(325		)
Net cash provided by financing activities	18,715			165,494
Net cash provided by (used in) financing activities							(6,486		)	18,715
Effect of exchange rate changes on cash	105			1,021			(826		)	105
Increase (decrease) in cash and cash equivalents	(14,057		)	48,041			39,012			(14,057		)
Cash and cash equivalents and restricted cash at beginning of period	40,102			26,389			17,768			40,102
Cash and cash equivalents and restricted cash at end of period	$	26,045		$	74,430		$	56,780		$	26,045


Supplemental cash flow information:
Interest paid	$	33,449		$	18,610		$	35,127		$	33,449
Income taxes paid	4,501			3,314			2,195			4,501

See Notes to Consolidated Financial Statements

TETRA Technologies, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A1 – 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. We are 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 June 30, ~~2019~~2020 are not necessarily indicative of results that may be expected for the twelve months ended December 31, ~~2019.~~2020.

We consolidate the financial statements of our CSI Compressco LP ~~and its subsidiaries~~subsidiary ("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, ~~2018~~2019 and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March ~~4, 2019.~~16, 2020.

Significant Accounting Policies

~~We have added~~Our significant accounting policies are described in the notes to our consolidated financial statements for the ~~recording of leases in conjunction with the adoption of the new lease standard discussed~~year ended December 31, 2019 included in our ~~"Leases" and "New Accounting Pronouncements" sections below. Other than the additional lease policies described herein, there~~Annual Report on Form 10-K. There have been no significant changes in our accounting policies or the application thereof during the second quarter of ~~these policies.~~2020.

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

Certain previously reported financial information has been reclassified to conform to the current year's presentation. The impact of such reclassifications was not significant to the prior year's overall presentation.

Assets Held for Sale

As of June 30, 2020, we had $2.6 million in net book value of compressor equipment classified as held for sale within net property, plant, and equipment on our consolidated balance sheets. For further details of the impairment recorded to adjust the net book value to fair value upon this classification, see Note 3 - Impairments and Other Charges below.

Impairments and Other Charges

~~During the three month period ending June 30, 2019, our Compression Division recorded impairments~~Impairments of $2.3 million on certain units of its low-horsepower compression fleet, reflecting the decision to 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.

~~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 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 June 30, 2019. Long-term finance leases are not material. We determine whether a contract is or contains a lease at inception of the contract. Where we are a lessee in a contract that includes an option to extend or terminate the lease, we include the extension period or exclude the period covered by the termination option in our lease term, if it is reasonably certain that we would exercise the option.

As an accounting policy election, we do not include short-term leases on our balance sheet. Short-term leases include leases with a term of 12 months or less, inclusive of renewal options we are reasonably certain to exercise. The lease payments for short-term leases are included as operating lease costs on a straight-line basis over the lease term in cost of 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 the determination of a lease liability in the 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 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 combined component based on the predominant component, we determined the services nonlease component is predominant, resulting in the ongoing recognition of our compression services contracts following ASC 606.

Our operating and finance leases are recognized at the present value of lease payments over the lease term. When the implicit discount rate is not readily determinable, we 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~~including identified intangible assets, are ~~held and used, we test for~~determined periodically when indicators of impairment ~~of our right-of-use assets when impairment~~are present. If such indicators are ~~present.~~

~~Foreign Currency Translation~~

~~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 $(0.8) millionand $0.5 millionduring the three and six months ended June 30, 2019, respectively, and $(0.6) million and $0.3 million during the three and six months ended June 30, 2018, respectively.~~

~~New Accounting Pronouncements~~

~~Standards adopted in 2019~~

In February 2016, the FASB issued Accounting Standards Update ("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, 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 standard had a material impact on our consolidated balance sheet, specifically, the reporting of our operating leases. The impact in the reporting of our finance leases was insignificant.

We chose to transition 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 the earliest period presented. Comparative information 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 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 August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. We are currently assessing the potential effects of these changes to our consolidated financial statements.

~~NOTE B – INVENTORIES~~

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

June 30, 2019 December 31, 2018
(In Thousands)
Finished goods $ 63,579
$ 69,762
Raw materials 3,428
3,503
Parts and supplies 44,120
47,386
Work in progress 27,297
22,920
Total inventories $ 138,424
$ 143,571

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
June 30, Six Months Ended
June 30,
2019 2018 2019 2018
(In Thousands)
Number of weighted average common shares outstanding 125,612
122,474
125,646
125,553
Assumed exercise of equity awards and warrants —
—
—
—
Average diluted shares outstanding 125,612
122,474
125,646
125,553

~~For the~~three and six month periods ended June 30, 2019 and June 30, 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 six month periods ended June 30, 2019 and June 30, 2018, the calculation of diluted earnings per common share excludes the impact of the CCLP Preferred Units (as defined in Note F), as the inclusion of the impact from conversion of the CCLP Preferred Units into CCLP common units would have been anti-dilutive.

~~NOTE D – DISCONTINUED OPERATIONS~~

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. 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
June 30, 2019 Three Months Ended
June 30, 2018
Offshore Services Maritech Total Offshore Services Maritech Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue $ —
$ —
$ —
$ 10
$ —
$ 10
Cost of revenues —
—
—
(235 ) (98 ) (333 )
Depreciation, amortization, and accretion —
—
—
—
—
—
General and administrative expense 345
—
345
284
—
284
Other (income) expense, net —
—
—
55
—
55
Pretax income (loss) from discontinued operations (345 ) —
(345 ) (94 ) 98
4
Pretax loss on disposal of discontinued operations —
(25 )
Total pretax income (loss) from discontinued operations (345 ) (21 )
Income tax expense —
—
Total income (loss) from discontinued operations $ (345 ) $ (21 )

Six Months Ended June 30, 2019 Six Months Ended June 30, 2018
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 22
—
22
10,888
139
11,027
Depreciation, amortization, and accretion —
—
—
1,873
212
2,085
General and administrative expense 749
—
749
1,537
187
1,724
Other (income) expense, net —
—
—
78
—
78
Pretax loss from discontinued operations (771 ) —
(771 ) (9,889 ) (351 ) (10,240 )
Pretax loss on disposal of discontinued operations —

(33,813 )
Total pretax loss from discontinued operations (771 ) (44,053 )
Income tax benefit —
(2,326 )
Total loss from discontinued operations $ (771 ) $ (41,727 )

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

~~(in thousands)~~

June 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 $ —
$ —
$ —
$ —
$ 1,340
$ 1,340
Other current assets —
—
—
14
—
14
Assets of discontinued operations $ —
$ —
$ —
$ 14
$ 1,340
$ 1,354

Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables $ 817
$ —
$ 817
$ 740
$ —
$ 740
Accrued liabilities 960
733
1,693
1,330
2,075
3,405
Liabilities of discontinued operations $ 1,777
$ 733
$ 2,510
$ 2,070
$ 2,075
$ 4,145

~~NOTE E – 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 June 30, 2019 and December 31, 2018, consists of the following:~~

June 30, 2019 December 31, 2018
(In Thousands)
TETRA Scheduled Maturity
Asset-based credit agreement (presented net of unamortized deferred financing costs of $1.5 million as of June 30, 2019) September 2023 $ 18,507
$ —
Term credit agreement (presented net of the unamortized discount of $6.8 million as of June 30, 2019 and $7.2 million as of December 31, 2018 and net of unamortized deferred financing costs of $10.1 million as of June 30, 2019 and $10.2 million as of December 31, 2018) September 2025 203,602
182,547
TETRA total debt 222,109
182,547
Less current portion —
—
TETRA total long-term debt $ 222,109
$ 182,547

CCLP
CCLP asset-based credit agreement June 2023 —
—
CCLP 7.25% Senior Notes (presented net of the unamortized discount of $2 million as of June 30, 2019 and $2.2 million as of December 31, 2018 and net of unamortized deferred financing costs of $3.4 million as of June 30, 2019 and $3.9 million as of December 31, 2018) August 2022 290,615
289,797
CCLP 7.50% Senior Secured Notes (presented net of unamortized deferred financing costs of $6.2 million as of June 30, 2019 and $6.8 million as of December 31, 2018) April 2025 343,758
343,216
CCLP total debt 634,373
633,013
Less current portion —
—
CCLP total long-term debt $ 634,373
$ 633,013
Consolidated total long-term debt $ 856,482
$ 815,560

~~As of June 30, 2019, TETRA had a $20.0 million outstanding balance and$8.9 million in letters of credit~~against its asset-based credit agreement ("ABL Credit Agreement"). As of June 30, 2019, subject to compliance with the covenants, borrowing base, and other provisions of the agreement that may limit borrowings, TETRA had an availability of $40.6 million under this agreement. There was no balance outstanding under the CCLP asset-based credit agreement ("CCLP Credit Agreement") as of June 30, 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 inpresent, the determination of the ~~borrowing base. As~~amount of June 30, 2019, and subject to compliance with the covenants, borrowing base, and other provisions of the agreements that may limit borrowings under the CCLP Credit Agreement, CCLP had availability of $22.2 million.

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 June 30, 2019.

~~NOTE F – CCLP SERIES A CONVERTIBLE PREFERRED UNITS~~

During 2016, CCLP issued 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”). We purchased 874,891 of the CCLP Preferred Units at the aggregate Issue Price of $10.0 million.

Unless otherwise redeemed for cash, 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 and will end in August 2019 (each, a “Conversion Date”). Based on the number of CCLP Preferred Units outstanding as of June 30, 2019, 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 approximately 4.3 million CCLP common units; however, CCLP may, at its option, pay cash, or a combination of cash and common units, to the holders of the CCLP Preferred Units instead of issuing common units on any Conversion Date, subject to certain restrictions as described in the Second Amended and Restated CCLP Partnership Agreement and the CCLP Credit Agreement. Beginning with the January 2019 Conversion Date, CCLP has elected to redeem the remaining CCLP Preferred Units for cash, resulting in 1,870,681 CCLP Preferred Units being redeemed during the six months ended June 30, 2019 for $19.8 million, which includes approximately $0.9 million of redemption premium that was paid and charged to other (income) expense, net in the accompanying consolidated statements of operations. The total number of CCLP Preferred Units outstanding as of June 30, 2019 was 751,736, of which we held 94,409. The final redemption of the remaining outstanding CCLP Preferred Units, along with a final cash payment made in lieu of paid in kind units for the quarter ended June 30, 2019, occurred on August 8, 2019, for an aggregate cash payment of $5.0 million of which $0.6 million was paid to us.

Based on the conversion provisions of the CCLP Preferred Units, calculated as of June 30, 2019, using the trading prices of the common units over the prior month, along with other factors, and as otherwise impacted by the existence of certain conditions related to the CCLP common units (the "Conversion Price"), the theoretical number of CCLP common units that would be issued if all of the outstanding CCLP Preferred Units were converted on June 30, 2019 on the same basis as the monthly conversions would be approximately 2.7 million CCLP common units, with an aggregate market value of $9.7 million. If converted to CCLP common units, a $1 decrease in the Conversion Price would result in the issuance of 1.3 million additional CCLP common units pursuant to these conversion provisions.

~~NOTE G – FAIR VALUE MEASUREMENTS~~

~~Financial Instruments~~

~~CCLP Preferred Units~~

The CCLP Preferred Units 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.

~~Warrants~~

~~The Warrants are valued using a Black Scholes option valuation model that includes implied volatility of the trading price (a Level 3 fair value measurement).~~

~~Contingent Consideration~~

~~The fair value of the remaining contingent consideration associated with the February 2018 acquisition of SwiftWater Energy Services, LLC ("SwiftWater")~~impairment is based on ~~a probability simulation utilizing forecasted revenues and EBITDA~~our judgment as to the future undiscounted operating cash flows to be generated from the relevant assets throughout theirremainingestimated useful lives. If these undiscounted cash flows are less than the carrying amount of the ~~water management business~~related assets, an impairment is recognized for the excess of ~~SwiftWater and all~~the carrying value over fair value. Fair value of ~~our pre-existing operations in~~intangible assets is generally determined using the ~~Permian Basin (a Level 3 fair~~discounted present value ~~measurement). At June 30, 2019, based on a forecast~~ of ~~SwiftWater 2019 revenues and EBITDA,~~future cash flows using discount rates commensurate with the risks inherent with the specific assets. Assets held for disposal are recorded at the lower of carrying value or estimated fair value less estimated selling costs. See Note 3 - "Impairments and Other Charges" for the liability associated with the remaining contingent purchase price consideration was $0.2 million, resulting in $0.4 million and $0.8 million being credited to other (income) expense, net, during the three and six months ended June 30, 2019, respectively. During the three months ended June 30, 2019, the sellers received a paymentadditional discussion 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, the sellers were paid contingent consideration of $1.4 million during the three month period ended June 30, 2019, based on JRGO's performance during the fourth quarter of 2018.recorded impairments.

~~Derivative Contracts~~

Derivative Contracts US Dollar Notional Amount Traded Exchange Rate Settlement Date

(In Thousands)

Forward purchase Euro $ 7,333
1.13 9/19/2019
Forward purchase Euro 2,025
1.15 9/19/2019
Forward purchase pounds sterling 4,285
1.26 7/19/2019
Forward purchase Mexican peso 780
19.23 7/19/2019
Forward purchase Norwegian krone 552
8.69 7/19/2019
Forward sale Mexican peso 7,858
19.09 7/19/2019

Derivative Contracts British Pound Notional Amount Traded Exchange Rate Settlement Date
(In Thousands)
Forward purchase Euro 1,780
0.89 7/19/2019

Derivative Contracts Swedish Krona Notional Amount Traded Exchange Rate Settlement Date
(In Thousands)
Forward purchase Euro 22,270
10.60 7/19/2019

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 during a period will be included in the determination of earnings for that period.

The fair values of foreign currency derivative instruments are based on quoted market values (a Level 2 fair value measurement). The fair values of our and CCLP's foreign currency derivative instruments as of June 30, 2019 and December 31, 2018, are as follows:

Foreign currency derivative instruments Balance Sheet Location Fair Value at June 30, 2019 Fair Value at December 31, 2018

(In Thousands)
Forward purchase contracts Current assets $ 147
$ 41
Forward sale contracts Current assets 64
76
Forward sale contracts Current liabilities —
(126 )
Forward purchase contracts Current liabilities (23 ) (168 )
Net asset (liability) $ 188
$ (177 )

None of 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 six month periods ended June 30, 2019, we recognized $0.2 million and $0.7 millionof net (gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program. During the three and six months ended June 30, 2018, we recognized~~$(0.7) million and $(0.8) million of net (gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program.~~

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

Fair Value Measurements Using
Total as of Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Significant Unobservable Inputs
Description June 30, 2019 (Level 1) (Level 2) (Level 3)
(In Thousands)
CCLP Series A Preferred Units $ (7,894 ) $ —
$ —
$ (7,894 )
Warrants liability (960 ) —
—
(960 )
Asset for foreign currency derivative contracts 211
—
211
—
Liability for foreign currency derivative contracts (23 ) —
(23 ) —
Acquisition contingent consideration liability (200 ) —
—
(200 )
Net liability $ (8,866 )

Fair Value Measurements Using
Total as of Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Significant Unobservable Inputs
Description December 31, 2018 (Level 1) (Level 2) (Level 3)
(In Thousands)
CCLP Series A Preferred Units $ (27,019 ) $ —
$ —
$ (27,019 )
Warrants liability (2,073 ) —
—
(2,073 )
Asset for foreign currency derivative contracts 117
—
117
—
Liability for foreign currency derivative contracts (294 ) —
(294 ) —
Acquisition contingent consideration liability (12,452 ) —
—
(12,452 )
Net liability $ (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 Credit Agreement approximate their carrying amounts. The fair values of the publicly traded CCLP 7.25% Senior Notes at June 30, 2019 and December 31, 2018, were approximately $267.1 million and $266.3 million, respectively. Those fair values compare to the face amount of $295.9 million both at June 30, 2019 and December 31, 2018. The fair values of the CCLP 7.50% Senior Secured Notes at June 30, 2019 and December 31, 2018 were approximately $344.8 million and $332.5 million, respectively. These fair values compare to aggregate principal amount of such notes at both June 30, 2019 and December 31, 2018, of $350.0 million. We based the fair values of the CCLP 7.25% Senior Notes and the CCLP 7.50% Senior Secured Notes as of June 30, 2019 on recent trades for these notes.

~~NOTE H – COMMITMENTS AND CONTINGENCIES~~Revenue Recognition

~~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 and Orinoco assumed all of Maritech's abandonment and decommissioning obligations. To the extent that Maritech or Orinoco fails to perform the abandonment and decommissioning work required, we, as the former parent company of Maritech, may be required to perform the abandonment and decommissioning work. 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 and agreed to replace, within 90 days following the closing, the initial bonds delivered at closing with other non-revocable performance bonds, meeting certain requirements, in the aggregate sum of $47.0 million. Orinoco further agreed to replace, within 180 days following the closing, such replacement performance bonds with a maximum of three performance bonds in the aggregate sum of $47.0 million, meeting certain requirements. In the event Orinoco does not provide either tranche of replacement 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. Each party filed a motion for summary judgment in the lawsuit asserting its respective claims. 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 plan to seek reconsideration of the decision by the court and/or file an appeal of the summary judgment. The non-revocable performance bonds delivered at the closing remain in effect.

~~NOTE I – INDUSTRY SEGMENTS~~

~~We manage our operations through~~ ~~three~~ ~~Divisions: Completion Fluids & Products, Water & Flowback Services, and Compression.~~

~~Summarized financial information concerning the business segments is as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2019 2018 2019 2018
(In Thousands)
Revenues from external customers

Product sales

Completion Fluids & Products Division $ 72,806
$ 72,287
$ 130,134
$ 123,344
Water & Flowback Services Division 367
—
731
676
Compression Division 62,177
35,400
96,266
59,046
Consolidated $ 135,350
$ 107,687
$ 227,131
$ 183,066

Services

Completion Fluids & Products Division $ 6,961
$ 4,268
$ 11,214
$ 6,317
Water & Flowback Services Division 72,757
83,593
151,071
143,770
Compression Division 73,728
64,524
143,108
126,300
Consolidated $ 153,446
$ 152,385
$ 305,393
$ 276,387

Interdivision revenues

Completion Fluids & Products Division $ —
$ 1
$ —
$ (1 )
Water & Flowback Services Division —
53
—
275
Compression Division —
—
—
—
Interdivision eliminations —
(54 ) —
(274 )
Consolidated $ —
$ —
$ —
$ —

Total revenues

Completion Fluids & Products Division $ 79,767
$ 76,556
$ 141,348
$ 129,660
Water & Flowback Services Division 73,124
83,646
151,802
144,721
Compression Division 135,905
99,924
239,374
185,346
Interdivision eliminations —
(54 ) —
(274 )
Consolidated $ 288,796
$ 260,072
$ 532,524
$ 459,453

Income (loss) before taxes

Completion Fluids & Products Division $ 14,614
$ 9,981
$ 20,800
$ 12,430
Water & Flowback Services Division 2,460
8,311
4,691
14,859
Compression Division (3,483 ) (8,655 ) (11,284 ) (22,673 )
Interdivision eliminations 1
4
7
4
Corporate Overhead⁽¹⁾
(19,303 ) (19,327 ) (36,990 ) (34,239 )
Consolidated $ (5,711 ) $ (9,686 ) $ (22,776 ) $ (29,619 )


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

Three Months Ended
June 30, Six Months Ended
June 30,
2019 2018 2019 2018
(In Thousands)
General and administrative expense $ 14,350
$ 11,871
$ 26,439
$ 24,469
Depreciation and amortization 172
164
340
315
Interest expense 5,696
4,877
11,038
8,884
Warrants fair value adjustment (income) expense (1,520 ) 2,195
(1,113 ) 201
Other general corporate (income) expense, net 605
220
286
370
Total $ 19,303
$ 19,327
$ 36,990
$ 34,239

~~NOTE J – REVENUE FROM CONTRACTS WITH CUSTOMERS~~

Performance Obligations.Revenue is generally recognized when we transfer 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. 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 financing component for our customer contracts.

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.

Product Sales. Product sales revenues are generally recognized when we ship products from our facility to our customer. The product sales for our Completion ~~Fluid~~Fluids & Products Division consist primarily of 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 such products or services is 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 June 30, 2019, we had $45.3 million of remaining performance obligations related to our compression service contracts. As a practical expedient, this amount does not reflect revenue for compression service contracts whose original expected duration is less than 12 months and does not consider the effects of the time value of money. T~~he remaining performance obligations are expected to be recognized through 2022 as follows (in thousands):~~

2019 2020 2021 2022 2023 Total
(In Thousands)
Compression service contracts remaining performance obligations $ 19,830
$ 19,279
$ 6,108
$ 101
$ —
$ 45,318

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. In recognizing revenue for 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,~~CBFs, 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 June 30, 2019, the amount of remaining credits expected to be issued for the repurchase of reclaimable used fluids was $4.2 million~~ ~~that were recorded in inventory (right of return asset) and accounts payable. T~~here were no material differences between amounts recognized during the three and six month periods ended June 30, 2019, compared to estimates made in a prior period from these variable consideration arrangements.

Contract Assets and Liabilities. We consider contract assets to be trade accounts receivable when 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 able to invoice the customer. ~~Our contract asset balances, primarily associated with these documentation requirements, were $35.4 million and $44.2 million as of~~ ~~June 30, 2019 and~~ ~~December 31, 2018, respectively.~~ Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.

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.

Bill-and-Hold Arrangements. We design and fabricate compressor packages based on our customer’s specifications. In some cases, the customer will request us to hold the equipment, upon completion of the unit, until the job site is ready to receive the equipment. When this occurs, we along with the customer sign a bill-and-hold agreement, which outlines that the customer has title to the equipment, the equipment is ready for delivery, we cannot use the equipment or direct it to another customer, and we have a present right to payment. When those criteria have been met and the agreement is executed, we recognize the revenue on the equipment because control of the equipment has passed to our customer and our performance obligations are complete. Entering into these arrangements is something we have done as a courtesy for certain customers for many years. The equipment subject to the bill-and-hold agreements has generally been invoiced and paid for through progressive billings such that at the time the bill-and-hold agreement is executed, the majority of the contractual cash obligation of the customer has been received by us.

Operating Costs

Cost of product sales includes direct and indirect costs of manufacturing and producing our products, including raw materials, fuel, utilities, labor, overhead, repairs and maintenance, materials, services, transportation, warehousing, equipment rentals, insurance, and certain taxes. Cost of services includes operating expenses we incur in delivering our services, including labor, equipment rental, fuel, repair and maintenance, transportation, overhead, insurance, and certain taxes. We include in product sales revenues the reimbursements we receive from customers for shipping and handling costs. Shipping and handling costs are included in cost of product sales. Amounts we incur for “out-of-pocket” expenses in the delivery of our services are recorded as cost of services. Reimbursements for “out-of-pocket” expenses we incur in the delivery of our services are recorded as service revenues. Depreciation, amortization, and accretion includes depreciation expense for all of our facilities, equipment and vehicles, amortization expense on our intangible assets, and accretion expense related to our decommissioning and other asset retirement obligations.

We include in general and administrative expense all costs not identifiable to our specific product or service operations, including divisional and general corporate overhead, professional services, corporate office costs, sales and marketing expenses, insurance, and certain taxes.

Foreign Currency Translation

We have designated the euro, the British pound, the Norwegian krone, the Canadian dollar, theBrazilian real, and theMexican 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 million and $2.3 millionduring the three and six months ended June 30, 2020, respectively, and $0.8 million and $(0.5) million during the three and six months ended June 30, 2019, respectively.

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 certain liabilities, including the liabilities for the warrants to purchase 11.2 million shares of our common stock (the "Warrants") and our foreign currency derivative contracts. Refer to Note 9 - "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 2020

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The adoption of this standard did not have a material impact on 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 work through our implementation plan which includes evaluating the impact on our allowance for doubtful accounts methodology, identifying new reporting requirements, and implementing changes to business processes, systems, and controls to 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 2016-13 has an effective date of the first quarter of fiscal 2023. We continue to assess the potential effects of these changes to our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences. It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for transactions that results in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for us the first quarter of fiscal 2021. We continue to assess the potential effects of these changes to our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impacts of the provisions of ASU 2020-04 on our consolidated financial statements.

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

As of June 30, 2020, we had $50.0 million of remaining contractual performance obligations for compression services. As a practical expedient, this amount does not reflect revenue for compression service contracts whose original expected duration is less than twelve months and does not consider the effects of the time value of money. Expected revenue to be recognized in the future as of June 30, 2020 for completion of performance obligations of compression service contracts are as follows:



	2020		2021		2022		2023		2024		Total
	(In Thousands)
Compression service contracts remaining performance obligations	$	35,385	$	12,735	$	1,807	$	62	$	46	$	50,035

For sales of CBFs where we have agreed to issue credits for the repurchase of reclaimable used fluids at an agreed price based on the condition of the fluid upon return, we adjust the revenue recognized in the period of shipment by an estimated amount, based on historical experience, of the credit expected to be issued. As of June 30, 2020, the amount of remaining credits expected to be issued for the repurchase of reclaimable used fluids was $1.5 million recorded in inventory (right of return asset) and either accounts payable or as a reduction to accounts receivable. There were no material differences between amounts recognized during the three and six month period ended June 30, 2020, compared to estimates made in a prior period from these variable consideration arrangements.

Our contract asset balances, primarily associated with customer documentation requirements, were $19.4 million and $34.9 million as of June 30, 2020 and December 31, 2019, respectively. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.

Collections primarily associated with progressive billings to customers for the construction of compression equipment is included in unearned income in the consolidated balance sheets. The following table reflects the changes in unearned income in our ~~contract liabilities~~consolidated balance sheets for the periods indicated:



	Six Months Ended June 30,
	2020			2019
	(In Thousands)
Unearned Income, beginning of period	$	9,678		$	25,333
Additional unearned income	32,834			84,456
Revenue recognized	(29,881		)	(78,119		)
Unearned income, end of period	$	12,631		$	31,670

Six Months Ended
June 30,
2019 2018
(In Thousands)
Unearned Income, beginning of period $ 25,333
$ 17,050
Additional unearned income 84,456
59,360
Revenue recognized (78,119 ) (47,276 )
Unearned income, end of period $ 31,670
$ 29,134

During the six month period ended June 30, 2020, we recognized product sales revenue of $5.9 million from unearned income that was deferred as of December 31, 2019. During the six months ended June 30, 2019, we recognized in product sales revenue of $19.1 million from unearned income that was deferred as of December 31, 2018. ~~During the six months ended June 30, 2018, we recognized in product sales revenue of $15.4 million from unearned income that was deferred as of our adoption of ASC 606 on January 1, 2018.~~

~~Contract Costs.~~ As of June 30, ~~2019,~~2020, contract costs were immaterial.

~~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 I.11. In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.



	Three months ended June 30,		Six months ended June 30,
	2020	2019	2020		2019
	(In Thousands)
Completion Fluids & Products
U.S.	32,102	37,536	$	70,060	$	69,142
International	39,244	42,231	76,523		72,206
	71,346	79,767	146,583		141,348
Water & Flowback Services
U.S.	22,866	68,412	77,250		141,611
International	1,857	4,712	4,940		10,191
	24,723	73,124	82,190		151,802
Compression
U.S.	88,583	126,122	169,183		219,638
International	7,789	9,783	17,427		19,736
	96,372	135,905	186,610		239,374
Total Revenue
U.S.	143,551	232,070	316,493		430,391
International	48,890	56,726	98,890		102,133
	192,441	288,796	$	415,383	$	532,524

NOTE 3 –IMPAIRMENTS AND OTHER CHARGES

Impairments of Long-Lived Assets

During the first half of 2020, the COVID-19 pandemic and decline in oil and gas prices had a significant impact on our customers and industry. These events led to a significant reduction in the operations of our customers resulting in a decrease in demand in certain of our service lines.

During the first quarter of 2020, we started to see our customers revise their capital budgets downwards and adjust their operations accordingly, which led to a decline in orders for new compression equipment to be fabricated and sold to third parties. We concluded that these events were indicators of impairment for all our asset groups within our Compression Division and certain asset groups within our Completion Fluids & Products Division. We performed recoverability analyses on the relevant asset groups within these divisions. Based upon these recoverability analyses, we determined that the carrying values of our Midland manufacturing facility and related new unit sales inventory in our Compression Division exceeded their respective fair values. Therefore, we recorded impairments of approximately $5.4 million related to these assets. Fair value was estimated based on a market approach.

During the second quarter of 2020, primarily as a result of continued negative impacts on our compression fleet associated with the COVID-19 pandemic and declines in oil and gas prices, our Compression Division recorded impairments and other charges of approximately $9.0 million associated with non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services. Fair value used to determine impairments was estimated based on a market approach. Given the dynamic nature of the events, we are not able to reasonably estimate how long our operations will be adversely impacted and the full impact these events will have on our operations. As a result, we could have indicators of impairment again in future periods resulting in additional asset impairments.

NOTE 4 – INVENTORIES

Three months ended June 30, Six months ended June 30,
2019 2018 2019 2018
(In Thousands)
Completion Fluids & Products
U.S. 37,536
34,112
$ 69,142
$ 62,020
International 42,231
42,444
72,206
67,640
79,767
76,556
141,348
129,660
Water & Flowback Services
U.S. 68,412
70,838
141,611
117,877
International 4,712
12,808
10,191
26,844
73,124
83,646
151,802
144,721
Compression
U.S. 126,122
90,927
219,638
167,907
International 9,783
8,997
19,736
17,439
135,905
99,924
239,374
185,346
Interdivision eliminations
U.S. —
—
—
1
International —
(54 ) —
(275 )
—
(54 ) —
(274 )
Total Revenue
U.S. 232,070
195,877
430,391
347,805
International 56,726
64,195
102,133
111,648
288,796
260,072
$ 532,524
$ 459,453

Components of inventories as of June 30, 2020 and December 31, 2019 are as follows:



	June 30, 2020		December 31, 2019
	(In Thousands)
Finished goods	$	63,952	$	70,135
Raw materials	4,030		4,125
Parts and supplies	35,814		47,793
Work in progress	11,710		14,457
Total inventories	$	115,506	$	136,510

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 at our Compression Division manufacturing facility in Midland, Texas.

NOTE K5 – 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. During the fourth quarter of 2019, CCLP entered into a lease agreement commitment for 14 compressor packages. The leases are for an initial term of seven years and commence upon the completion of the equipment fabrication. During the first quarter, CCLP took delivery of eight compressor packages. During the second quarter, CCLP took delivery of the remaining six compressor packages. We ~~do not~~ have ~~leases~~no other lease commitments 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~~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 June 30,				Six Months Ended June 30,
	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019		2020		2019		2020		2019
	(In Thousands)				(In Thousands)
Operating lease expense	$	4,987	$	10,031	$	5,319	$	4,987	$	10,467	$	10,031
Short-term lease expense	9,552		20,713		5,423		9,552		14,853		20,713
Total lease expense	$	14,539	$	30,744	$	10,742	$	14,539	$	25,320	$	30,744

Supplemental cash flow information:



	Six Months Ended June 30,
	2020		2019
	(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	12,065	$	9,398

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	17,069	$	4,881

Six Months Ended June 30, 2019
(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases $ 9,398

Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 4,881

Supplemental balance sheet information:


	June 30, 2019		June 30, 2020		December 31, 2019
	(In Thousands)		(In Thousands)
Operating leases:
Operating lease right-of-use assets	$	57,924	$	75,524	$	68,131

Accrued liabilities and other	$	12,652	$	16,402	$	15,850
Operating lease liabilities	47,398		60,693		53,919
Total operating lease liabilities	$	60,050	$	77,095	$	69,769

Additional operating lease information:



	June 30, 2020		December 31, 2019
Weighted average remaining lease term:
Operating leases	6.36 Years		6.43 Years

Weighted average discount rate:
Operating leases	9.74	%	9.46	%



	~~June 30, 2019~~
~~Weighted average remaining lease term:~~
~~Operating leases~~	~~6.88 Years~~

~~Weighted average discount rate:~~
~~Operating leases~~	~~9.41~~	%

Future minimum lease payments by year and in the aggregate, under ~~non-cancelable~~non-cancellable operating leases with terms in excess of one year consist of the following at June 30, ~~2019:~~2020:



		Operating Leases
	(In Thousands)

Remainder of 2020		$	11,662
2021		20,294
2022		16,684
2023		13,026
2024		11,505
Thereafter		32,611
Total lease payments		105,782
Less imputed interest		(28,687		)
Total lease liabilities		$	77,095

Operating Leases
(In Thousands)

Remainder of 2019 $ 8,948
2020 15,996
2021 11,702
2022 9,107
2023 7,844
Thereafter 29,391
Total lease payments 82,988
Less imputed interest (22,938 )
Total lease liabilities $ 60,050

At June 30, ~~2019,~~2020, future minimum rental receipts under a ~~non-cancelable~~non-cancellable sublease for office space in one of our locations totaled ~~$5.9~~$5.3 million. For the three and six months ended June 30, ~~2019,~~2020, we recognized sublease income of $0.3 million and $0.6 million.

NOTE 6 – 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 or cross guarantees between CCLP's debt and TETRA's debt.

Consolidated long-term debt as of June 30, 2020 and December 31, 2019, consists of the following:



		June 30, 2020		December 31, 2019
		(In Thousands)
TETRA	Scheduled Maturity
Asset-based credit agreement (presented net of unamortized deferred financing costs of $0 million as of June 30, 2020 and $1.0 million as of December 31, 2019)	September 2023	$	—	$	—
Term credit agreement (presented net of the unamortized discount of $6 million as of June 30, 2020 and $6.4 million as of December 31, 2019 and net of unamortized deferred financing costs of $8.8 million as of June 30, 2020 and $9.5 million as of December 31, 2019)	September 2025	205,713		204,633
TETRA total debt		205,713		204,633
Less current portion		—		—
TETRA total long-term debt		$	205,713	$	204,633

CCLP
CCLP asset-based credit agreement (presented net of unamortized deferred financing costs of $0.7 million as of June 30, 2020 and $0.9 million of December 31, 2019)	June 2023	746		2,622
CCLP 7.25% Senior Notes (presented net of the unamortized discount of $0.4 million as of June 30, 2020 and $1.7 million as of December 31, 2019 and net of unamortized deferred financing costs of $0.6 million as of June 30, 2020 and $2.8 million as of December 31, 2019)	August 2022	79,745		291,444
CCLP 7.50% First Lien Notes (presented net of unamortized deferred financing costs of $5.7 million as of June 30, 2020 and $5.8 million as of December 31, 2019, net of the unamortized discount of $0.2 million as of June 30, 2020, and net of deferred restructuring gain of $5.6 million as of June 30, 2020)	April 2025	399,613		344,172
CCLP 10.00%/10.75% Second Lien Notes (presented net of the unamortized discount of $0.8 million as of June 30, 2020, net of unamortized deferred financing costs of $1.3 million as of June 30, 2020, and net of deferred restructuring gain of $4 million as of June 30, 2020)	April 2026	157,475		—
CCLP total debt		637,579		638,238
Less current portion		—		—
CCLP total long-term debt		$	637,579	$	638,238
Consolidated total long-term debt		$	843,292	$	842,871

As of June 30, 2020, TETRA had 0 outstanding balance and$6.4 million in letters of creditagainst its asset-based credit agreement ("ABL Credit Agreement"). Because there was no outstanding balance on this Credit Agreement, associated deferred financing costs of $1.2 million as of June 30, 2020, were classified as other long-term assets on the accompanying consolidated balance sheet. As of June 30, 2020, subject to compliance with the covenants, borrowing base, and other provisions of the ABL Credit Agreement that may limit borrowings, TETRA had an availability of $37.1 million under this agreement. There was a $1.5 million balance outstanding and$2.8 million in letters of creditagainst the CCLP asset-based credit agreement ("CCLP Credit Agreement") as of June 30, 2020. As of June 30, 2020, and subject to compliance with the covenants, borrowing base, and other provisions of the CCLP Credit Agreement that may limit borrowings, CCLP had availability of $12.3 million.

Second Amendment to Credit Agreement

On June 11, 2020, CSI Compressco, LP and CSI Compressco Sub Inc (the “Borrowers”) entered into theSecond Amendment to Loan and Security Agreement (the “Amendment”) amending the Loan and Security Agreement dated June 29, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) with Bank of America, N.A., in its capacity as administrative agent, issuing bank and swing line issuer (“Administrative Agent”), and the other lenders and loan parties party thereto. The Amendment provided for changes and modifications to the Credit Agreement which include, among other things, changes to certain terms of the Credit Agreement as follows: (i) resizing of the maximum credit commitment under the Credit Agreement from $50,000,000 to $35,000,000; (ii) the inclusion of a $5,000,000 reserve with respect to the Borrowing Base (as defined in the Credit Agreement) thereunder, which would result in reduced borrowing availability; (iii) the removal of the financial covenant compliance test with respect to the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement); (iv) an increase in the applicable margin related to (x) LIBOR Rate Loans (as defined in the Credit Agreement) to a range between 3.00% and 3.50% and (y) Base Rate Loans (as defined in the Credit Agreement) to a range between 2.00% and 2.50%, in each case, which shall be determined according to average daily excess availability under the Credit Agreement; and (v) an increase in the rate used to calculate the commitment fee in respect of the unutilized commitments under the Credit Agreement to 0.50%. In connection to this amendment, $0.2 million of financing costs were incurred by CCLP and~~$0.4~~ deferred against the carrying value of the amount outstanding, if any. Additionally, $0.2 million ~~respectively.~~of financing fees were charged to other (income) expense, net during the three month period ended June 30, 2020.

First Supplemental Indenture for the Old Notes

On June 11, 2020, CSI Compressco, LP and CSI Compressco Finance Inc. (the "Issuers") announced that they had accepted for exchange $215,208,000, or approximately 72.7%, of their outstanding 7.25% Senior Notes due 2022 (the "Old Notes") that were validly tendered (and not validly withdrawn) by 11:59 p.m., New York City time, on June 10, 2020, for (i) $50,000,000 of the Issuers' 7.50% Senior Secured First Lien Notes due 2025 (the "7.50% First Lien Notes") and (ii) $155,529,000 aggregate principal amount of new 10.00%/10.75% Senior Secured Second Lien Notes due 2026 (the "10.00%/10.75% Second Lien Notes" and, together with the 7.50% First Lien Notes, the "New Notes"), pursuant to its previously announced exchange offer and consent solicitation (the "Exchange Offer"), which commenced on April 17, 2020. In connection with the exchange offer, CCLP incurred financing fees of $4.8 million which were charged to other (income) expense, net during the three month period ended June 30, 2020.

On June 12, 2020, following receipt of the requisite consents of the holders of the Old Notes, the Issuers entered into the First Supplemental Indenture (the "First Supplemental Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of August 4, 2014 (the "Unsecured Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee.

The First Supplemental Indenture eliminated substantially all of the restrictive covenants and certain of the default provisions in the Unsecured Indenture and became operative upon the consummation by the Issuers of the Exchange Offer.

On June 12, 2020, the Issuers issued $50,000,000 in aggregate principal amount of New First Lien Notes to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. In March 2018, the Issuers had issued $350,000,000 in aggregate principal amount of 7.50% Senior Secured Notes due 2025 (the

"Existing First Lien Notes" and, together with the New First Lien Notes, the "7.50% First Lien Notes") pursuant to the First Lien Base Indenture. The New First Lien Notes were issued as "additional notes" under the First Lien Base Indenture and will be treated as a single class with such notes but will not trade fungibly with the Existing First Lien Notes.

Second Lien Notes Indenture

On June 12, 2020, the Issuers issued $155,529,000 in aggregate principal amount of the 10.00%/10.75% Second Lien Notes to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. The Issuers issued the 10.00%/10.75% Second Lien Notes pursuant to an indenture, dated June 12, 2020 (the "Second Lien Notes Indenture"),by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee (the "Second Lien Trustee"). In connection with the payment of PIK Interest (as defined

below), if any, in respect of the 10.00%/10.75% Second Lien Notes, the Issuers will be entitled, without the consent of the Holders, to increase the outstanding aggregate principal amount of the 10.00%/10.75% Second Lien Notes or issue additional notes ("PIK notes") under the Second Lien Notes Indenture on the same terms and conditions as the 10.00%/10.75% Second Lien Notes offered hereby (each such increase or issuance, a "PIK Payment"). The Issuers may issue additional 10.00%/10.75% Second Lien Notes under the Second Lien Notes Indenture from time to time. Any issuance of additional 10.00%/10.75% Second Lien Notes (including PIK notes) is subject to all of the covenants in the Second Lien Notes Indenture. The 10.00%/10.75% Second Lien Notes and any additional 10.00%/10.75% Second Lien Notes subsequently issued under the indenture, will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Subject to the making of PIK Payments, the Issuers will issue 10.00%/10.75% Second Lien Notes in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000; provided that PIK Payments may result in 10.00%/10.75% Second Lien Notes being issued in denominations of $1.00 and integral multiples of $1.00. The 10.00%/10.75% Second Lien Notes will mature on April 1, 2026. Interest on the 10.00%/10.75% Second Lien Notes will be payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2020. The Issuers will make each interest payment to the holders of record on March 15 and September 15 immediately preceding each interest payment date. Interest will accrue at (1) the annual rate of 7.250% payable in cash, plus (2) at the election of the Issuers (made by delivering a notice to the Second Lien Trustee not less than five business days prior to the record date), the annual rate of (i) 2.750% payable in cash (together with the annual rate set forth in clause (1), the "Cash Interest Rate") or (ii) 3.500% payable by increasing the principal amount of the outstanding 10.00%/10.75% Second Lien Notes or by issuing additional PIK notes, in each case rounding up to the nearest $1.00 (such increased principal amount or additional PIK notes, the "PIK Interest"). In the absence of an interest payment election made by the Issuers as set forth above, interest on the notes will be payable as if the Issuers had elected to pay PIK Interest with respect to the portion of interest payable pursuant to clause (2) above.

The 10.00%/10.75% Second Lien Notes are jointly and severally, and fully and unconditionally, guaranteed (the "Guarantees") on a senior secured basis initially by each of the Partnership's domestic restricted subsidiaries (other than Finance Corp, certain immaterial subsidiaries and certain other excluded domestic subsidiaries, the "Guarantors") and will be secured by a second-priority security interest in substantially all of the Issuers' and the Guarantors' assets (other than certain excluded assets) (the "Collateral") as collateral security for their obligations under the 10.00%/10.75% Second Lien Notes, subject to certain permitted encumbrances and exceptions. At any time prior to April 1, 2023, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 10.00%/10.75% Second Lien Notes issued under the Second Lien Notes Indenture at a redemption price of 110.000% of the principal amount of the 10.00%/10.75% Second Lien Notes, plus accrued and unpaid interest to the redemption date, with an amount of cash equal to the net cash proceeds of certain equity offerings. On or after April 1, 2023, the Issuers may redeem all or part of the 10.00%/10.75% Second Lien Notes at redemption prices (expressed as percentages of the principal amount) equal to (i) 107.500% for the twelve month period beginning on April 1, 2023; (ii) 105.000% for the twelve-month period beginning on April 1, 2024 and (iii) 100.000% at any time thereafter, plus accrued and unpaid interest up to, but not including, the redemption date. In addition, at any time prior to April 1, 2023, the Company may redeem all or a part of the 10.00%/10.75% Second Lien Notes at a redemption price equal to 100% of the principal amount of the 10.00%/10.75% Second Lien Notes to be redeemed plus a make-whole premium, plus accrued and unpaid interest up to, but not including, the redemption date.

The Second Lien Notes Indenture contains customary covenants restricting the Partnership's ability and the ability of its restricted subsidiaries to: (i) pay distributions on, purchase or redeem its common units or purchase or redeem its 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 the Partnership. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting the Partnership, subject to the satisfaction of certain conditions, to transfer assets to certain of its unrestricted subsidiaries. Moreover, if the 10.00%/10.75% Second Lien Notes receive an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the 10.00%/10.75% Second Lien Notes Indenture, many of the restrictive covenants in the Second Lien Notes Indenture will be terminated. The Second Lien Notes 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 Second Lien Notes Indenture, the Second Lien Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding 10.00%/10.75% Second Lien Notes may declare all of the 10.00%/10.75% Second Lien Notes to be due and payable immediately.

NOTE 7 – DISCONTINUED OPERATIONS

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. See Note 8 - "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 June 30, 2020								Three Months Ended June 30, 2019
	Offshore Services			Maritech		Total			Offshore Services			Maritech		Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	—		$	—	$	—		$	—		$	—	$	—
Cost of revenues	(274		)	—		(274		)	—			—		—
Depreciation, amortization, and accretion	—			—		—			—			—		—
General and administrative expense	111			—		111			345			—		345
Other (income) expense, net	—			—		—			—			—		—
Pretax income (loss) from discontinued operations	163			—		163			(345		)	—		(345		)
Pretax Income (loss) on disposal of discontinued operations						—								—
Total pretax income (loss) from discontinued operations						163								(345		)
Income tax provision (benefit)						—								—
Total income (loss) from discontinued operations						$	163							$	(345	)



	Six Months Ended June 30, 2020								Six Months Ended June 30, 2019
	Offshore Services			Maritech		Total			Offshore Services			Maritech		Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	—		$	—	$	—		$	—		$	—	$	—
Cost of revenues	(334		)	—		(334		)	22			—		22
Depreciation, amortization, and accretion	—			—		—			—			—		—
General and administrative expense	316			—		316			749			—		749
Other (income) expense, net	—			—		—			—			—		—
Pretax income (loss) from discontinued operations	18			—		18			(771		)	—		(771		)
Pretax income (loss) on disposal of discontinued operations						—								—
Total pretax income (loss) from discontinued operations						18								(771		)
Income tax provision (benefit)						—								—
Total income (loss) from discontinued operations						$	18							$	(771	)

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

(in thousands)



	June 30, 2020						December 31, 2019
	Offshore Services		Maritech		Total		Offshore Services		Maritech		Total
Carrying amounts of major classes of assets included as part of discontinued operations
Trade receivables	$	—	$	—	$	—	$	—	$	—	$	—
Other current assets	—		—		—		—		—		—
Assets of discontinued operations	$	—	$	—	$	—	$	—	$	—	$	—

Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables	$	1,231	$	—	$	1,231	$	1,233	$	—	$	1,233
Accrued liabilities	414		228		642		745		120		865
Liabilities of discontinued operations	$	1,645	$	228	$	1,873	$	1,978	$	120	$	2,098

NOTE L8 – ~~SUBSEQUENT EVENTS~~COMMITMENTS AND CONTINGENCIES

Litigation

Contingencies of Discontinued Operations

~~Part~~In early 2018, we closed the Maritech Asset Purchase and Sale 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. Shortly thereafter, we closed the Maritech Membership Interest Purchase and Sale Agreement with Orinoco that provided for the purchase by Orinoco of all of the ~~consideration~~outstanding membership interests in Maritech. As a result of these transactions, we ~~received~~have effectively exited the business of our former Maritech segment.

Under the Maritech Asset Purchase and Sale 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 and Sale 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.

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 ~~March 1,~~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 did not provide the Interim Replacement Bonds or the Final Bonds, Orinoco was 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 neither it nor the Clarkes has 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 initially granted in favor of Orinoco and the Clarkes which dismissed our claims against Orinoco under the Bonding Agreement and against the Clarkes under the Clarke Bonding Guaranty Agreement. We filed an appeal and also asked the trial court to grant a new trial on the summary judgment or to modify the judgment because we believe this judgment should not have been granted. On November 5, 2019, the trial court signed an order granting our motion for new trial and vacating the prior order granting summary judgment for Orinoco and the Clarkes. The parties are awaiting direction from the court on a new scheduling order and/or trial setting. The Initial Bonds, which are non-revocable, remain in effect.

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.

In early 2018, ~~disposition~~we also closed the sale of our Offshore Division ~~was a promissory note in the original principal amount of $7.5 million (the “Epic Promissory Note”) payable by~~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 agreements with Epic Companies, certain other amounts relating to the Offshore Division totaling approximately ~~$1.4~~$1.5 million ~~as of June 30, 2019 are~~ were payable to us.

In At the end of August 2019, ~~certain creditors of~~ Epic Companies filed ~~an involuntary petition against Epic Companies under Chapter 7~~for bankruptcy. We recorded a reserve of $7.5 million for the full amount of the ~~bankruptcy code~~promissory note, including accrued interest, and the certain other receivables in the ~~Eastern District~~amount of ~~Louisiana. Although~~$1.5 million during the quarter ended September 30, 2019. The Epic Promissory Note ~~is not currently~~became due on December 31, 2019 but neither Epic nor the Clarkes made the required payment. Upon the default by Epic and ~~is guaranteed by~~the Clarkes, we filed a lawsuit against the Clarkes on January 15, 2020 in Montgomery County, Texas for breach of the Clarke Promissory Note Guaranty Agreement, seeking the amounts due under the Epic Promissory Note and related interest, as well as attorneys’ fees and expenses. The Clarkes each filed an answer and counterclaims for fraud and negligent misrepresentation and seek monetary damages in excess of $1 million, punitive damages, and attorneys’ fees. We have taken discovery from the Clarkes. Currently, the case is set for its first trial setting on October 19, 2020.We will vigorously prosecute our claim and defend against the claims by the Clarkes.

NOTE 9 – FAIR VALUE MEASUREMENTS

Financial Instruments

Warrants

The Warrants are valued using a Black Scholes option valuation model that includes implied volatility of the trading price (a Level 3 fair value measurement).

Derivative Contracts

We and CCLP each enter into 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 June 30, 2020, we ~~continue to monitor this matter~~ and ~~there can be no assurance that future developments, including those involving~~CCLP had the ~~financial condition of Epic Companies or~~following foreign currency derivative contracts outstanding relating to ~~the involuntary bankruptcy proceeding,~~portions of our foreign operations:



Derivative Contracts	US Dollar Notional Amount		Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	$	9,000	1.14	7/2/2020
Forward sale Mexican peso	5,292		22.58	7/2/2020

Under this program, we and CCLP may ~~or may not adversely impact our ability~~enter into similar derivative contracts from time to ~~timely collect amounts owed to us by Epic Companies~~time. Although contracts pursuant to this program will serve as an economic hedge of the ~~Offshore Services Purchase~~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 contracts during a period will be included in the determination of earnings for that period.

The fair values of foreign currency derivative contracts are based on quoted market values (a Level 2 fair value measurement). The fair values of our and CCLP's foreign currency derivative contracts as of June 30, 2020 and December 31, 2019, are as follows:



Foreign currency derivative contracts	Balance Sheet Location	Fair Value at June 30, 2020			Fair Value at December 31, 2019
		(In Thousands)
Forward purchase contracts	Current assets	$	95		$	86
Forward sale contracts	Current liabilities	—			(53		)
Forward purchase contracts	Current liabilities	(127		)	(3		)
Net asset (liability)		$	(32	)	$	30

None of 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 six months ended June 30, 2020, we recognized $0.1 million and $(0.9) millionof net (gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program. During the three and six months ended June 30, 2019, we recognized $0.2 million and$0.7 million of net (gains) losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program.

During the six months ended June 30, 2020, we recorded impairments of approximately $9.0 million, reflecting the decreased fair value for certain assets. The fair values used in these impairment calculations were estimated based on a market approach, which is based on significant unobservable inputs (Level 3) in accordance with the fair value hierarchy.

Recurring and nonrecurring fair value measurements by valuation hierarchy as of June 30, 2020 and December 31, 2019, are as follows:



				Fair Value Measurements Using
	Total as of			Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs			Significant Unobservable Inputs
Description	June 30, 2020			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)
Midland manufacturing facility and related assets	$	19,646		$	—	$	—		$	19,646
Non-core used compressor equipment held for sale	2,600			—					2,600
Warrants liability	(123		)	—		—			(123		)
Asset for foreign currency derivative contracts	95			—		95			—
Liability for foreign currency derivative contracts	(127		)	—		(127		)	—
Net asset	$	22,091



				Fair Value Measurements Using
	Total as of			Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs			Significant Unobservable Inputs
Description	December 31, 2019			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)
Warrants liability	$	(449	)	$	—	$	—		$	(449	)
Asset for foreign currency derivative contracts	86			—		86			—
Liability for foreign currency derivative contracts	(56		)	—		(56		)	—
Net liability	$	(419	)

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 ~~Epic Promissory Note.~~CCLP Credit Agreement approximate their carrying amounts. The fair values of the publicly traded CCLP 7.25% Senior Notes at June 30, 2020 and December 31, 2019, were approximately $41.6 million and $266.0 million, respectively. Those fair values compare to the face amount of $80.7 million and 295.9 million at June 30, 2020 and December 31, 2019, respectively. The fair values of the CCLP 7.50% Senior Secured Notes at June 30, 2020 and December 31, 2019 were approximately $336.4 million and $344.8 million, respectively. These fair values compare to aggregate principal amount of such notes at June 30, 2020 and December 31, 2019, of $400.0 million and $350.0 million, respectively. The fair value of the CCLP 10.00%/10.75% Second Lien Notes at June 30, 2020 was approximately $96.8 million. This fair value compares to aggregate principal amount of such notes at June 30, 2020 of $155.5 million. We based the fair values of the CCLP 7.25% Senior Notes, the CCLP 7.50% Senior Secured Notes, and the CCLP 10.00%/10.75% Second Lien Notes as of June 30, 2020 on recent trades for these notes.

NOTE 10 – NET INCOME (LOSS) PER SHARE



	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
	(In Thousands)
Number of weighted average common shares outstanding	125,886	125,612	125,736	125,646
Assumed exercise of equity awards and warrants	—	—	—	—
Average diluted shares outstanding	125,886	125,612	125,736	125,646

~~CCLP~~For thethree and six month periods ended June 30, 2020 and June 30, 2019, 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 six month period ended June 30, 2019, the calculation of diluted earnings per common share excludes the impact of the CSI Compressco LP Series A Convertible Preferred Units

~~On August 8, 2019,~~ (the "CCLP Preferred Units"), as the ~~remaining 375,868~~inclusion of the impact from conversion of the CCLP Preferred Units into CCLP common units would have been anti-dilutive.

NOTE 11 – INDUSTRY SEGMENTS

We manage our operations through 3 Divisions: Completion Fluids & Products, Water & Flowback Services, and Compression.

Summarized financial information concerning the business segments is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
	(In Thousands)
Revenues from external customers
Product sales
Completion Fluids & Products Division	$	67,243		$	72,806		$	137,433		$	130,134
Water & Flowback Services Division	8			367			33			731
Compression Division	30,922			62,177			45,740			96,266
Consolidated	$	98,173		$	135,350		$	183,206		$	227,131

Services
Completion Fluids & Products Division	$	4,103		$	6,961		$	9,150		$	11,214
Water & Flowback Services Division	24,715			72,757			82,157			151,071
Compression Division	65,450			73,728			140,870			143,108
Consolidated	$	94,268		$	153,446		$	232,177		$	305,393

Total revenues
Completion Fluids & Products Division	$	71,346		$	79,767		$	146,583		$	141,348
Water & Flowback Services Division	24,723			73,124			82,190			151,802
Compression Division	96,372			135,905			186,610			239,374
Interdivision eliminations	—			—			—			—
Consolidated	$	192,441		$	288,796		$	415,383		$	532,524

Income (loss) before taxes
Completion Fluids & Products Division	$	13,202		$	14,614		$	32,598		$	20,800
Water & Flowback Services Division	(8,418		)	2,460			(10,662		)	4,691
Compression Division	(23,006		)	(3,483		)	(35,796		)	(11,284		)
Interdivision eliminations	2			1			7			7
Corporate Overhead⁽¹⁾	(16,909		)	(19,303		)	(30,353		)	(36,990		)
Consolidated	$	(35,129	)	$	(5,711	)	$	(44,206	)	$	(22,776	)


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



	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020			2019
	(In Thousands)
General and administrative expense	$	11,611	$	14,350		$	19,692		$	26,439
Depreciation and amortization	175		172			372			340
Interest expense	4,749		5,696			10,204			11,038
Warrants fair value adjustment (income) expense	11		(1,520		)	(327		)	(1,113		)
Other general corporate (income) expense, net	363		605			412			286
Total	$	16,909	$	19,303		$	30,353		$	36,990

NOTE 12 – SUBSEQUENT EVENTS

On July 2, 2020, we completed the previously announced sale of our Midland manufacturing facility for a total sale price of $17.0 million. In connection with the sale, we have entered into an agreement with the buyer that permits us to continue to operate the facility until the completion and sale of our remaining backlog, which we ~~held 47,205, were redeemed, along with a final cash payment made in lieu~~anticipate will be completed during the third quarter of ~~paid in kind~~2020. While we will continue to operate the facility until the completion and sale of our remaining backlog, we no longer intend to fabricate new compressor packages for sales to third parties or for our own service fleet.

During the second quarter of 2020, we entered into an agreement to sell 58 low-horsepower units to one of our customers for $2.6 million. We received the ~~quarter ended~~proceeds prior to June 30, ~~2019,~~2020, however, the assets were not transferred to the customer until after June 30,2020. Therefore, they are classified as held for ~~an aggregate cash payment of $5.0~~sale at June 30, 2020 in our financial statements. In addition, in late July, we received a purchase order to sell $6.7 million of ~~which $0.6~~idle high horsepower compressor units to one of our significant customers. We expect this sale to be completed and proceeds received by the end of the third quarter. We have and will continue to evaluate the sale of other non-core assets, including our low-horsepower compression fleet. We can provide no assurance that we will consummate a future sale of our low-horsepower compression fleet or any other non-core asset.

Following a customer bankruptcy filing that occurred during the third quarter of 2020, we recorded an additional $2.8 million ~~was paid to us.~~reserve against the trade receivable balance in the June 30, 2020 consolidated balance sheet.

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, ~~2018~~2019 filed with the SEC on March 4, 16, 2020 ("2019 ("~~2018~~ Annual Report"). This discussion includes forward-looking statements that involve certain risks and uncertainties.

Business Overview

~~The increase in consolidated revenues during the six month period ended June 30, 2019 primarily reflects the growth in demand for~~We are a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, comprehensive water management, frac flowback, production well testing and offshore rig cooling services, and compression services and equipment, as well as an increase in completion fluids activity. Our Compression Division revenues increased 36.0% during the quarter ended June 30, 2019 compared to the prior year quarter, driven by increased new compressor equipment salesequipment. We operate through three reporting segments organized into three Divisions - Completion Fluids & Products, Water & Flowback Services, and ~~reflecting the increased utilization~~Compression.

Demand for products and services of ~~its compression services fleet. Our~~our Completion Fluids & Products Division ~~also reported increased revenues, a 4.2% increase compared to~~has remained resilient despite the ~~prior year quarter, primarily due to increased Gulf~~continued significant downward pressure on oil prices and the continuing uncertainty in many of ~~Mexico and international CBF product sales. Demand for these products and services during~~ the ~~period was strong despite continued volatility in pricing for oil,~~markets where we operate, which affects the plans of many of our oil and gas operations customers. During the second quarter of 2020, we experienced increased completion fluids product sales revenues sequentially in the U.S. Gulf of Mexico while international demand for our completion fluids products decreased, in large part due to a one-time spot sale in Latin America that we had in the first quarter of 2020. We also benefited from the strong seasonal results of our Northern European industrial chemicals business in the current quarter. However, the continuing low prices for oil and gas and any further price erosion may adversely affect the demand for our products and services in the near future.

Recent ~~oil price volatility~~macroeconomic uncertainty resulting from depressed commodity prices and the COVID-19 pandemic has particularly affected domestic onshore demand for our Water & Flowback Services ~~Division~~Division. We experienced decreased water management services ~~resulting in increased customer contract pricing pressure. Water & Flowback Services Division revenues and profitability~~activity during the second quarter ~~ended June 30, 2019 reflects the impact~~ of ~~this decreased demand. Other than for the Compression Division, the outlook for domestic onshore demand for~~2020 and without a meaningful recovery, we expect our ~~products and~~water management services ~~is expected~~operations to continue to be ~~uncertain~~negatively impacted in the near future.

Our Compression Division is significantly dependent upon the demand for, and production of, oil and the associated natural gas from unconventional oil and natural gas production in the domestic and international markets in which we operate. During the second quarter of 2020, we continued to see macroeconomic uncertainty in the oil and natural gas industry and steep declines in spending by the oil and gas operators as evidenced by a 64% decline in the U.S. onshore rig count. In addition, the second quarter of 2020 was the first full quarter where we experienced the impact of the COVID-19 pandemic and mitigation efforts to minimize the spread of the virus. The

unprecedented drop in U.S. land oil and natural gas activity led to some of our customers temporarily shutting in wells, presenting a new challenge for us. Approximately 15% of our US domestic horsepower was on standby during the quarter as a result. Customers started bringing production back online late in the second quarter and we expect that activity to continue during the third quarter of 2020. During the first half of 2020, we saw our customers revise their capital budgets substantially downward and adjust their operations accordingly, which we believe will continue for an indefinite period. We expect reduced activity levels, particularly in North America, coupled with downward pricing pressure and corresponding reductions in revenue and profitability to continue for the remainder of ~~2019.~~2020.

Given the decline in orders for new compression equipment to be fabricated and sold to third parties, in early April 2020, we announced our plan to shut down our Midland manufacturing facility. On July 2, 2020, we completed the previously announced sale of our Midland manufacturing facility for a total sale price of $17.0 million. While we will continue to operate the facility until the completion and sale of our remaining backlog, we no longer intend to fabricate new compressor packages for sales to third parties. Due to excess compression equipment in the industry, we have seen lower utilization of our compression fleet, client requests to put units on stand-by, and pricing pressures as customers try to reduce their costs.

~~Funding~~During the first quarter of 2020, we concluded that the impact on our customers and industry from the COVID-19 pandemic and decline in oil prices were indicators of impairment for ~~the expected long-term growth~~all asset groups within our Compression Division and certain asset groups in our Completion Fluids & Products Division. As a result, we performed a recoverability analysis on all our long-lived asset groups and we determined that the carrying values of our Midland manufacturing facility and related new unit sales inventory exceeded their respective fair values. Therefore, we recorded impairments of approximately $5.4 million during the first quarter of 2020 related to these assets. During the second quarter of 2020, as a result of continued negative impacts on our compression fleet associated with the COVID-19 pandemic and declines in oil and gas prices, we recorded impairments and other charges of approximately $9.0 million in our Compression Division associated with non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services. Given the dynamic nature of the events, we are not able to reasonably estimate how long our operations ~~remains~~will be impacted and the full impact these events will have on our operations. As a ~~key focus. Consolidated~~result, we could have indicators of impairment again in future periods resulting in additional asset impairments. We have and will continue to evaluate the sale of non-core assets, including our low-horsepower compression fleet. We can provide no assurance that we will consummate a future sale of our low-horsepower compression fleet or any other non-core asset.

During the second quarter of 2020, CCLP, which has a separate capital structure from TETRA, completed a debt exchange offer whereby the effect was a permanent reduction in outstanding long-term debt of $9.6 million and the extension of maturity dates of certain of its remaining long-term debt balances. See further discussion of these changes in the Liquidity and Capital Resources section below.

We intend to continue to manage our flexible cost structure to proactively respond to changing market conditions and execute on actions necessary to manage through these conditions, some of which could result in impairments or restructuring charges in future periods. Temporary and permanent cost reductions we have implemented include reductions in 2020 capital expenditures, workforce reductions, salary reductions, the suspension of 401(k) matching contributions for our employees, targeted reduction in SG&A expenses, and negotiated reductions in expenditures with many of our suppliers. Absent a meaningful recovery in natural gas and oil prices and a material improvement in the status of the COVID-19 pandemic, we expect our operations to continue to be negatively impacted, particularly in our onshore producing regions of the United States. We are not able to predict how long market disruptions resulting from the COVID-19 pandemic will continue, or what impact it will ultimately have on our business. Despite that, we will continue to maintain our commitment to safety and service quality for our customers.

How we Evaluate Operations

We use U.S. GAAP financial measures such as revenues, gross profit, income (loss) before taxes, and net cash provided by operating activities, ~~during the six months ended June 30, 2019 increased~~as well as certain non-GAAP financial measures, including Adjusted EBITDA, as performance measures for our business.

Adjusted EBITDA.We view Adjusted EBITDA as one of our primary management tools, and we trackiton a monthly basis, both in dollars and as a percentage of revenues(typically compared to the prior month,prior year

period,and weto budget). We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and certain other non-cash charges and non-recurring adjustments.

Adjusted EBITDA is used as a supplemental financial measure by our ~~CSI Compressco LP ("CCLP") subsidiary are utilizing operating cash flows~~management to:

evaluate the financial performance of our assets without regard to fund our respective capital expenditure needs. We also have capacity under our term credit agreement (the “Term Credit Agreement”) and our asset-based lending credit agreement (the “ABL Credit Agreement”) to fund our growth capital expenditure plans, as well as potential acquisition transactions. In addition, our Compression Division, through the separatefinancing methods, capital structure, ~~of CCLP, expects~~or historical cost basis; and

determine our ability to ~~fund additional 2019 growth capital expenditures for new compression services equipment through $4.3 million of currently available cash as of June 30, 2019, expected operating cash flows,~~incur and up to $15.0 million of new compression services equipment to be purchased by us, and leased to CCLP, of which $11.1 million has been funded as of June 30, 2019. These sources are expected to enable CCLP to meet its growth capital expenditure requirements without having to access available borrowings under its credit agreement (the "CCLP Credit Agreement") and without having to access the currentservice debt and ~~equity markets. We~~fund capital expenditures.

The following tablereconciles net income (loss) to Adjusted EBITDA for the periods indicated:



	Three Months Ended
	June 30, 2020
	Net Income (Loss), as reported			Tax Provision		Income (Loss) Before Tax, as Reported			Impairments & Special Charges			Adjusted Income (Loss) Before Tax			Interest Expense, Net			Depreciation & Amortization			Equity Comp. Expense		Adjusted EBITDA
	(In Thousands)
Completion Fluids & Products Division						$	13,202		$	3,310		$	16,512		$	(143	)	$	1,934		$	—	$	18,303
Water & Flowback Services Division						(8,418		)	1,203			(7,215		)	(2		)	7,617			—		400
Compression Division						(23,006		)	15,736			(7,270		)	12,982			20,116			488		26,316
Eliminations and other						2			—			2			—			—			—		2
Subtotal						(18,220		)	20,249			2,029			12,837			29,667			488		45,021
Corporate and other						(16,909		)	621			(16,288		)	4,749			175			1,602		(9,762		)
TETRA excluding Discontinued Operations	$	(37,130	)	$	2,001	$	(35,129	)	$	20,870		$	(14,259	)	$	17,586		$	29,842		$	2,090	$	35,259

	Three Months Ended
	June 30, 2019
	Net Income (Loss), as reported			Tax Provision		Income (Loss) Before Tax, as Reported			Impairments & Special Charges			Adjusted Income (Loss) Before Tax			Interest Expense, Net			Depreciation & Amortization			Equity Comp. Expense		Adjusted EBITDA
	(In Thousands)
Completion Fluids & Products Division						$	14,614		$	(289	)	$	14,325		$	(157	)	$	3,723		$	—	$	17,891
Water & Flowback Services Division						2,460			(400		)	2,060			(8		)	8,871			—		10,923
Compression Division						(3,483		)	3,607			124			12,998			19,054			590		32,766
Eliminations and other						1			—			1			—			(3		)	—		(2		)
Subtotal						13,592			2,918			16,510			12,833			31,645			590		61,578
Corporate and other						(19,303		)	268			(19,035		)	5,696			172			1,673		(11,494		)
TETRA excluding Discontinued Operations	$	(8,201	)	$	2,490	$	(5,711	)	$	3,186		$	(2,525	)	$	18,529		$	31,817		$	2,263	$	50,084

Adjusted EBITDA is a financial measure that is not in accordance with U.S. GAAP and ~~CCLP are aggressively managing our working capital and capital expenditure needs~~should not be considered an alternative to net income, operating income, cash provided by operating activities,or any other measure of financial performance presented in ~~order~~accordance with U.S. GAAP. This measure may not be comparable to ~~maximize our liquidity~~similarly titled financial metrics of other companies, as other companies may not calculate Adjusted EBITDA in the ~~current environment. The earliest maturity date~~same manner aswe do. Management compensates for the limitations of ~~our long-term debt is September 2023~~ Adjusted EBITDA as an analytical tool by reviewing the comparable U.S. GAAP measures, understanding the differences between the measures,and ~~the earliest maturity date of CCLP's long-term debt is August 2022.~~ incorporating this knowledge into management’s decision-making processes.

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~~2019 Annual Report. In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. 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.

Results of Operations

Three months ended June 30, ~~2019~~2020 compared with three months ended June 30, ~~2018~~.2019.

Consolidated Comparisons


	Three Months Ended June 30,						Period to Period Change					Three Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	288,796		$	260,072		$	28,724		11.0	%	$	192,441		$	288,796		$	(96,355	)	(33.4	)%
Gross profit	48,366			47,801			565			1.2	%	20,321			48,366			(28,045		)	(58.0	)%
Gross profit as a percentage of revenue	16.7		%	18.4		%						10.6		%	16.7		%
General and administrative expense	36,295			33,617			2,678			8.0	%	34,014			36,295			(2,281		)	(6.3	)%
General and administrative expense as a percentage of revenue	12.6		%	12.9		%						17.7		%	12.6		%
Interest expense, net	18,529			18,379			150			0.8	%	17,586			18,529			(943		)	(5.1	)%
Warrants fair value adjustment (income) expense	(1,520		)	2,195			(3,715		)			11			(1,520		)	1,531			(100.7	)%
CCLP Series A Preferred Units fair value adjustment (income) expense	146			(512		)	658					—			146			(146		)	(100.0	)%
Other (income) expense, net	627			3,808			(3,181		)			3,839			627			3,212			512.3	%
Loss before taxes and discontinued operations	(5,711		)	(9,686		)	3,975			41.0	%	(35,129		)	(5,711		)	(29,418		)	(515.1	)%
Loss before taxes and discontinued operations as a percentage of revenue	(2.0		)%	(3.7		)%						(18.3		)%	(2.0		)%
Provision for income taxes	2,490			2,446			44					2,001			2,490			(489		)	(19.6	)%
Loss before discontinued operations	(8,201		)	(12,132		)	3,931					(37,130		)	(8,201		)	(28,929		)	352.7	%
Discontinued operations:
Income (loss) from discontinued operations, net of taxes	(345		)	(21		)	(324		)			163			(345		)	508			(147.2	)%
Net loss	(8,546		)	(12,153		)	3,607					(36,967		)	(8,546		)	(28,421		)	332.6	%
Loss attributable to noncontrolling interest	1,633			6,188			(4,555		)			15,712			1,633			14,079			862.2	%
Net income (loss) attributable to TETRA stockholders	$	(6,913	)	$	(5,965	)	$	(948	)
Net loss attributable to TETRA stockholders												$	(21,255	)	$	(6,913	)	$	(14,342	)	207.5	%

Consolidated revenues during the current year quarter ~~increased~~decreased compared to the prior year quarter due to the COVID-19 pandemic and decline in oil and gas prices resulting in decreases in demand and activity. See Divisional Comparisons section below for additional discussion.

Consolidated gross profit during the current year quarter decreased compared to the prior year quarter primarily due to a $36.0 million increase in Compression Division revenues. The increase in Compression Division revenues was primarily driven by increased new compressor equipment sales activity. See Divisional Comparisons section below for additional discussion.

~~Consolidated~~decreased gross profit ~~during~~from our Water & Flowback Services and Compression Divisions and included the ~~current year quarter increased~~impact of $9.0 million of impairments and other charges. This decrease was slightly ~~compared to~~offset by the ~~prior year quarter primarily due to~~ increased gross profit ~~from~~of our Completion Fluids & Products and Compression Divisions. This increase was largely offset, however, by the lower gross profit of our Water & Flowback Services Division resulting primarily from increased customer pricing pressures. Despite the improvement in the activity levels of certain of our businesses, domestic onshore and offshore activity levels remain flat and the impact of pricing pressures also continues to impact profitability in certain markets. Operating expenses reflect the increase in consolidated revenues, although we remain aggressive in managing operating costs.Division.

Consolidated general and administrative expenses ~~increased~~decreased during the current year quarter compared to the prior year quarter primarily due to ~~increased~~decreased salary and employee expenses of ~~$2.7~~$4.4 million, ~~and increased professional services fees of $0.3 million, partially offset by~~ decreased insurance and other general expenses of ~~$0.2~~$1.1 million, and decreased professional services fees of $0.4 million partly offset by increased provision for bad debt of ~~$0.1~~$3.8 million. Increased general and administrative expenses were driven primarily by executive transition costs of our Corporate Division. 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, ~~remained flat~~decreased during the current year quarter compared to the prior year quarter primarily due to ~~increased~~decreased Corporate ~~interest expense offset by Compression Division decreased~~ interest expense. Corporate interest expense ~~increased~~decreased due to ~~additional borrowings~~reduced borrowing under the ~~TETRA Term Credit Agreement and~~ ABL Credit ~~Agreement during the current year period. Compression Division interest expense decreased due to~~

~~the conversions and redemption of CCLP Preferred Units outstanding.~~Agreement. Interest expense during the ~~2019~~current and ~~2018 quarterly periods~~prior year quarters includes ~~$0.9~~$1.1 million and ~~$0.9~~$1.0 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 volatility of our earnings during the period the CCLP Preferred Units are outstanding. The final redemption of the remaining outstanding CCLP Preferred Units occurred on August 8, 2019.

Consolidated other (income) expense, net, was ~~$0.6~~$3.8 million of other expense during the current year quarter compared to ~~$3.8~~$0.6 million of other expense during the prior year quarter primarily due to ~~$4.7~~$4.8 million of ~~decreased expense~~fees primarily associated with the ~~remeasurement of the contingent purchase price consideration for the SwiftWater acquisition,~~CCLP unsecured debt exchange transaction offset by $0.5 million of increased ~~expense~~gains on the sale of ~~$0.6~~compression assets, and $0.4 million ~~associated with a redemption premium incurred in connection with the redemption of CCLP Preferred Units for cash.~~increased foreign currency gains.

Our consolidated provision for income taxes during the three month period ended June 30, ~~2019~~2020 is attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the three month period ended June 30, ~~2019~~2020 of negative ~~43.6%~~5.7% 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


	Three Months Ended June 30,						Period to Period Change					Three Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	79,767		$	76,556		$	3,211		4.2	%	$	71,346		$	79,767		$	(8,421	)	(10.6	)%
Gross profit	19,809			14,396			5,413			37.6	%	20,819			19,809			1,010			5.1	%
Gross profit as a percentage of revenue	24.8		%	18.8		%						29.2		%	24.8		%
General and administrative expense	5,200			4,462			738			16.5	%	8,442			5,200			3,242			62.3	%
General and administrative expense as a percentage of revenue	6.5		%	5.8		%						11.8		%	6.5		%
Interest (income) expense, net	(157		)	(131		)	(26		)			(143		)	(157		)	14			(8.9	)%
Other (income) expense, net	152			84			68					(682		)	152			(834		)	(548.7	)%
Income before taxes	$	14,614		$	9,981		$	4,633		46.4	%	$	13,202		$	14,614		$	(1,412	)	(9.7	)%
Income before taxes as a percentage of revenue	18.3		%	13.0		%						18.5		%	18.3		%

The ~~increase~~decrease in Completion Fluids & Products Division revenues during the current year quarter compared to the prior year quarter was primarily due to ~~$2.7 millionof increased~~lower demand for our completions fluids products and services ~~revenue from offshore completion fluids activity~~and our industrial chemicals sales in the onshore United States, partially offset by a stronger Northern European industrial chemicals business and Gulf of Mexico ~~and Eastern hemisphere compared to the prior year quarter. Additionally, product~~completion fluids demand.

~~sales revenue increased $0.5 million, as increased offshore completion activity resulting in increased CBF product sales more than offset a decrease in manufactured product sales.~~

Completion Fluids & Products Division gross profit during the current year quarter increased compared to the prior year quarter despite decreased revenues primarily due to ~~the~~higher margins on sales of manufactured products as well as increased ~~revenues and~~ profitability associated with ~~the mix of CBF~~higher margin completion fluids products and ~~services.~~cost cutting initiatives 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.~~market demand for our products and services, drilling and completions activity and commodity prices.

The Completion Fluids & Products Division reported ~~an increase~~a decrease in pretax earnings during the current year quarter compared to the prior year quarter ~~primarily due to~~despite increased gross profit discussed above. ~~Completion Fluids & Products Division~~Pre-tax earnings were lower because general and administrative ~~cost levels~~costs increased compared to the prior year quarter ~~with $0.3~~primarily due to increased provision for bad debt of $2.9 million ~~of increased legal~~ and ~~professional fees, $0.2 million of~~ increased salary and ~~employee related~~employee-related expenses ~~$0.1 million~~ of ~~increased bad debt expense and $0.2 million of increased general expenses. The Completion Fluids & Products Division continues to review opportunities to further reduce its administrative costs.~~$0.6 million. Other ~~expense~~income increased primarily due to increased foreign currency ~~losses.~~gains and income from investments.

Water & Flowback Services Division


	Three Months Ended June 30,						Period to Period Change					Three Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	73,124		$	83,646		$	(10,522	)	(12.6	)%	$	24,723		$	73,124		$	(48,401	)	(66.2	)%
Gross profit	7,490			18,631			(11,141		)
Gross profit as a percentage of revenue	10.2		%	22.3		%
Gross profit (loss)												(4,836		)	7,490			(12,326		)	(164.6	)%
Gross profit (loss) as a percentage of revenue												(19.6		)%	10.2		%
General and administrative expense	5,775			6,444			(669		)	(10.4	)%	3,809			5,775			(1,966		)	(34.0	)%
General and administrative expense as a percentage of revenue	7.9		%	7.7		%						15.4		%	7.9		%
Interest (income) expense, net	(8		)	(1		)	(7		)			(2		)	(8		)	6			(75.0	)%
Other (income) expense, net	(737		)	3,877			(4,614		)			(225		)	(737		)	512			(69.5	)%
Income before taxes	$	2,460		$	8,311		$	(5,851	)
Income before taxes as a percentage of revenue	3.4		%	9.9		%
Income (loss) before taxes												$	(8,418	)	$	2,460		$	(10,878	)	(442.2	)%
Income (loss) before taxes as a percentage of revenue												(34.0		)%	3.4		%

Water & Flowback Services Division revenues decreased significantly during the current year quarter primarily due to decreased customer drilling and completions activity as a result of lower oil and gas prices caused by the COVID-19 pandemic as well as decreased international equipment sales activity.

The Water & Flowback Services Division reported a gross loss during the current year quarter compared to the prior year quarter gross profit primarily due to ~~increased customer pricing pressures and~~lower revenues ~~recorded~~resulting from ~~specific high-margin Rocky Mountain and Mid-Continents customer projects during the prior year period.~~

~~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 from the high-margin projects~~activity levels described above. Customer pricing continues to be challenging due to excess availability of equipment in certain markets. The Water & Flowback Services Division continues to monitor its cost structure, minimize costs, and seeks to capture additional synergies following the SwiftWater and JRGO acquisitions.

The Water & Flowback Services Division reported ~~decreased~~a pretax loss compared to a pretax income ~~during the current year quarter compared to~~in the prior year ~~quarter~~period, primarily due to the substantial reduction in gross profit described above. General and administrative expense levels decreased compared to the prior year quarter primarily due to decreased ~~salary~~wage and ~~employee~~benefit related expenses of $2.1 million, decreased general expenses of $0.5 million, and decreased professional ~~services~~ fees of ~~$0.3 million, and decreased~~$0.2 million. These decreases were offset by increased bad debt expense of ~~$0.1 million, partially offset by increased insurance and other general expenses of $0.2~~$0.8 million. Other (income) expense includes $0.4 million current period gain compared to a $4.3 million prior period charge associated with the remeasurement of the contingent purchase price consideration for SwiftWater.

Compression Division


	Three Months Ended June 30,						Period to Period Change					Three Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	135,905		$	99,924		$	35,981		36.0	%	$	96,372		$	135,905		$	(39,533	)	(29.1	)%
Gross profit	21,235			14,933			6,302			42.2	%	4,511			21,235			(16,724		)	(78.8	)%
Gross profit as a percentage of revenue	15.6		%	14.9		%						4.7		%	15.6		%
General and administrative expense	10,972			10,841			131			1.2	%	10,152			10,972			(820		)	(7.5	)%
General and administrative expense as a percentage of revenue	8.1		%	10.8		%						10.5		%	8.1		%
Interest expense, net	12,998			13,634			(636		)			12,982			12,998			(16		)	(0.1	)%
CCLP Series A Preferred fair value adjustment (income) expense	146			(512		)	658					—			146			(146		)	(100.0	)%
Other (income) expense, net	602			(375		)	977					4,383			602			3,781			628.1	%
Loss before taxes	$	(3,483	)	$	(8,655	)	$	5,172		59.8	%	$	(23,006	)	$	(3,483	)	$	(19,523	)	(560.5	)%
Loss before taxes as a percentage of revenue	(2.6		)%	(8.7		)%						(23.9		)%	(2.6		)%

Compression Division revenues ~~increased~~decreased during the current year quarter compared to the prior year quarter primarily due to the COVID-19 pandemic's impact on demand for oil and natural gas and the resulting decline in oil prices that led to a ~~$26.8 million increase~~significant reduction in ~~product~~our customer's activity. Product sales revenues decreased$31.3 million, as we continued to close out remaining backlog and prepared to shut down our Midland manufacturing facility. Service revenues decreased $8.3 million due to a higher number of new compressor equipment sales compared to the prior year quarter. Demand for new compressor equipment continues to be strong. In addition, current year revenues reflect a $9.2 million increase in service revenues. This increase in service revenues was primarily due to increasing demand for compression services, as reflected by increased compression fleet utilizationreturned compressors, compressors placed on standby rates, ~~led by increased utilization of the high-~~ and ~~medium-horsepower fleet.~~some pricing concessions.

Compression Division gross profit ~~increased~~decreased during the current year quarter compared to the prior year ~~quarter~~ due to ~~increased~~the lower revenues discussed ~~above. This increase was despite a $2.5~~above and the impairments and other charges of $9.0 million ~~charge for the impairment~~primarily on ~~certain low-horsepower~~non-core used compressor equipment ~~and associated inventory during~~that we have held for sale, the ~~current year period. Higher~~low-horsepower class of our compression fleet, ~~utilization rates have led to increases in customer contract pricing.~~and field inventory for compression and related services.

The Compression Division recorded ~~a decreased~~an increased pretax loss during the current year quarter compared to the prior year quarter due to ~~increased~~the decreased gross profit discussed above. ~~Interest~~General and administrative expense levels 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, due to increased legal and professional fees of $0.4 million and increased bad debt expense of $0.1 million, offset by decreased ~~other general~~employee expenses of ~~$0.5~~$0.9 million. ~~The CCLP Preferred Units fair value adjustment resulted in a $0.1 million charge to earnings in the current year quarter compared to a $0.5 million credit to earnings in the prior year period.~~ Other (income) expense, net, reflected increased expense primarily due to $4.8 million of fees associated with the exchange of debt offset by decreased expense of $0.6 million ofassociated with the redemption premium incurred during the prior year period in connection with the redemption of ~~the~~ CCLP Series A Preferred Units for cash and increased foreign currency ~~losses.~~gains of 0.2 million.

Corporate Overhead


	Three Months Ended June 30,						Period to Period Change					Three Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Depreciation and amortization	$	172		$	164		$	8		(4.9	)%	$	175		$	172		$	3		(1.7	)%
General and administrative expense	14,350			11,871			2,479			20.9	%	11,611			14,350			(2,739		)	(19.1	)%
Interest (income) expense, net	5,696			4,877			819					4,749			5,696			(947		)	(16.6	)%
Warrants fair value adjustment (income) expense	(1,520		)	2,195			(3,715		)			11			(1,520		)	1,531			(100.7	)%
Other (income) expense, net	605			220			385					363			605			(242		)	(40.0	)%
Loss before taxes	$	(19,303	)	$	(19,327	)	$	24		0.1	%	$	(16,909	)	$	(19,303	)	$	2,394		12.4	%

Corporate Overhead pretax loss ~~remained flat~~decreased during the current year quarter compared to the prior year quarter, primarily due to ~~increased income associated with~~decreased general and administrative expense and decreased interest expense. Corporate general and administrative expense decreased primarily due to decreased salary and employee expenses of $2.0 million, and decreased general expenses of $0.7 million. Interest expense decreased resulting from decreased borrowing under the ABL Credit Agreement. The fair value of the outstanding Warrants liability ~~offset by increased general and administrative and interest expenses. The fair value of the outstanding Warrants liability~~

resulted in a ~~$1.5~~$0.01 million ~~credit~~charge to earnings during the current year quarter compared to a ~~$2.2~~$1.5 million ~~charge~~credit to earnings in the prior year quarter. Corporate general and administrative expense increased primarily due to increased salary, incentives, and other employee related expenses, which included $1.8 million of executive transition costs incurred during the current year quarter. These increases were partially offset by $0.2 million of decreased professional service fees. Interest expense increased resulting from increased borrowings. In addition, other expense, net, increased primarily due to increased foreign currency losses of $0.3 million.

Results of Operations

Six months ended June 30, ~~2019~~2020 compared with six months ended June 30, ~~2018.~~2019.

Consolidated Comparisons


	Six Months Ended June 30,						Period to Period Change					Six Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	532,524		$	459,453		$	73,071		15.9	%	$	415,383		$	532,524		$	(117,141	)	(22.0	)%
Gross profit	84,576			75,784			8,792			11.6	%	59,738			84,576			(24,838		)	(29.4	)%
Gross profit as a percentage of revenue	15.9		%	16.5		%						14.4		%	15.9		%
General and administrative expense	70,572			64,420			6,152			9.5	%	64,551			70,572			(6,021		)	(8.5	)%
General and administrative expense as a percentage of revenue	13.3		%	14.0		%						15.5		%	13.3		%
Interest expense, net	36,908			33,352			3,556			10.7	%	35,442			36,908			(1,466		)	(4.0	)%
Warrants fair value adjustment (income) expense	(1,113		)	201			(1,314		)			(327		)	(1,113		)	786			(70.6	)%
CCLP Series A Preferred Units fair value adjustment (income) expense	1,309			846			463					—			1,309			(1,309		)	(100.0	)%
Other (income) expense, net	(324		)	6,584			(6,908		)			4,278			(324		)	4,602			(1420.4	)%
Loss before taxes and discontinued operations	(22,776		)	(29,619		)	6,843			23.1	%	(44,206		)	(22,776		)	(21,430		)	94.1	%
Loss before taxes and discontinued operations as a percentage of revenue	(4.3		)%	(6.4		)%						(10.6		)%	(4.3		)%
Provision for income taxes	4,099			3,570			529					3,155			4,099			(944		)	(23.0	)%
Loss before discontinued operations	(26,875		)	(33,189		)	6,314					(47,361		)	(26,875		)	(20,486		)	76.2	%
Discontinued operations:
Loss from discontinued operations (including 2018 loss on disposal of $31.5 million), net of taxes	(771		)	(41,727		)	40,956
Income (loss) from discontinued operations, net of taxes												18			(771		)	789			(102.3	)%
Net loss	(27,646		)	(74,916		)	47,270					(47,343		)	(27,646		)	(19,697		)	71.2	%
Loss attributable to noncontrolling interest	9,895			15,303			(5,408		)			24,537			9,895			14,642			148.0	%
Net loss attributable to TETRA stockholders	$	(17,751	)	$	(59,613	)	$	41,862				$	(22,806	)	$	(17,751	)	$	(5,055	)	28.5	%

Consolidated revenuesfor the current year period ~~increased~~decreased compared to the prior year period primarily due to ~~increased~~decreased revenues in our Water & Flowback Services and Compression Divisions, which decreased by $69.6 millionand$52.8 million, respectively, primarily due to the COVID-19 pandemic and decline in oil prices. The decrease in revenues for the Water & Flowback Services Division ~~and Completion Fluids & Products Division revenues, which increased by $54.0 millionand $11.7 million, respectively.~~was primarily due to decreased water management services activity. The ~~increased~~decreased revenues of the Compression Division were primarily due to ~~increased~~lower new ~~compressor equipment~~unit sales ~~activity. The~~as we progress the shut down of our Midland manufacturing facility. These decreases were partially offset by an increase in revenues ~~for the~~in our Completion Fluids & Products Division ~~was~~of $5.2 million primarily due to increased CBF product sales revenues in the U.S. Gulf of Mexico, and increased international CBF product sales and domestic manufactured products sales. ~~Our Water & Flowback Services Division also reported increased revenues, primarily driven by the impact of a full six months of SwiftWater, which was acquired on February 28, 2018.~~ See Divisional Comparisons section below for additional discussion.

Consolidated gross profit ~~increased~~decreased during the current year period compared to the prior year period primarily due to the ~~increased~~decreased profitability of our Water & Flowback Services and Compression ~~Division and~~Divisions. This decreased gross profit was slightly offset by increased gross profit of our Completion Fluids & Products Division. ~~The~~While offshore activity levels for our Completion Fluids & Products Division 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~~period, onshore activity levels ~~of certain of our businesses, onshore and offshore U.S. Gulf of Mexico activity levels remain flat and~~decreased, particularly during the second quarter. The impact of pricing pressures in addition to reduced levels of onshore activity continues to challenge profitability in ~~certain~~the current markets. Operating expenses reflect the ~~increase~~decrease in consolidated revenues, ~~although we remain~~as well as aggressive ~~in managing~~management of operating costs and ~~minimizing increased headcount, despite the increased operations.~~headcount.

Consolidated general and administrative expenses ~~increased~~decreased during the current year periodcompared to the prior year period primarily due to ~~$6.6 million of increased~~decreased salary related expenses of $9.3 million and ~~$0.2 million of increased insurance and other~~decreased general expenses ~~partially~~of $1.3 million. These decreases were partly offset by ~~$0.3 million~~increased bad debt expense of ~~decreased professional services fees, and $0.3 million of decreased consulting and other expenses. Increased~~$4.8 million. Decreased general and administrative expenses were driven primarily by our ~~Compression~~Corporate Division. Most of the decrease of our general and ~~Corporate Divisions. Due~~administrative expenses stemmed from our restructuring efforts and headcount reductions in response to the ~~increased consolidated revenues discussed above, general~~decline in activity levels, particularly in our U.S. onshore operations. General and administrative expense as a percentage of revenues ~~decreased~~increased compared to the prior year period.

Consolidated interest expense, net, ~~increased~~decreased in the current year period primarily due to a decrease in Corporate and Compression Division interest expense. Corporate interest expense ~~increased~~decreased due to ~~additional~~lower borrowings under the ~~TETRA Term Credit Agreement and~~ ABL Credit ~~Agreement in the current period.~~Agreement. Compression Division interest expense ~~increased~~decreased due to ~~higher~~interest associated with the expense of CCLP ~~outstanding debt balances and higher interest rates compared to~~Series A Preferred units that was incurred in the prior year period. Interest expense during the current year period and the prior year period includes ~~$1.9~~$2.2 million and ~~$2.1~~$1.9 million, respectively, of finance cost amortization.

The CCLP Preferred Units were eligible to be settled using a variable number of CCLP common units, and therefore the fair value of the CCLP Preferred Units was classified as a long-term liability on our consolidated balance sheets in accordance with ASC 480. Because the CCLP Preferred Units were convertible into CCLP common units at the option of the holder, the fair value of the CCLP Preferred Units generally increased or decreased with the trading price of the CCLP common units, and this increase (decrease) in CCLP Preferred Unit fair value was charged (credited) to earnings, as appropriate. The last remaining outstanding CCLP Preferred Units were redeemed for cash on August 8, 2019.

Consolidated other (income) expense, net, was ~~$0.3~~$4.3 million of ~~income~~expense during the current year period compared to ~~$6.6~~$0.3 million of ~~expense~~income during the prior year ~~period~~period. The increase in expense is primarily due to ~~$5.1~~$4.8 million of ~~decreased expense~~fees associated with the ~~remeasurement~~CCLP unsecured debt exchange transaction, $1.0 million of increased foreign currency losses due to the devaluation of the ~~contingent purchase price consideration for the SwiftWater acquisition~~Mexican peso and ~~$3.5 million~~increased deferred compensation expense of ~~decreased~~$0.3 million. The increases in 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. These decreases~~ were offset by ~~increased expense of~~ $1.1 million of gains associated with ~~a redemption premium incurred in connection~~the sale of assets and $0.4 million of increased income associated with ~~the redemption of CCLP Preferred Units for cash and increased foreign currency losses.~~investments.

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 six month period ended June 30, ~~2019~~2020 of negative ~~18.0%~~7.1% 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


	Six Months Ended June 30,						Period to Period Change				Six Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018		% Change		2020			2019			2020 vs 2019		% Change
	(In Thousands, Except Percentages)										(In Thousands, Except Percentages)
Revenues	$	141,348		$	129,660		$	11,688	9.0	%	$	146,583		$	141,348		$	5,235	3.7	%
Gross profit	30,472			21,082			9,390		44.5	%	46,783			30,472			16,311		53.5	%
Gross profit as a percentage of revenue	21.6		%	16.3		%					31.9		%	21.6		%
General and administrative expense	9,928			9,102			826		9.1	%	14,375			9,928			4,447		44.8	%
General and administrative expense as a percentage of revenue	7.0		%	7.0		%					9.8		%	7.0		%
Interest (income) expense, net	(337		)	(365		)	28				(297		)	(337		)	40		(11.9	)%
Other (income) expense, net	81			(85		)	166				107			81			26		32.1	%
Income before taxes	$	20,800		$	12,430		$	8,370	67.3	%	$	32,598		$	20,800		$	11,798	56.7	%
Income before taxes as a percentage of revenue	14.7		%	9.6		%					22.2		%	14.7		%

The increase in Completion Fluids & Products Division revenues during the current year period compared to the prior year period was primarily due to ~~$6.8~~$7.3 million of increased product sales revenue ~~primarily~~which was 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.~~Mexico as well as improved markets for CBF product sales in international locations, including South America and domestic manufactured product sales. Additionally, service revenues ~~increased~~decreased$~~4.9~~2.1 million, primarily due to ~~increased international completion services activity. Offshore~~overall decreased demand and decreased filtration and engineering work in the U.S. Gulf of Mexico ~~activity levels remain challenged, and the impact of pricing pressures continues to hamper profitability.~~associated with fluid sales.

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. Gross profit was negatively affected by approximately $0.7 million of costs associated with a damaged manufactured products facility, a portion of which is expected to be reimbursed from insurance proceeds in future periods. 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~~an increase in pretax earnings during the current year period compared to the prior year period due to the increase in gross profit discussed above. Completion Fluids & Products Division general and administrative ~~cost levels~~expenses increased compared to the prior year period ~~as $0.7~~primarily due to increased bad debt expense of $3.0 million ofand increased ~~legal and professional fees and $0.4 million of increased general expenses were partially offset by $0.3 million of decreased~~ salary and ~~employee related expenses.~~employee-related expenses of $1.7 million.

Water & Flowback Services Division


	Six Months Ended June 30,						Period to Period Change					Six Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	151,802		$	144,721		$	7,081		4.9	%	$	82,190		$	151,802		$	(69,612	)	(45.9	)%
Gross profit	16,341			30,035			(13,694		)	(45.6	)%
Gross profit (loss)												(1,569		)	16,341			(17,910		)	(109.6	)%
Gross profit as a percentage of revenue	10.8		%	20.8		%						(1.9		)%	10.8		%
General and administrative expense	12,571			11,722			849			7.2	%	10,143			12,571			(2,428		)	(19.3	)%
General and administrative expense as a percentage of revenue	8.3		%	8.1		%						12.3		%	8.3		%
Interest (income) expense, net	(4		)	(16		)	12					(11		)	(4		)	(7		)	175.0	%
Other (income) expense, net	(917		)	3,470			(4,387		)			(1,039		)	(917		)	(122		)	13.3	%
Income before taxes	$	4,691		$	14,859		$	(10,168	)	68.4	%
Income before taxes as a percentage of revenue	3.1		%	10.3		%
Income (loss) before taxes												$	(10,662	)	$	4,691		$	(15,353	)	327.3	%
Income (loss) before taxes as a percentage of revenue												(13.0		)%	3.1		%

Water & Flowback Services Division service and product revenues ~~increased~~decreased$69.6 million during the current year period compared to the prior year period due to ~~increased~~decreased water management services ~~activity. Water management~~activity associated with significantly lower customer drilling and flowback services revenues increased $7.0 million during the current year period compared to the prior year period primarily resulting from the impact of a full six month of revenues from SwiftWater, which was acquired on February 28, 2018,completion activity and ~~the impact of the December 2018 acquisition of JRGO. Product sales revenue increased by $0.1 million, due to~~decreased international equipment sales activity.

The Water & Flowback Services Division reflected decreased gross profit during the current year period compared to the prior year period ~~despite increased revenues,~~partly 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 same period had a meaningful impact on profitability. In addition, we reflected decreasedlower revenues and ~~profit from~~partly due to certain high-margin projects performed during the prior year period. We also experienced high maintenance costs on our flowback service equipment following the significant activity experienced in the fourth quarter of 2018, which was our highest flowback service revenue quarter in over three years.year.

The Water & Flowback Services Division reported ~~decreased~~a pretax loss compared to a pretax income ~~compared to~~in the prior year period, primarily due to the decrease in gross profit described above. General and administrative expenses ~~increased~~decreased primarily due to ~~the $2.5 million impact from additional administrative expenses from the operations added as a result of the 2018 acquisitions. Total general and administrative increases included increased~~decreased wage and benefit related expenses of ~~$0.6 million, increased sales and marketing expenses of $0.3~~$3.1 million and ~~increased~~decreased general expenses of ~~$0.3~~$0.9 million offset by ~~decreased professional fees~~increased bad debt expense of ~~$0.3~~$1.5 million. The Water & Flowback Services Division reported other income, net, during the current year period compared to other expense during the prior year period primarily due to $0.8 million of current period income associated with the remeasurement of the contingent purchase price consideration for SwiftWater compared to a $4.3 million expense during the prior year period.

Compression Division


	Six Months Ended June 30,						Period to Period Change					Six Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Revenues	$	239,374		$	185,346		$	54,028		29.1	%	$	186,610		$	239,374		$	(52,764	)	(22.0	)%
Gross profit	38,094			24,973			13,121			52.5	%	14,890			38,094			(23,204		)	(60.9	)%
Gross profit as a percentage of revenue	15.9		%	13.5		%						8.0		%	15.9		%
General and administrative expense	21,635			19,127			2,508			13.1	%	20,341			21,635			(1,294		)	(6.0	)%
General and administrative expense as a percentage of revenue	9.0		%	10.3		%						10.9		%	9.0		%
Interest expense, net	26,210			24,848			1,362					25,546			26,210			(664		)	(2.5	)%
CCLP Series A Preferred fair value adjustment (income) expense	1,309			846			463					—			1,309			(1,309		)	(100.0	)%
Other (income) expense, net	224			2,825			(2,601		)			4,799			224			4,575			2,042.4	%
Loss before taxes	$	(11,284	)	$	(22,673	)	$	11,389		50.2	%	$	(35,796	)	$	(11,284	)	$	(24,512	)	217.2	%
Loss before taxes as a percentage of revenue	(4.7		)%	(12.2		)%						(19.2		)%	(4.7		)%

Compression Division revenues ~~increased~~decreased during the current year period compared to the prior year period primarily due to the COVID-19 pandemic's impact on demand for oil and natural gas and the resulting decline in oil prices that led to a ~~$37.2 million increase~~significant decrease in ~~product~~customer activity. Product sales revenues decreased$50.5 million due to ~~improving demand. Demand for~~a decrease in deliveries of new ~~compressor equipment remains strong, although the current equipment sales backlog has decreased~~compressors compared to the prior year ~~period,~~ due to ~~significant sales recorded in~~ the ~~prior year period. Changes in~~planned shut down of our ~~new equipment sales backlog are a function of additional customer orders less completed orders that result in equipment sales revenues. In addition, current year~~Midland manufacturing facility. Service revenues ~~reflect a $16.8~~decreased $2.2 million ~~increase in service revenues~~ from compression and aftermarket services operations. ~~This increase~~The decrease in service revenues was primarily due to ~~increasing~~reduction in customer activity resulting in a decrease in demand for compression services, as reflected by increased compression fleet utilization rates. Overall utilization of the Compression Division's compression fleet has improved sequentially for the past two year period, led by increased utilization of the high-services. In addition, returned compressors, compressors placed on standby rates, and ~~medium-horsepower fleet.~~pricing concessions also resulted in decreased revenues.

Compression Division gross profit ~~increased~~decreased during the current year period compared to the prior year due to ~~increased~~decreased revenues discussed ~~above. This increase was despite a $2.5~~above and the impairments and other charges of $14.3 million ~~charge for the impairment~~primarily on ~~certain low-horsepower~~our Midland manufacturing facility and related assets, non-core used compressor equipment ~~and associated inventory during~~that we have held for sale, the ~~current year period. The increased~~low-horsepower class of our compression fleet, ~~utilization rates have led to increases in customer contract pricing.~~and field inventory for compression and related services.

The Compression Division recorded ~~less~~increased pretax loss in the current year period compared to the prior year period ~~primarily~~ due to the ~~increased~~decreased gross profit discussed above. Interest expense ~~increased~~decreased compared to the prior year period due to ~~higher CCLP outstanding debt balances and a higher~~decreased interest ~~rate on~~associated with the CCLP ~~Senior Secured Notes, a portion of~~Series A Preferred units that was incurred in the ~~proceeds of which were used to repay the balance outstanding under the previous CCLP bank credit facility.~~prior year period. General and administrative expense levels ~~increased~~decreased compared to the prior year period, due to ~~$2.2 million of increased~~decreased salary and employee-related expenses, including the impact of ~~increased~~decreased headcount, incentives and equity compensation ~~and~~of $1.6 million. These decreases were offset by increased professional services of ~~$0.4~~$0.3 million and increased bad debt expense of $0.2 million. ~~In addition, other~~Other (income) expense, ~~decreased $2.6~~net changed from income of $0.3 million ~~as $1.1~~expense in the prior year period to $4.8 million of expense ~~during~~in the current year ~~period~~period. The increase in expense is primarily due to $4.8 million of fees associated with the exchange of debt and $0.9 million of increased foreign currency losses due to the devaluation of the Mexican peso offset by decreased expense of $1.1 million associated with the redemption premium incurred during the prior year period in connection with the redemption of ~~the~~Preferred Units for cash. The last remaining outstanding CCLP Preferred Units were redeemed for cash was offset by $3.5 million of expense during the prior year period for unamortized deferred financing costs charged to earnings as a result of the termination of the previous CCLP bank credit facility. The CCLP Preferred Units fair value adjustment resulted in a $1.3 million charge to earnings during the current year period compared to a $0.8 million charge to earnings in the prior year period.on August 8, 2019.

Corporate Overhead


	Six Months Ended June 30,						Period to Period Change					Six Months Ended June 30,						Period to Period Change
	2019			2018			2019 vs 2018			% Change		2020			2019			2020 vs 2019			% Change
	(In Thousands, Except Percentages)											(In Thousands, Except Percentages)
Depreciation and amortization	$	340		$	315		$	25		(7.9	)%	$	372		$	340		$	32		9.4	%
General and administrative expense	26,439			24,469			1,970			8.1	%	19,692			26,439			(6,747		)	(25.5	)%
Interest expense, net	11,038			8,884			2,154					10,204			11,038			(834		)	(7.6	)%
Warrants fair value adjustment (income) expense	(1,113		)	201			(1,314		)			(327		)	(1,113		)	786			(70.6	)%
Other (income) expense, net	286			370			(84		)			412			286			126			44.1	%
Loss before taxes	$	(36,990	)	$	(34,239	)	$	(2,751	)	(8.0	)%	$	(30,353	)	$	(36,990	)	$	6,637		(17.9	)%

Corporate Overhead pretax loss ~~increased~~decreased during the current year period compared to the prior year period primarily due to ~~increased interest expense resulting from increased borrowings.~~decreased general and administrative expenses. Corporate general and administrative expense ~~increased~~decreased primarily due to ~~increased~~decreased salary related expense of ~~$4.1~~$6.3 million ~~which included $1.8 million of executive transition costs. This increase was offset by $1.1 million of decreased professional fees,~~and $0.4 million of decreased general ~~expenses, and $0.6 million of~~expenses. Interest expense decreased ~~consulting fees.~~due to lower borrowings under the ABL Credit Agreement. The fair value of the outstanding Warrants liability resulted in a ~~$1.1~~$0.3 million credit to earnings in the current year period compared to an ~~$0.2~~$1.1 million ~~charge~~credit to earnings during the prior year period. ~~In addition, other expense of $0.3 million was recorded during the current year period, compared to $0.4 million during the prior year period.~~

Liquidity and Capital Resources

We believe that ~~the~~our and CCLP's separate capital ~~structure steps we have taken during the past three years continue to support our ability~~structures allow us to meet our respective financial obligations, ~~and fund future growth as needed,~~ despite current uncertain operating conditions and financial markets. As of June 30, ~~2019,~~2020, we and CCLP are in compliance with all covenants of our respective debt agreements. Information about the terms and covenants of our debt agreements can be found in our ~~2018~~2019 Annual Report.

~~Because of the level of consolidated debt, we~~We believe it is important to consider our capital structure and ~~CCLP's capital structure~~that of CCLP separately asbecause there are no cross default ~~provisions, cross collateralization~~ provisions or cross guarantees between CCLP's debt and TETRA's debt. Our consolidated debt outstanding has a carrying value of approximately ~~$856.5~~$843.3 million as of June 30, ~~2019.~~2020. However, approximately ~~$634.4~~$637.6 million of this consolidated debt balance is owed by CCLP and is serviced from the ~~existing~~ cash balances and cash flows of CCLP, and ~~$343.8~~$557.8 million of which is secured by certain of CCLP's assets. Through our common unit ownership interest in CCLP, which was approximately 34% as of June 30, ~~2019,~~2020, and ownership of an ~~approximately~~approximate 1.4% general partner interest, we receive our share of the distributable cash flows of CCLP through its quarterly cash distributions. Approximately ~~$4.3~~$6.8 million of the ~~$26.0~~$56.7 million of the cash balance reflected on our consolidated balance sheet is owned by CCLP and is not accessible by us. 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.


	June 30, 2019									June 30, 2020
Condensed Consolidating Balance Sheet	TETRA		CCLP		Eliminations			Consolidated		TETRA		CCLP		Eliminations			Consolidated
	(In Thousands)									(In Thousands)
Cash, excluding restricted cash	$	21,683	$	4,296	$	—		$	25,979	$	49,965	$	6,757	$	—		$	56,722
Affiliate receivables	10,086		—		(10,086		)	—		13,074		—		(13,074		)	—
Other current assets	225,552		141,315		—			366,867		156,110		96,155		—			252,265
Property, plant and equipment, net	212,198		648,237		—			860,435		106,949		606,635		—			713,584
Long-term affiliate receivables	11,142		—		(11,142		)	—		12,019		—		(12,019		)	—
Other assets, including investment in CCLP	67,404		42,344		76,157			185,905		12,338		60,191		93,494			166,023
Total assets	$	548,065	$	836,192	$	54,929		$	1,439,186	$	350,455	$	769,738	$	68,401		$	1,188,594

Affiliate payables	$	—	$	10,086	$	(10,086	)	$	—	$	—	$	13,074	$	(13,074	)	$	—
Other current liabilities	98,149		109,313		—			207,462		73,141		74,186		—			147,327
Long-term debt, net	222,109		634,373		—			856,482		205,713		637,579		—			843,292
CCLP Series A Preferred Units	—		9,000		(1,106		)	7,894
Warrants liability	960		—		—			960		123		—		—			123
Long-term affiliate payable	—		11,142		(11,142		)	—		—		12,019		(12,019		)	—
Other non-current liabilities	64,714		6,983		—			71,697		62,616		22,550		—			85,166
Total equity	162,133		55,295		77,263			294,691		8,862		10,330		93,494			112,686
Total liabilities and equity	$	548,065	$	836,192	$	54,929		$	1,439,186	$	350,455	$	769,738	$	68,401		$	1,188,594

As of June 30, ~~2019,~~2020, subject to compliance with the covenants, borrowing base requirements, and other provisions of the agreement that may limit borrowings, we had ~~$40.6~~$37.1 million of availability under the ABL Credit Agreement. The amounts we may borrow under the ABL Credit Agreement are derived from our accounts receivable and certain inventory. Decreases in the amount of our accounts receivable and the value of our inventory would result in reduced borrowing availability under the ABL Credit Agreement. As of June 30, ~~2019,~~2020, and subject to compliance with the covenants, borrowing base requirements, and other provisions of the agreement that may limit borrowings under the CCLP Credit Agreement, CCLP had availability of ~~$22.2~~$12.3 million. See CCLP Financing Activities below for further discussion.

Our consolidated sources (uses) of cash during the six months ended June 30, ~~2019~~2020 and ~~2018~~2019 are as follows:


	Six months ended June 30,						Six months ended June 30,
	2019			2018			2020			2019
	(In Thousands)						(In Thousands)
Operating activities	$	38,377		$	(12,127	)	$	60,387		$	38,377
Investing activities	(71,254		)	(106,347		)	(14,063		)	(71,254		)
Financing activities	18,715			165,494			(6,486		)	18,715

Operating Activities

Consolidated cash flows provided by operating activitiesincreasedby ~~$50.5 million.~~$22.0 million compared to the first half of 2019. CCLP generated ~~$40.3~~$18.2 million of our consolidated cash flows provided by operating activities during the six months ended June 30, ~~2019~~2020 compared to ~~a utilization of $4.3~~$40.3 million during the corresponding prior year period. Operating cash flows increased primarily due to ~~improved operating profitability and due to minimizing the use~~monetization of ~~cash for~~ working capital changes, particularly related to the management of inventory levels and the timing of payments of accounts payable. We have taken steps to aggressively manage working capital, including increased accounts receivable collection efforts.capital. We continue to monitor customer credit risk in the current environment and focus on serving larger capitalized oil and gas operators and national oil companies.

Investing Activities

Total cashcapital expenditures during the first six months of ~~2019~~2020 were ~~$60.6 million.~~$19.6 million, which is net of $2.3 million cost of compressors sold. Our Completion Fluids & Products Division spent ~~$3.6~~$1.3 million on capital expenditures, ~~during the first~~ ~~six~~ ~~months of~~ ~~2019~~, the majority of which related to plant and facility additions. Our Water & Flowback Services Division spent ~~$16.8~~$6.8 million on capital expenditures, primarily to ~~add to~~maintain, automate and upgrade its water management and flowback equipment fleet. Our Compression Division spent ~~$40.1~~$11.2 million, primarily ~~for growth capital expenditure projects~~ to ~~increase~~maintain its compression fleet.

~~Generally,~~Historically, a significant 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~~such expenditures have recently 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 ~~$30.0~~$10.0 million to ~~$35.0~~$15.0 million during ~~2019~~2020 on capital expenditures, primarily to expand and maintain our Water & Flowback Services Division equipment fleet.

Our Compression Division ~~expects~~has adjusted its expected capital spend downward to ~~spend~~ approximately ~~$80.0~~$28.0 million to ~~$85.0~~$35.0 million ~~on capital expenditures~~ during ~~2019~~2020 primarily to ~~expand~~maintain its compression ~~fleet in response to increased demand for compression services.~~ fleet.

If the forecasted demand for our products and services ~~during the remainder of 2019~~ increases or decreases, the amount of planned expenditures on growth and expansion may be adjusted.

Financing Activities

During the first six months of ~~2019,~~2020, the total amount of consolidated cash ~~provided by~~used in financing activities was ~~$18.7~~$6.5 million, ~~consisting~~ primarily ~~of borrowings~~due to repayments under our ABL Credit Agreement and ~~our Term Credit Agreement.~~cash fees paid for the exchange of debt. 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. We and CCLP are aggressively managing our working capital and capital expenditure needs in order to maximize our liquidity in the current environment.

TETRA Long-Term Debt

Asset-Based Credit Agreement. 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~~includes a ~~letter of credit~~ sublimit of $20.0 million for letters of credit and a swingline loan sublimit of $10.0 million. The amounts we may borrow under the ABL Credit Agreement are derived from our accounts receivable and certain inventory. Changes in demand for our products and services have an impact on our eligible accounts receivable, which could result in significant changes to our borrowing base and therefore our availability

under our ABL Credit Agreement. With the current depressed oil and gas market conditions, we believe our availability under our ABL Credit facility will be adversely impacted by the expected decline in our customers’ activity levels. The ABL Credit Agreement is scheduled to mature on September 10, 2023. As of August ~~7, 2019,~~5, 2020, we have ~~$31.0~~$0.1 million outstanding under our ABL Credit Agreement and ~~$6.9~~$6.4 million letters of ~~credit.~~credit, resulting in $28.4 million of availability.

Term Credit Agreement. The Term Credit Agreement provides for an initial loan in the amount of $200 million and the availability of additional loans, subject to the terms of the Term Credit Agreement, up to an aggregate amount of $75 million. The Term Credit Agreement is scheduled to mature on September 10, 2025. As of August ~~7, 2019,~~5, 2020, $220.5 million in aggregate principal amount of our Term Credit Agreement is outstanding.

CCLP Financing Activities

CCLP Series A Preferred Units. ~~Beginning in~~In January 2019 CCLP ~~elected to redeem the remaining CCLP~~began redeeming its Series A Preferred Units for cash, resulting in ~~783,046~~2,653,727 Series A Preferred Units being redeemed during the six months ended June 30, 2019 for ~~$22.5~~an aggregate of $19.8 million, which includes approximately ~~$1.1~~$0.9 million of redemption ~~premium~~premiums that ~~was~~were paid. Including the impact of paid in kind distributions of CCLP Preferred Units and conversions of CCLP Preferred Units into CCLP common units, and the redemption of CCLP Preferred Units for cash, the total number of CCLP Preferred Units outstanding as of June 30, 2019 was 751,736, of which we held 94,409. The ~~final~~last redemption of the remaining ~~outstanding CCLP~~Series A Preferred Units, along with a final cash payment made in lieu of ~~paid in kind Preferred Units for the quarter ended June 30, 2019,~~paid-in-kind units, occurred on August 8, 2019.

CCLP Bank Credit ~~Facilities~~Facility. All the obligations of CCLP and two of its wholly owned subsidiaries (collectively the "CCLP Borrowers") under the CCLP Credit Agreement are guaranteed by certain of their existing and future domestic subsidiaries. The ~~CCLP~~ Credit Agreement, as amended, ~~includes a~~provided for modifications to the Credit Agreement which include, among other things: (i) reducing the maximum credit commitment from $50,000,000 to $35,000,000; (ii) the inclusion of ~~$50.0 million available for loans, letters~~a $5,000,000 reserve with respect to the Borrowing Base (as defined in the Credit Agreement) thereunder, which would result in reduced borrowing availability; (iii) the removal of ~~credit (with~~the Fixed Charge Coverage Ratio (as defined in the Credit Agreement) financial maintenance covenant; (iv) a ~~sublimit~~1.25% increase in the applicable margin related to (x) LIBOR Rate Loans (as defined in the Credit Agreement) and (y) Base Rate Loans (as defined in the Credit Agreement), in each case, which shall be determined according to average daily excess availability under the Credit Agreement; and (v) an 0.50% increase in the rate used to calculate the commitment fee in respect of ~~$25.0 million)~~the unutilized commitments. As of June 30, 2020, and ~~swingline loans (with a sublimit of $5.0 million),~~ subject to acompliance with the covenants, borrowing base, and other provisions of the agreements that may limit borrowings under the CCLP Credit Agreement, CCLP had availability of $12.3 million.

The CCLP Borrowers may borrow funds under the CCLP Credit Agreement to ~~be determined by reference~~pay fees and expenses related to the ~~value of CCLP’s~~CCLP Credit Agreement and ~~any other borrowers’ accounts receivable. Such maximum credit commitment~~for the CCLP Borrower's ongoing working capital needs and for general partnership purposes. The revolving loans under the CCLP Credit Agreement may be ~~increased by $25.0 million~~voluntarily prepaid, in ~~accordance with the terms and conditions~~whole or in part, without premium or penalty, subject to breakage or similar costs. The maturity date of the CCLP Credit ~~Agreement.~~Agreement is June 29, 2023. As of June 30, ~~2019,~~2020, CCLP had noa $1.5 million outstanding balance and had ~~$4.5~~$2.8 million in letters of credit against the CCLP Credit Agreement. ~~The CCLP Credit Agreement is scheduled to mature on June 29, 2023.~~ As of August ~~7, 2019,~~3, 2020, CCLP has no$0.0 million balance outstanding under the CCLP Credit Agreement and ~~$3.7~~$2.4 million in letters of credit, resulting in ~~$31.6~~$13.8 million of availability. The amounts the CCLP Borrowers may borrow under the CCLP Credit Agreement are derived from CCLP’s accounts receivable and certain inventory. Decreases in the amount of CCLP’s accounts receivable and the value of its inventory would result in reduced borrowing availability ~~reflecting recent increases~~under the CCLP Credit Agreement.

First Supplemental Indenture for the Old Notes. On June 11, 2020, CSI Compressco, LP and CSI Compressco Finance Inc. (the "Issuers") announced they had accepted for exchange $215,208,000, of their outstanding 7.25% Senior Notes due 2022 (the "Old Notes") that were validly tendered by 11:59 p.m., New York City time, on June 10, 2020, for (i) $50,000,000 of the Issuers' 7.50% Senior Secured First Lien Notes due 2025 (the "7.50% First Lien Notes") and (ii) $155,529,000 aggregate principal amount of new 10.00%/10.75% Senior Secured Second Lien Notes due 2026 (the "10.00%/10.75% Second Lien Notes" and, together with the 7.50% First Lien Notes, the "New Notes"), pursuant to its previously announced exchange offer and consent solicitation, which commenced on April 17, 2020. In connection with the exchange offer, CCLP incurred financing fees of $4.8 million which were charged to other (income) expense, net during the three month period ended June 30, 2020.

On June 12, 2020, following receipt of the requisite consents of the holders of the Old Notes, the Issuers entered into the First Supplemental Indenture (the "First Supplemental Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee, to the ~~borrowing base.~~Indenture, dated as of August 4, 2014 (the "Unsecured Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee.

~~CCLP Senior Secured Notes~~. AsThe First Supplemental Indenture eliminated substantially all of ~~August 7, 2019, $350.0 million~~the restrictive covenants and certain of the default provisions in the Unsecured Indenture and became operative upon the consummation by the Issuers of the exchange offer

On June 12, 2020, the Issuers issued $50,000,000 in aggregate principal ~~was outstanding. The CCLP~~amount of new First Lien Notes to certain holders of the Old Notes pursuant to the terms of the exchange offer. In March 2018, the Issuers had issued $350,000,000 in aggregate principal amount of 7.50% Senior Secured Notes ~~accrue interest at~~due 2025 (the "Existing First Lien Notes" and, together with the newly issued First Lien Notes, the "7.50% First Lien Notes") pursuant to the First Lien Base Indenture. The New First Lien Notes were issued as "additional notes" under the First Lien Base Indenture and will be treated as a ~~rate~~single class with such notes but will not trade fungibly with the Existing First Lien Notes.

Second Lien Notes Indenture. On June 12, 2020, the Issuers issued $155,529,000 in aggregate principal amount of ~~7.50% per annum~~the 10.00%/10.75% Second Lien Notes to certain holders of the Old Notes pursuant to the terms of the exchange offer. The Issuers issued the 10.00%/10.75% Second Lien Notes pursuant to an indenture, dated June 12, 2020 (the "Second Lien Notes Indenture"),by and ~~are scheduled~~among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee (the "Second Lien Trustee"). In connection with the payment of PIK Interest (as defined below), if any, in respect of the 10.00%/10.75% Second Lien Notes, the Issuers will be entitled, to increase the outstanding aggregate principal amount of the 10.00%/10.75% Second Lien Notes or issue additional notes ("PIK notes") under the Second Lien Notes Indenture on the same terms and conditions as the 10.00%/10.75% Second Lien Notes offered hereby. The 10.00%/10.75% Second Lien Notes and any additional 10.00%/10.75% Second Lien Notes subsequently issued under the indenture, will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The 10.00%/10.75% Second Lien Notes will mature on April 1, ~~2025.~~

~~CCLP Senior~~2026. Interest on the 10.00%/10.75% Second Lien Notes. As will be payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2020. Interest will accrue at (1) the annual rate of ~~August 7, 2019, $295.9 million~~7.250% payable in ~~aggregate~~cash, plus (2) at the election of the Issuers (made by delivering a notice to the Second Lien Trustee not less than five business days prior to the record date), the annual rate of (i) 2.750% payable in cash (together with the annual rate set forth in clause (1), the "Cash Interest Rate") or (ii) 3.500% payable by increasing the principal amount ~~was outstanding. The CCLP Senior~~of the outstanding 10.00%/10.75% Second Lien Notes ~~accrue interest at a rate of 7.25% per annum and are scheduled~~or by issuing additional PIK notes, in each case rounding up to ~~mature on August 15, 2022.~~the nearest $1.00 (such increased principal amount or additional PIK notes, the "PIK Interest").

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 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 affect the cost of capital and the ability to raise capital for an indeterminable length of time. If it is necessary to issue additional equity to fund our capital needs, additional dilution toof our common stockholders will occur.

~~On April 11, 2019, we filed a universal shelf Registration Statement on Form S-3 with~~ We periodically evaluate engaging in strategic transactions and may consider divesting non-core assets where our evaluation suggests such transaction is in the SEC. On 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 $464.1 million, inclusive of $64.1 millionbest interest of our ~~common stock issuable upon conversion~~business. In challenging economic environments, we may experience increased delays and failures by customers to pay our invoices. Given the nature and significance of the pandemic and disruption in the oil and gas industry, we could experience delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies. If our customers delay paying or fail to pay us a significant amount 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~~receivables, it could have an adverse effect on our ~~financial condition may require.~~liquidity.An increase of unpaid receivable would also negatively affect our borrowing availability under the ABL Credit Agreement.

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 six months ended June 30, ~~2019,~~2020, CCLP distributed $1.0 million in cash, including $0.6 million to its public ~~unitholders, reflecting the reduction in~~unitholders. The amount of quarterly distributions ~~announced previously by CCLP in December 2018.~~is determined based on a variety of factors, including estimates of CCLP's cash needs to fund its future operating, investing, and debt service requirements. There can be no assurance that quarterly distributions from CCLP will increase from this amount per unit going forward.

Off Balance Sheet Arrangements

As of June 30, ~~2019,~~2020, 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

Contingencies of Discontinued Operations

In early 2018, we closed the Maritech Asset Purchase and Sale 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,~~Shortly thereafter, we closed the Maritech Membership Interest Purchase and Sale 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 former Maritech ~~segment~~segment.

Under the Maritech Asset Purchase and Sale Agreement, Orinoco assumed all of ~~Maritech's abandonment~~Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase and Sale Agreement, Orinoco assumed all other liabilities of Maritech, including the decommissioning ~~obligations.~~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 ~~perform~~satisfy decommissioning liabilities associated with any of the ~~abandonment and decommissioning work required,~~Orinoco Lease Liabilities or the Legacy Liabilities, we ~~as the former parent company of Maritech,~~ may be required to ~~perform~~satisfy such liabilities under third party indemnity agreements and corporate guarantees that we previously provided to the ~~abandonment~~US Department of the Interior and ~~decommissioning work.~~ 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~~$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 delivered at closing~~Initial Bonds with other non-revocable performance bonds, meeting certain requirements, in the aggregate sum of ~~$47.0 million.~~$47.0 million (collectively, the “Interim Replacement Bonds”). Orinoco further agreed to replace, within 180 days following the closing, ~~such replacement performance bonds~~the Interim Replacement Bonds with a maximum of three non-revocable performance bonds in the aggregate sum of ~~$47.0~~$47.0 million, meeting certain ~~requirements.~~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~~did not provide ~~either tranche of replacement bonds,~~the Interim Replacement Bonds or the Final Bonds, Orinoco iswas 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 neither it nor the Clarkes 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. ~~Each party filed a motion for summary judgment in the lawsuit asserting its respective claims.~~ A summary judgment was initially granted in favor of Orinoco and the Clarkes which ~~has~~dismissed our claims against Orinoco under the ~~effect of dismissing~~Bonding Agreement and against the Clarkes under the Clarke Bonding Guaranty Agreement. We filed an appeal and also asked the trial court to grant a new trial on the summary judgment or to modify the judgment because we believe this judgment should not have been granted. On November 5, 2019, the trial court signed an order granting our ~~present claims~~motion for new trial and vacating the ~~replacement bonds~~prior order granting summary judgment for Orinoco and the ~~escrow payments provided for~~Clarkes. The parties are awaiting direction from the court on a new scheduling order and/or trial setting. The Initial Bonds, which are non-revocable, remain in effect.

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. ~~We plan to seek reconsideration~~However, if the Final Bonds or the full amount of the ~~decision by~~escrowed cash have been provided, neither Orinoco nor the ~~court and/~~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 ~~file an appeal~~if we become liable for a significant portion of the ~~summary judgment. The non-revocable performance bonds delivered at~~decommissioning liabilities.

In early 2018, we also closed the ~~closing remain in effect.~~

~~Part of the consideration we received in the March 1, 2018 disposition~~sale of our Offshore Division ~~was a promissory note in the original principal amount of $7.5 million (the “Epic Promissory Note”) payable by~~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 agreements with Epic Companies, certain other amounts relating to the Offshore Division totaling approximately ~~$1.4~~$1.5 million ~~as of June 30, 2019 are~~ were payable to us.

In At the end of August 2019, ~~certain creditors of~~ Epic Companies filed ~~an involuntary petition against Epic Companies under Chapter 7~~for bankruptcy. We recorded a reserve of $7.5 million for the full amount of the ~~bankruptcy code~~promissory note, including accrued interest, and the certain other receivables in the ~~Eastern District~~amount of ~~Louisiana. Although~~$1.5 million during the quarter ended September 30, 2019. The Epic Promissory Note ~~is not currently~~became due on December 31, 2019 but neither Epic nor the Clarkes made the required payment. Upon the default by Epic and ~~is guaranteed by~~the Clarkes, we filed a lawsuit against the Clarkes on January 15, 2020 in Montgomery County, Texas for breach of the Clarke Promissory Note Guaranty Agreement, ~~we continue to monitor this matter and there can be no assurance that future developments, including those involving~~seeking the ~~financial condition of Epic Companies or relating to the involuntary bankruptcy proceeding, may or may not adversely impact our ability to timely collect~~ amounts ~~owed to us by Epic Companies pursuant to the Offshore Services Purchase Agreement and~~due under the Epic Promissory ~~Note.~~Note and related interest, as well as attorneys’ fees and expenses. The Clarkes each filed an answer and counterclaims for fraud and negligent misrepresentation and seek monetary damages in excess of $1 million, punitive damages, and attorneys’ fees. We have taken discovery from the Clarkes. Currently, the case is set for its first trial setting on October 19, 2020.We will vigorously prosecute our claim and defend against the claims by the Clarkes.

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 June 30, ~~2019:~~2020:


	Payments Due														Payments Due
	Total		2019		2020		2021		2022		2023		Thereafter		Total		2020		2021		2022		2023		2024		Thereafter
	(In Thousands)														(In Thousands)
Long-term debt - TETRA	$	240,500	$	—	$	—	$	—	$	—	$	20,000	$	220,500	$	220,500	$	—	$	—	$	—	$	—	$	—	$	220,500
Long-term debt - CCLP	645,930		—		—		—		295,930		—		350,000		637,728		—		—		80,722		1,477		—		555,529
Interest on debt - TETRA	122,403		14,331		19,108		19,108		19,108		18,883		31,865		83,927		7,993		15,986		15,986		15,986		15,986		11,990
Interest on debt - CCLP	230,320		35,672		47,563		47,563		40,459		26,250		32,813		244,842		25,741		51,483		49,532		45,592		45,553		26,941
Purchase obligations	99,250		4,750		9,500		9,500		9,500		9,500		56,500		90,188		4,763		9,525		9,525		9,525		9,525		47,325
Asset retirement obligations⁽¹⁾	12,468		—		—		—		—		—		12,468		12,862		—		—		—		—		—		12,862
Operating leases	82,988		8,948		15,996		11,702		9,107		7,844		29,391		105,782		11,662		20,294		16,684		13,026		11,505		32,611
Total contractual cash obligations⁽²⁾	$	1,433,859	$	63,701	$	92,167	$	87,873	$	374,104	$	82,477	$	733,537	$	1,395,829	$	50,159	$	97,288	$	172,449	$	85,606	$	82,569	$	907,758


⁽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 June 30, ~~2019.~~2020.

⁽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$~~0.8~~0.4 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 settlements. These excluded amounts also include the approximately $7.9 million July 8, 2019 and August 8, 2019 final payments for liabilities related to the CCLP Preferred Units. Refer to Part I, Item 1. Financial Statements- Note F – "CCLP Series A Convertible Preferred Units," for further discussion.

For additional information about our contractual obligations as of December 31, ~~2018,~~2019, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our ~~2018~~2019 Annual Report on Form 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~~Management believes that these forward-looking statements ~~reflect our current views with respect~~are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events ~~and financial performance and are based on assumptions that we believe to be reasonable, but such~~or otherwise, except as required by law. In addition, 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 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;~~

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

~~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.~~

~~The risks and uncertainties referred to above are generally beyond our ability to control and we cannot predict all the~~certain risks and uncertainties that could cause ~~our~~ actual results to differ materially from ~~those indicated by the forward-looking statements. If any of these risks~~our historical experience and our present expectations 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~~projections. These risks and ~~uncertainties. You should~~uncertainties include, but are not ~~place undue reliance~~limited to, those described in Part II, "Item 1A. Risk Factors" and elsewhere in this report and in our Annual Report on ~~forward-looking statements. Each forward-looking statement speaks only as of~~Form 10-K for the ~~date of~~year ended December 31, 2019, and those described from time to time in our future reports filed with 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.~~SEC.

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~~.~~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 June 30, 2019, due to borrowings made during the period then ended, we had balances outstanding under the Term Credit Agreement and ABL Credit Agreement, and such borrowings bear interest at variable rates of interest.

Expected Maturity Date Fair Market
Value
($ amounts in thousands) 2019 2020 2021 2022 2023 Thereafter Total
June 30, 2019
U.S. dollar variable rate - TETRA $ —
$ —
$ —
$ —
$ 20,000
$ 220,500
$ 240,500
$ 240,500
Weighted average interest rate (variable) — % — % — % — % 4.50 % 8.54 %
U.S. dollar fixed rate - CCLP $ —
$ —
$ —
$ 295,930
$— $ 350,000
$ 645,930
$ 611,900
Weighted average interest rate (fixed) — % — % — % 7.25 % — % 7.50 %

~~Exchange Rate Risk~~

~~As of June 30, 2019, there have been no material changes pertaining to our exchange rate exposures as disclosed in our~~ ~~2018 Annual Report~~.Not Applicable.

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 June 30, ~~2019,~~2020, the end of the period covered by this quarterly report.

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, ~~2019,~~2020, 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 styled~~In 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.

Item 1A. Risk Factors.

The statements in this section describe the known material risks to our business and should be considered carefully. We have described in the 2019 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 2019 Annual Report.

The COVID-19 pandemic has had, or may in the future have, certain negative impacts on our business, and such impacts have had, or may in the future have, an adverse effect on our business, our financial condition, results of operations, or liquidity.

The COVID-19 pandemic and the resulting economic impact have had a significant negative impact on the oil and gas industry. The deterioration in demand for oil caused by the pandemic, coupled with oil oversupply, has had, and is reasonably likely to continue to have, an adverse impact on the demand for our products and services.

~~There~~The public health crisis caused by the COVID-19 pandemic, and the measures that have been ~~no material changes~~taken or that may be taken in the ~~information pertaining~~future by governments, various regulatory agencies, our customers and our suppliers, have had, or may in the future have, certain negative impacts on our financial condition, results of operations, and liquidity, including, without limitation, the following:

demand for our products and services is declining as our customers continue to revise their budgets downward and adjust their operations in response to lower oil and gas prices;

actions undertaken by national, state and local governments and health officials to contain COVID-19 or treat its effects. In response to various governmental directives, at points we have required most office-based employees, including most employees based at our headquarters in The Woodlands, Texas, to work remotely. We may experience reductions in productivity and disruptions to our business routines while work-from-home arrangements remain in place;

We could encounter logistical complications and increased costs adapting our disclosure controls and procedures and our internal control over financial reporting in a changing environment that includes work-from-home arrangements and furloughs. In the future we may encounter operational challenges or disruptions stemming from the pandemic that require us to implement new or enhanced internal controls to mitigate the risks of operating in a remote environment or increased risks of material misstatements resulting from changes to the business and other uncertainties;

restrictions on importing and exporting products;

claims from customers and suppliers that their non-performance under our contracts is permitted as a result of force majeure or other reasons;

impacts related to late customer payments and contractual defaults associated with customer and supplier bankruptcies;

potentially higher borrowing costs in the future;

cybersecurity issues, as our network may become more vulnerable to cyberattacks due to increased remote access associated with work-from-home arrangements;

our ability to use our net operating loss carryforwards may be limited;

increased costs associated with possible facility closures to meet expected customer activity levels; and

we may be required to record significant impairment charges with respect to assets, whose fair values may be negatively affected by the effects of the COVID-19 pandemic on our operations. Also, we may be required to write off obsolete inventory, and such charges may be significant.

The resumption of our normal business operations after the disruptions caused by the COVID-19 pandemic may be delayed or constrained by its lingering effects on the oil and gas industry. Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a significant adverse effect on our financial condition, results of operations, or liquidity. Any of these negative impacts, alone or in combination with others, could exacerbate many of the risk factors discussed in Part I, "Item 1A. Risk ~~Factors as disclosed~~Factors" in our ~~2018~~ Annual Report. on Form 10-K for the year ended December 31, 2019. The full extent to which the COVID-19 pandemic will negatively affect our financial condition, results of operations, or liquidity will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and the resulting impact on the oil and gas industry. Given the dynamic nature of these events, we cannot reasonably estimate the period of time that the COVID-19 pandemic and related market conditions will persist, the full extent of the impact they will have on our financial condition, results of operations, or liquidity or the pace or extent of any subsequent recovery. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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⁾
April 1 – April 30, 2019 906
$ 2.40
—
$ 14,327,000
May 1 – May 31, 2019 4,855
(2) 1.99
—
14,327,000
June 1 – June 30, 2019 —
—
—
14,327,000
Total 5,761

—
$ 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⁾
April 1 – April 30, 2020	11,590	(2)	$	1.11	—	$	14,327,000
May 1 – May 31, 2020	—		—		—	14,327,000
June 1 – June 30, 2020	—		—		—	14,327,000
Total	11,590				—	$	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:



~~10.1~~10.1*	Amendment to Transition Agreement dated ~~as of May~~April 8, ~~2019~~2020 between TETRA Technologies, Inc. and Stuart M. Brightman ~~(incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 8, 2019 (SEC File No. 001-13455)).~~
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.DEF+	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB+	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE+	XBRL Taxonomy Extension Presentation Linkbase Document.
~~101.DEF+~~104*	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL ~~Taxonomy Extension Definition Linkbase Document.~~tags are embedded within the Inline XBRL documents


*	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 six month periods ended June 30, ~~2019~~2020 and ~~2018~~2019; (ii) Consolidated Statements of Comprehensive Income for the three and six month periods ended June 30, ~~2019~~2020 and ~~2018~~2019; (iii) Consolidated Balance Sheets as of June 30, ~~2019~~2020 and December 31, ~~2018~~2019; (iv) Consolidated Statements of Cash Flows for the six month periods ended June 30, ~~2019~~2020 and ~~2018~~2019; and (v) Notes to Consolidated Financial Statements for the six months ended June 30, ~~2019~~2020.

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:	August ~~8, 2019~~7, 2020	By:	/s/Brady M. Murphy
			Brady M. Murphy
			President
			Chief Executive Officer

Date:	August ~~8, 2019~~7, 2020	By:	/s/Elijio V. Serrano
			Elijio V. Serrano
			Senior Vice President
			Chief Financial Officer

Date:	August ~~8, 2019~~7, 2020	By:	/s/Richard D. O'Brien
			Richard D. O'Brien
			Vice President – Finance and Global Controller
			Principal Accounting Officer

4346



	June 30, 2019		December 31, 2018
	(In Thousands)
Finished goods	$	63,579	$	69,762
Raw materials	3,428		3,503
Parts and supplies	44,120		47,386
Work in progress	27,297		22,920
Total inventories	$	138,424	$	143,571



	Three Months Ended June 30, 2019								Three Months Ended June 30, 2018
	Offshore Services			Maritech		Total			Offshore Services			Maritech			Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	—		$	—	$	—		$	10		$	—		$	10
Cost of revenues	—			—		—			(235		)	(98		)	(333		)
Depreciation, amortization, and accretion	—			—		—			—			—			—
General and administrative expense	345			—		345			284			—			284
Other (income) expense, net	—			—		—			55			—			55
Pretax income (loss) from discontinued operations	(345		)	—		(345		)	(94		)	98			4
Pretax loss on disposal of discontinued operations						—									(25		)
Total pretax income (loss) from discontinued operations						(345		)							(21		)
Income tax expense						—									—
Total income (loss) from discontinued operations						$	(345	)							$	(21	)



	Six Months Ended June 30, 2019								Six Months Ended June 30, 2018
	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	22			—		22			10,888			139			11,027
Depreciation, amortization, and accretion	—			—		—			1,873			212			2,085
General and administrative expense	749			—		749			1,537			187			1,724
Other (income) expense, net	—			—		—			78			—			78
Pretax loss from discontinued operations	(771		)	—		(771		)	(9,889		)	(351		)	(10,240		)
Pretax loss on disposal of discontinued operations						—									(33,813		)
Total pretax loss from discontinued operations						(771		)							(44,053		)
Income tax benefit						—									(2,326		)
Total loss from discontinued operations						$	(771	)							$	(41,727	)



Derivative Contracts	British Pound Notional Amount	Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	1,780	0.89	7/19/2019



Derivative Contracts	Swedish Krona Notional Amount	Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward purchase Euro	22,270	10.60	7/19/2019



Foreign currency derivative instruments	Balance Sheet Location	Fair Value at June 30, 2019			Fair Value at December 31, 2018
		(In Thousands)
Forward purchase contracts	Current assets	$	147		$	41
Forward sale contracts	Current assets	64			76
Forward sale contracts	Current liabilities	—			(126		)
Forward purchase contracts	Current liabilities	(23		)	(168		)
Net asset (liability)		$	188		$	(177	)



		Operating Leases
	(In Thousands)

Remainder of 2019		$	8,948
2020		15,996
2021		11,702
2022		9,107
2023		7,844
Thereafter		29,391
Total lease payments		82,988
Less imputed interest		(22,938		)
Total lease liabilities		$	60,050



	Expected Maturity Date																				Fair Market Value
($ amounts in thousands)	2019			2020			2021			2022			2023			Thereafter			Total		Fair Market Value
June 30, 2019
U.S. dollar variable rate - TETRA	$	—		$	—		$	—		$	—		$	20,000		$	220,500		$	240,500	$	240,500
Weighted average interest rate (variable)	—		%	—		%	—		%	—		%	4.50		%	8.54		%
U.S. dollar fixed rate - CCLP	$	—		$	—		$	—		$	295,930		$—			$	350,000		$	645,930	$	611,900
Weighted average interest rate (fixed)	—		%	—		%	—		%	7.25		%	—		%	7.50		%