UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

~~(Mark One)~~

____________________



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2020~~2021



☐			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: 001-16337

OIL STATES INTERNATIONAL, ~~INC~~.

~~______________~~INC.

(Exact name of registrant as specified in its charter)



Delaware		76-0476605
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Three Allen Center, 333 Clay Street
Suite 4620		77002
Houston,	Texas	(Zip Code)
(Address of principal executive offices)

(713) 652-0582

(Registrant's telephone number, including area code)

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, par value $0.01 per share

OIS

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	☒	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	☒	No	☐

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

Large accelerated filer

☒☐

Accelerated filer

☐☒

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	☒

As of April ~~24, 2020,~~23, 2021, the number of shares of common stock outstanding was ~~60,941,131.~~61,281,095.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

~~INDEX~~TABLE OF CONTENTS


	Page
Part I – FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Consolidated Financial Statements
Unaudited Consolidated Statements of Operations			3
Unaudited Consolidated Statements of Comprehensive Loss			4
Consolidated Balance Sheets			5
Unaudited Consolidated Statements of Stockholders' Equity			6
Unaudited Consolidated Statements of Cash Flows			7
Notes to Unaudited Condensed Consolidated Financial Statements	8	–	23

Cautionary Statement Regarding Forward-Looking Statements	22	–	23

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	23	–	35

Item 3. Quantitative and Qualitative Disclosures About Market Risk			35

Item 4. Controls and Procedures			36

Part II – OTHER INFORMATION

Item 1. Legal Proceedings			37

Item 1A. Risk Factors			37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			37

Item 3. Defaults Upon Senior Securities			37

Item 4. Mine Safety Disclosures			37

Item 5. Other Information			37

Item 6. Exhibits			38

Signature Page			39

Page No.
Part I – FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Consolidated Financial Statements
Unaudited Consolidated Statements of Operations
3
Unaudited Consolidated Statements of Comprehensive Loss
4
Consolidated Balance Sheets
5
Unaudited Consolidated Statements of Stockholders' Equity
6
Unaudited Consolidated Statements of Cash Flows
7
Notes to Unaudited Condensed Consolidated Financial Statements
8
–
19

Cautionary Statement Regarding Forward-Looking Statements
21
–
22

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
22
–
33

Item 3. Quantitative and Qualitative Disclosures About Market Risk
33

Item 4. Controls and Procedures
34

Part II – OTHER INFORMATION

Item 1. Legal Proceedings
35

Item 1A. Risk Factors
35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
36

Item 3. Defaults Upon Senior Securities
36

Item 4. Mine Safety Disclosures
36

Item 5. Other Information
36

Item 6. Exhibits
37

Signature Page
38

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

Three Months Ended March 31,
2020 2019
Revenues:
Products $ 102,980
$ 116,328
Services 116,714
134,283
219,694
250,611

Costs and expenses:
Product costs 89,746
89,268
Service costs 107,856
110,610
Cost of revenues (exclusive of depreciation and amortization expense presented below) 197,602
199,878
Selling, general and administrative expense 26,124
30,108
Depreciation and amortization expense 26,409
31,551
Impairments of goodwill 406,056
—
Impairment of fixed assets 5,198
—
Other operating expense (income), net 107
(86 )
661,496
261,451
Operating loss (441,802 ) (10,840 )

Interest expense, net (3,504 ) (4,752 )
Other income, net 774
667
Loss before income taxes (444,532 ) (14,925 )
Income tax benefit 39,491
277
Net loss $ (405,041 ) $ (14,648 )

Net loss per share:
Basic $ (6.79 ) $ (0.25 )
Diluted (6.79 ) (0.25 )

Weighted average number of common shares outstanding:
Basic 59,654
59,258
Diluted 59,654
59,258


	Three Months Ended March 31,
	2021		2020
Revenues:
Products	$	61,445	$	102,980
Services	64,144		116,714
	125,589		219,694

Costs and expenses:
Product costs	49,463		89,746
Service costs	52,847		107,856
Cost of revenues (exclusive of depreciation and amortization expense presented below)	102,310		197,602
Selling, general and administrative expense	21,225		26,124
Depreciation and amortization expense	21,520		26,409
Impairments of goodwill	0		406,056
Impairments of fixed assets	650		5,198
Other operating (income) expense, net	(354)		107
	145,351		661,496
Operating loss	(19,762)		(441,802)

Interest expense, net	(2,325)		(3,504)
Other income, net	3,960		774
Loss before income taxes	(18,127)		(444,532)
Income tax benefit	2,317		39,491
Net loss	$	(15,810)	$	(405,041)

Net loss per share:
Basic	$	(0.26)	$	(6.79)
Diluted	(0.26)		(6.79)

Weighted average number of common shares outstanding:
Basic	60,098		59,654
Diluted	60,098		59,654

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In Thousands)

Three Months Ended March 31,
2020 2019
Net loss $ (405,041 ) $ (14,648 )

Other comprehensive income (loss):
Currency translation adjustments (14,791 ) 2,466
Comprehensive loss $ (419,832 ) $ (12,182 )


	Three Months Ended March 31,
	2021		2020
Net loss	$	(15,810)	$	(405,041)

Other comprehensive loss:
Currency translation adjustments	(1,529)		(14,791)
Comprehensive loss	$	(17,339)	$	(419,832)

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)

March 31,
2020 December 31, 2019
(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents $ 24,308
$ 8,493
Accounts receivable, net 222,472
233,487
Inventories, net 209,180
221,342
Income taxes receivable 43,950
2,568
Prepaid expenses and other current assets 14,638
17,539
Total current assets 514,548
483,429

Property, plant, and equipment, net 429,002
459,724
Operating lease assets, net 40,902
43,616
Goodwill, net 75,757
482,306
Other intangible assets, net 223,958
230,091
Other noncurrent assets 27,843
28,701
Total assets $ 1,312,010
$ 1,727,867

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt $ 25,643
$ 25,617
Accounts payable 75,392
78,368
Accrued liabilities 43,227
48,840
Current operating lease liabilities 8,361
8,311
Income taxes payable 2,845
4,174
Deferred revenue 20,721
17,761
Total current liabilities 176,189
183,071

Long-term debt 239,229
222,552
Long-term operating lease liabilities 33,323
35,777
Deferred income taxes 38,506
38,079
Other noncurrent liabilities 22,131
24,421
Total liabilities 509,378
503,900

Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 73,212,778 shares and 72,546,321 shares issued, respectively 732
726
Additional paid-in capital 1,115,677
1,114,521
Retained earnings 392,669
797,710
Accumulated other comprehensive loss (82,537 ) (67,746 )
Treasury stock, at cost, 12,268,293 and 12,045,065 shares, respectively (623,909 ) (621,244 )
Total stockholders' equity 802,632
1,223,967
Total liabilities and stockholders' equity $ 1,312,010
$ 1,727,867


	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	54,513	$	72,011
Accounts receivable, net	173,512		163,135
Inventories, net	174,314		170,376
Prepaid expenses and other current assets	17,167		18,071
Total current assets	419,506		423,593

Property, plant, and equipment, net	365,605		383,562
Operating lease assets, net	32,122		33,140
Goodwill, net	76,550		76,489
Other intangible assets, net	200,685		205,749
Other noncurrent assets	29,951		29,727
Total assets	$	1,124,419	$	1,152,260

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt	$	17,789	$	17,778
Accounts payable	50,010		46,433
Accrued liabilities	40,552		44,504
Current operating lease liabilities	7,162		7,620
Income taxes payable	2,398		2,413
Deferred revenue	43,207		43,384
Total current liabilities	161,118		162,132

Long-term debt	170,119		165,759
Long-term operating lease liabilities	28,565		29,166
Deferred income taxes	8,882		14,263
Other noncurrent liabilities	23,573		23,309
Total liabilities	392,257		394,629

Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 73,790,059 shares and 73,288,976 shares issued, respectively	738		733
Additional paid-in capital	1,100,077		1,122,945
Retained earnings	329,750		329,327
Accumulated other comprehensive loss	(72,914)		(71,385)
Treasury stock, at cost, 12,508,964 and 12,283,817 shares, respectively	(625,489)		(623,989)
Total stockholders' equity	732,162		757,631
Total liabilities and stockholders' equity	$	1,124,419	$	1,152,260

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In Thousands)


Three Months Ended March 31, 2021	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
Balance, December 31, 2020	$	733	$	1,122,945	$	329,327	$	(71,385)	$	(623,989)	$	757,631
Net loss	—		—		(15,810)		—		—		(15,810)
Currency translation adjustments (excluding intercompany advances)	—		—		—		1,068		—		1,068
Currency translation adjustments on intercompany advances	—		—		—		(2,597)		—		(2,597)
Stock-based compensation expense:
Restricted stock	5		2,815		—		—		—		2,820
Surrender of stock to settle taxes on restricted stock awards	—		—		—		—		(1,500)		(1,500)
Adoption of ASU 2020-06	—		(25,683)		16,233		—		—		(9,450)
Balance, March 31, 2021	$	738	$	1,100,077	$	329,750	$	(72,914)	$	(625,489)	$	732,162

Three Months Ended March 31, 2020
Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Treasury
Stock

Total
Stockholders'
Equity
Balance, December 31, 2019 $ 726
$ 1,114,521
$ 797,710
$ (67,746 ) $ (621,244 ) $ 1,223,967
Net loss —
—
(405,041 ) —
—
(405,041 )
Currency translation adjustments (excluding intercompany advances) —
—
—
(6,085 ) —
(6,085 )
Currency translation adjustments on intercompany advances —
—
—
(8,706 ) —
(8,706 )
Stock-based compensation expense:
Restricted stock 6
1,156
—
—
—
1,162
Surrender of stock to settle taxes on restricted stock awards —
—
—
—
(2,665 ) (2,665 )
Balance, March 31, 2020 $ 732
$ 1,115,677
$ 392,669
$ (82,537 ) $ (623,909 ) $ 802,632

Three Months Ended March 31, 2019 Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders' Equity
Balance, December 31, 2018 $ 718
$ 1,097,758
$ 1,029,518
$ (71,397 ) $ (616,829 ) $ 1,439,768
Net loss —
—
(14,648 ) —
—
(14,648 )
Currency translation adjustments (excluding intercompany advances) —
—
—
2,553
—
2,553
Currency translation adjustments on intercompany advances —
—
—
(87 ) —
(87 )
Stock-based compensation expense:
Restricted stock 7
4,365
—
—
—
4,372
Stock options —
53
—
—
—
53
Stock repurchases —
—
—
—
(757 ) (757 )
Surrender of stock to settle taxes on restricted stock awards —
—
—
—
(3,610 ) (3,610 )
Balance, March 31, 2019 $ 725
$ 1,102,176
$ 1,014,870
$ (68,931 ) $ (621,196 ) $ 1,427,644


Three Months Ended March 31, 2020	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
Balance, December 31, 2019	$	726	$	1,114,521	$	797,710	$	(67,746)	$	(621,244)	$	1,223,967
Net loss	—		—		(405,041)		—		—		(405,041)
Currency translation adjustments (excluding intercompany advances)	—		—		—		(8,706)		—		(8,706)
Currency translation adjustments on intercompany advances	—		—		—		(6,085)		—		(6,085)
Stock-based compensation expense:
Restricted stock	6		1,156		—		—		—		1,162
Surrender of stock to settle taxes on restricted stock awards	—		—		—		—		(2,665)		(2,665)
Balance, March 31, 2020	$	732	$	1,115,677	$	392,669	$	(82,537)	$	(623,909)	$	802,632

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

Three Months Ended March 31,
2020 2019
Cash flows from operating activities:
Net loss $ (405,041 ) $ (14,648 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense 26,409
31,551
Impairments of goodwill 406,056
—
Impairments of inventories 25,230
—
Impairment of fixed assets 5,198
—
Stock-based compensation expense 1,162
4,425
Amortization of debt discount and deferred financing costs 1,681
1,937
Deferred income tax benefit (40,832 ) (1,513 )
Gain on disposals of assets (513 ) (418 )
Other, net 771
(340 )
Changes in operating assets and liabilities:
Accounts receivable 4,617
21,893
Inventories (15,332 ) 2,735
Accounts payable and accrued liabilities (8,625 ) (9,576 )
Income taxes payable (1,100 ) 1,878
Other operating assets and liabilities, net 5,768
(3,632 )
Net cash flows provided by operating activities 5,449
34,292

Cash flows from investing activities:
Capital expenditures (5,881 ) (17,922 )
Proceeds from disposition of property, plant and equipment 4,092
368
Other, net (256 ) (304 )
Net cash flows used in investing activities (2,045 ) (17,858 )

Cash flows from financing activities:
Revolving credit facility borrowings 72,173
57,874
Revolving credit facility repayments (52,404 ) (73,774 )
Purchase of 1.50% convertible senior notes (4,737 ) —
Other debt and finance lease activity, net 35
(142 )
Shares added to treasury stock as a result of net share settlements
due to vesting of restricted stock (2,665 ) (3,610 )
Purchase of treasury stock —
(757 )
Net cash flows provided by (used in) financing activities 12,402
(20,409 )

Effect of exchange rate changes on cash and cash equivalents 9
(32 )
Net change in cash and cash equivalents 15,815
(4,007 )
Cash and cash equivalents, beginning of period 8,493
19,316
Cash and cash equivalents, end of period $ 24,308
$ 15,309

Cash paid for:
Interest $ 2,436
$ 3,460
Income taxes, net of refunds 2,499
(487 )


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(15,810)	$	(405,041)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	21,520		26,409
Impairments of goodwill	0		406,056
Impairments of inventories	0		25,230
Impairments of fixed assets	650		5,198
Stock-based compensation expense	2,820		1,162
Amortization of debt discount and deferred financing costs	895		1,681
Deferred income tax benefit	(2,710)		(40,832)
Gains on extinguishment of 1.50% convertible senior notes	(3,637)		0
Gains on disposals of assets	(307)		(513)
Other, net	285		771
Changes in operating assets and liabilities:
Accounts receivable	(10,701)		4,617
Inventories	(3,890)		(15,332)
Accounts payable and accrued liabilities	1,648		(8,625)
Income taxes payable	0		(1,100)
Deferred revenue	(206)		3,118
Other operating assets and liabilities, net	1,026		2,650
Net cash flows provided by (used in) operating activities	(8,417)		5,449

Cash flows from investing activities:
Capital expenditures	(4,120)		(5,881)
Proceeds from disposition of property, plant and equipment	1,851		4,092
Other, net	(95)		(256)
Net cash flows used in investing activities	(2,364)		(2,045)

Cash flows from financing activities:
Revolving credit facility borrowings	12,220		72,173
Revolving credit facility repayments	(24,220)		(52,404)
Issuance of 4.75% convertible senior notes	135,000		0
Purchases of 1.50% convertible senior notes	(120,000)		(4,737)
Other debt and finance lease activity, net	(145)		35
Payment of financing costs	(7,961)		0
Shares added to treasury stock as a result of net share settlements due to vesting of stock awards	(1,500)		(2,665)
Net cash flows provided by (used in) financing activities	(6,606)		12,402

Effect of exchange rate changes on cash and cash equivalents	(111)		9
Net change in cash and cash equivalents	(17,498)		15,815
Cash and cash equivalents, beginning of period	72,011		8,493
Cash and cash equivalents, end of period	$	54,513	$	24,308

Cash paid for:
Interest	$	1,842	$	2,436
Income taxes, net	577		2,499

The accompanying notes are an integral part of these financial statements.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

1. Organization and Basis of Presentation


1.	~~Organization and Basis of Presentation~~

The accompanying unaudited condensed consolidated financial statements of Oil States International, Inc. and its subsidiaries (referred to in this report as "we" or the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission") pertaining to interim financial information. Certain information in footnote disclosures normally included with financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to these rules and regulations. The unaudited financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair statement of the results of operations for the interim periods covered and for the financial condition of the Company at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year. Certain prior-year amounts in the Company's unaudited condensed consolidated financial statements have been reclassified to conform to the current year presentation.

As further discussed in Note 13, "Commitments and Contingencies," the impact of the Coronavirus Disease 2019 ("COVID-19") pandemic and the related economic, business and market disruptions ~~is evolving rapidly~~continues to evolve and its future effects ~~are~~remain uncertain. The actual impact of these ~~recent~~ developments on the Company will depend on ~~many~~numerous factors, many of which are beyond management's control and knowledge. It is therefore difficult for management to assess or predict with precision the broad future effect of this health crisis on the global economy, the energy industry or the Company. During 2020 and the first quarter of ~~2020,~~2021, the Company recorded asset impairments, ~~and recorded~~ severance and facility closure charges in response to these ~~recent~~ developments as further discussed in Note 3, "Asset Impairments and Other ~~Charges.~~Restructuring Items." As additional information becomes available, events or circumstances change and strategic operational decisions are made by management, further adjustments may be required which could have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of such estimates include, but are not limited to, goodwill and ~~other~~long-lived asset impairments, revenue and income recognized over time, valuation allowances recorded on deferred tax assets, reserves on inventory, allowances for doubtful accounts, settlement of litigation and potential future adjustments related to contractual indemnification and other agreements. Actual results could materially differ from those estimates.

The financial statements included in this report should be read in conjunction with the Company's audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.


2.	~~Recent Accounting Pronouncements~~

2. Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB"), which are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's consolidated financial statements upon adoption.

In ~~June 2016,~~August 2020, the FASB issued updated guidance ~~on credit impairment~~to simplify the accounting for ~~short-term receivables which,~~convertible instruments and contracts in an entity's own equity (referred to as ~~amended, introduces~~"ASU 2020-06"). This guidance eliminated the ~~recognition~~requirement that the carrying value of ~~management's current estimate of credit losses that are expected to occur over~~convertible debt instruments, such as the ~~remaining life of a financial asset. The~~Company's 1.50% convertible senior notes due 2023 (the "2023 Notes"), be allocated between debt and equity components. As permitted under the standard, the Company adopted ~~this~~the guidance on January 1, ~~2020,~~2021, using the ~~optional~~modified retrospective transition ~~method~~method. Adoption of ~~recognizing any cumulative effect~~the standard resulted in a $12.2 million increase in the net carrying value of ~~adopting this guidance as~~the 2023 Notes, a $2.7 million decrease in deferred income taxes and an ~~adjustment~~$9.5 million net decrease in stockholders' equity. The effective interest rate associated with the 2023 Notes after adoption decreased from approximately 6% to approximately 2%, which compares to the ~~opening balance~~contractual interest rate of ~~retained earnings. The cumulative impact~~1.50%. As further discussed in Note 6, "Long-term Debt," the Company issued $135 million principal amount of its 4.75% convertible senior notes due 2026 (the "2026 Notes") on March 19, 2021, which have been accounted for in accordance with the ~~adoption~~provisions of ~~the new standard was not material to the Company's consolidated financial statements. Prior periods were not retrospectively adjusted.~~

ASU 2020-06.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

3. Asset Impairments and Other Restructuring Items


3.	~~Asset Impairments and Other Charges~~

In March of 2020, the spot price of West Texas Intermediate ("WTI") crude oil declined over 50% in response to actual and forecasted reductions in global demand for crude oil due to the COVID-19 pandemic, ~~and~~coupled with announcements by Saudi Arabia and Russia of plans to increase crude oil ~~production.~~production in an effort to protect market share. Following this unprecedented collapse in crude oil prices, the spot price of Brent and WTI crude oil closed at $15 and $21 per barrel, respectively, on March 31, 2020. ~~Crude oil prices further declined in April of 2020 to record low levels.~~

Demand for most of the Company's products and services depends substantially on the level of capital expenditures by the oil and natural gas industry. This decline in oil prices is expected to result in further near-term reductions to most of the Company's customers' drilling, completion and production activities and their related spending on products and services, particularly in the U.S. shale play regions. These conditions may also result in a material adverse impact on certain customers' liquidity and financial position, leading to further spending reductions, delays in the collection of amounts owed and in certain instances, non-payment of amounts owed.

Consistent with oilfield service industry peers, the Company's stock price declined dramatically during the first quarter of 2020, with its market capitalization falling substantially below the carrying value of stockholders' equity.

Demand for most of the Company's products and services depends substantially on the level of capital expenditures invested in the oil and natural gas industry, which reached 15-year lows in 2020. The decline in oil prices, coupled with higher crude oil inventory levels in 2020, caused rapid reductions in most of the Company's customers' drilling, completion and production activities and their related spending on products and services, particularly those supporting activities in the U.S. shale play regions. While crude oil prices have recovered significantly since reaching record low levels in April 2020, with crude oil inventory levels moderating, there remains some uncertainty around the timing of demand recovery to pre-COVID-19 levels. These conditions have and may continue to result in adverse impacts on certain customers' liquidity and financial position, leading to further spending reductions, delays in the collection of amounts owed and in certain instances, non-payment of amounts owed.

Following these March 2020 events, the Company immediately ~~expanded its~~implemented significant cost reduction initiatives. The Company also assessed the carrying value of goodwill, long-lived ~~assets~~ and other assets based on the ~~current~~ industry outlook regarding overall demand for and pricing of its products and services, other market considerations and the financial condition of the Company's customers. As a result of these events, actions and assessments, the Company recorded the following charges during the first quarter of 2020 (in thousands):

Completion Services Drilling Services Downhole Technologies Offshore/
Manufactured Products Pre-tax Total Tax After-tax Total
Impairment of goodwill $ 127,054
$ —
$ 192,502
$ 86,500
$ 406,056
$ 19,600
$ 386,456
Impairment of fixed assets —
5,198
—
—
5,198
1,092
4,106
Impairment of inventories (Note 4)
8,981
—
—
16,249
25,230
4,736
20,494
Severance and facility closure costs 331
217
—
112
660
139
521


	Offshore/ Manufactured Products		Downhole Technologies		Well Site Services		Corporate		Pre-tax Total		Tax		After-tax Total
Impairments of:
Goodwill	$	86,500	$	192,502	$	127,054	$	0	$	406,056	$	19,600	$	386,456
Fixed assets	0		0		5,198		0		5,198		1,092		4,106
Inventories (Note 4)	16,249		0		8,981		0		25,230		4,736		20,494
Severance and restructuring charges	112		0		548		0		660		139		521

~~In addition,~~During the first quarter of 2021, the Company further reduced its workforce, closed additional facilities in the United States ~~in April~~and continued to assess the carrying value of ~~2020, which will result in additional severance costs in~~its assets based on the ~~second~~industry outlook regarding demand for and pricing of its products and services, and recorded the following charges (in thousands):


	Offshore/ Manufactured Products		Downhole Technologies		Well Site Services		Corporate		Pre-tax Total		Tax		After-tax Total
Impairments of fixed assets	$	0	$	0	$	650	$	0	$	650	$	137	$	513
Severance and restructuring charges	282		275		1,306		1,555		3,418		717		2,701

Additionally, during the first quarter of ~~2020.~~2021, the Company recognized an aggregate $4.8 million reduction of payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") employee retention credit program. The Company continues to evaluate additional benefits potentially available to it under the CARES Act.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

Goodwill

~~The Company has three reporting units – Completion Services, Downhole Technologies and Offshore/Manufactured Products – with goodwill balances totaling $482.3 million as of December 31, 2019.~~ Goodwill is allocated to each reporting unit ~~from~~based on acquisitions made by the ~~Company. In accordance with current accounting guidance, the~~ Company ~~does not amortize goodwill, but rather assesses goodwill~~and is assessed for impairment annually and when an event occurs or circumstances change that indicate the carrying amounts may not be recoverable. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss is recorded. The Company had 3 reporting units – Offshore/Manufactured Products, Downhole Technologies and Well Site Services – whose goodwill balances totaled $482.3 million as of December 31, 2019. Given the significance of the March 2020 events described above, the Company performed a quantitative assessment of goodwill for impairment as of March 31, 2020. This interim assessment indicated that the fair value of each of the reporting units was less than their respective carrying ~~amounts.~~amounts due to, among other factors, the significant decline in the Company's stock price (and that of its peers) and reduced growth rate expectations given weak energy market conditions resulting from the demand destruction caused by the global response to the COVID-19 pandemic. In addition, the estimated returns required by market participants increased materially in the Company's March 31, 2020 assessment from the assessment performed as of December 1, 2019, resulting in higher discount rates used in the discounted cash flow analysis.

Management utilizes, depending on circumstances, a combination of valuation methodologies including a market approach and an income approach, as well as guideline public company comparables. The valuation techniques used in the March 31, 2020 assessment were consistent with those used during the December 1, 2019 assessment, except for the Completion Services reporting unit where the income approach was used to estimate its fair value – with the market approach used only to validate the results in 2020. The fair values ~~of each~~ of the Company's reporting units were determined using significant unobservable inputs (Level 3 fair value measurements). ~~This approach estimates fair value by discounting the Company's forecasts of future cash flows by a discount rate (expected return) that a market participant is expected to require.~~

Significant assumptions and estimates used in the income approach include, among others, estimated future net annual cash flows and discount rates for each reporting unit, current and anticipated market conditions, estimated growth rates and historical data. These estimates rely upon significant management judgment, particularly given the continued uncertainties regarding the COVID-19 pandemic and its impact on activity levels and commodity prices as well as future global economic growth.

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

Based on this quantitative assessment as of March 31, 2020, the Company concluded that goodwill recorded in the ~~Completion Services and~~ Downhole Technologies ~~businesses~~and Well Site Services segments was fully impaired while goodwill recorded in the Offshore/Manufactured Products ~~business~~segment was partially impaired. The Company therefore recognized non-cash goodwill impairment charges totaling $406.1 million in the first quarter of ~~2020. These impairment charges do not impact~~2020, as presented in further detail in the ~~Company's liquidity position, debt covenants or cash flows. Following impairment,~~table above.

The Company performed its annual quantitative assessment of goodwill as of December 1, 2020, which indicated that the fair value of the Offshore/Manufactured Products ~~reporting unit did not have a fair value substantially in excess of~~segment was greater than its carrying ~~amount.~~

amount and no additional provision for impairment was required. The ~~discount rates used to value~~Company's remaining goodwill within the ~~Company's reporting units ranged between 16.8%~~segment totaled approximately $76.5 million as of March 31, 2021 and 18.5%. Holding all other assumptions and inputs used in the discounted cash flow analysis constant, a 50 basis point increase in the discount rate assumption for the Offshore/Manufactured Products reporting unit would have increased the goodwill impairment charge by approximately $10 million.

~~A summary of changes in the carrying values of goodwill by reporting unit in the first quarter of 2020 is presented in Note 4, "Details of Selected Balance Sheet Accounts."~~December 31, 2020.

Long-lived Assets

The Company also ~~assessed~~assesses the carrying value of long-lived assets, including property, plant and equipment, operating lease assets and other intangible assets held by each of its ~~four reporting units.~~segments (reporting units). As a result of ~~this~~the March 2020 assessment, the Company concluded that certain drilling-related property and equipment held by the ~~Drilling~~Well Site Services ~~reporting unit~~segment was ~~further~~ impaired and recognized a non-cash fixed asset impairment charge of $5.2 million in the first quarter of 2020.

During the first quarter of 2021, the Well Site Services segment recognized non-cash fixed asset impairment charges of $0.7 million associated with the closure of additional facilities and other management actions.

Should, among other events and circumstances, global economic and industry conditions ~~further~~ deteriorate, the COVID-19 pandemic business and market disruptions worsen, the outlook for future operating results and cash flow for any of the Company's reporting units decline, income tax rates increase or regulations change, costs of equity or debt capital increase, valuations for comparable public companies or comparable acquisition valuations decrease, or management implement strategic decisions based on industry conditions, the Company may need to recognize additional impairment losses in future periods.


4.	~~Details of Selected Balance Sheet Accounts~~

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

4. Details of Selected Balance Sheet Accounts

Additional information regarding selected balance sheet accounts atas of March 31, ~~2020~~2021 and December 31, ~~2019~~2020 is presented below (in thousands):

March 31,
2020 December 31,
2019
Accounts receivable, net:
Trade $ 174,041
$ 178,813
Unbilled revenue 29,086
28,341
Contract assets 23,148
26,034
Other 4,883
9,044
Total accounts receivable 231,158
242,232
Allowance for doubtful accounts (8,686 ) (8,745 )
$ 222,472
$ 233,487

Allowance for doubtful accounts as a percentage of total accounts receivable 4 % 4 %


	March 31, 2021			December 31, 2020
Accounts receivable, net:
Trade	$	123,129		$	109,294
Unbilled revenue	21,262			23,173
Contract assets	29,975			35,870
Other	7,691			3,102
Total accounts receivable	182,057			171,439
Allowance for doubtful accounts	(8,545)			(8,304)
	$	173,512		$	163,135

Allowance for doubtful accounts as a percentage of total accounts receivable	5		%	5		%

March 31,
2020 December 31,
2019
Deferred revenue (contract liabilities) $ 20,721
$ 17,761


	March 31, 2021		December 31, 2020
Deferred revenue (contract liabilities)	$	43,207	$	43,384

For the three months ended March 31, ~~2020,~~2021, the ~~$2.9~~$5.9 million net decrease in contract assets was primarily attributable to ~~$18.7~~$16.8 million transferred to accounts receivable, which was partially offset by ~~$16.1~~$10.9 million in revenue recognized during the period. Deferred revenue (contract liabilities) ~~increased~~decreased by $0.2 million in the first quarter of 2021, primarily reflecting the recognition of $3.0 million ~~in 2020, primarily reflecting $10.5~~of revenue that was deferred at the beginning of the period, substantially offset by $2.8 million in new customer billings which were not recognized as revenue during the ~~period, partially offset by the recognition of $7.4 million of revenue that was deferred at the beginning of the~~ period.

As of March 31, ~~2020~~2021, accounts receivable, net in the United States and ~~December 31, 2019, 74%~~the United Kingdom represented 70% and ~~73%~~18%, respectively, of ~~total accounts receivables related to revenues generated in~~ the ~~United States. As of March 31, 2020 and December 31, 2019, 10% of total accounts receivables related to revenues generated in the United Kingdom.~~total. No other country or single customer accounted for more than 10% of the Company's total accounts ~~receivables at these dates.~~receivable as of March 31, 2021.

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments. Determination of the collectability of amounts due from customers requires us to make judgments regarding future events and trends. Allowances for doubtful accounts are established through an assessment of the Company's portfolio on an individual customer and consolidated basis taking into account current and expected future market conditions and trends. This process consists of a thorough review of historical collection experience, current aging status of the customer accounts, and financial condition of the Company's customers as well as political and economic factors in countries of operations and other customer-specific factors. Based on a review of these factors, the Company establishes or adjusts allowances for trade and unbilled receivables as well as contract assets. If a customer receivable is deemed to be uncollectible, the receivable is charged-off against allowance for doubtful accounts. If the financial condition of the Company's customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The following provides a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2021 and 2020 (in thousands):

2020 2019
Allowance for doubtful accounts – December 31 $ 8,745
$ 6,701
Provision 589
(134 )
Write-offs (1,785 ) —
Other 1,137
157
Allowance for doubtful accounts – March 31 8,686
6,724


	Three Months Ended March 31,
	2021		2020
Allowance for doubtful accounts – January 1	$	8,304	$	8,745
Provisions	214		589
Write-offs	(116)		(1,785)
Other	143		1,137
Allowance for doubtful accounts – March 31	$	8,545	$	8,686

March 31,
2020 December 31,
2019
Inventories, net:
Finished goods and purchased products $ 106,833
$ 107,691
Work in process 30,175
21,963
Raw materials 114,818
110,719
Total inventories 251,826
240,373
Allowance for excess or obsolete inventory (42,646 ) (19,031 )
$ 209,180
$ 221,342


	March 31, 2021		December 31, 2020
Inventories, net:
Finished goods and purchased products	$	90,664	$	88,634
Work in process	31,222		27,063
Raw materials	92,137		95,410
Total inventories	214,023		211,107
Allowance for excess or obsolete inventory	(39,709)		(40,731)
	$	174,314	$	170,376

The Company recorded impairment charges totaling $25.2 million in the first quarter of 2020 to reduce the carrying value of inventories to their estimated net realizable value following the March 2020 decline in crude oil prices, which ~~is expected to reduce~~reduced the near-term utility of certain goods within the Offshore/Manufactured Products and ~~Completion~~Well Site Services ~~operations.~~segments.

March 31,
2020 December 31,
2019
Property, plant and equipment, net:
Land $ 34,917
$ 37,507
Buildings and leasehold improvements 265,924
273,384
Machinery and equipment 238,599
246,826
Completion Services equipment 513,101
510,737
Office furniture and equipment 37,554
45,309
Vehicles 93,301
97,264
Construction in progress 11,358
13,281
Total property, plant and equipment 1,194,754
1,224,308
Accumulated depreciation (765,752 ) (764,584 )
$ 429,002
$ 459,724

~~For the three months ended March 31, 2020 and 2019, depreciation expense was $20.1 million and $24.8 million, respectively.~~

As discussed in Note 3, "Asset Impairments and Other Charges," during the first quarter of 2020 the Drilling Services reporting unit recognized a non-cash impairment charge of $5.2 million to reduce the carrying value of the business's fixed assets to their estimated realizable value.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

March 31,
2020 December 31,
2019
Other noncurrent assets:
Deferred compensation plan $ 21,327
$ 22,268
Other 6,516
6,433
$ 27,843
$ 28,701

March 31,
2020 December 31,
2019
Accrued liabilities:
Accrued compensation $ 16,340
$ 24,930
Insurance liabilities 8,563
9,108
Accrued taxes, other than income taxes 4,335
3,424
Accrued commissions 2,089
1,481
Other 11,900
9,897
$ 43,227
$ 48,840

Goodwill: Well Site Services Downhole Technologies Offshore/
Manufactured Products Total
Completion Services Drilling Services Subtotal
Balance as of December 31, 2019
Goodwill $ 221,582
$ 22,767
$ 244,349
$ 357,502
$ 162,750
$ 764,601
Accumulated impairment losses (94,528 ) (22,767 ) (117,295 ) (165,000 ) —
(282,295 )
127,054
—
127,054
192,502
162,750
482,306
Goodwill impairments⁽¹⁾
(127,054 ) —
(127,054 ) (192,502 ) (86,500 ) (406,056 )
Foreign currency translation —
—
—
—
(493 ) (493 )
Balance as of March 31, 2020 $ —
$ —
$ —
$ —
$ 75,757
$ 75,757

~~________________~~


~~(1)~~	~~See Note 3, "Asset Impairments and Other Charges" for discussion of first quarter 2020 goodwill impairments.~~

Other Intangible Assets: March 31, 2020 December 31, 2019

Gross
Carrying
Amount

Accumulated
Amortization
Net Carrying Amount
Gross
Carrying
Amount

Accumulated
Amortization
Net Carrying Amount
Customer relationships $ 168,260
$ 47,056
$ 121,204
$ 168,278
$ 44,296
$ 123,982
Patents/Technology/Know-how 86,123
32,291
53,832
85,919
30,791
55,128
Noncompete agreements 17,087
12,291
4,796
17,125
11,061
6,064
Tradenames and other 53,708
9,582
44,126
53,708
8,791
44,917
$ 325,178
$ 101,220
$ 223,958
$ 325,030
$ 94,939
$ 230,091


			March 31, 2021			December 31, 2020
Property, plant and equipment, net:
Land	$	33,913		$	34,968
Buildings and leasehold improvements							264,513		267,072
Machinery and equipment							241,734		239,986
Completion-related rental equipment							505,521		507,755
Office furniture and equipment							32,260		35,767
Vehicles							80,751		81,607
Construction in progress	4,352			7,207
Total property, plant and equipment	1,163,044			1,174,362
Accumulated depreciation	(797,439)			(790,800)
							$	365,605	$	383,562

For the three months ended March 31, 2021 and 2020, depreciation expense was $16.4 million and ~~2019,~~$20.1 million, respectively.


	March 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Other intangible assets:
Customer relationships	$	168,290	$	58,158	$	110,132	$	168,288	$	55,380	$	112,908
Patents/Technology/Know-how	78,293		28,832		49,461		75,920		26,124		49,796
Noncompete agreements	0		0		0		16,044		14,742		1,302
Tradenames and other	53,708		12,616		41,092		53,708		11,965		41,743
	$	300,291	$	99,606	$	200,685	$	313,960	$	108,211	$	205,749

For the three months ended March 31, 2021 and 2020, amortization expense was ~~$6.3~~$5.2 million and ~~$6.7~~$6.3 million, respectively.


	March 31, 2021		December 31, 2020
Other noncurrent assets:
Deferred compensation plan	$	23,053	$	22,801
Deferred income taxes	1,359		1,280
Other	5,539		5,646
	$	29,951	$	29,727


	March 31, 2021		December 31, 2020
Accrued liabilities:
Accrued compensation	$	14,066	$	18,463
Insurance liabilities	6,579		7,694
Accrued taxes, other than income taxes	9,685		7,307
Accrued interest	1,788		2,202
Accrued commissions	1,333		1,416
Other	7,101		7,422
	$	40,552	$	44,504

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

5. Net Loss Per Share


5.	~~Net Loss Per Share~~

The table below provides a reconciliation of the numerators and denominators of basic and diluted net loss per share for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands, except per share amounts):

Three Months Ended
March 31,
2020 2019
Numerators:
Net loss $ (405,041 ) $ (14,648 )
Less: Income attributable to unvested restricted stock awards —
—
Numerator for basic net loss per share (405,041 ) (14,648 )
Effect of dilutive securities:
Unvested restricted stock awards —
—
Numerator for diluted net loss per share $ (405,041 ) $ (14,648 )

Denominators:
Weighted average number of common shares outstanding 60,770
60,249
Less: Weighted average number of unvested restricted stock awards outstanding (1,116 ) (991 )
Denominator for basic and diluted net loss per share 59,654
59,258

Net loss per share:
Basic $ (6.79 ) $ (0.25 )
Diluted (6.79 ) (0.25 )


	Three Months Ended March 31,
	2021		2020
Numerators:
Net loss	$	(15,810)	$	(405,041)
Less: Income attributable to unvested restricted stock awards	0		0
Numerator for basic net loss per share	(15,810)		(405,041)
Effect of dilutive securities:
Unvested restricted stock awards	0		0
Numerator for diluted net loss per share	$	(15,810)	$	(405,041)

Denominators:
Weighted average number of common shares outstanding	61,169		60,770
Less: Weighted average number of unvested restricted stock awards outstanding	(1,071)		(1,116)






Denominator for basic and diluted net loss per share	60,098		59,654

Net loss per share:
Basic	$	(0.26)	$	(6.79)
Diluted	(0.26)		(6.79)

The calculation of diluted net loss per share for the three months ended March 31, 2021 and 2020 ~~and 2019~~ excluded ~~629~~500 thousand shares and ~~687~~629 thousand shares, respectively, issuable pursuant to outstanding stock options, due to their antidilutive effect. Additionally, shares issuable upon conversion of both the ~~1.50% convertible senior notes~~2023 Notes and the 2026 Notes were ~~not convertible and therefore~~ excluded ~~for the three months ended March 31, 2020 and 2019,~~ due to, among other factors, their antidilutive effect.


6.	~~Long-term Debt~~

6. Long-term Debt

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, long-term debt consisted of the following (in thousands):


								March 31, 2021		December 31, 2020
	March 31, 2020			December 31, 2019
Revolving credit facility⁽¹⁾	$	70,471		$	50,534
1.50% convertible senior notes⁽²⁾	164,370			167,594
Revolving credit facilities(1)							Revolving credit facilities(1)	$	3,807	$	18,408
2023 Notes(2)							2023 Notes(2)	32,022		143,242
2026 Notes(3)							2026 Notes(3)	130,336		0
Promissory note	25,000			25,000			Promissory note	17,095		17,095
Other debt and finance lease obligations	5,031			5,041			Other debt and finance lease obligations	4,648		4,792
Total debt	264,872			248,169			Total debt	187,908		183,537
Less: Current portion	(25,643		)	(25,617		)	Less: Current portion	(17,789)		(17,778)
Total long-term debt	$	239,229		$	222,552		Total long-term debt	$	170,119	$	165,759

____________________


~~(1)~~	~~Presented net of $1.2 million and $1.4 million of unamortized debt issuance costs as of March 31, 2020 and December 31, 2019, respectively.~~


~~(2)~~	~~The outstanding principal amount of the 1.50% convertible senior notes was $186.6 million and $192.3 million as of March 31, 2020 and December 31, 2019, respectively.~~

(1)Presented net of $3.2 million and $0.6 million of unamortized debt issuance costs as of March 31, 2021 and December 31, 2020, respectively.

(2)The outstanding principal amount of the 2023 Notes was $32.4 million and $157.4 million as of March 31, 2021 and December 31, 2020, respectively.

(3)The outstanding principal amount of the 2026 Notes was $135.0 million as of March 31, 2021.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

Revolving Credit Facilities

~~RevolvingCredit~~ABL Facility

~~The Company's~~On February 10, 2021, the Company entered into a senior secured credit facility with certain lenders, which provides for a $125.0 million asset-based revolving credit facility ~~as amended~~ (the ~~"Revolving Credit~~"ABL Facility") under which credit availability is subject to a borrowing base calculation. Concurrent with entering into this facility, the Former Facility (discussed below) was terminated. On March 16, 2021, the Company entered into an amendment to the ABL Facility that permitted the Company to incur the indebtedness represented by the 2026 Notes.

The ABL Facility is governed by a credit agreement, as amended, with Wells Fargo Bank, ~~N.A.,~~National Association, as administrative agent ~~for the lenders party thereto and collateral agent for the secured parties thereunder,~~ and the lenders and other financial institutions from time to time party thereto ~~dated as of January 30, 2018, as amended and restated~~ (the ~~"Credit~~"ABL Agreement")~~, and~~. The ABL Agreement matures on ~~January 30, 2022.~~ February 10, 2025 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $17.5 million (excluding the unsecured promissory note discussed below).

The ~~Revolving Credit Facility~~ABL Agreement provides funding based on a borrowing base calculation that includes eligible U.S. customer accounts receivable and inventory and provides for ~~$350.0 million in lender commitments. Under the Revolving Credit Facility,~~a $50.0 million ~~is available~~sub-limit for the issuance of letters of credit.

As of March 31, 2020, the Company had $71.7 million of borrowings and $19.1 million of outstanding letters of credit under the Revolving Credit Facility, leaving $107.6 million available to be drawn. The total amount available to be drawn under the Revolving Credit Facility was less than the total lender commitments due to limits imposed by maintenance covenants in the Credit Agreement. As of March 31, 2020, the Company was in compliance with its debt covenants under the Credit Agreement.

Amounts outstanding under the Revolving Credit Facility bear interest at LIBOR plus a margin of 1.75% to 3.00%, or at a base rate plus a margin of 0.75% to 2.00%, in each case based on a ratio of the Company's total net funded debt to consolidated EBITDA (as defined in the Credit Agreement). The Company must also pay a quarterly commitment fee of 0.25% to 0.50%, based on the Company's ratio of total net funded debt to consolidated EBITDA, on the unused commitments under the Credit Agreement.

The Credit Agreement contains customary financial covenants and restrictions. Specifically, the Company must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.0 to 1.0, a maximum senior secured leverage ratio, defined as the ratio of senior secured debt to consolidated EBITDA, of no greater than 2.25 to 1.0 and a total net leverage ratio, defined as the ratio of total net funded debt to consolidated EBITDA, of no greater than 3.75 to 1.0. The financial covenants give pro forma effect to acquired businesses and the annualization of EBITDA for acquired businesses.

The various components used in the calculation of these ratios are defined in the Credit Agreement. Consolidated EBITDA and consolidated interest expense, as defined, exclude non-cash goodwill and fixed asset impairment charges, losses on extinguishment of debt, debt discount amortization, stock-based compensation expense and other non-cash charges.

Borrowings under the ~~Credit~~ABL Agreement are secured by a pledge of substantially all of the Company's domestic assets (other than real property) and the ~~assets~~stock of ~~its domestic~~certain foreign subsidiaries. ~~The Company's obligations~~

Borrowings under the ~~Credit~~ABL Agreement ~~are guaranteed by its significant domestic subsidiaries.~~bear interest at a rate equal to the London Interbank Offered Rate ("LIBOR") plus a margin of 2.75% to 3.25% and subject to a LIBOR floor rate of 0.50%, or at a base rate plus a margin of 1.75% to 2.25%, in each case based on average borrowing availability. The ~~Credit~~Company must also pay a quarterly commitment fee of 0.375% to 0.50% per annum, based on unused commitments under the ABL Agreement.

The ABL Agreement ~~also contains negative covenants that limit~~places restrictions on the Company's ability to ~~borrow~~incur additional ~~funds, encumber~~indebtedness, grant liens on assets, pay dividends ~~sell~~or make distributions on equity interests, dispose of assets, make investments, repay other indebtedness (including the 2023 Notes and ~~enter into~~the 2026 Notes), engage in mergers, and other ~~significant transactions.~~

~~Under the Credit~~matters, in each case, subject to certain exceptions. The ABL Agreement ~~the occurrence~~contains customary default provisions, which, if triggered, could result in acceleration of ~~specified change of control events involving~~all amounts then outstanding. The ABL Agreement also requires the Company ~~would constitute~~to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 for specified periods of time in the event that availability under the ABL Agreement is less than the greater of 15% of the borrowing base and $14.1 million or if an event of default ~~that would permit the banks to, among other things, accelerate the maturity~~has occurred and is continuing.

As of ~~the facility and cause it to become immediately due and payable in full.~~

The Company is working with its bank group regarding an amendment to the Revolving Credit Facility. The amendment entails converting the Company's existing cash flow-based revolving credit facility into an asset-based revolving credit facility (the "Amended Facility"). The Company currently expects to complete the amendment process in the second quarter of 2020. The amendment process remains subject to completion of final documentation and credit approval by the bank group and, accordingly,March 31, 2021, the Company ~~cannot be certain that it will be able to complete the amendment process.~~

If the Company is not successful in amending the Revolving Credit Facility, its borrowings would be governed by the existing Credit Agreement, which contains financial covenants and restrictions as further described above. Based on Company forecasts, the Company anticipates that it could be outhad $7.0 million of compliance with the total net leverage ratio covenant in the third quarter of 2020 as a result of projected declines in consolidated EBITDA resulting from current industry conditions caused by the global response to the COVID-19 pandemic and the resulting collapse in crude oil prices. However, the Company believes that it will have sufficient liquidity over the next twelve months to fund its liabilities as they become due.

If the Company does not complete the amendment process and subsequently is not in compliance with the total net leverage ratio under its Revolving Credit Facility, the Company believes that it will have sufficient cash on hand, together with cash flow from operations (after investments in capital expenditures), to repay the borrowings outstanding under the ~~Revolving Credit~~ABL Agreement and $19.0 million of outstanding letters of credit. The total amount available to be drawn as of March 31, 2021 was $40.6 million, calculated based on the current borrowing base less outstanding borrowings and letters of credit.

As of March 31, 2021, the Company was in compliance with its debt covenants under the ABL Agreement.

Former Facility ~~or that it could seek~~

The Company's former senior secured revolving credit facility was governed by a credit agreement which was scheduled to ~~obtain~~mature on January 30, 2022. On June 17, 2020, the Company entered into an omnibus amendment ~~or waiver from its lenders~~to the credit agreement, under which lender commitments were reduced in ~~order to avoid a default.~~exchange for the suspension of certain financial covenants through March 30, 2021.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

The following provides a summary of the more significant provisions of the Company's former revolving credit facility.

~~1.50% Convertible Senior~~


	Prior to June 17, 2020	From June 17, 2020 to February 10, 2021
Lender commitments	$350 million	$200 million
Interest rate on outstanding borrowings(1):
LIBOR based borrowings	LIBOR plus a margin of 1.75% to 3.00%	LIBOR plus a margin of 2.50% to 3.75%
Base-rate based borrowings	Base rate plus a margin of 0.75% to 2.00%	Base rate plus a margin of 1.50% to 2.75%
Commitment fees(2)	0.25% to 0.50%	0.375% to 0.50%

____________________

(1)Based on the ratio of the Company's total net funded debt to consolidated EBITDA.

(2)Based on unused commitments under the credit agreement.

2026 Notes

On ~~January 30, 2018,~~March 19, 2021, the Company issued ~~$200~~$135 million aggregate principal amount of ~~its 1.50% convertible senior notes due 2023 (the "Notes")~~the 2026 Notes pursuant to an indenture, dated as of ~~January 30, 2018~~March 19, 2021 (the ~~"Indenture"~~"2026 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

~~During~~ Net proceeds from the ~~first quarter~~2026 Notes offering, after deducting issuance costs, totaled $130.3 million. The Company used $120.0 million of ~~2020,~~ the ~~Company repurchased $5.7~~cash proceeds to purchase $125.0 million in principal amount of the outstanding 2023 Notes, ~~for $4.7 million, which approximated~~with the ~~net carrying amount of the related liability. Since December 31, 2018, the Company has repurchased $13.5 million in principal amount of the outstanding notes for $11.5 million.~~balance added to cash on-hand.

The initial carrying amount of the Notes recorded in the consolidated balance sheet was less than the $200 million in principal amount of the Notes, in accordance with applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that does not have a conversion feature. The Company recorded the value of the conversion feature as a debt discount, which is amortized as interest expense over the term of the Notes, with a similar amount allocated to additional paid-in capital. As a result of this amortization, the interest expense the Company recognizes related to the Notes for accounting purposes is based on an effective interest rate of approximately 6%, which is greater than the cash interest payments the Company is obligated to pay on the Notes. Reported interest expense associated with the Notes for both the three months ended March 31, 2020 and 2019 was $2.5 million, while the related contractual cash interest expense totaled $0.7 million and $0.8 million, respectively.

~~The following table presents the carrying amount of the Notes in the consolidated balance sheets as of March 31, 2020 and December 31, 2019 (in thousands):~~

March 31,
2020 December 31,
2019
Principal amount of the liability component $ 186,550
$ 192,250
Less: Unamortized discount 19,366
21,544
Less: Unamortized issuance costs 2,814
3,112
Net carrying amount of the liability component $ 164,370
$ 167,594

Net carrying amount of the equity component $ 25,683
$ 25,683

~~The~~2026 Notes bear interest at a rate of ~~1.50%~~4.75% per year until maturity. Interest is payable semi-annually in arrears on ~~February 15~~April 1 and ~~August 15~~October 1 of each year. In addition, additional interest and special interest may accrue on the 2026 Notes under certain circumstances as described in the 2026 Indenture. The 2026 Notes will mature on ~~February 15, 2023,~~April 1, 2026, unless earlier repurchased, redeemed or converted. The initial conversion rate is ~~22.2748~~95.3516 shares of the Company's common stock per $1,000 principal amount of 2026 Notes (equivalent to an initial conversion price of approximately ~~$44.89~~$10.49 per share of common stock). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2026 Indenture. The Company's intent is to repay the principal amount of the 2026 Notes in cash and settle the conversion feature in shares of the Company's common stock.

Noteholders may convert their 2026 Notes, at their option, only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the 5 consecutive business days immediately after any ~~five~~5 consecutive trading day period (such 5 consecutive trading day period, the "measurement period") in which the trading price per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company's common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company's common stock, as described in the 2026 Indenture; or (4) if the Company calls the 2026 Notes for redemption, or at any time from, and including, January 1, 2026 until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares of common stock, at the Company's election, based on the applicable conversion rate(s). If the Company elects to deliver cash or a combination of cash and shares of common stock, then the consideration due upon conversion will be based on a defined observation period.

The 2026 Notes will be redeemable, in whole or in part, at the Company's option on or after April 6, 2024, at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of common stock exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice.

If specified change in control events involving the Company as defined in the 2026 Indenture occur, then noteholders may require the Company to repurchase their 2026 Notes at a cash repurchase price equal to the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest. Additionally, the 2026 Indenture contains certain events of default,

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

including certain defaults by the Company with respect to other indebtedness of at least $40.0 million. As of March 31, 2021, none of the conditions allowing holders of the 2026 Notes to convert, or requiring the Company to repurchase the 2026 Notes, had been met.

2023 Notes

On January 30, 2018, the Company issued $200 million aggregate principal amount of the 2023 Notes pursuant to an indenture, dated as of January 30, 2018 (the "2023 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

During the three months ended March 31, 2021, the Company purchased $125.0 million principal amount ($123.6 million net carrying amount) of the outstanding 2023 Notes for $120.0 million in cash. In connection with extinguishment of a portion of the 2023 Notes, the Company recognized non-cash gains totaling $3.6 million during the first quarter of 2021, which is included as other income, net.

During the three months ended March 31, 2020, the Company purchased $5.7 million principal amount of the outstanding 2023 Notes for $4.7 million in cash, which approximated the net carrying amount of the related liability.

Since December 31, 2018, the Company has purchased a cumulative $167.6 million principal amount of the outstanding 2023 Notes for $146.8 million.

The initial carrying amount of the 2023 Notes recorded in the consolidated balance sheet was less than their $200 million principal amount, in accordance with then-applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that did not have a conversion feature. The Company recorded the value of the conversion feature as a debt discount, which was amortized as interest expense over the term of the 2023 Notes, with a similar amount allocated to additional paid-in capital. As a result of this amortization, prior to the Company's adoption of ASU 2020-06 effective January 1, 2021, the interest expense recognized on the 2023 Notes for accounting purposes was based on an effective interest rate of approximately 6%, which was greater than the cash interest the Company is obligated to pay.

The following table presents the carrying amount of the 2023 Notes in the consolidated balance sheets as of March 31, 2021 and December 31, 2020 (in thousands):


	March 31, 2021		December 31, 2020
Principal amount of the liability component	$	32,369	$	157,369
Less: Unamortized discount	0		12,308
Less: Unamortized issuance costs	347		1,819
Net carrying amount of the liability component	$	32,022	$	143,242

Net carrying amount of the equity component	n.a.		$	25,683

See Note 2, "Recent Accounting Pronouncement," for discussion of the recent revision to accounting guidance for convertible instruments, which changed the Company's method of accounting for the 2023 Notes upon its adoption of the standard effective January 1, 2021.

The 2023 Notes bear interest at a rate of 1.50% per year until maturity. Interest is payable semi-annually in arrears on February 15 and August 15 of each year. In addition, additional interest and special interest may accrue on the 2023 Notes under certain circumstances as described in the 2023 Indenture. The 2023 Notes will mature on February 15, 2023, unless earlier repurchased, redeemed or converted. The initial conversion rate is 22.2748 shares of the Company's common stock per $1,000 principal amount of 2023 Notes (equivalent to an initial conversion price of approximately $44.89 per share of common stock). The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the 2023 Indenture. The Company's intent is to repay the principal amount of the 2023 Notes in cash and settle the conversion feature in shares of the Company's common stock.

Noteholders may convert their 2023 Notes, at their option, only in the following circumstances: (1) if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for each of at least 20 trading days

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the 5 consecutive business days immediately after any 5 consecutive trading day period (such 5 consecutive trading day period, the "measurement period") in which the trading price per $1,000 principal amount of the 2023 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company's common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company's common stock, as described in the 2023 Indenture; or (4) if the Company calls the 2023 Notes for redemption, or at any time from, and including, November 15, 2022 until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares of common stock, at the Company's election, based on the applicable conversion rate(s). If the Company elects to deliver cash or a combination of cash and shares of common stock, then the consideration due upon conversion will be based on a defined observation period.

The 2023 Notes ~~will be~~are redeemable, in whole or in part, at the Company's option at ~~any time, and from time to time, on or after February 15, 2021, at~~ a cash redemption price equal to the principal amount of the 2023 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of common stock exceeds

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice.

If specified change in control events involving the Company as defined in the 2023 Indenture occur, then noteholders may require the Company to repurchase their 2023 Notes at a cash repurchase price equal to the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest. Additionally, the 2023 Indenture contains certain events of default, including certain defaults by the Company with respect to other indebtedness of at least $40.0 million. As of March 31, ~~2020,~~2021, none of the conditions allowing holders of the 2023 Notes to convert, or requiring the Company to repurchase the 2023 Notes, had been met.

Promissory Note

In connection with the 2018 acquisition of GEODynamics ~~Inc. ("GEODynamics"~~(the "GEODynamics Acquisition"), the Company issued a $25.0 million promissory note that bears interest at 2.50% per annum and was scheduled to mature on July 12, 2019. ~~Payments~~The Company believes that payments due under the promissory note are subject to ~~set off,~~set-off, in ~~part~~full or in ~~full,~~part, against certain indemnification claims related to matters occurring prior to the ~~Company's acquisition of GEODynamics. As more fully described in Note 13, "Commitments and Contingencies," the~~GEODynamics Acquisition. The Company has provided notice to and asserted indemnification claims against the seller of ~~GEODynamics. As~~GEODynamics (the "Seller"), and the Seller has filed a ~~result,~~breach of contract suit against the Company and one of its wholly-owned subsidiaries alleging that payments due under the promissory note are required to be, but have not been, repaid in accordance with the terms of such note. The Company has incurred settlement costs and expenses of $7.9 million related to such indemnification claims, and believes that the maturity date of ~~the~~such note is extended until the resolution of these ~~indemnity claims. The Company~~claims and expects that the amount ultimately paid in respect of such note will be reduced as a result of ~~these~~the indemnification claims. Accordingly, the Company has reduced the carrying amount of such note in the consolidated balance sheet to $17.1 million as of March 31, 2021 and December 31, 2020, which is its current best estimate of what is owed after set-off for such indemnification matters. See Note 13, "Commitments and Contingencies."


7.	~~Fair Value Measurements~~

7. Fair Value Measurements

The Company's financial instruments consist of cash and cash equivalents, investments, receivables, payables and debt instruments. The Company believes that the carrying values of these instruments, other than the 2023 Notes and 2026 Notes, on the accompanying consolidated balance sheets approximate their fair values. The estimated fair value of the 2023 Notes as of March 31, ~~2020~~2021 was ~~$78.5~~$27.3 million based on quoted market prices (a Level 12 fair value measurement), which compares to the ~~$186.6 million in~~ principal amount of $32.4 million. The estimated fair value of the ~~Notes.~~2026 Notes as of March 31, 2021 was $128.4 million based on quoted market prices (a Level 2 fair value measurement), which compares to the principal amount of $135.0 million.


8.	~~Stockholders' Equity~~

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

8. Stockholders' Equity

The following table provides details with respect to the changes to the number of shares of common stock, $0.01 par value, outstanding during the first ~~quarter~~three months of ~~2020~~2021 (in thousands):



Shares of common stock outstanding – December 31, ~~2019~~2020	~~60,501~~61,005
Restricted stock awards, net of forfeitures	~~666~~501
Shares withheld for taxes on vesting of ~~restricted~~ stock awards and transferred to treasury	~~(223~~(225)	)

Shares of common stock outstanding – March 31, ~~2020~~2021	~~60,944~~61,281

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had 25,000,000 shares of preferred stock, $0.01 par value, authorized, with 0 shares issued or outstanding.

The Company maintains a share repurchase program which was extended to July 29, 2020 by the Company's Board of Directors. During the first quarter of 2020, the Company did 0t repurchase any common stock under the program. The amount remaining under the Company's share repurchase authorization as of March 31, 2020 was $119.8 million. Subject to applicable securities laws, such purchases will be at such times and in such amounts as the Company deems appropriate.

9. Accumulated Other Comprehensive Loss


9.	~~Accumulated Other Comprehensive Loss~~

Accumulated other comprehensive loss, reported as a component of stockholders' equity, increased from ~~$67.7~~$71.4 million at December 31, ~~2019~~2020 to ~~$82.5~~$72.9 million at March 31, ~~2020,~~2021, due to changes in currency exchange rates. Accumulated other comprehensive loss is primarily related to fluctuations in the currency exchange rates compared to the U.S. dollar which are used to translate certain of the international operations of the Company's ~~reportable~~operating segments. For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, currency translation adjustments recognized as a component of other comprehensive ~~income~~loss were primarily attributable to the United Kingdom and Brazil. As of March 31, ~~2020,~~2021, the exchange rate for the British pound ~~and~~compared to the U.S. dollar strengthened by 1% while the exchange rate for the Brazilian real compared to the U.S. dollar weakened by ~~6% and 22%, respectively,~~8% compared to the exchange ~~rate~~rates at December 31, ~~2019,~~2020, contributing to other comprehensive loss of ~~$14.8~~$1.5 million reported for the three months ended March 31, ~~2020. During the first three months of 2019, the exchange rate for the British pound strengthened by 2% compared to the U.S. dollar, contributing to other comprehensive income of $2.5 million.~~2021.

10. Long-Term Incentive Compensation

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~


~~10.~~	~~Long-Term Incentive Compensation~~

The following table presents a summary of activity for stock options, service-based restricted stock awards and performance-based stock unit awards for the three months ended March 31, ~~2020~~2021 (in thousands):

Stock Options Service-based Restricted Stock Performance-based Stock Units
Outstanding – December 31, 2019 636
1,064
248
Granted —
594
181
Vested/Exercised —
(472 ) (125 )
Forfeited (14 ) (52 ) —
Outstanding – March 31, 2020 622
1,134
304
Weighted average grant date fair value (2020 awards) $ —
$ 11.06
$ 11.15


	Stock Options		Service-based Restricted Stock		Performance-based Stock Units
Outstanding – December 31, 2020	530		1,087		287
Granted	0		446		245
Vested	0		(506)		(70)
Forfeited	(80)		(15)		(42)
Outstanding – March 31, 2021	450		1,012		420
Weighted average grant date fair value (2021 awards)	$	0	$	6.87	$	6.84

The restricted stock program consists of a combination of service-based restricted stock and performance-based stock units. Service-based restricted stock awards generally vest on a straight-line basis over their term, which is generally three years. Performance-based restricted stock awards generally vest at the end of a three-year period, with the number of shares ultimately issued under the program dependent upon achievement of predefined specific performance measures.

In the event the predefined targets are exceeded for any performance-based award, additional shares up to a maximum of 200% of the target award may be granted. Conversely, if actual performance falls below the predefined target, the number of shares vested is reduced. If the actual performance falls below the threshold performance level, no restricted shares will vest. The performance measure for outstanding awards granted in 2019 and 2020 is the Company's EBITDA growth rate over a three-year period. The performance measure for outstanding awards granted in 2021 is the Company's cumulative EBITDA over a three-year period.

During the first quarters of ~~2020~~2021 and ~~2019,~~2020, the Company issued conditional long-term cash incentive awards ("Cash Awards") of ~~approximately $2.0~~$1.5 million and ~~$1.4~~$1.5 million (adjusted for forfeitures), respectively, with the ultimate dollar amount to be awarded ranging from 0 to a maximum of ~~$4.0~~$3.1 million for the ~~2020~~2021 Cash Award and from 0 to a maximum of ~~$2.7~~$3.0 million for the ~~2019~~2020 Cash Award. The performance measure for these Cash Awards is relative total stockholder return compared to a peer group of companies measured over a three-year period. The ultimate dollar amount to be awarded for the 2021 and 2020 ~~and 2019~~ Cash

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

Awards is limited to their targeted award value ($~~2.0 million and $1.4 million, respectively)~~1.5 million) if the Company's total stockholder return is negative over the performance period. The ~~obligation~~obligations, if any, related to the Cash Awards isare classified as ~~a liability~~liabilities and recognized over the vesting period.

Stock-based compensation ~~pre-tax~~ expense recognized induring the three months ended March 31, 2021 and 2020 ~~and 2019~~ totaled ~~$1.2~~$2.8 million and ~~$4.4~~$1.2 million, respectively. As of March 31, ~~2020,~~2021, there was ~~$15.6~~$10.4 million of pre-tax compensation costs related to service-based and performance-based stock awards, which will be recognized in future periods as vesting conditions are satisfied.


~~11.~~	~~Income Taxes~~

The income tax benefit for the three month periods ended March 31, 2020 was calculated using a discrete approach. This methodology was used because minor changes in the Company's results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. 11. Income Taxes

For the three months ended March 31, ~~2020,~~2021, the Company's income tax benefit was $2.3 million on a pre-tax loss of $18.1 million, which included certain non-deductible expenses and discrete tax items. This compares to an income tax benefit of $39.5 million on a pre-tax loss of $444.5 million, which included non-cash goodwill charges (approximately $313.1 million) and other expenses that are not deductible for income tax ~~purposes.~~purposes, for the three months ended March 31, 2020. The impact of these non-deductible expenses was partially offset by a $14.8 million discrete tax benefit related to the carryback of U.S. net operating losses under the CARES Act (discussed below). This compares to an income tax benefit of $0.3 million on a pre-tax loss of $14.9 million, which includes certain non-deductible expenses, for the three months ended March 31, 2019.Act.

~~On March 27, 2020, the Coronavirus Aid, Relief,~~

12. Segments and Economic Security ("CARES") Act was signed into law. In accordance with the recently established rules and procedures under the CARES Act, the Company has filed carryback claims regarding U.S. net operating losses generated in 2018 and plans to file carryback claims regarding U.S. net operating losses generated in 2019 during the second quarter of 2020. Prior to the enactment of the CARES Act, such tax losses could only be carried forward. The Company expects to receive refunds related to these carryback claims in 2020 of approximately $41.2 million, which are classified in income taxes receivable in the consolidated balance sheet as of March 31, 2020.Related Information

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~


~~12.~~	~~Segments and Related Information~~

The Company operates through 3 ~~reportable~~operating segments: ~~Well Site Services,~~Offshore/Manufactured Products, Downhole Technologies and Offshore/Manufactured Products. The Company's reportable segments represent strategic business units that generally offer different products and services. They are managed separately because each business often requires different technologies and marketing strategies.Well Site Services.

Financial information by ~~business~~operating segment for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 is summarized in the following tables (in thousands).


	Revenues		Depreciation and amortization		Operating income (loss)		Capital expenditures		Total assets
Three Months Ended March 31, 2021
Offshore/Manufactured Products	$	60,609	$	5,469	$	1,071	$	463	$	534,819
Downhole Technologies	25,430		4,389		(1,615)		83		280,320
Well Site Services(1)	39,550		11,468		(9,853)		3,330		229,968
Corporate	0		194		(9,365)		244		79,312
Total	$	125,589	$	21,520	$	(19,762)	$	4,120	$	1,124,419

Revenues Depreciation and
amortization Operating income (loss) Capital
expenditures Total assets
Three months ended March 31, 2020
Well Site Services –
Completion Services⁽¹⁾
$ 82,926
$ 14,766
$ (139,603 ) $ 2,938
$ 313,349
Drilling Services⁽²⁾
4,531
270
(5,351 ) 114
7,506
Total Well Site Services 87,457
15,036
(144,954 ) 3,052
320,855
Downhole Technologies⁽³⁾
41,065
5,584
(192,691 ) 1,649
333,518
Offshore/Manufactured Products⁽⁴⁾
91,172
5,628
(95,496 ) 1,065
562,179
Corporate —
161
(8,661 ) 115
95,458
Total $ 219,694
$ 26,409
$ (441,802 ) $ 5,881
$ 1,312,010

Revenues Depreciation and
amortization Operating income (loss) Capital
expenditures Total assets
Three months ended March 31, 2019
Well Site Services –
Completion Services $ 100,642
$ 17,286
$ (3,494 ) $ 11,682
$ 521,553
Drilling Services 7,750
3,341
(4,559 ) 949
55,785
Total Well Site Services 108,392
20,627
(8,053 ) 12,631
577,338
Downhole Technologies 54,290
5,066
4,054
3,616
715,217
Offshore/Manufactured Products 87,929
5,587
5,259
1,546
677,907
Corporate —
271
(12,100 ) 129
46,765
Total $ 250,611
$ 31,551
$ (10,840 ) $ 17,922
$ 2,017,227


	Revenues		Depreciation and amortization		Operating income (loss)		Capital expenditures		Total assets
Three Months Ended March 31, 2020
Offshore/Manufactured Products(2)	$	91,172	$	5,628	$	(95,496)	$	1,065	$	562,179
Downhole Technologies(3)	41,065		5,584		(192,691)		1,649		333,518
Well Site Services(4)	87,457		15,036		(144,954)		3,052		320,855
Corporate	0		161		(8,661)		115		95,458
Total	$	219,694	$	26,409	$	(441,802)	$	5,881	$	1,312,010

________________


~~(1)~~	Operating loss includes a non-cash goodwill impairment charge of $127.1 million to reduce the carrying value of the Completion Services reporting unit to its estimated fair value and an inventory impairment charge of $9.0 million to reduce the carrying value of the Completion Services reporting unit's inventory to its estimated net realizable value.


~~(2)~~	~~Operating loss includes a non-cash fixed asset impairment charge of $5.2 million to reduce the carrying value of the Drilling Services business's fixed assets to their estimated realizable value.~~


~~(3)~~	~~Operating loss includes non-cash goodwill impairment charge of $192.5 million to reduce the carrying value of the Downhole Technologies reporting unit to its estimated fair value.~~


~~(4)~~	Operating loss includes a non-cash goodwill impairment charge of $86.5 million to reduce the carrying value of the Offshore/Manufactured Products reporting unit to its estimated fair value and an inventory impairment charge of $16.2 million to reduce the carrying value of the Offshore/Manufactured Products reporting unit's inventory to its estimated net realizable value.

(1)Operating loss included a non-cash fixed asset impairment charge of $0.7 million.

(2)Operating loss included non-cash goodwill and inventory impairment charges of $86.5 million and $16.2 million, respectively.

(3)Operating loss included a non-cash goodwill impairment charge of $192.5 million.

(4)Operating loss included non-cash goodwill, inventory and fixed asset impairment charges of $127.1 million, $9.0 million and $5.2 million, respectively.

See Note 3, "Asset Impairments and Other ~~Charges"~~Restructuring Items," and Note 4, "Details of Selected Balance Sheet Accounts," for further discussion of ~~impairment~~these and other charges ~~recorded during the~~and benefits recognized in first ~~quarter of 2020.~~

~~No customer individually accounted for 10% of the Company's consolidated revenue for the~~ three months ~~ended March 31, 2020~~of 2021 and ~~2019.~~2020.

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

The following ~~table provides~~tables provide supplemental disaggregated revenue from contracts with customers by ~~business~~operating segment for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Well Site Services				Downhole Technologies				Offshore/Manufactured Products				Total					Offshore/Manufactured Products				Downhole Technologies				Well Site Services				Total
	2020		2019		2020		2019		2020		2019		2020		2019			2021		2020		2021		2020		2021		2020		2021		2020
Three months ended March 31																	Three months ended March 31
Major revenue categories -																	Major revenue categories -
Project-driven products	$	—	$	—	$	—	$	—	$	36,788	$	27,245	$	36,788	$	27,245	Project-driven products	$	21,374	$	36,788	$	0	$	0	$	0	$	0	$	21,374	$	36,788
Short-cycle:																	Short-cycle:
Completion products and services	82,926		100,642		41,065		54,290		13,649		24,274		137,640		179,206		Completion products and services	8,114		13,677		25,430		41,065		38,799		82,926		72,343		137,668
Drilling services	4,531		7,750		—		—		—		—		4,531		7,750		Drilling services	0		0		0		0		751		4,531		751		4,531
Other products	—		—		—		—		8,420		7,739		8,420		7,739		Other products	4,136		8,420		0		0		0		0		4,136		8,420
Total short-cycle	87,457		108,392		41,065		54,290		22,069		32,013		150,591		194,695		Total short-cycle	12,250		22,097		25,430		41,065		39,550		87,457		77,230		150,619
Other products and services	—		—		—		—		32,315		28,671		32,315		28,671		Other products and services	26,985		32,287		0		0		0		0		26,985		32,287
	$	87,457	$	108,392	$	41,065	$	54,290	$	91,172	$	87,929	$	219,694	$	250,611		$	60,609	$	91,172	$	25,430	$	41,065	$	39,550	$	87,457	$	125,589	$	219,694

Revenues from products and services transferred to customers over time accounted for approximately 62% and 66% of consolidated revenues for ~~both~~each of the three months ended March 31, 2021 and 2020, ~~and 2019.~~respectively. The balance of revenues for the respective periods relates to products and services transferred to customers at a point in time. As of March 31, ~~2020,~~2021, the Company had ~~$161~~$166 million of remaining backlog related to contracts with an original expected duration of greater than one year. Approximately ~~51%~~40% of this remaining backlog is expected to be recognized as revenue over the remaining nine months of ~~2020,~~2021, with an additional ~~30%~~31% in ~~2021~~2022 and the balance thereafter.

13. Commitments and Contingencies

The impact of the ~~recent~~ COVID-19 pandemic and related economic, business and market disruptions ~~is evolving rapidly~~continue to evolve and ~~its~~their future effects ~~are~~remain uncertain. The most direct and immediate impact that the Company has experienced and expects to continue to experience from the COVID-19 pandemic is decreased demand for its products and services due to lower activity levels by its customers resulting from the precipitous decline in crude oil prices. The overall impact of the pandemic and oil price collapse on the Company and its customers will depend on ~~many~~numerous factors, many of which are beyond management's control and knowledge. In response to public health concerns related to COVID-19, many federal, state, local and other authorities around the world ~~have~~ imposed mandatory regulations directing individuals to stay at home and ~~limiting~~limited their ability to travel domestically or internationally. In certain cases, when travel iswas permitted, a multi-week quarantine period iswas required before an individual ~~can~~could work in the area. Additionally, rules and regulations regarding employer responsibilities continue to be promulgated. Facility closures, quarantines, travel restrictions, and possible future workforce shortages may, among numerous other impacts, result in delays by the Company in fulfilling its existing contractual obligations to its customers, which could result in adverse financial consequences. Additionally, the Company procures a variety of raw materials and component products, including steel, in the manufacture of ~~our~~its products from companies which may be impacted by similar challenges. The Company continues to monitor the effect of COVID-19 on its employees, customers, critical suppliers and other stakeholders. The ultimate magnitude and duration of the COVID-19 pandemic, resulting governmental restrictions placing limitations on the mobility and ability to work of the worldwide population, and the related impact on crude oil prices and the U.S. and global economy and capital markets isremains uncertain.

~~OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

Following the Company's acquisition of GEODynamics in January 2018, the Company determined that certain steel products historically imported by GEODynamics from China for use in its manufacturing process may potentially be subject to anti-dumping and countervailing duties based on recent clarifications/decisions rendered by the U.S. Department of Commerce and the U.S. Court of International Trade. Following these findings, the Company commenced an internal review of this matter and ceased further purchases of these potentially affected Chinese products. As part of the Company's internal review, the Company engaged trade counsel and decided to voluntarily disclose this matter to U.S. Customs and Border Protection in September 2018. In connection with the acquisition of GEODynamics, the seller agreed to indemnify and hold the Company harmless against certain claims related to matters such as this, and the Company has provided notice to and asserted indemnification claims against the seller. Additionally, the Company is able to set-off payments due under the $25.0 million promissory note (see Note 6, "Long-term Debt") issued to the seller of GEODynamics in respect of indemnification claims. Such note was scheduled to mature on July 12, 2019, but, because the Company has provided notice to and asserted indemnification claims, the maturity date of the note is extended until the resolution of such claim. The Company expects that the amount ultimately paid in respect of such note will be reduced as a result of these indemnification claims.

Additionally, in the ordinary course of conducting its business, the Company becomes involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state and local levels.

The Company is a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of the Company's products or operations. Some of these claims relate to matters occurring prior to the acquisition of businesses, and some relate to businesses the Company has sold. In certain cases, the Company is entitled to indemnification from the sellers of businesses and, in other cases, the Company has indemnified the buyers of businesses. Although the Company can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on the Company, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by indemnity or insurance, will not have a material adverse effect on the Company's consolidated financial position, results of operations or liquidity.


~~14.~~	~~Related Party Transactions~~

OIL STATES INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

Following the GEODynamics ~~historically leased certain land and facilities from an equity holder and employee of~~Acquisition in January 2018, the Company ~~following~~determined that certain steel products historically imported by GEODynamics from China for use in its ~~acquisition~~manufacturing process were potentially be subject to anti-dumping and countervailing duties. Following an internal review, the Company voluntarily disclosed this matter to U.S. Customs and Border Protection ("CBP") and, in December 2020, reached an agreement with CBP to settle this matter for $7.3 million. The Company believes that the Seller is required to indemnify and hold the Company harmless against the amount of ~~GEODynamics. In connection~~this and other settlements and related costs of $7.9 million, and the Company has provided notice to and asserted indemnification claims against the Seller. Additionally, the Company believes that its agreements with the ~~acquisition of GEODynamics,~~Seller allow it to set-off such amounts against payments due under the $25.0 million promissory note and that, because the Company ~~assumed these leases. Rent expense related~~has asserted indemnification claims, the maturity date of such note is extended until the resolution of such claims. Accordingly, the Company has reduced the carrying amount of such note in its consolidated balance sheets to ~~leases with this employee for the three months ended March~~$17.1 million as of December 31, 2020 and ~~2019 totaled $44 thousand and $25 thousand, respectively.~~

Additionally, GEODynamics purchases products from and sells products to a company in which this employee is an investor. Sales to this company by GEODynamics were $1.8 million and $7 thousand for the three months ended March 31, 2021, which is the Company's current best estimate of what is owed after set-off for indemnification matters.

In August 2020, the Seller filed a breach of contract suit against the Company and ~~2019, respectively. Purchases from~~one of its wholly-owned subsidiaries in federal court alleging that payments due under the promissory note are required to be, but have not been, repaid in accordance with the terms of the note. Additionally, the Seller alleged that it was entitled to approximately $19 million in U.S. federal income tax carryback claims received by the Company under the provisions of the CARES Act. On February 15, 2021, the Seller dismissed the federal lawsuit without prejudice and refiled its lawsuit in state court. The Company denies the validity of these breach of contract claims and plans to vigorously defend against this ~~company were $410 thousand for the three months ended March 31, 2019.~~lawsuit.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other statements we make contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors, including incorrect or changed assumptions. For a discussion of known material factors that could affect our results, please refer to "Part I, Item 1. Business," "Part I, Item 1A. Risk Factors," "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" included in our ~~2019~~2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February ~~21, 2020~~22, 2021 as well as "Part II. Item 1A. Risk Factors" included in this Quarterly Report on Form 10-Q.

You can typically identify "forward-looking statements" by the use of forward-looking words such as "may," "will," "could," "project," "believe," "anticipate," "expect," "estimate," "potential," "plan," "forecast," "proposed," "should," "seek," and other similar words. Such statements may relate to our future financial position, budgets, capital expenditures, projected costs, plans and objectives of management for future operations and possible future strategic transactions. Actual results frequently differ from assumed facts and such differences can be material, depending upon the circumstances.

While we believe we are providing forward-looking statements expressed in good faith and on a reasonable basis, there can be no assurance that actual results will not differ from such forward-looking statements. The following are important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, our Company:

•public health crises, such as the ~~coronavirus outbreak at the beginning of 2020,~~Coronavirus Disease 2019 ("COVID-19") pandemic, which has negatively impacted the global economy, and correspondingly, the price of ~~crude~~oil;

•the ability and willingness of the Organization of Petroleum Exporting Countries ("OPEC") and other producing nations to set and maintain oil production levels and ~~the global economy;~~pricing;

•the level of supply of and demand for oil and natural gas;

•fluctuations in the current and future prices of oil and natural gas;

•the level of exploration, drilling and completion activity;

•the cyclical nature of the oil and natural gas industry;

•the level of ~~exploration, drilling~~offshore oil and ~~completion activity;~~natural gas developmental activities;

•the financial health of our customers;

•the impact of environmental matters, including executive actions and regulatory or legislative efforts under the Biden Administration to adopt environmental or climate change regulations that may result in increased operating costs or reduced oil and natural gas production or demand globally;

•political, economic and litigation efforts to restrict or eliminate certain oil and natural gas exploration, development and production activities due to concerns over the threat of climate change;

•the availability of and access to attractive oil and natural gas field prospects, ~~by our customers,~~ which may be affected by governmental actions or actions of other parties which may restrict drilling and completion activities;

~~the level of offshore oil and natural gas developmental activities;~~

~~the ability of the Organization of Petroleum Exporting Countries ("OPEC") to set and maintain production levels and pricing;~~

•changes in tax laws and regulations;

•the impact of tariffs and duties on imported ~~raw~~ materials and exported finished goods;

impact of environmental matters, including future regulatory efforts to adopt environmental or climate change regulations that may result in increased operating costs or reduced commodity demand globally;

•our ~~facilities and~~ability to find and retain skilled personnel;

•negative outcome of litigation, threatened litigation or government proceedings;

•our ability to develop new competitive technologies and products;

•fluctuations in currency exchange rates;

•physical, digital, cyber, internal and external security ~~breaches;~~breaches and other incidents affecting information security and data privacy;

•our ability to access and the ~~availability and~~ cost of capital ~~including our ability to complete~~in the ~~amendment to our Revolving Credit Facility;~~bank and capital markets;

•our ability to protect and enforce our intellectual property rights;

•our ability to complete the integration of acquired businesses and achieve the expected accretion in earnings; and

•the other factors identified in "Part I, Item 1A. Risk Factors" in our ~~2019~~2020 Annual Report on Form ~~10-K and "Part II, Item 1A. Risk Factors" included in this Quarterly Report on Form 10‑Q.~~10-K.

Should one or more of these risks or uncertainties materialize, or should the assumptions on which our forward-looking statements are based prove incorrect or change, actual results may differ materially from those expected, estimated or projected. In addition, the factors identified above may not necessarily be all of the important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by us, or on our behalf. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility to publicly release the result of any revision of our forward-looking statements after the date they are made.

In addition, in certain places in this Quarterly Report on Form 10-Q, we refer to information and reports published by third parties that purport to describe trends or developments in the energy industry. We do so for the convenience of our stockholders and in an effort to provide information available in the market that will assist our investors in better understanding the market environment in which we operate. However, we specifically disclaim any responsibility for the accuracy and completeness of such information and undertake no obligation to update such information.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with our condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form ~~10‑Q~~10-Q and our consolidated financial statements and notes to those statements included in our ~~2019~~2020 Annual Report on Form ~~10‑K~~10-K in order to understand factors, such as business combinations, charges and credits and financing transactions, which may impact comparability from period to period.

We provide a broad range of products and services to the oil and gas industry through our ~~Well Site Services,~~Offshore/Manufactured Products, Downhole Technologies and ~~Offshore/Manufactured Products business~~Well Site Services segments. Demand for our products and services is cyclical and substantially dependent upon activity levels in the oil and gas industry, particularly our customers' willingness to invest capital in the exploration for and development of crude oil and natural gas reserves. Our customers' capital spending programs are generally based on their cash flows and their outlook for near-term and long-term commodity prices, economic growth, commodity demand and estimates of resource production. As a result, demand for our products and services is sensitive to future expectations with respect to crude oil and natural gas prices.

In March of 2020, the spot price of West Texas Intermediate ("WTI") crude oil declined over 50% in response to actual and forecasted reductions in global demand for crude oil due to the ~~Coronavirus Disease 2019 ("COVID-19")~~COVID-19 pandemic, ~~and~~coupled with announcements by Saudi Arabia and Russia of plans to increase crude oil ~~production. Following this unprecedented collapse~~production in an effort to protect market share. OPEC, its members and other state-controlled oil companies later agreed to reduce production following the crude oil ~~prices,~~price collapse and many operators shut-in production in the ~~spot price of Brent~~United States in an effort to address collapsing demand and ~~WTI crude oil closed at $15 and $21 per barrel, respectively, on March 31, 2020. Since the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q,~~rapidly rising inventories. While crude oil prices have ~~declined further to~~recovered significantly since reaching record low levels. The ultimate magnitude and duration of the COVID-19 pandemic, resulting governmental restrictions placing limitations on the mobility and ability to work of the worldwide population, and the related impact onlevels in April 2020, with crude oil ~~prices and~~inventories moderating, there remains some uncertainty around the ~~U.S. and global economy and capital markets is uncertain. While it is difficult for management~~timing of demand recovery to assess or predict with precision the broad future effect of this pandemic on the global economy, the energy industry or the Company, management expects that it will materially adversely affect demand for the Company's products and services during the remainder of 2020.pre-COVID-19 levels.

Demand for most of our products and services depends substantially on the level of capital expenditures by the oil and natural gas ~~industry. This~~industry, which reached 15-year lows in 2020. The decline in crude oil prices, ~~is expected to result~~coupled with higher crude oil inventory levels in ~~further near-term~~2020, caused rapid reductions to most of our customers' drilling, completion and production activities and their related spending on products and services, particularly those supporting activities in the U.S. shale play regions. These conditions have and may ~~also~~continue to result in ~~a material~~ adverse ~~impact~~impacts on certain customers' liquidity and financial position, leading to further spending reductions, delays in the collection of amounts owed and, in certain instances, non-payments of amounts owed. Additionally, future actions among OPEC members and other producing nations as to production levels and prices could result in declines in crude oil prices, which would prove detrimental.

Following ~~these~~the unprecedented events in March 2020, ~~events,~~ we immediately ~~implemented additional~~began aggressive implementation of cost reduction initiatives. We also assessed the carrying value of goodwill and other assets based on the current industry outlook regarding overall demand for and pricing of our products and services. As a result of these events, actions and assessments, we recorded the following charges during the first quarter of 2020:

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law. In accordance with the recently established rules and procedures under the CARES Act, we have filed carryback claims regarding U.S. net operating losses generatedinitiatives in 2018 and we plan to file carryback claims regarding U.S. net operating losses generated in 2019 during the second quarter of 2020. Prior to the enactment of the CARES Act, such losses could only be carried forward. We expect to receive refunds related to these carryback claims of approximately $41.2 million in 2020.

~~In response to the anticipated material declines in revenue expected over the balance of 2020, management has taken, among others, the following actions~~an effort to reduce our expenditures to protect the financial health of our ~~company:~~

protect liquidity. As discussed in more detail below and under "– ~~Revolving Credit~~ABL Facility," "– 2023 Notes," and "– 2026 Notes," we ~~expect~~completed two significant financing transactions during the first quarter of 2021 to ~~amend~~strengthen our ~~existing~~liquidity position.

On February 10, 2021, we entered into a new revolving credit facility ~~converting it from~~which provides for a ~~cash flow-based to an~~$125.0 million asset-based revolving credit facility (the ~~"Amended~~"ABL Facility")~~, during~~ under which credit availability is subject to a borrowing base calculation that includes eligible U.S. customer accounts receivable and inventory. The ABL Facility matures in February 2025. Concurrent with entering into the ~~second quarter of 2020. While~~ABL Facility, our former senior secured revolving credit facility was terminated. On March 16, 2021, we entered into an amendment to our ABL Facility that permitted us to incur the indebtedness represented by the 2026 Notes discussed below.

On March 19, 2021, we issued $135.0 million aggregate principal amount of our 4.75% convertible senior notes due 2026 (the "2026 Notes"). Net proceeds from the ~~borrowing base has not been finalized, we expect the size~~2026 Notes offering, after deducting issuance costs, totaled $130.3 million. The 2026 Notes will mature on April 1, 2026 and bear interest at an annual rate of 4.75%, which is payable semi-annually on April 1 and October 1. We used $120.0 million of the ~~Amended Facility~~cash proceeds to ~~range~~purchase $125.0 million principal amount of our outstanding 1.50% convertible senior notes due 2023 (the "2023 Notes"), with the balance added to cash on-hand.

Activity levels in each of our segments were adversely impacted by the severe winter weather event that occurred in February 2021 – particularly in Texas, Oklahoma and surrounding states. While our facilities did not sustain meaningful damage and our operations and services were restored following the event, our February results of operations were adversely impacted due to the temporary cessation of work at well sites, facility closures by us and our customers, and delays in the shipment of goods to our customers and from ~~$175 million to $200 million.~~our vendors.

Brent and West Texas Intermediate ("WTI") crude oil prices averaged $50 and $45 per barrel in the first quarter of 2020 – down 20% and 17%, respectively, compared to average prices in the first quarter of 2019. Recent WTI ~~and Brent~~ crude oil and natural gas pricing trends ~~are~~were as follows:

Average Price⁽¹⁾ for quarter ended

Average Price⁽¹⁾ for year ended December 31
Year March 31 June 30 September 30 December 31
WTI Crude (per bbl)
2020 $ 45.34

2019 $ 54.82
$ 59.88
$ 56.34
$ 56.82
$ 56.98
2018 $ 62.91
$ 68.07
$ 69.70
$ 59.97
$ 65.25
Brent Crude (per bbl)
2020 $ 50.27

2019 $ 63.10
$ 69.01
$ 61.95
$ 63.17
$ 64.26
2018 $ 66.86
$ 74.53
$ 75.08
$ 68.76
$ 71.32
Henry Hub Natural Gas (per mmBtu)
2020 $ 1.91

2019 $ 2.92
$ 2.57
$ 2.38
$ 2.40
$ 2.56
2018 $ 3.08
$ 2.85
$ 2.93
$ 3.77
$ 3.15


	Average Price(1) for quarter ended								Average Price(1) for year ended December 31
Year	March 31		June 30		September 30		December 31
Brent Crude (per bbl)
2021	$	61.04
2020	$	50.27	$	29.70	$	42.91	$	44.32	$	41.96

WTI Crude (per bbl)
2021	$	58.09
2020	$	45.34	$	27.96	$	40.89	$	42.52	$	39.16

Henry Hub Natural Gas (per MMBtu)
2021	$	3.50
2020	$	1.91	$	1.70	$	2.00	$	2.52	$	2.03

(1)Source: U.S. Energy Information Administration (spot prices).

On April ~~24, 2020,~~23, 2021, Brent ~~and~~crude oil, WTI crude oil and natural gas spot prices ~~both~~ closed at ~~$16~~$65.75 per barrel, ~~– down 68%~~$62.18 per barrel and ~~65%, respectively, from the first quarter 2020 average prices.~~$2.79 per MMBtu, respectively. Additionally, as presented in more detail below, the U.S. drilling rig count reported on April ~~24, 2020~~23, 2021 was ~~465~~438 rigs, ~~41% below~~11% above the first quarter ~~2020~~2021 average.

Our ~~Well Site Services~~Offshore/Manufactured Products segment provides ~~completion~~technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities, as well as certain products and services to ~~a much lesser extent land drilling services, in~~ the ~~United States (including the Gulf of Mexico)~~offshore and ~~the rest of the world. U.S.~~land-based drilling and completion ~~activity~~markets. This segment is particularly influenced by global spending on deepwater drilling and production, which is primarily driven by our customers' longer-term commodity demand forecasts and outlook for crude oil and natural gas prices. Approximately 35% of Offshore/Manufactured Products sales in ~~turn,~~the first three months of 2021 were driven by our ~~Well Site Services results,~~customers' capital spending for products used in exploratory and developmental drilling, greenfield offshore production infrastructure, and subsea pipeline tie-in and repair system applications, along with upgraded equipment for existing offshore drilling rigs and other vessels (referred to herein as "project-driven products"). Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans. Such projects are ~~sensitive~~generally undertaken by larger exploration, field development and production companies (primarily international oil companies ("IOCs") and state-run national oil companies ("NOCs")) using relatively conservative crude oil and natural gas pricing assumptions. Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to ~~near-term~~short-term fluctuations in ~~commodity prices, particularly WTI~~the price of crude oil ~~prices, given~~and natural gas. Further, we expect that the ~~short-term, call-out nature~~segment's 2021 bookings will trend higher than the orders booked into backlog in 2020.

Backlog reported by our Offshore/Manufactured Products segment totaled $226 million at March 31, 2021, an increase of ~~its operations.~~

~~Within this segment, our Completion Services business supplies equipment and service personnel utilized in the completion and initial production~~3% from December 31, 2020. First quarter 2021 booking improved sequentially, totaling $70 million, yielding a quarterly book-to-bill ratio of new and recompleted wells. Activity for the Completion Services business is dependent primarily upon the level and complexity of drilling, completion, and workover activity in the areas of operations mentioned above. Well intensity and complexity has increased with the continuing transition to multi-well pads, the drilling of longer lateral wells and increased downhole pressures, along with the increased number of frac stages completed in horizontal wells. Similarly, demand for our Drilling Services operations was historically driven by activity in our primary land drilling markets1.2x. The following table sets forth backlog as of the Permian Basin in West Texas and the U.S. Rocky Mountain area. During the third quarter of 2019, we made the strategic decision to reduce the scope of our Drilling Services business (adjusting from 34 rigs to 9 rigs) due to the ongoing weakness in customer demand for vertical drilling rigs in the U.S. land market. The operations now focus on serving operators in the U.S. Rocky Mountain region.dates indicated (in millions).


	Backlog as of
Year	March 31		June 30		September 30		December 31
2021	$	226
2020	$	267	$	235	$	227	$	219
2019	$	234	$	283	$	293	$	280

Our Downhole Technologies segment, is comprised of the GEODynamics, Inc. ("GEODynamics") business we acquired in January ~~2018. GEODynamics was founded in 2004 as a researcher, developer and manufacturer of consumable engineered products used in completion applications. This segment~~2018, provides oil and gas perforation systems, downhole tools and services in support of completion, intervention, wireline and well abandonment operations. This segment designs, manufactures and markets its consumable engineered products to oilfield service as well as exploration and production companies. Product and service offerings for this segment include innovations in perforation technology through patented and proprietary systems combined with advanced modeling and analysis tools. This expertise has led to the optimization of perforation hole size, depth, and quality of tunnels, which are key factors for maximizing the effectiveness of hydraulic fracturing. Additional offerings include proprietary toe valve and frac plug products, which are focused on zonal isolation for hydraulic fracturing of horizontal wells, and a broad range of consumable products, such as setting tools and bridge plugs, that are used in completion, intervention and decommissioning applications. Demand drivers for the Downhole Technologies segment include continued trends toward longer lateral lengths, increased frac stages and more perforation clusters to target increased unconventional well productivity, which requires ongoing technological and product developments.

~~Demand for~~Our Well Site Services segment provides completion services and, to a much lesser extent land drilling services, in the United States (including the Gulf of Mexico) and the rest of the world. U.S. drilling and completion activity and, in turn, our Well Site Services results, are sensitive to near-term fluctuations in commodity prices, particularly WTI crude oil prices, given the short-term, call-out nature of its operations. We primarily supply equipment and ~~Downhole Technologies segments' businesses~~service personnel utilized in the completion and initial production of new and recompleted wells. Our U.S. activity is dependent primarily upon the level and complexity of drilling, completion and workover activity in our areas of operations. Well intensity and complexity has increased with the continuing transition to multi-well pads, the drilling of longer lateral wells and increased downhole pressures, along with the increased number of frac stages completed in horizontal wells.

Demand for our completion products and services within each of our segments is highly correlated to changes in the total number of wells drilled in the United States, total footage drilled, the number of drilled wells that are completed and ~~to a lesser degree,~~ changes in the drilling rig count. The following table sets forth a summary of the average U.S. and international drilling rig count, as measured by Baker Hughes ~~as of and~~Company, for the periods indicated.


		Average for the
	As of April 23, 2021	Three Months Ended March 31,
		2021	2020
United States:
Land – Oil	332	286	650
Land – Natural gas and other	94	91	113
Offshore	12	16	22
	438	393	785
International:
Land		667	1,022
Offshore		169	247
		836	1,269
		1,229	2,054

As of April 24, 2020 Three Months Ended March 31,
2020 2019
U.S. drilling rig count
Land – Oil 361 650 831
Land – Natural gas and other 87 113 190
Offshore 17 22 22
Total 465 785 1,043

~~Over recent years, our~~The U.S. energy industry ~~experienced an increase in customer spending~~is primarily focused on crude oil and liquids-rich exploration and development activities in U.S. shale plays utilizing horizontal drilling and completion techniques. As of March 31, ~~2020,~~2021, oil-directed drilling accounted for ~~86%~~78% of the total U.S. rig count – with the balance largely natural gas related. ~~Following the significant decline in crude oil prices in the fourth quarter of 2018, coupled with customers reducing spending~~Due to be within their cash flows, the U.S. rig count declined steadily during 2019 and exited the year at 805 rigs – 278 rigs, or 26%, below the level reported at the end of 2018. The rig count declined further in the first quarter of 2020, with the average U.S. rig count for the three months ended March 31, 2020 decreasing by 258 rigs, or 25%, compared to the average for the three months ended March 31, 2019. With the unprecedented decline in crude oil prices in March and April of 2020, drilling and completion activity in the ~~continued uncertainties related~~United States collapsed – with the active drilling rig count declining from 790 rigs as of February 29, 2020 to ~~the COVID-19 pandemic, industry analysts are projecting that~~a trough of 244 rigs as of August 14, 2020. Since August 14, 2020, the U.S. rig count ~~could decline rapidly~~has increased 71% to an417 rigs as of March 31, 2021. As can be derived from the table above, the average ~~of approximately 200~~U.S. rig count for the three months ended March 31, 2021 decreased by 392 rigs, or ~~fewer operating during the third and fourth quarters of 2020.~~

Our Offshore/Manufactured Products segment provides technology-driven, highly-engineered products and services for offshore oil and natural gas production systems and facilities, as well as certain products and services50%, compared to the offshore and land-based drilling and completion markets. This segment is particularly influenced by global deepwater drilling and production spending, which are primarily driven by our customers' longer-term commodity demand forecasts and outlookaverage for ~~crude oil and natural gas prices. Approximately 40% of Offshore/Manufactured Products revenues in~~ the ~~first quarter of 2020 were driven by our customers' capital~~

spending for offshore production systems and subsea pipelines, repairs and, to a lesser extent, upgrades of existing offshore drilling rigs and construction of new offshore drilling rigs and vessels (referred to herein as "project-driven products"). Deepwater oil and gas development projects typically involve significant capital investments and multi-year development plans. Such projects are generally undertaken by larger exploration, field development and production companies (primarily international oil companies ("IOCs") and state-run national oil companies ("NOCs")) using relatively conservative crude oil and natural gas pricing assumptions. Given the long lead times associated with field development, we believe some of these deepwater projects, once approved for development, are generally less susceptible to short-term fluctuations in the price of crude oil and natural gas. Customers have focused in recent years on improving the economics of major deepwater projects at lower commodity breakeven prices by re-bidding projects, identifying advancements in technology, and reducing overall project costs through equipment standardization. Bidding and quoting activity, along with orders from customers, for deepwater projects improved in 2019 from 2018 levels. However, with reduced market visibility given the significant decline in crude oil prices in the first quarter of 2020 and reduced customer spending, we expect that the segment's 2020 bookings will be lower than the levels achieved in 2019.

~~Backlog reported by our Offshore/Manufactured Products segment totaled $267 million at~~three months ended March 31, 2020, a decrease of 4% from December 31, 2019 and an increase of 14% from March 31, 2019. First quarter 2020 bookings totaled $87 million, yielding a book-to-bill ratio of 1.0x. The following table sets forth backlog as of the dates indicated (in millions).

Backlog as of
Year March 31 June 30 September 30 December 31
2020 $ 267

2019 $ 234
$ 283
$ 293
$ 280
2018 $ 157
$ 165
$ 175
$ 179
2020.

Reduced demand for our products and services, coupled with a reduction in the prices we charge our customers for our products and services, has adversely affected our results of operations, cash flows and financial position. If the current pricing environment for crude oil does not ~~improve, or declines further,~~stabilize at these higher levels, our customers may be required to ~~further~~ reduce their capital expenditures, causing ~~additional~~ declines in the demand for, and prices of, our products and services, which would adversely affect our results of operations, cash flows and financial position.

We use a variety of domestically produced and imported raw materials and component products, including steel, in ~~manufacturing~~the manufacture of our products. The United States has imposed tariffs on a variety of imported products, including steel and

aluminum. In response to the U.S. tariffs on steel and aluminum, the European Union and several other countries, including Canada and China, have threatened and/or imposed retaliatory tariffs. The effect of these tariffs and the application and interpretation of existing trade agreements and customs, anti-dumping and countervailing duty regulations continue to evolve, and we continue to monitor these matters. If we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase as a result of customs, anti-dumping and countervailing duty regulations or otherwise, and we are unable to pass corresponding cost increases on to our customers, our financial position and results of operations could be adversely affected. Furthermore, uncertainty with respect to potential costs in the drilling and completion of oil and gas wells could cause our customers to delay or cancel planned projects which, if this occurred, would adversely affect our financial position, cash flows and results of operations. See Note 13, "Commitments and Contingencies."

Other factors that can affect our business and financial results include but are not limited to the general global economic environment, competitive pricing pressures, public health crises, climate-related and other regulatory changes, and changes in tax laws in the United States and international markets. We continue to monitor the global economy, the prices of and demand for crude oil and natural gas, and the resultant impact on the capital spending plans and operations of our customers in order to plan and manage our business.

For more information on our health and safety, diversity and other workforce policies, please see "Part I, Item 1. Business – Human Capital" in our Annual Report on Form 10-K for the year ended December 31, 2020.

Selected Financial Data

This selected financial data should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes included in "Part I, Item 1. Financial Statements" of this Quarterly Report on Form 10-Q and "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and related notes included in "Part II, Item 8. Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for the year ended December 31, 2020 in order to understand factors, such as business combinations, charges and credits, financing transactions and changes in tax regulations, which may impact the comparability of the selected financial data.

Unaudited Consolidated Results of Operations Data

The following summarizes our unaudited consolidated results of operations for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands, except per share amounts):

Cost of revenues (exclusive of depreciation and amortization expense presented below)⁽¹⁾

Cost of revenues (exclusive of depreciation and amortization expense presented below)(1)

Impairments of goodwill⁽²⁾

Impairments of goodwill(2)

Impairment of fixed assets⁽³⁾

Impairments of fixed assets(3)

Income tax benefit⁽⁴⁾

Income tax benefit(5)

(1)Cost of revenues (exclusive of depreciation and amortization expense) included non-cash inventory impairment charges of $25.2 million ($12.0 million in product costs and $13.2 million in service costs) recognized in the first quarter of 2020.

(2)During the first quarter of 2020, we recognized non-cash goodwill impairment charges totaling $406.1 million to reduce the carrying value of our reporting units to their estimated fair value.

(3)During the first quarters of 2021 and 2020, our Well Site Services segment recognized non-cash impairment charges of $0.7 million and $5.2 million, respectively, to reduce the carrying value of the segment's fixed assets to their estimated realizable value.

(4)During the first quarter 2021, we recognized non-cash gains of $3.6 million in connection with our purchases of $125.0 million principal amount of our 2023 Notes.

(5)During the first quarter of 2020, we recognized a discrete tax benefit of $14.8 million related to U.S. net operating loss carrybacks under provisions of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

See Note 3, "Asset Impairments and Other ~~Charges,~~Restructuring Items," Note 4, "Details of Selected Balance Sheet ~~Accounts"~~Accounts," Note 6, "Long-term Debt," and Note 11, "Income Taxes," to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form ~~10‑Q~~10-Q for further discussion of these and other charges and benefits recognized in the first ~~quarter~~three months of 2021 and 2020.

Unaudited Operating Segment Financial Data

We manage and measure our business performance in three distinct operating segments: ~~Well Site Services,~~Offshore/Manufactured Products, Downhole Technologies and ~~Offshore/Manufactured Products.~~Well Site Services. Supplemental unaudited financial information by ~~business~~operating segment for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 is summarized below (dollars in thousands):

Three Months Ended March 31,
2020 2019 Variance
Revenues
Well Site Services -
Completion Services $ 82,926
$ 100,642
$ (17,716 )
Drilling Services 4,531
7,750
(3,219 )
Total Well Site Services 87,457
108,392
(20,935 )
Downhole Technologies 41,065
54,290
(13,225 )
Offshore/Manufactured Products 91,172
87,929
3,243
Total $ 219,694
$ 250,611
$ (30,917 )

Operating income (loss)
Well Site Services -
Completion Services⁽¹⁾
$ (139,603 ) $ (3,494 ) $ (136,109 )
Drilling Services⁽²⁾
(5,351 ) (4,559 ) (792 )
Total Well Site Services (144,954 ) (8,053 ) (136,901 )
Downhole Technologies⁽³⁾
(192,691 ) 4,054
(196,745 )
Offshore/Manufactured Products⁽⁴⁾
(95,496 ) 5,259
(100,755 )
Corporate (8,661 ) (12,100 ) 3,439
Total $ (441,802 ) $ (10,840 ) $ (430,962 )


	Three Months Ended March 31,
	2021		2020		Variance
Revenues
Offshore/Manufactured Products	$	60,609	$	91,172	$	(30,563)
Downhole Technologies	25,430		41,065		(15,635)
Well Site Services	39,550		87,457		(47,907)
Total	$	125,589	$	219,694	$	(94,105)

Operating income (loss)
Offshore/Manufactured Products(1)	$	1,071	$	(95,496)	$	96,567
Downhole Technologies(2)	(1,615)		(192,691)		191,076
Well Site Services(3)	(9,853)		(144,954)		135,101
Corporate	(9,365)		(8,661)		(704)
Total	$	(19,762)	$	(441,802)	$	422,040

~~Operating loss in the first quarter of 2020 includes an inventory impairment charge of~~ ~~$16.2 million~~ ~~and a non-cash goodwill impairment charge of~~ ~~$86.5 million~~ ~~to reduce the carrying value of the Offshore/Manufactured Products reporting unit to its estimated fair value.~~

(1)Operating loss in the first quarter of 2020 included non-cash goodwill and inventory impairment charges of $86.5 million and $16.2 million, respectively.

(2)Operating loss in the first quarter of 2020 included a non-cash goodwill impairment charge of $192.5 million.

(3)Operating loss in the first quarter of 2021 included non-cash fixed asset impairment charges of $0.7 million. Operating loss in the first quarter of 2020 included non-cash goodwill, inventory and fixed asset impairment charges of $127.1 million, $9.0 million and $5.2 million, respectively.

See Note 3, "Asset Impairments and Other ~~Charges"~~Restructuring Items," and Note 4,, "Details of Selected Balance Sheet Accounts," to the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form ~~10‑Q~~10-Q for further discussion of these and other charges and benefits recognized in the first ~~quarter~~three months of 2021 and 2020.

Three Months Ended March 31, ~~2020~~2021 Compared to Three Months Ended March 31, ~~2019~~2020

Consolidated Operating Results

We reported a net loss for the three months ended March 31, 2021 of $15.8 million, or $0.26 per share. The reported first quarter loss included non-cash gains of $3.6 million ($2.9 million after-tax, or $0.05 per share) associated with debt extinguishment offset by $3.4 million ($2.7 million after-tax) of severance and restructuring costs. These results compare to a net loss for the three months ended March 31, 2020 of $405.0 million, or $6.79 per ~~share. The reported first quarter loss~~share, which included non-cash impairment charges totaling $436.5 million ($411.1 million after-tax, or $6.89 per share) related to write-downs of goodwill, inventories and fixed assets and $0.7 million ($0.5 million after-tax, or $0.01 per share) of severance and downsizing costs as well as a discrete tax benefit of $14.8 million, or $0.25 per share, associated with the carryback of tax losses allowed under the CARES Act. These results compare to a net loss for the three months ended March 31, 2019 of $14.6 million, or $0.25 per share, which included $1.0 million ($0.8 million after-tax, or $0.01 per share) of severancerestructuring costs.

Our reported ~~first quarter~~ results of operations reflect the negative impact of ~~industry trends and customer spending activities with investments weighted toward U.S. shale play regions and recent general improvements~~the unprecedented decline in ~~the level of investments in deepwater markets globally. However,~~crude oil prices starting in March and April of 2020 instemming from the global response ~~to reductions in global demand due~~ to the COVID-19 pandemic and ~~announcements by Saudi Arabia and Russia of plans~~ongoing uncertainties related to ~~increase~~future crude oil ~~production,~~demand. While the spot price of WTI crude oil ~~declined over 50%. This decline in crude oil prices began to have a negative impact on U.S. land-based customer drilling and completion activity, particularly in the U.S. shale play regions, late~~averaged $58 per barrel in the first quarter of ~~2020.~~2021, up 28% from the comparable prior-year quarterly average, and crude oil inventory levels have moderated, there remains some uncertainty around demand recovery to pre-COVID-19 levels.

~~We expect customer-driven~~Additionally, activity levels in each of our segments were adversely impacted during the first quarter of 2021 by the severe winter weather event that occurred in February 2021 – particularly in Texas, Oklahoma and surrounding states. While our facilities did not sustain meaningful damage and our operations and services were restored following the event, our February results of operations were adversely impacted due to ~~decline significantly~~the temporary cessation of work at well sites, facility closures by us and our customers, and delays in the ~~United States over~~shipment of goods to our customers and from our vendors.

During the ~~balance~~first quarter of 2021, we recognized an aggregate $4.8 million reduction of payroll tax expense (within cost of revenues and selling, general and administrative expense) as part of the CARES Act employee retention credit program. During the first quarter of 2020, ~~and into 2021.~~we recognized a discrete income tax benefit of $14.8 million related to U.S. net operating loss carrybacks under provisions of the CARES Act. We continue to evaluate additional benefits potentially available to us under the CARES Act.

Customer-driven activity has improved off of 2020's low levels but could remain tempered in 2021 given uncertainty around the timing of demand recovery to pre-COVID-19 levels due to the ongoing nature of the COVID-19 pandemic. If the current pricing environment for crude oil does not ~~improve, or declines further,~~stabilize at these higher levels, our customers may be required to ~~further~~ reduce their planned capital expenditures, causing ~~additional~~ declines in the demand for, and prices of, our products and ~~services, which would further adversely affect our results of operations, cash flows and financial position.~~services.

Revenues. Consolidated total revenues in the first quarter of ~~2020~~2021 decreased ~~$30.9~~$94.1 million, or ~~12%~~43%, from the first quarter of ~~2019.~~2020.

Consolidated product revenues in the first quarter of ~~2020~~2021 decreased ~~$13.3~~$41.5 million, or ~~11%~~40%, from the first quarter of ~~2019,~~2020, driven by ~~lower~~the significant decline in U.S. land-based customer activity ~~as well as the impact of competitive pricing pressures~~and reduced project-driven customer demand for ~~conventional perforating and intervention products in our Downhole Technologies segment, partially offset by higher project-driven product demand in our Offshore/Manufactured Products segment.~~connector products. Consolidated service revenues in the first quarter of ~~2020~~2021 decreased ~~$17.6~~$52.6 million, or ~~13%~~45%, from the first quarter of ~~2019~~2020 due primarily to reduced customer spending in the U.S. shale play regions. As can be derived from the following table, ~~69%~~61% of our consolidated revenues in the first quarter of ~~2020~~2021 were derived from sales of our short-cycle product and service offerings, which compares to ~~78%~~69% in the same period last year.

The following table provides supplemental disaggregated revenue from contracts with customers by operating segment for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Offshore/ Manufactured Products				Downhole Technologies				Well Site Services				Total
Three months ended March 31	2021		2020		2021		2020		2021		2020		2021		2020
Major revenue categories -
Project-driven products	$	21,374	$	36,788	$	—	$	—	$	—	$	—	$	21,374	$	36,788
Short-cycle:
Completion products and services	8,114		13,677		25,430		41,065		38,799		82,926		72,343		137,668
Drilling services	—		—		—		—		751		4,531		751		4,531
Other products	4,136		8,420		—		—		—		—		4,136		8,420
Total short-cycle	12,250		22,097		25,430		41,065		39,550		87,457		77,230		150,619
Other products and services	26,985		32,287		—		—		—		—		26,985		32,287
	$	60,609	$	91,172	$	25,430	$	41,065	$	39,550	$	87,457	$	125,589	$	219,694

Well Site Services Downhole Technologies Offshore/ Manufactured Products Total
Three months ended March 31 2020 2019 2020 2019 2020 2019 2020 2019
Major revenue categories -
Project-driven products $ —
$ —
$ —
$ —
$ 36,788
$ 27,245
$ 36,788
$ 27,245
Short-cycle:
Completion products and services 82,926
100,642
41,065
54,290
13,649
24,274
137,640
179,206
Drilling services 4,531
7,750
—
—
—
—
4,531
7,750
Other products —
—
—
—
8,420
7,739
8,420
7,739
Total short-cycle 87,457
108,392
41,065
54,290
22,069
32,013
150,591
194,695
Other products and services —
—
—
—
32,315
28,671
32,315
28,671
$ 87,457
$ 108,392
$ 41,065
$ 54,290
$ 91,172
$ 87,929
$ 219,694
$ 250,611


Percentage of total revenue by type -																	Percentage of total revenue by type -
Products	—	%	—	%	92	%	96	%	72	%	73	%	47	%	46	%	Products	65	%	72	%	86	%	92	%	—	%	—	%	49	%	47	%
Services	100	%	100	%	8	%	4	%	28	%	27	%	53	%	54	%	Services	35	%	28	%	14	%	8	%	100	%	100	%	51	%	53	%

Cost of Revenues (exclusive of Depreciation and Amortization Expense). Our consolidated total cost of revenues (exclusive of depreciation and amortization expense) decreased ~~$2.3~~$95.3 million, or 1%48%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019.~~2020. Cost of revenues in the first quarter of 2020 ~~includes~~included provisions totaling $25.2 million for excess and obsolete inventory – driven by ~~the expected duration of~~ the unprecedented market downturn in March of 2020. Excluding these provisions, consolidated cost of revenues decreased ~~$27.5~~$70.1 million, or ~~14%~~41%, from the prior-year period.

Consolidated product costs in the first quarter of ~~2020 increased $0.5~~2021, decreased $40.3 million, or 1%45%, from the first quarter of ~~2019 due to~~2020, which included a provision of $12.0 million for excess and obsolete ~~inventory in the current period.~~inventory. Excluding this charge, consolidated product costs decreased ~~$11.5~~$28.3 million, or ~~13%.~~36%, from the prior-year period. Consolidated service costs ~~which includes provisions for excess and obsolete inventories of $13.2 million~~ in the first quarter of ~~2020,~~2021, decreased ~~$2.8~~$55.0 million, or 2%51%, from the first quarter of ~~2019.~~2020, which included provisions for excess and obsolete inventory of $13.2 million. Excluding these ~~incremental inventory reserves,~~charges, consolidated service costs ~~declined $16.0~~decreased $41.8 million, or ~~14%~~44%, ~~due primarily to lower activity levels in U.S. shale play regions.~~from the prior-year period.

Selling, General and Administrative Expense. Selling, general and administrative expense decreased ~~$4.0~~$4.9 million, or ~~13%~~19%, in the first quarter of ~~2020~~2021 from the first quarter of ~~2019~~2020 due primarily to areductions in personnel, compensation levels and travel expenses along with other implemented cost reduction ~~in short- and long-term incentive compensation costs associated with the anticipated decline in U.S. customer activity levels over the balance of 2020.~~measures.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased ~~$5.1~~$4.9 million, or ~~16%~~19%, in the first quarter of ~~2020~~2021 compared to the prior-year quarter, driven primarily by ~~our decision to exit drilling operations in West Texas in the latter part of 2019 and~~ reduced capital investments made in our ~~Completion~~Well Site Services ~~business~~segment in recent years. Note 12, "Segments and Related Information," presents depreciation and amortization expense by segment.

Impairment of Goodwill. During the first quarter of 2020, our ~~Completion Services,~~Offshore/Manufactured Products, Downhole Technologies and ~~Offshore/Manufactured Products~~Well Site Services operations recognized non-cash goodwill impairment charges of ~~$127.1~~$86.5 million, $192.5 million and ~~$86.5~~$127.1 million, respectively, arising from, among other factors, the significant decline in our stock price ~~and~~(and that of most of our ~~peers~~peers) and reduced growth rate expectations given weak energy market conditions resulting from the demand destruction caused by the global response to the COVID-19 pandemic. In addition, the estimated returns required by market participants increased materially in our March 31, 2020 assessment from our ~~most recent~~ assessment as of December 1, ~~2019.~~2019, resulting in higher discount rates used in the discounted cash flow analysis.

~~Impairment~~Impairments of Fixed Assets. During the first ~~quarter~~quarters of 2021 and 2020, our ~~Drilling~~Well Site Services ~~business~~segment recorded a non-cash impairment ~~charge~~charges of $0.7 million and $5.2 million, respectively, to reduce the carrying value of certain of the ~~unit's~~segment's fixed assets to their estimated realizable ~~value following the significant decline in crude oil prices in March of 2020.~~

~~Other Operating (Income) Expense, Net.~~ ~~Other operating (income) expense was relatively consistent between periods, with expense of $0.1 million in the first quarter of 2020 and income of $0.1 million in the first quarter of 2019.~~value.

Operating Income (Loss). Our consolidated operating loss was $19.8 million in the first quarter of 2021, which included $3.4 million of severance and restructuring charges. This compares to a consolidated operating loss of $441.8 million recognized in the first quarter of 2020, which included the impact of $436.5 million of non-cash asset impairment charges and $0.7 million of severance and ~~downsizing charges. This compares to a consolidated operating loss of $10.8 million in the first quarter of 2019, which included the impact of $1.0 million in severance~~restructuring charges.

Interest Expense, Net. Net interest expense was ~~$3.5~~$2.3 million in the first quarter of ~~2020,~~2021, which compares to ~~net interest expense of $4.8~~$3.5 million in the same period of ~~2019.~~2020. Interest expense, which includes amortization of deferred financing costs in 2021 and amortization of debt discount and deferred financing costs in 2020, as a percentage of total debt outstanding was approximately 4% in the

first quarter of 2021 and 6% in ~~both~~ the first quarter of ~~2020 and 2019.~~2020. Our contractual cash interest expense as a percentage of total debt outstanding was ~~substantially lower – averaging~~ approximately 3% in ~~both~~ the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

Other Income, Net. Net other income for first quarter of 2021 includes a non-cash gain of $3.6 million recognized in connection with our purchases of $125.0 million principal amount of our 2023 Notes for $120.0 million in cash.

Income Tax. ~~The~~For the three months ended March 31, 2021, our income tax benefit was $2.3 million, or 13% of the pre-tax loss of $18.1 million, which included certain non-deductible expenses and discrete tax items. This compares to an income tax benefit of $39.5 million, or 9% of the pre-tax loss of $444.5 million for the three months ended March 31, 2020, was calculated using a discrete approach. This methodology was used because minor changes in our results of operations and non-deductible expenses can materially impact the estimated annual effective tax rate. For the three months ended March 31, 2020, our income tax benefit was $39.5 million on a pre-tax loss of $444.5 million, which included non-cash goodwill charges (approximately $313.1 million) and other expenses that are not deductible for income tax purposes. ~~The~~In the first quarter of 2020, the impact of these non-deductible expenses was partially offset by a $14.8 million discrete tax benefit related to the carryback of U.S. net operating losses under the CARES Act. ~~This compares to an income tax benefit of $0.3 million on a pre-tax loss of $14.9 million, which also included certain non-deductible expenses, for the three months ended March 31, 2019.~~

On March 27, 2020, the CARES Act was signed into law. In accordance with the recently established rules and procedures under the CARES Act, we have filed carryback claims regarding U.S. net operating losses generated in 2018 and plan to file carryback claims regarding U.S. net operating losses generated in 2019 during the second quarter of 2020. Prior to the enactment of the CARES Act, such losses could only be carried forward. We expect to receive refunds related to these carryback claims of approximately $41.2 million in 2020, which are classified in income taxes receivable in the consolidated balance sheet as of March 31, 2020.

Other Comprehensive ~~Income (Loss).~~Loss. Reported comprehensive loss is the sum of reported net loss and other comprehensive ~~income (loss).~~loss. Other comprehensive loss was $1.5 million in the first quarter of 2021 compared to loss of $14.8 million in the first quarter of 2020 ~~compared to income of $2.5 million in the first quarter of 2019~~ due to fluctuations in foreign currency exchange rates compared to the U.S. dollar for certain of the international operations of our ~~reportable~~operating segments. For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, currency translation adjustments recognized as a component of other comprehensive ~~income (loss)~~loss were primarily attributable to the United Kingdom and Brazil. During the first quarter of ~~2020, the exchange rates for both the British pound and the Brazilian real weakened compared to the U.S. dollar, while during the first quarter of 2019,~~2021, the exchange rate for the British pound strengthened compared to the U.S. dollar and the Brazilian real weakened compared to the U.S. dollar.

~~Segment Operating Results~~

~~Well Site Services~~

~~Revenues.~~ ~~Our Well Site Services segment revenues decreased $20.9 million, or 19%, in~~ This compares to the first quarter of 2020, when the exchange rate for both the British pound and Brazilian real weakened compared to the ~~prior-year quarter. Completion Services revenue decreased $17.7 million, or 18%, driven by the impact of a decline in~~ U.S. land-based customer completion and production activity due to lower commodity prices. Our Drilling Services revenues decreased $3.2 million, or 42%, in the first quarter of 2020 from the first quarter of 2019 due to our exit of drilling operations in the West Texas region in the fourth quarter of 2019.dollar.

Segment Operating ~~Loss.~~ Our Well Site Services segment operating loss increased $136.9 million in the first quarter of 2020 from the prior-year period due primarily to non-cash impairment charges of $127.1 million related to~~goodwill and $9.0 million related to inventory recorded in Completion Services and a $5.2 million non-cash~~fixed asset impairment charge recorded in Drilling Services. Our Completion Services operating loss in the first quarter of 2020, after excluding the goodwill and inventory impairment charges, was $3.6 million, compared to an operating loss of $3.5 million in the prior-year quarter, with the impact of lower revenues offset by a $2.0 million reduction in depreciation expense and continued costs reduction measures. Excluding the fixed asset impairment charge, our Drilling Services operating loss decreased $4.4 million in the first quarter of 2020 from the first quarter of 2019 ($3.1 million of which was due to a reduction in depreciation expense) following our exit of drilling operations in the West Texas region in the fourth quarter of 2019.

~~Downhole Technologies~~

~~Revenues.~~ Our Downhole Technologies segment revenues decreased $13.2 million, or 24%, in the first quarter of 2020 from the prior-year period due to a decline in U.S. land-based customer completion activity and a market shift toward sales of integrated perforating gun systems, which the segment did not commercialize until late 2019.

~~Operating Income.~~ During the first quarter of 2020, our Downhole Technologies segment recorded a non-cash goodwill impairment charge of $192.5 million. Excluding this charge, operating income declined $4.2 million in the first quarter of 2020 from the prior-year period due primarily to the decline in revenues.Results

Offshore/Manufactured Products

Revenues. Our Offshore/Manufactured Products segment revenues ~~increased $3.2~~decreased $30.6 million, or 4%34%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019~~2020 due primarily to ~~an increase in project-driven product sales, partially offset by~~ a reduction in sales of ~~our shorter-cycle~~its connector and short-cycle products ~~(elastomer~~ and ~~valve products)~~service activities.

Operating Income (Loss). ~~Reported revenues~~ Our Offshore/Manufactured Products segment reported operating income of $1.1 million in the first quarter of 2021, compared to an operating loss of $95.5 million in the first quarter of 2020, ~~were tempered bydelays in project-driven sales arising from global disruptions in the segment's operations and in various parts of its supply chain due to the COVID-19 pandemic.~~

~~Operating Income.~~ ~~During the first quarter, our Offshore/Manufactured segment recorded~~which included non-cash impairment charges of $86.5 million related to goodwill and $16.2 million related to inventory. Excluding these charges, our Offshore/Manufactured Products segment operating income ~~increased $2.0~~decreased $6.1 million in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019 due to~~2020, with the impact of the year-over-year ~~increases~~decrease in ~~revenues.~~revenues partially offset by cost reduction measures implemented in 2020.

Backlog. Backlog in our Offshore/Manufactured Products segment totaled ~~$267~~$226 million as of March 31, ~~2020, a decrease~~2021, an increase of 4%3% from December 31, ~~2019 and an increase of 14% from March 31, 2019.~~2020. First quarter ~~2020~~2021 bookings totaled ~~$87~~$70 million, yielding a quarterly book-to-bill ratio of ~~1.0x.~~1.2x.

~~Corporate~~Downhole Technologies

~~Expenses~~Revenues. Our Downhole Technologies segment revenues decreased ~~$3.4~~$15.6 million, or ~~28%~~38%, in the first quarter of ~~2020~~2021 from the prior-year period due primarily to the year-over-year decline in U.S. land-based customer completion activity.

Operating Loss. Our Downhole Technologies segment reported an operating loss of $1.6 million in the first quarter of 2021 compared to an operating loss of $192.7 million in the prior-year period, which included a non-cash goodwill impairment charge of $192.5 million. Excluding this charge, operating loss increased $1.4 million in the first quarter of 2021 from the prior-year period due to ~~reductions~~the decline in ~~required short- and long-term incentive accruals~~revenues, partially offset by cost reduction measures implemented in 2020.

Revenues. Our Well Site Services segment revenues decreased $47.9 million, or 55%, in the first quarter of 2021 compared to the prior-year quarter, driven by reduced customer completion and production activity.

Operating Loss. Our Well Site Services segment operating loss decreased $135.1 million in the ~~unanticipated sharp decline~~first quarter of 2021 from the first quarter of 2020, which included non-cash impairment charges of $127.1 million related to goodwill, $9.0 million related to inventory and $5.2 million related to fixed assets. Excluding these 2020 asset impairment charges, our Well Site Services operating loss increased $6.1 million from the prior-year period due to the significant decrease in ~~crude oil prices~~revenues, substantially offset by cost reduction measures implemented in ~~March and~~2020.

Corporate expenses increased $0.7 million, or 8%, in the ~~resulting outlook for~~first quarter of 2021 from the ~~Company for~~prior-year period, due to $1.6 million of severance costs incurred in the ~~remainder~~first quarter of 2021 partially offset by cost reduction measures implemented in 2020.

Liquidity, Capital Resources and Other Matters

Our primary liquidity needs are to fund operating and capital expenditures, which, in the past, have included expanding and upgrading our Offshore/Manufactured Products and Downhole Technologies manufacturing facilities and equipment, replacing and increasing Completion Services assets, funding new product development and general working capital needs. In addition, capital has been used to ~~repay debt,~~ fund strategic business acquisitions, repay debt, and fund ~~our~~ share ~~repurchase program.~~repurchases. Our primary sources of funds ~~have been~~are cash flow from operations, proceeds from borrowings under our credit facilities and, less frequently, capital markets transactions.

The crude oil and natural gas industry is highly cyclical which may result in declines in the demand for, and prices of, our products and services, the inability or failure of our customers to meet their obligations to us or a sustained decline in our market capitalization. These and other potentially adverse market conditions could require us to incur additional asset impairment charges, record additional deferred tax valuation allowances and/or further write down the value of our goodwill and long-lived assets, and may otherwise adversely impact our results of operations, our cash flows and our financial position. See Note 3, "Asset Impairments and Other Charges," and Note 4, "Details of Selected Balance Sheet Accounts," for further information.

Operating Activities

Cash flows ~~from operations~~ totaling ~~$5.4~~$8.4 million were ~~generated~~used in operations during the first quarter of ~~2020~~2021, compared to ~~$34.3~~$5.4 million generated by operations during the same period of ~~2019.~~2020. During the first quarter of 2021, $12.1 million was used to fund net working capital increases, primarily due to increases in accounts receivable and inventories. During the first quarter of 2020, $14.7 million was used to fund net working capital increases, primarily due to an increase in inventories and a reduction in accrued liabilities. During the first quarter of 2019, $13.3 million was provided by net working capital decreases, driven primarily by a reduction in accounts receivable, partially offset by a decrease in accrued liabilities.

Investing Activities

Cash used in investing activities during the first quarter of ~~2020~~2021 totaled ~~$2.0~~$2.4 million, compared to ~~$17.9~~$2.0 million used in investing activities during the first quarter of ~~2019.~~2020.

Capital expenditures totaled ~~$5.9~~$4.1 million and ~~$17.9~~$5.9 million during the first quarter of ~~2020~~2021 and ~~2019,~~2020, respectively.

~~Based on current industry conditions, we now~~We expect to spend ~~a total of~~approximately $15 million to $20 million in capital expenditures during 2020 to replace and upgrade our Completion Services equipment, to maintain Downhole Technologies' and Offshore/Manufactured Products' facilities and equipment and to fund various other capital spending projects.2021. Whether planned expenditures will actually be ~~spent~~made in ~~2020~~2021 depends on industry conditions, project approvals and schedules, vendor delivery timing, free cash flow generation and careful monitoring of our levels of liquidity. We plan to fund these capital expenditures with available cash, internally generated funds and, if necessary, borrowings under our ~~Revolving Credit Facility, as defined below.~~ABL Facility.

Financing Activities

During the three months ended March 31, ~~2020,~~2021, net cash of ~~$12.4~~$6.6 million was ~~provided by~~used in financing activities including ~~$19.8~~our purchases of $125.0 million ~~of net borrowings under our Revolving Credit Facility, as defined below, partially offset by our repurchase of $5.7 million in~~ principal amount of our ~~1.50% convertible senior notes~~2023 Notes for ~~$4.7~~cash totaling $120.0 million and $12.0 million of net repayments under our ABL Facility. Partially offsetting these uses was our issuance of $135.0 million principal amount of our 2026 Notes yielding net cash proceeds of $130.3 million. This compares to ~~$20.4~~$12.4 million of cash ~~used in~~provided by financing activities during the three months ended March 31, ~~2019,~~2020, primarily as a result of ~~$15.9~~$19.8 million in net ~~repayments~~borrowings under our Revolving Credit ~~Facility.~~Facility, partially offset by our purchase of $5.7 million principal amount of our 2023 Notes for $4.7 million.

As of March 31, ~~2020,~~2021, we had cash and cash equivalents totaling ~~$24.3 million.~~$54.5 million, which compared to $72.0 million as of December 31, 2020.

As of March 31, ~~2020,~~2021, we had ~~principal~~$7.0 million outstanding ~~of $71.7 million~~ under our ~~Revolving Credit~~ABL Facility (discussed below), $135.0 million principal amount of our 2026 Notes outstanding and ~~$164.4~~$32.4 million ~~under~~principal amount of our ~~Notes.~~2023 Notes outstanding. Our reported interest expense, which appropriately ~~includes~~included amortization of ~~debt discount and~~ deferred financing costs of ~~$1.7~~$0.9 million ~~is substantially~~during the first three months of 2021, was above our contractual cash interest ~~expense – reflective primarily of the Notes which provide for a cash interest payment of 1.5% per annum.~~expense. For the first ~~quarter~~three months of ~~2020,~~2021, our contractual cash interest expense was ~~$1.8~~$1.4 million, or approximately 3% of the average principal balance of debt outstanding.

We believe that cash ~~on hand and~~on-hand, cash flow from operations and borrowing capacity available under our ABL Facility will be sufficient to meet our liquidity needs in the coming twelve months. If our plans or assumptions change, or are inaccurate, we may need to raise additional capital. Our ability to obtain capital for additional projects to implement our growth strategy over the longer term will depend upon our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global financial markets, stakeholder scrutiny of environmental, social and governance matters and other factors, many of which are beyond our control. In this regard, the effect of the COVID-19 pandemic has resulted in significant disruption of global financial markets. For companies like ours that support the energy industry, this disruption has been exacerbated by the global crude oil supply and demand imbalance and resulting decline in crude oil prices, which has negatively impacted the value of our common stock; has and may continue to reduce our ability to access capital in the bank and capital markets; and

has and may continue to result in such capital being available on less favorable terms, which could in the future negatively affect our liquidity.

~~Revolving Credit~~ABL Facility. ~~Our~~On February 10, 2021, we entered into a senior secured credit facility with certain lenders, which provides for a $125.0 million asset-based revolving credit facility as(as amended, ~~(the "Revolving Credit~~the "ABL Facility") under which credit availability is subject to a borrowing base calculation. Concurrent with entering into the ABL Facility, our former revolving credit facility was terminated. On March 16, 2021, we entered into an amendment to the ABL Facility that permitted us to incur the indebtedness represented by the 2026 Notes.

The ABL Facility is governed by a credit agreement, ~~dated as of January 30, 2018,~~ as amended ~~(the "Credit Agreement") by and among~~on March 16, 2021 to allow for the ~~Company,~~issuance of the 2026 Notes, with Wells Fargo

Bank, ~~N.A.,~~National Association, as administrative agent ~~for the lenders party thereto and collateral agent for the secured parties thereunder,~~ and the lenders and other financial institutions from time to time party ~~thereto. Our Revolving Credit Facility~~thereto (the "ABL Agreement"). The ABL Agreement matures on February 10, 2025 with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $17.5 million (excluding the unsecured promissory note to the seller of GEODynamics).

The ABL Agreement provides funding based on a borrowing base calculation that includes eligible U.S. customer accounts receivable and inventory and provides for ~~up to $350~~a $50.0 million ~~in lender commitments and is scheduled to mature on January 30, 2022. Under our Revolving Credit Facility, $50 million is available~~sub-limit for the issuance of letters of credit. Borrowings under the ABL Agreement are secured by a pledge of substantially all of our domestic assets (other than real property) and the stock of certain foreign subsidiaries.

Borrowings under the ABL Agreement bear interest at a rate equal to the London Interbank Offered Rate ("LIBOR") plus a margin of 2.75% to 3.25% and subject to a LIBOR floor rate of 0.50%, or at a base rate plus a margin of 1.75% to 2.25%, in each case based on average borrowing availability. We must also pay a quarterly commitment fee of 0.375% to 0.50% per annum, based on unused commitments under the ABL Agreement.

The ABL Agreement places restrictions on our ability to incur additional indebtedness, grant liens on assets, pay dividends or make distributions on equity interests, dispose of assets, make investments, repay other indebtedness (including the 2023 Notes and 2026 Notes), engage in mergers, and other matters, in each case, subject to certain exceptions. The ABL Agreement contains customary default provisions, which, if triggered, could result in acceleration of all amounts then outstanding. The ABL Agreement also requires us to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 for specified periods of time in the event that availability under the ABL Agreement is less than the greater of 15% of the borrowing base and $14.1 million or if an event of default has occurred and is continuing.

As of March 31, 2021, we had $7.0 million of borrowings outstanding under the ABL Facility and $19.0 million of outstanding letters of credit. The total amount available to be drawn as of March 31, 2021 was $40.6 million, calculated based on the current borrowing base less outstanding borrowings and letters of credit.

Former Revolving Credit Facility. See Note 6, "Long-term Debt," for further information regarding ~~the terms of the Credit Agreement.~~

As of March 31, 2020, we had $71.7 million of borrowings outstanding under the Credit Agreement and $19.1 million of outstanding letters of credit, leaving $107.6 million available to be drawn. The total amount available to be drawn was less than the lender commitments as of March 31, 2020, due to limits imposed by maintenance covenants in the Credit Agreement.

~~As of March 31, 2020, we were in compliance with~~ our ~~debt covenants under the Revolving Credit Facility.~~

~~We are working with our bank group regarding an amendment to the Revolving Credit Facility. The amendment entails converting our existing cash flow-based~~former revolving credit facility into an asset-based revolving credit facility (the "Amended Facility"). We have made significant progress to date with our bank group and currently expect to complete the amendment process in the second quarter of 2020. The Amended Facility is expected to be subject to a borrowing base, with availability based upon the amount of our accounts receivable and inventory with advance rates dependent upon several factors, including the age and geographic location of the assets. While the amount of the borrowing base has not been finalized, we expect the size of the Amended Facility to range from $175 million to $200 million. While we believe we will be able to complete the amendment process within the time frame estimated and on the general terms described above, the amendment process remains subject to the completion of final documentation and credit approval by the bank group and, accordingly, we cannot be certain that we will be able to complete the amendment process within the time frame or on the terms currently expected.

If we are not successful in amending the Revolving Credit Facility, our borrowings would be governed by the existing Credit Agreement, which contains financial covenants and restrictions as further described above. Based on our forecasts, we anticipate that we could fail to comply with the total net leverage ratio covenant in the third quarter of 2020 as a result of projected declines in consolidated EBITDA resulting from current industry conditions caused by the global response to the COVID‑19 pandemic and the resulting collapse in oil prices. However, we believe that we will have sufficient liquidity over the next twelve months to fund its liabilities as they become due. Key elements affecting our liquidity position included the following as of March 31, 2020:

Cash and cash equivalents $ 24,308
Working capital, net of cash and current debt and lease obligations $ 348,055
Revolving Credit Facility borrowings outstanding $ 71,700

If we do not complete the amendment process and subsequently are not in compliance with the total net leverage ratio covenant under the Revolving Credit Facility, we believe that we will have sufficient cash on hand, together with cash flow from operations (after investments in capital expenditures), to repay the borrowings outstanding under the Revolving Credit Facility or that we could seek to obtain an amendment or waiver from our lenders in order to avoid a default.facility.

~~1.50% Convertible Senior~~2026 Notes. On ~~January 30, 2018,~~March 16, 2021, we issued ~~$200~~$135 million aggregate principal amount of the 2026 Notes pursuant to an indenture, dated as of ~~January 30, 2018~~March 16, 2021 (the ~~"Indenture"~~"2026 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee. Net proceeds from the 2026 Notes offering, after deducting issuance costs, totaled $130.3 million. We used $120.0 million of the cash proceeds to purchase $125.0 million principal amount of the outstanding 2023 Notes, with the balance added to cash on-hand.

The 2026 Indenture contains certain events of default, including certain defaults by the Company with respect to other indebtedness of at least $40.0 million.

During the first quarter of 2020, we repurchased $5.7 million in principal amount of the outstanding Notes for $4.7 million, which approximated the net carrying value. Since December 31, 2018, we have repurchased $13.5 million in principal amount of the outstanding notes for $11.5 million.

The initial carrying amount of the Notes recorded in the consolidated balance sheet was less than the $200 million in principal amount of the Notes, in accordance with applicable accounting principles, reflective of the estimated fair value of a similar debt instrument that does not have a conversion feature. We recorded the value of the conversion feature as a debt discount, which is amortized as interest expense over the term of the Notes, with a similar amount allocated to additional paid-in capital. As a result of this amortization, the interest expense we recognize related to the Notes for accounting purposes is based on an effective interest rate of approximately 6%, which is greater than the cash interest payments we are obligated to pay on the Notes. Reported interest expense associated with the Notes for both the three months ended March 31, 2020 and 2019 was $2.5 million, while the related contractual cash interest expense totaled $0.7 million and $0.8 million, respectively. See Note 6, "Long-term Debt," for further information regarding the 2026 Notes. As of March 31, ~~2020,~~2021, none of the conditions allowing holders of the 2026 Notes to convert, or requiring us to repurchase the 2026 Notes, had been met.

2023 Notes. On January 30, 2018, we issued $200 million aggregate principal amount of the 2023 Notes pursuant to an indenture, dated as of January 30, 2018 (the "2023 Indenture"), between the Company and Wells Fargo Bank, National Association, as trustee.

The 2023 Indenture contains certain events of default, including certain defaults by the Company with respect to other indebtedness of at least $40.0 million.

During the first three months of 2021, we purchased $125.0 million principal amount of the outstanding 2023 Notes for $120.0 million in cash, which was $3.6 million below the net carrying amount of the related liability, resulting in the recognition of a non-cash gain. Since September 2019, we have purchased a cumulative $167.6 million principal amount of the 2023 Notes for $146.8 million in cash.

See Note 6, "Long-term Debt," for further information regarding the 2023 Notes. As of March 31, 2021, none of the conditions allowing holders of the 2023 Notes to convert, or requiring us to repurchase the 2023 Notes, had been met.

Promissory Note. In connection with the 2018 acquisition of GEODynamics ~~Acquisition,~~(the "GEODynamics Acquisition"), we issued a $25.0 million promissory note that bears interest at 2.5% per annum and was scheduled to mature on July 12, 2019. ~~Payments~~We believe that payments due under the promissory note are subject to set-off, in full or in part, against certain indemnification claims related to matters occurring prior to our acquisition of GEODynamics. ~~As more fully described in Note 13, "Commitments and Contingencies," the Company has~~We have provided notice to and asserted an indemnification ~~claim~~claims against the seller of ~~GEODynamics. As~~GEODynamics (the "Seller"), and the Seller has filed a ~~result,~~breach of contract suit against us and one of our wholly-owned subsidiaries alleging that payments due under the promissory note are required to be, but have not been, repaid in accordance with the terms of such note. We have incurred settlement costs and expenses of $7.9 million related to such indemnification claims and we believe that the maturity date of ~~the~~such note is extended until the resolution of ~~the indemnity claim. The Company expects~~these claims and expect that the amount ultimately paid in respect of such note will be reduced as a result of the indemnification claims. Accordingly, we have reduced the carrying amount of such note in our consolidated balance sheet to $17.1 million as of March 31, 2021 and December 31, 2020, which is our current best estimate of what is owed after set-off for indemnification matters. See Note 13, "Commitments and Contingencies," to the Consolidated Financial Statements included in this ~~indemnification claim.~~Quarterly Report on Form 10-Q for additional discussion.

Our total debt represented ~~25%~~20% of our combined total debt and stockholders' equity ~~at March 31, 2020, an increase from 17% at December 31, 2019 due primarily to the non-cash asset impairment charges recorded in the first quarter of 2020.~~

~~Stock Repurchase Program.~~ We maintain a share repurchase program which was extended to July 29, 2020 by our Board of Directors. During the first three months of 2020, we did not repurchase any shares of our common stock under the program. The amount remaining under our share repurchase authorization as of March 31, ~~2020 was $119.8 million. Subject~~2021 and December 31, 2020.

Contingencies and Other Obligations. We are a party to ~~applicable securities laws, any purchases will be at such times~~various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of our product or operations. Some of these claims relate to matters occurring prior to the acquisition of businesses, and some relate to businesses we have sold. In certain cases, we are entitled to indemnification from the sellers of the businesses and, in other cases, we have indemnified the buyers of businesses. In addition, the Seller in the GEODynamics Acquisition filed a breach of contract suit against us in federal court in August 2020, in which the Seller alleged, among other contractual breaches, that it was entitled to approximately $19 million in U.S. federal income tax carryback claims we received under the provisions of the CARES Act legislation. On February 15, 2021, the Seller dismissed the federal lawsuit without prejudice and refiled its lawsuit in state court. Although we can give no assurance about the outcome of pending legal and administrative proceedings and the effect such ~~amounts as~~outcomes may have on us, we believe that any ultimate liability resulting from the ~~Company deems appropriate.~~outcome of such proceedings, to the extent not otherwise provided for or covered by indemnity or insurance, will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. See Note 13, "Commitments and Contingencies," to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional discussion.

Off-Balance Sheet Arrangements

As of March 31, ~~2020,~~2021, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

We use a variety of domestically produced and imported raw materials and component products, including steel, in the manufacture of our products. In 2018, the United States imposed tariffs on a variety of imported products, including steel and aluminum. In response to the U.S. tariffs on steel and aluminum, the European Union and several other countries, including Canada and China, have threatened and/or imposed retaliatory tariffs. The effect of these ~~new~~ tariffs and the application and interpretation of existing trade agreements and customs, anti-dumping and countervailing duty regulations continues to evolve, and we continue to monitor these matters. If we encounter difficulty in procuring these raw materials and component products, or if the prices we have to pay for these products increase further as a result of customs, anti-dumping and countervailing duty regulations or otherwise and we are unable to pass corresponding cost increases on to our customers, our financial position and results of operations could be adversely affected. Furthermore, uncertainty with respect to potential costs in the drilling and completion of oil and gas wells could cause customers to delay or cancel planned projects which, if this occurred, would adversely affect our financial position and results of operations. See Note 13, "Commitments and ~~Contingencies"~~Contingencies," to the Consolidated Financial Statements included in this Quarterly Report on Form ~~10‑Q~~10-Q for additional discussion.

Critical Accounting Policies

For a discussion of the critical accounting policies and estimates that we use in the preparation of our condensed consolidated financial statements, see "Part II Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our ~~2019~~2020 Annual Report on Form ~~10‑K.~~10-K. These estimates require significant judgments, assumptions and estimates. We have discussed the development, selection, and disclosure of these critical accounting policies and estimates with the audit committee of our Board of Directors. ~~Except as discussed in Note 3, "Asset Impairments and Other Charges," there~~There have been no material changes to the judgments, assumptions and estimates upon which our critical accounting estimates are based.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the "FASB"), which are adopted by us as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our consolidated financial statements upon adoption.

In August 2020, the FASB issued updated guidance to simplify the accounting for convertible instruments and contracts in an entity’s own equity (referred to as "ASU 2020-06"). This guidance eliminated the requirement that the carrying value of convertible debt instruments, such as our 2023 Notes, be allocated between the debt and equity components. As permitted under the standard, we adopted the guidance on January 1, 2021 using the modified retrospective transition method. Adoption of the standard resulted in a $12.2 million increase in the net carrying value of the 2023 Notes, a $2.7 million decrease in deferred income taxes and an $9.5 million net decrease in stockholders' equity. The effective interest rate associated with the 2023 Notes after adoption of the standard decreased from approximately 6% to approximately 2%, which compares to the contractual cash interest rate of 1.50%. As further discussed in Note 6, "Long-term Debt," we issued $135 million principal amount of our 2026 Notes on March 19, 2021, which have been accounted for in accordance with the provisions of ASU 2020-06.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk refers to the potential losses arising from changes in interest rates, foreign currency fluctuations and exchange rates, equity prices, and commodity prices, including the correlation among these factors and their volatility.

Our principal market risks are our exposure to changes in interest rates and foreign currency exchange rates. We enter into derivative instruments only to the extent considered necessary to meet risk management objectives and do not use derivative contracts for speculative purposes.

Interest Rate ~~Risk~~

Risk.We have a revolving credit facility that is subject to the risk of higher interest charges associated with increases in interest rates. As of March 31, ~~2020,~~2021, we had floating-rate obligations totaling ~~$71.7~~$7.0 million drawn under our ~~Revolving Credit~~ABL Facility. These floating-rate obligations expose us to the risk of increased interest expense in the event of increases in short-term interest rates. If the floating interest rates increased by 1% from March 31, ~~2020~~2021 levels, our consolidated interest expense would increase by a total of approximately ~~$0.7~~$0.1 million annually.

Foreign Currency Exchange Rate ~~Risk~~

Risk.Our operations are conducted in various countries around the world and we receive revenue from these operations in a number of different currencies. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in (i) currencies other than the U.S. dollar, which is our functional currency, or (ii) the functional currency of our subsidiaries, which is not necessarily the U.S. dollar. In order to mitigate the effects of foreign currency exchange rate risks in areas outside of the United States (primarily in our Offshore/Manufactured Products segment), we generally pay a portion of our expenses in local currencies and a substantial portion of our contracts provide for collections from customers in U.S. dollars. During the three months ended March 31, ~~2020,~~2021, our reported foreign currency exchange losses were $0.1 million and are included in "Other operating expense, net" in the condensed consolidated statements of operations.

Our accumulated other comprehensive loss, reported as a component of stockholders' equity, increased ~~$14.8~~$1.5 million from ~~$67.7~~$71.4 million atas of December 31, ~~2019~~2020 to ~~$82.5~~$72.9 million atas of March 31, ~~2020,~~2021, due to changes in currency exchange rates. Accumulated other comprehensive loss is primarily related to fluctuations in the currency exchange rates compared to the U.S. dollar which are used to translate certain of the international operations of our ~~reportable~~operating segments.

ITEM 4. Controls and Procedures

(i) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) of the Exchange Act. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, ~~2020~~2021 at the reasonable assurance level.

(ii) Changes in Internal Control Over Financial Reporting



	Page No.
Part I – FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Consolidated Financial Statements
Unaudited Consolidated Statements of Operations			3
Unaudited Consolidated Statements of Comprehensive Loss			4
Consolidated Balance Sheets			5
Unaudited Consolidated Statements of Stockholders' Equity			6
Unaudited Consolidated Statements of Cash Flows			7
Notes to Unaudited Condensed Consolidated Financial Statements	8	–	19

Cautionary Statement Regarding Forward-Looking Statements	21	–	22

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	22	–	33

Item 3. Quantitative and Qualitative Disclosures About Market Risk			33

Item 4. Controls and Procedures			34

Part II – OTHER INFORMATION

Item 1. Legal Proceedings			35

Item 1A. Risk Factors			35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36

Item 3. Defaults Upon Senior Securities			36

Item 4. Mine Safety Disclosures			36

Item 5. Other Information			36

Item 6. Exhibits			37

Signature Page			38



	March 31, 2020			December 31, 2019
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	24,308		$	8,493
Accounts receivable, net	222,472			233,487
Inventories, net	209,180			221,342
Income taxes receivable	43,950			2,568
Prepaid expenses and other current assets	14,638			17,539
Total current assets	514,548			483,429

Property, plant, and equipment, net	429,002			459,724
Operating lease assets, net	40,902			43,616
Goodwill, net	75,757			482,306
Other intangible assets, net	223,958			230,091
Other noncurrent assets	27,843			28,701
Total assets	$	1,312,010		$	1,727,867

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt	$	25,643		$	25,617
Accounts payable	75,392			78,368
Accrued liabilities	43,227			48,840
Current operating lease liabilities	8,361			8,311
Income taxes payable	2,845			4,174
Deferred revenue	20,721			17,761
Total current liabilities	176,189			183,071

Long-term debt	239,229			222,552
Long-term operating lease liabilities	33,323			35,777
Deferred income taxes	38,506			38,079
Other noncurrent liabilities	22,131			24,421
Total liabilities	509,378			503,900

Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares authorized, 73,212,778 shares and 72,546,321 shares issued, respectively	732			726
Additional paid-in capital	1,115,677			1,114,521
Retained earnings	392,669			797,710
Accumulated other comprehensive loss	(82,537		)	(67,746		)
Treasury stock, at cost, 12,268,293 and 12,045,065 shares, respectively	(623,909		)	(621,244		)
Total stockholders' equity	802,632			1,223,967
Total liabilities and stockholders' equity	$	1,312,010		$	1,727,867



Three Months Ended March 31, 2019	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity
Balance, December 31, 2018	$	718	$	1,097,758	$	1,029,518		$	(71,397	)	$	(616,829	)	$	1,439,768
Net loss	—		—		(14,648		)	—			—			(14,648		)
Currency translation adjustments (excluding intercompany advances)	—		—		—			2,553			—			2,553
Currency translation adjustments on intercompany advances	—		—		—			(87		)	—			(87		)
Stock-based compensation expense:
Restricted stock	7		4,365		—			—			—			4,372
Stock options	—		53		—			—			—			53
Stock repurchases	—		—		—			—			(757		)	(757		)
Surrender of stock to settle taxes on restricted stock awards	—		—		—			—			(3,610		)	(3,610		)
Balance, March 31, 2019	$	725	$	1,102,176	$	1,014,870		$	(68,931	)	$	(621,196	)	$	1,427,644



	Completion Services		Drilling Services		Downhole Technologies		Offshore/ Manufactured Products		Pre-tax Total		Tax		After-tax Total
Impairment of goodwill	$	127,054	$	—	$	192,502	$	86,500	$	406,056	$	19,600	$	386,456
Impairment of fixed assets	—		5,198		—		—		5,198		1,092		4,106
Impairment of inventories (Note 4)	8,981		—		—		16,249		25,230		4,736		20,494
Severance and facility closure costs	331		217		—		112		660		139		521



	2020			2019
Allowance for doubtful accounts – December 31	$	8,745		$	6,701
Provision	589			(134		)
Write-offs	(1,785		)	—
Other	1,137			157
Allowance for doubtful accounts – March 31	8,686			6,724



Goodwill:	Well Site Services									Downhole Technologies			Offshore/ Manufactured Products			Total
	Completion Services			Drilling Services			Subtotal			Downhole Technologies			Offshore/ Manufactured Products			Total
Balance as of December 31, 2019
Goodwill	$	221,582		$	22,767		$	244,349		$	357,502		$	162,750		$	764,601
Accumulated impairment losses	(94,528		)	(22,767		)	(117,295		)	(165,000		)	—			(282,295		)
	127,054			—			127,054			192,502			162,750			482,306
Goodwill impairments⁽¹⁾	(127,054		)	—			(127,054		)	(192,502		)	(86,500		)	(406,056		)
Foreign currency translation	—			—			—			—			(493		)	(493		)
Balance as of March 31, 2020	$	—		$	—		$	—		$	—		$	75,757		$	75,757



Other Intangible Assets:	March 31, 2020						December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	168,260	$	47,056	$	121,204	$	168,278	$	44,296	$	123,982
Patents/Technology/Know-how	86,123		32,291		53,832		85,919		30,791		55,128
Noncompete agreements	17,087		12,291		4,796		17,125		11,061		6,064
Tradenames and other	53,708		9,582		44,126		53,708		8,791		44,917
	$	325,178	$	101,220	$	223,958	$	325,030	$	94,939	$	230,091



	Revenues		Depreciation and amortization		Operating income (loss)			Capital expenditures		Total assets
Three months ended March 31, 2020
Well Site Services –
Completion Services⁽¹⁾	$	82,926	$	14,766	$	(139,603	)	$	2,938	$	313,349
Drilling Services⁽²⁾	4,531		270		(5,351		)	114		7,506
Total Well Site Services	87,457		15,036		(144,954		)	3,052		320,855
Downhole Technologies⁽³⁾	41,065		5,584		(192,691		)	1,649		333,518
Offshore/Manufactured Products⁽⁴⁾	91,172		5,628		(95,496		)	1,065		562,179
Corporate	—		161		(8,661		)	115		95,458
Total	$	219,694	$	26,409	$	(441,802	)	$	5,881	$	1,312,010



	Average Price⁽¹⁾ for quarter ended								Average Price⁽¹⁾ for year ended December 31
Year	March 31		June 30		September 30		December 31		Average Price⁽¹⁾ for year ended December 31
WTI Crude (per bbl)
2020	$	45.34
2019	$	54.82	$	59.88	$	56.34	$	56.82	$	56.98
2018	$	62.91	$	68.07	$	69.70	$	59.97	$	65.25
Brent Crude (per bbl)
2020	$	50.27
2019	$	63.10	$	69.01	$	61.95	$	63.17	$	64.26
2018	$	66.86	$	74.53	$	75.08	$	68.76	$	71.32
Henry Hub Natural Gas (per mmBtu)
2020	$	1.91
2019	$	2.92	$	2.57	$	2.38	$	2.40	$	2.56
2018	$	3.08	$	2.85	$	2.93	$	3.77	$	3.15


~~(1)~~	~~Source: U.S. Energy Information Administration (spot prices).~~



	As of April 24, 2020	Three Months Ended March 31,
	As of April 24, 2020	2020	2019
U.S. drilling rig count
Land – Oil	361	650	831
Land – Natural gas and other	87	113	190
Offshore	17	22	22
Total	465	785	1,043


~~(2)~~	~~During the first quarter of 2020, we recognized non-cash goodwill impairment charges totaling $406.1 million to reduce the carrying value of our reporting units to their estimated fair value.~~


~~(3)~~	During the first quarter of 2020, our Drilling Services business recognized a non-cash impairment charge of $5.2 million to decrease the carrying value of the business' fixed assets to their estimated realizable value.


~~(1)~~	Operating loss in the first quarter of 2020 includes an inventory impairment charge of $9.0 million and a non-cash goodwill impairment charge of $127.1 million to reduce the carrying value of the Completion Services reporting unit to its estimated fair value.



Cash and cash equivalents	$	24,308
Working capital, net of cash and current debt and lease obligations	$	348,055
Revolving Credit Facility borrowings outstanding	$	71,700


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
January 1 through January 31, 2021	31,529	$	6.55	—	$	—
February 1 through February 28, 2021	171,453	6.51		—	—
March 1 through March 31, 2021	22,165	7.98		—	—
Total	225,147	$	6.66	—



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs⁽²⁾
January 1 through January 31, 2020	49,550	$	15.87	—	$	119,788,435
February 1 through February 29, 2020	173,563	10.82		—	119,788,435
March 1 through March 31, 2020	115	5.93		—	119,788,435
Total	223,228	$	11.94	—


~~(1)~~	All shares purchased during the three-month period ended March 31, 2020 were acquired from employees in connection with the settlement of income tax and related benefit withholding obligations arising from vesting in restricted stock grants. These shares were not part of a publicly announced program to purchase common stock.


~~(2)~~	We maintain a share repurchase program providing for the repurchase of up to $150 million of the Company's common stock, which, following extensions, was scheduled to expire on July 29, 2019. On July 24, 2019, our Board of Directors extended the share repurchase program for one year to July 29, 2020.


Exhibit No.				Description

~~Exhibit No.~~			~~Description~~

3.1	—		Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000, as filed with the Commission on March 30, 2001 (File No. 001-16337)).

3.2		—		Fourth Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, as filed with the Commission on May 8, 2019 (File No. 001-16337)).

3.3		—		Certificate of Designations of Special Preferred Voting Stock of Oil States International, Inc. (incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000, as filed with the Commission on March 30, 2001 (File No. 001-16337)).

10.1*4.1		—		~~Annual Incentive Compensation Plan,~~Indenture, dated ~~January 1, 2020.~~March 19, 2021, by and among Oil States International, Inc. and Wells Fargo Bank, National Association, as trustee, relating to the 4.75% Convertible Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to Company’s Current Report on Form 8-K, as filed with the Commission on March 22, 2021 (File No. 001-16337)).

31.1*10.1		—		Asset-based Credit Agreement, dated February 10, 2021, among Oil States International, Inc., as Borrower, the Lenders from time to time hereto, and Wells Fargo Bank, National Association, as Agent (incorporated by reference to Exhibit 10.1 to Company’s Current Report on Form 8-K, as filed with the Commission on February 12, 2021 (File No. 001-16337)).

10.2		—		First Amendment to Credit Agreement, dated March 16, 2021, among Oil States International, Inc., as Borrower, the Lenders from time to time hereto, and Wells Fargo Bank, National Association, as Agent (incorporated by reference to Exhibit 10.1 to Company’s Current Report on Form 8-K, as filed with the Commission on March 22, 2021 (File No. 001-16337)).

10.3 ***		—		Form of Performance Award Agreement under the Company's 2018 Equity Participation Plan.

10.4 *		—		Form of Cash Award Agreement.

31.1*		—		Certification of Chief Executive Officer of Oil States International, Inc. pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

31.2*		—		Certification of Chief Financial Officer of Oil States International, Inc. pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

32.1**		—		Certification of Chief Executive Officer of Oil States International, Inc. pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934, as amended.

32.2**		—		Certification of Chief Financial Officer of Oil States International, Inc. pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934, as amended.

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