The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with the unaudited condensed
consolidated financial statements and the related notes thereto included
elsewhere in this Form 10-Q and the audited consolidated financial statements
and notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in our Annual Report.

This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statement because of various factors, including those described in the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" of this Form 10-Q.

Overview of Business


    We are a global provider of highly engineered tubular services, tubular
fabrication and specialty well construction and well intervention solutions to
the oil and gas industry and have been in business for over 80 years. We provide
our services and products to leading exploration and production companies in
both offshore and onshore environments, with a focus on complex and technically
demanding wells.

We conduct our business through three operating segments:



•Tubular Running Services. The Tubular Running Services ("TRS") segment provides
tubular running services globally. Internationally, the TRS segment operates in
the majority of the offshore oil and gas markets and also in several onshore
regions with operations in approximately 50 countries on six continents. In the
U.S., the TRS segment provides services in the active onshore oil and gas
drilling regions, including the Permian Basin, Eagle Ford Shale, Haynesville
Shale, Marcellus Shale and Utica Shale, as well as in the U.S. Gulf of Mexico.
Our customers in these markets are primarily large exploration and production
companies, including international oil and gas companies, national oil and gas
companies, major independents and other oilfield service companies.

•Tubulars. The Tubulars segment designs, manufactures and distributes connectors
and casing attachments for large outside diameter ("OD") heavy wall pipe.
Additionally, the Tubulars segment sells large OD pipe originally manufactured
by various pipe mills, as plain end or fully fabricated with proprietary welded
or thread-direct connector solutions and provides specialized fabrication and
welding services in support of offshore deepwater projects, including drilling
and production risers, flowlines and pipeline end terminations, as well as
long-length tubular assemblies up to 400 feet in length. The Tubulars segment
also specializes in the development, manufacture and supply of proprietary
drilling tool solutions that focus on improving drilling productivity through
eliminating or mitigating traditional drilling operational risks.

•Cementing Equipment. The Cementing Equipment ("CE") segment provides specialty
equipment to enhance the safety and efficiency of rig operations. It provides
specialized equipment, services and products utilized in the construction of the
wellbore in both onshore and offshore environments. The product portfolio
includes casing accessories that serve to improve the installation of casing,
centralization and wellbore zonal isolation, as well as enhance cementing
operations through advance wiper plug and float equipment technology. The CE
segment also provides services and products utilized in the construction,
completion or abandonment of the wellbore. These solutions are primarily used to
isolate portions of the wellbore through the setting of barriers downhole to
allow for rig evacuation in case of inclement weather, maintenance work on other
rig equipment, squeeze cementing, pressure testing within the wellbore,
hydraulic fracturing and temporary and permanent abandonments. These offerings
improve operational efficiencies and limit non-productive time if unscheduled
events are encountered at the wellsite.


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Outlook



    Two significant events that began during the first quarter are continuing to
create headwinds across the oil and gas markets. First, there was a breakdown in
the Organization of Petroleum Exporting Countries ("OPEC") and Russia production
cut agreements and during the period of dispute, meaningful downward pressure on
commodity prices occurred. There was an ultimate agreement made amongst these
parties in April 2020 which took effect beginning in May 2020. Despite this
agreement, there continues to be excess inventory of oil. This is due to the
second event, the global Covid-19 pandemic which created an energy demand
decline and has given rise to logistical challenges in furthering certain
existing drilling programs. Both of these events have caused our customers to
reduce capital spending, with the U.S. onshore market seeing a large reduction
from initial 2020 guidance. International customer spending has also been
reduced although at a lower rate than the U.S. onshore markets. In Africa,
travel restrictions have led to significant activity disruptions. We continue to
believe that the effects of Covid-19 will depress the oil and gas markets in the
short to intermediate term. We expect commodity over-supply issues to have a
long-term effect over the next 24 months, requiring time for the market supply
and demand curve to return to balance.

    As of June 30, 2020, the full impact of the Covid-19 outbreak and the
reduction in oil sector activity continues to evolve daily. It is uncertain how
long either event will last. With the significant decline in oil prices as well
as the general economic decline caused by the impacts of Covid-19, we expect the
lower demand for our products and services to continue due to much lower capital
expenditure budgets throughout the industry.

    Although Covid-19 has contributed to a decline in demand for our offerings,
the direct impact of the outbreak on our ability to conduct operations has been
minor. We have implemented a work-from-home directive for office personnel
across the globe, split-shift rotation protocols for our manufacturing and
operations facilities, social distancing guidelines in manufacturing and
operations facilities, and quarantine protocols for employees at risk of
exposure to Covid-19. In addition, we have experienced local disruptions of
activity in response to outbreaks of Covid-19 at certain offshore drilling
locations, and disruptions due to travel restrictions and local governmental
orders. However, in the majority of locations, our products and services have
been deemed essential economic activity and have continued during local
restrictions on business activity.

    In this challenging and uncertain environment, we are continuing and
building upon our profitability improvement project to further reduce our cost
base. We are implementing workforce reductions, in conjunction with changes to
our compensation and benefits programs and concurrent with the pursuit of
several government-sponsored relief support programs globally that will capture
additional labor savings. We are also working to reduce our non-labor spend,
engaging in active discussions with our vendors and scrutinizing research and
development spending. We are also working to optimize working capital, with
workstreams under way in the areas of collections, capital expenditures,
inventory management and disbursements.

    We also continue to monitor potential goodwill impairments as a result of
Covid-19. For further information, see Note 6-Goodwill and Intangible Assets in
our Notes to Unaudited Condensed Consolidated Financial Statements.

    While management anticipates that the industry and economic impact of
Covid-19 and OPEC's actions will have a negative effect on our results of
operations in 2020 and perhaps beyond, the degree to which these factors will
impact our business remains uncertain. Please read Item 1A, Risk Factors, in
this Quarterly Report.

How We Evaluate Our Operations

We use a number of financial and operational measures to routinely analyze and evaluate the performance of our business, including revenue, Adjusted EBITDA, Adjusted EBITDA margin and safety performance.


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Revenue



    We analyze our revenue growth by comparing actual monthly revenue to our
internal projections for each month to assess our performance. We also assess
incremental changes in our monthly revenue across our operating segments to
identify potential areas for improvement.

Adjusted EBITDA and Adjusted EBITDA Margin



    We define Adjusted EBITDA as net income (loss) before interest income, net,
depreciation and amortization, income tax benefit or expense, asset impairments,
gain or loss on disposal of assets, foreign currency gain or loss, equity-based
compensation, unrealized and realized gains or losses, the effects of the tax
receivable agreement ("TRA"), other non-cash adjustments and other charges or
credits. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of
our revenue. We review Adjusted EBITDA and Adjusted EBITDA margin on both a
consolidated basis and on a segment basis. We use Adjusted EBITDA and Adjusted
EBITDA margin to assess our financial performance because it allows us to
compare our operating performance on a consistent basis across periods by
removing the effects of our capital structure (such as varying levels of
interest expense), asset base (such as depreciation and amortization), income
tax, foreign currency exchange rates and other charges and credits. Adjusted
EBITDA and Adjusted EBITDA margin have limitations as analytical tools and
should not be considered as an alternative to net income (loss), operating
income (loss), cash flow from operating activities or any other measure of
financial performance presented in accordance with generally accepted accounting
principles in the U.S. ("GAAP").

The following table presents a reconciliation of net loss to Adjusted EBITDA and Adjusted EBITDA margin for each of the periods presented (in thousands):


                                                        Three Months Ended                                      Six Months Ended
                                                             June 30,                                               June 30,
                                                      2020               2019               2020                   2019

Net loss                                          $ (34,245)         $ (15,160)         $ (120,223)         $       (43,447)
Goodwill impairment                                       -                  -              57,146                        -
Severance and other charges, net                      5,162                815              25,887                    1,270
Interest income, net                                   (178)              (426)               (711)                  (1,194)
Depreciation and amortization                        17,252             23,913              36,970                   49,155
Income tax expense (benefit)                          8,986              3,300              (6,577)                  13,073
(Gain) loss on disposal of assets                      (650)               154                (590)                     381
Foreign currency (gain) loss                         (1,693)               661               8,199                      178
TRA related adjustments                                   -               (220)                  -                     (220)
Charges and credits (1)                               3,674              4,126               5,266                    7,625
Adjusted EBITDA                                   $  (1,692)         $  17,163          $    5,367          $        26,821
Adjusted EBITDA margin                                 (2.0) %            11.0  %              2.6  %                   8.9  %




(1) Comprised of Equity-based compensation expense (for the three months ended
June 30, 2020 and 2019: $3,515 and $3,017, respectively, and for the six months
ended June 30, 2020 and 2019: $5,661 and $5,591, respectively), Unrealized and
realized (gains) losses (for the three months ended June 30, 2020 and 2019: $111
and $(383), respectively, and for the six months ended June 30, 2020 and 2019:
$(1,593) and $(691), respectively), and Investigation-related matters (for the
three months ended June 30, 2020 and 2019: $48 and $1,492, respectively, and for
the six months ended June 30, 2020 and 2019: $1,198 and $2,725, respectively).

    For a reconciliation of our Adjusted EBITDA on a segment basis to the most
comparable measure calculated in accordance with GAAP, see "Operating Segment
Results."


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Safety and Quality Performance



    Safety is one of our primary core values. Maintaining a strong safety record
is a critical component of our operational success. Many of our customers have
safety standards we must satisfy before we can perform services. As a result, we
continually monitor our safety performance through the evaluation of safety
observations, job and customer surveys, and safety data. The primary measure for
our safety performance is the tracking of the Total Recordable Incident Rate
which is reviewed on both a monthly and rolling twelve-month basis.

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