The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Financial Statements and Supplementary Data" in Item 8 of Part II of this Annual Report.



This discussion contains forward-looking statements based on our current
expectations, estimates, and projections about our operations and the industry
in which we operate. Our actual results may differ materially from those
anticipated in these forward-looking statements as a result of a variety of
risks and uncertainties, including those described under "Risk Factors" in Item
1A of Part I of this Annual Report. We assume no obligation to update any of
these forward-looking statements.

Overview

Company Description



We are a leading North American onshore completion services provider that
targets unconventional oil and gas resource development. We partner with our E&P
customers across all major onshore basins in both the U.S. and Canada as well as
abroad to design and deploy downhole solutions and technology to prepare
horizontal, multistage wells for production. We focus on providing our customers
with cost-effective and comprehensive completion solutions designed to maximize
their production levels and operating efficiencies.

Generally, operators have continued to improve operational efficiencies in
completions design, increasing the complexity and difficulty, making oilfield
service selection more important. This increase in high-intensity,
high-efficiency completions of oil and gas wells further enhances the demand for
our services. We compete for the most complex and technically demanding wells in
which we specialize, which are characterized by extended laterals, increased
stage spacing, multi-well pads, cluster spacing, and high proppant loads. These
well characteristics lead to increased operating leverage and returns for us, as
we are able to complete more jobs and stages with the same number of units and
crews. Service providers for these projects are selected based on their
technical expertise and ability to execute safely and efficiently.

We provide (i) cementing services, which consist of blending high-grade cement
and water with various solid and liquid additives to create a cement slurry that
is pumped between the casing and the wellbore of the well, (ii) an innovative
portfolio of completion tools, including those that provide pinpoint frac sleeve
system technologies as well as a portfolio of completion technologies used for
completing the toe stage of a horizontal well and fully-composite, dissolvable,
and extended range frac plugs to isolate stages during plug-and-perf operations,
(iii) wireline services, the majority of which consist of plug-and-perf
completions, which is a multistage well completion technique for cased-hole
wells that consists of deploying perforating guns and isolation tools to a
specified depth, and (iv) coiled tubing services, which perform wellbore
intervention operations utilizing a continuous steel pipe that is transported to
the wellsite wound on a large spool in lengths of up to 30,000 feet and which
provides a cost-effective solution for well work due to the ability to deploy
efficiently and safely into a live well.

We believe our success is a product of our culture, which is driven by our intense focus on performance and wellsite execution as well as our commitment to forward-leaning technologies that aid us in the development of smarter, customized applications that drive efficiencies.

Recent Events



On January 30, 2023, we completed our public offering of 300,000 units with an
aggregate stated amount of $300.0 million (the "Units"). Each Unit consists of
$1,000 principal amount of the 2028 Notes and five shares of our common stock.
We received proceeds of $279.8 million from the Units offering, after deducting
underwriting discounts and commission, which was deposited with the trustee of
the 8.750% Senior Notes due 2023 (the "2023 Notes"), along with $40.0 million of
cash received from borrowings under the ABL Credit Facility. On January 30,
2023, we instructed the trustee of the 2023 Notes to apply such deposits toward
the payment of the 2023 Notes on February 1, 2023, and we elected to discharge
the indenture governing the 2023 Notes, thereby releasing us from our remaining
obligations under such indenture as of January 30, 2023.

On February 1, 2023, all of the outstanding 2023 Notes were redeemed at a redemption price of 100.0% of the principal amount thereof ($307.3 million), plus accrued and unpaid interest ($6.7 million). We also wrote off the unamortized deferred financing costs associated with the 2023 Notes in conjunction with the redemption.



For additional information on our Units offering, the ABL Credit Facility, which
was amended in connection with such offering, and the redemption of the 2023
Notes, see Note 9 - Debt Obligations included in Item 8 of Part II of this
Annual Report.
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How We Generate Revenue and the Costs of Conducting Our Business



We generate our revenues by providing completion services to E&P customers
across all major onshore basins in both the U.S. and Canada as well as abroad.
We primarily earn our revenues pursuant to work orders entered into with our
customers on a job-by-job basis. We typically will enter into an MSA with each
customer that provides a framework of general terms and conditions of our
services that will govern any future transactions or jobs awarded to us. Each
specific job is obtained through competitive bidding or as a result of
negotiations with customers. The rate we charge is determined by location,
complexity of the job, operating conditions, duration of the contract, and
market conditions. In addition to MSAs, we have entered into a select number of
longer-term contracts with certain customers relating to our wireline and
cementing services, and we may enter into similar contracts from time to time to
the extent beneficial to the operation of our business. These longer-term
contracts address pricing and other details concerning our services, but each
job is performed on a standalone basis.

The principal expenses involved in conducting our business include labor costs,
materials and freight, the costs of maintaining our equipment, and fuel costs.
Our direct labor costs vary with the amount of equipment deployed and the
utilization of that equipment. Another key component of labor costs relates to
the ongoing training of our field service employees, which improves safety rates
and reduces employee attrition.

How We Evaluate Our Operations

We evaluate our performance based on a number of financial and non-financial measures, including the following:



•Revenue: We compare actual revenue achieved each month to the most recent
projection for that month and to the annual plan for the month established at
the beginning of the year. We monitor our revenue to analyze trends in the
performance of our operations compared to historical revenue drivers or market
metrics. We are particularly interested in identifying positive or negative
trends and investigating to understand the root causes.

•Adjusted Gross Profit (Loss): Adjusted gross profit (loss) is a key metric that
we use to evaluate operating performance. We define adjusted gross profit (loss)
as revenues less direct and indirect costs of revenues (excluding depreciation
and amortization). Costs of revenues include direct and indirect labor costs,
costs of materials, maintenance of equipment, fuel and transportation freight
costs, contract services, crew cost, and other miscellaneous expenses. For
additional information, see "Non-GAAP Financial Measures" below.

•Adjusted EBITDA: We define Adjusted EBITDA as net income (loss) before
interest, taxes, and depreciation and amortization, further adjusted for
(i) goodwill, intangible asset, and/or property and equipment impairment
charges, (ii) transaction and integration costs related to acquisitions, (iii)
loss or gain on revaluation of contingent liabilities, (iv) loss or gain on the
extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi)
restructuring charges, (vii) stock-based compensation and cash award expense,
(viii) loss or gain on sale of property and equipment, and (ix) other expenses
or charges to exclude certain items which we believe are not reflective of
ongoing performance of our business, such as legal expenses and settlement costs
related to litigation outside the ordinary course of business. For additional
information, see "Non-GAAP Financial Measures" below.

•Return on Invested Capital ("ROIC"): We define ROIC as after-tax net operating
profit (loss), divided by average total capital. We define after-tax net
operating profit (loss) as net income (loss) plus (i) goodwill, intangible
asset, and/or property and equipment impairment charges, (ii) transaction and
integration costs related to acquisitions, (iii) interest expense (income), (iv)
restructuring charges, (v) loss (gain) on the sale of subsidiaries, (vi) loss
(gain) on the extinguishment of debt, and (vii) the provision (benefit) for
deferred income taxes. We define total capital as book value of equity plus the
book value of debt less balance sheet cash and cash equivalents. We compute the
average of the current and prior period-end total capital for use in this
analysis. For additional information, see "Non-GAAP Financial Measures" below.

•Safety: We measure safety by tracking the total recordable incident rate
("TRIR"), which is reviewed on a monthly basis. TRIR is a measure of the rate of
recordable workplace injuries, defined below, normalized and stated on the basis
of 100 workers for an annual period. The factor is derived by multiplying the
number of recordable injuries in a calendar year by 200,000 (i.e., the total
hours for 100 employees working 2,000 hours per year) and dividing this value by
the total hours actually worked in the year. A recordable injury includes
occupational death, nonfatal occupational illness, and other occupational
injuries that involve loss of consciousness, restriction of work or motion,
transfer to another job, or medical treatment other than first aid.
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Industry Trends and Outlook



Our business depends, to a significant extent, on the level of unconventional
resource development activity and corresponding capital spending of oil and
natural gas companies. These activity and spending levels are strongly
influenced by current and expected oil and natural gas prices. Throughout 2022,
oil and natural gas prices were very supportive, with an average WTI price of
$94.90 for the year, although prices began to decline during the third quarter
of 2022 in response to some indications of slowing economic growth, inflation,
and rising interest rates. In addition, over the last several months, we have
seen a sharp decline in natural gas prices, which has and will likely continue
to affect activity levels in the Northeast and Haynesville. We anticipate these
effects will be felt more strongly in the Haynesville in the near-term. Industry
dynamics can shift very quickly, however, and we are operating this business for
the long-term. Together, the Northeast and Haynesville comprised 30% of our
total 2022 revenue, and we believe that these basins are vital to supplying the
global markets and are important pieces of our footprint.

In 2022, operators increased activity levels with the average U.S. rig count,
according to Baker Hughes, increasing by 51% year over year. Total U.S.
completions in 2022 increased by approximately 22% over 2021 according to the
Energy Information Administration (the "EIA"). Activity levels, specifically rig
counts, thus far in the first quarter of 2023 have been down compared to the
fourth quarter of 2022, with the rig count declining by 26 rigs since the end of
2022. Nonetheless, we expect U.S. E&P capital expenditure levels to increase in
2023, although not likely at the same rate as 2022. Underinvestment in oil and
gas development during the coronavirus pandemic and an increase in overall
global demand coming out of the pandemic, production cuts announced by OPEC,
international conflict, specifically between Russia and Ukraine, and public U.S.
producers' commitment to capital discipline rather than increased drilling, are
together creating supportive market fundamentals for a longer cycle. The U.S.
average drilled but uncompleted wells inventory in 2022 was down by over 40%
from the average 2019 levels, and operators will need to drill more wells to
maintain production levels in 2023. In a recent report, the EIA is forecasting
U.S. production will increase from 11.90 mb/d in 2022 to 12.49 mb/d in 2023.

Throughout 2022, the oilfield services industry faced labor shortages, as well
as equipment and supply chain constraints, which limited availability for
customers. As a result, in 2022, we implemented price increases across many of
our service lines. Potential price increases in 2023 will be dependent on
activity increases, as well as a number of other factors, and pricing has
remained mostly steady thus far in 2023 across service lines. Any price
increases in 2023 could be largely or wholly offset by labor and material cost
inflation, and any such price increases could also negatively impact our
customers' activity levels due to their own cost inflation.

Significant factors that are likely to affect commodity prices moving forward
include actions of the members of OPEC and other oil exporting nations that
relate to or impact oil production or supply; the effect of energy, monetary,
and trade policies of the U.S.; the pace of economic growth in the U.S. and
throughout the world, including the potential for macro weakness; geopolitical
and economic developments in the U.S. and globally, including conflicts,
instability, acts of war or terrorism in oil producing countries or regions,
particularly Russia, the Middle East, South America and Africa and including
recovery from the coronavirus pandemic and any resurgence thereof; changes to
energy regulations and policies, including those of the EPA and other
governmental bodies; and overall North American oil and natural gas supply and
demand fundamentals, including the pace at which export capacity grows.
Furthermore, although as noted above, our customers' activity and spending
levels, and thus demand for our services and products, are strongly influenced
by current and expected oil and natural gas prices, even with price improvements
in oil and natural gas, operator activity may not materially increase, as
operators remain focused on operating within their capital plans, and
uncertainty remains around supply and demand fundamentals.


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Results of Operations

                                                                       Year Ended December 31,
                                                                       2022                   2021              Change
                                                                                     (in thousands)
Revenues                                                       $     593,382              $ 349,419          $ 243,963

Cost of revenues (exclusive of depreciation and amortization shown separately below)

                                              457,093                307,992            149,101
Adjusted gross profit                                          $     136,289              $  41,427          $  94,862

General and administrative expenses                            $      51,653              $  45,301          $   6,352
Depreciation                                                          26,784                 28,905             (2,121)
Amortization of intangibles                                           13,463                 16,116             (2,653)
Loss on revaluation of contingent liability                              454                    460                 (6)
Loss on sale of property and equipment                                   367                    660               (293)
Income (loss) from operations                                         43,568                (50,015)            93,583
Non-operating expenses                                                28,629                 14,585             14,044
Income (loss) before income taxes                                     14,939                (64,600)            79,539
Provision (benefit) for income taxes                                     546                    (25)               571
Net income (loss)                                              $      14,393              $ (64,575)         $  78,968


Revenues

Revenues increased $244.0 million, or 70%, to $593.4 million in 2022. The
increase in comparison to 2021 was prevalent across all lines of service and was
due to activity and pricing improvements. As compared to 2021, the average U.S.
rig count increased by 51%, and completions increased by 22%. Cementing revenue
(including pump downs) increased by $115.3 million, or 101%, as total cement job
count increased by 50%, in comparison to 2021. In addition, coiled tubing
revenue increased $56.6 million, or 91%, as total days worked increased by 37%,
tools revenue increased $37.2 million, or 37%, as completion tools stages
increased by 38%, and wireline revenue increased $34.9 million, or 48%, as total
completed wireline stages increased by 26%, in each case, in comparison to 2021.

Cost of Revenues (Exclusive of Depreciation and Amortization)



Cost of revenues increased $149.1 million, or 48%, to $457.1 million in 2022.
The increase in comparison to 2021 was prevalent across all lines of service and
was primarily related to increased activity coupled with cost inflation
associated with both labor and materials as well as headcount increases. More
specifically, the increase was related to a $79.2 million increase in materials
installed and consumed while performing services, a $54.4 million increase in
employee costs, and a $15.5 million increase in other costs such as repairs and
maintenance, travel, and vehicle expenses, in comparison to 2021.

Adjusted Gross Profit (Loss)

Adjusted gross profit increased $94.9 million to $136.3 million in 2022 as a result of the factors described above under "Revenues" and "Cost of Revenues."

General and Administrative Expenses



General and administrative expenses increased $6.4 million to $51.7 million in
2022. The increase in comparison to 2021 was primarily related to an
$8.2 million increase in employee costs mainly due to increases in headcount and
compensation and a $0.4 million increase in other general and administrative
costs such as marketing, travel, and vehicle costs. The overall increase was
partially offset by a $2.2 million decrease in professional fees in comparison
to 2021.

Depreciation

Depreciation expense decreased $2.1 million to $26.8 million in 2022. The decrease in comparison to 2021 was primarily due to certain assets becoming fully depreciated in the last twelve months.


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Amortization of Intangibles



Intangible amortization expense decreased $2.7 million to $13.5 million in 2022
and was primarily attributable to technology and customer relationships. The
decrease was related to certain intangible assets being fully amortized in 2022.

(Gain) Loss on Revaluation of Contingent Liability



We recorded a $0.5 million loss on the revaluation of contingent liability in
both 2022 and 2021. The losses for both periods were related to increases of the
value of the earnout associated with our acquisition Frac Technology AS.

Non-Operating Expenses (Income)



We recorded $28.6 million in non-operating expenses in 2022 compared to $14.6
million in non-operating expenses in 2021. The $14.0 million increase in
non-operating expense was primarily related to a $14.8 million decrease in gains
on the extinguishment of debt related to the repurchase of 2023 Notes between
periods. The overall increase in non-operating expenses was partially offset by
a $0.7 million increase in interest and other income between periods.

Provision (Benefit) for Income Taxes



Our effective tax rate was 3.7% for 2022 and 0.01% for 2021. Our tax provision
for 2022 is primarily the result of our tax position in state and foreign tax
jurisdictions.

Adjusted EBITDA

Adjusted EBITDA increased $88.5 million to $93.7 million for 2022. The Adjusted EBITDA increase was primarily due to the changes in revenue and expenses discussed above. See "Non-GAAP Financial Measures" below for further explanation.



Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders, and rating agencies.



We define Adjusted EBITDA as EBITDA (which is net income (loss) before interest,
taxes, depreciation, and amortization) further adjusted for (i) goodwill,
intangible asset, and/or property and equipment impairment charges,
(ii) transaction and integration costs related to acquisitions, (iii) loss or
gain on revaluation of contingent liabilities, (iv) loss or gain on the
extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi)
restructuring charges, (vii) stock-based compensation and cash award expense,
(viii) loss or gain on sale of property and equipment, and (ix) other expenses
or charges to exclude certain items which we believe are not reflective of
ongoing performance of our business, such as legal expenses and settlement costs
related to litigation outside the ordinary course of business.

Management believes Adjusted EBITDA is useful because it allows us to more
effectively evaluate our operating performance and compare the results of our
operations from period to period without regard to our financing methods or
capital structure. We exclude the items listed above from net income (loss) in
arriving at this measure because these amounts can vary substantially from
company to company within our industry depending upon accounting methods and
book values of assets, capital structures, and the method by which the assets
were acquired. This measure should not be considered as an alternative to, or
more meaningful than, net income (loss) as determined in accordance with
accounting principles generally accepted in the United States of America
("GAAP") or as an indicator of our operating performance. Certain items excluded
from this measure are significant components in understanding and assessing a
company's financial performance, such as a company's cost of capital and tax
structure, as well as the historic costs of depreciable assets, none of which
are components of this measure. Our computation of this measure may not be
comparable to other similarly titled measures of other companies.
                                       39
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The following table presents a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measure of net income (loss):



                                                        Year Ended December 31,
                                                          2022               2021
                                                            (in thousands)
EBITDA reconciliation:
Net income (loss)                                 $     14,393            $ (64,575)
Interest expense                                        32,486               32,527
Interest income                                           (305)                 (26)
Provision (benefit) for income taxes                       546                  (25)
Depreciation                                            26,784               28,905
Amortization of intangibles                             13,463               16,116
EBITDA                                            $     87,367            $  12,922
Adjusted EBITDA reconciliation:
EBITDA                                            $     87,367            $ 

12,922


Loss on revaluation of contingent liability (1)            454              

460


Gain on extinguishment of debt                          (2,843)             

(17,618)


Restructuring charges                                    3,393              

1,588


Stock-based compensation and cash award expense          4,914              

5,406


Loss on sale of property and equipment                     367              

660


Legal fees and settlements (2)                              86                1,809
Adjusted EBITDA                                   $     93,738            $   5,227


(1)   Amounts relate to the revaluation of contingent liability associated with
a 2018 acquisition. The impact is included in our Consolidated Statements of
Income and Comprehensive Income (Loss). For additional information on contingent
liabilities, see Note 12 - Commitments and Contingencies included Item 8 of Part
II of this Annual Report.

(2) Amounts represent fees and legal settlements associated with legal proceedings brought pursuant to the FLSA and/or similar state laws.


                                       40
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Return on Invested Capital



ROIC is a supplemental non-GAAP financial measure. We define ROIC as after-tax
net operating profit (loss), divided by average total capital. We define
after-tax net operating profit (loss) as net income (loss) plus (i) goodwill,
intangible asset, and/or property and equipment impairment charges, (ii)
transaction and integration costs related to acquisitions, (iii) interest
expense (income), (iv) restructuring charges, (v) loss (gain) on the sale of
subsidiaries, (vi) loss (gain) on the extinguishment of debt, and (vii) the
provision (benefit) for deferred income taxes. We define total capital as book
value of equity (deficit) plus the book value of debt less balance sheet cash
and cash equivalents. We compute the average of the current and prior period-end
total capital for use in this analysis.

Management believes ROIC is a meaningful measure because it quantifies how well
we generate operating income relative to the capital we have invested in our
business and illustrates the profitability of a business or project taking into
account the capital invested. Management uses ROIC to assist them in capital
resource allocation decisions and in evaluating business performance. Although
ROIC is commonly used as a measure of capital efficiency, definitions of ROIC
differ, and our computation of ROIC may not be comparable to other similarly
titled measures of other companies.

The following table provides an explanation of our calculation of ROIC for the years ended December 31, 2022 and 2021:



                                            Year Ended December 31,
                                             2022              2021
                                                (in thousands)
Net income (loss)                       $     14,393       $ (64,575)
Add back:
Interest expense                              32,486          32,527
Interest income                                 (305)            (26)
Restructuring charges                          3,393           1,588
Gain on extinguishment of debt                (2,843)        (17,618)

After-tax net operating income (loss) $ 47,124 $ (48,104) Total capital as of prior period-end: Total stockholders' equity (deficit) $ (39,267) $ 20,409 Total debt

                                   337,436         348,637
Less cash and cash equivalents               (21,509)        (68,864)

Total capital as of prior period-end $ 276,660 $ 300,182 Total capital as of period-end: Total stockholders' deficit

$    (23,507)      $ (39,267)
Total debt                                   341,606         337,436
Less cash and cash equivalents               (17,445)        (21,509)
Total capital as of period-end          $    300,654       $ 276,660
Average total capital                   $    288,657       $ 288,421
ROIC                                            16.3  %        (16.7) %


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Adjusted Gross Profit (Loss)



GAAP defines gross profit (loss) as revenues less cost of revenues and includes
depreciation and amortization in costs of revenues. We define adjusted gross
profit (loss) as revenues less direct and indirect costs of revenues (excluding
depreciation and amortization). This measure differs from the GAAP definition of
gross profit (loss) because we do not include the impact of depreciation and
amortization, which represent non-cash expenses.

Management uses adjusted gross profit (loss) to evaluate operating performance.
We prepare adjusted gross profit (loss) to eliminate the impact of depreciation
and amortization because we do not consider depreciation and amortization
indicative of our core operating performance. Adjusted gross profit (loss)
should not be considered as an alternative to gross profit (loss), operating
income (loss), or any other measure of financial performance calculated and
presented in accordance with GAAP. Adjusted gross profit (loss) may not be
comparable to similarly titled measures of other companies because other
companies may not calculate adjusted gross profit (loss) or similarly titled
measures in the same manner as we do.

The following table presents a reconciliation of adjusted gross profit (loss) to GAAP gross profit (loss).



                                                                                  Year Ended December 31,
                                                                                  2022                   2021
                                                                                      (in thousands)
Calculation of gross profit (loss)
Revenues                                                                  $     593,382              $ 349,419

Cost of revenues (exclusive of depreciation and amortization shown separately below)

                                                               457,093                307,992
Depreciation (related to cost of revenues)                                       24,909                 26,882
Amortization of intangibles                                                      13,463                 16,116
Gross profit (loss)                                                       $      97,917              $  (1,571)
Adjusted gross profit reconciliation:
Gross profit (loss)                                                       $      97,917              $  (1,571)
Depreciation (related to cost of revenues)                                       24,909                 26,882
Amortization of intangibles                                                      13,463                 16,116
Adjusted gross profit                                                     $     136,289              $  41,427


                                       42

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Liquidity and Capital Resources

Sources and Uses of Liquidity



Historically, we have met our liquidity needs principally from cash on hand,
cash flows from operations and, if needed, external borrowings and issuances of
debt securities. Our principal uses of cash are to fund capital expenditures,
service our outstanding debt, fund our working capital requirements and fund
acquisitions. Due to our high level of variable costs and the asset-light
make-up of our business, we have historically been able to quickly implement
cost-cutting measures and will continue to adapt as the market dictates. We have
also used cash to make open market repurchases of our debt and may, from time to
time, continue to make such repurchases (including with respect to the 2028
Notes) when it is opportunistic to do so to manage our debt maturity profile.

We continually monitor potential capital sources, including equity and debt
financing, to meet our investment and target liquidity requirements. Our future
success and growth will be highly dependent on our ability to continue to access
outside sources of capital.

Although we do not budget for acquisitions, pursuing growth through acquisitions
may continue to be a part of our business strategy. Our ability to make
significant additional acquisitions for cash will require us to obtain
additional equity or debt financing, which we may not be able to obtain on terms
acceptable to us or at all.

In 2023, our planned capital expenditure budget, excluding possible
acquisitions, is expected to be between $25.0 million to $35.0 million. The
nature of our capital expenditures is comprised of a base level of investment
required to support our current operations and amounts related to growth and
company initiatives. Capital expenditures for growth and company initiatives are
discretionary. We continually evaluate our capital expenditures, and the amount
we ultimately spend will depend on a number of factors, including expected
industry activity levels and company initiatives.

At December 31, 2022, we had $17.4 million of cash and cash equivalents and
$66.6 million of availability under the ABL Credit Facility, which resulted in a
total liquidity position of $84.0 million. On January 27, 2023, we borrowed an
additional $40.0 million under the ABL Credit Facility to pay for the redemption
price of the 2023 Notes and to pay for fees and expenses related to the Units
offering. We believe that, based on our current forecasts, our cash on hand,
together with cash flow from operations and borrowings under the ABL Credit
Facility, should be sufficient to fund our capital requirements for at least the
next twelve months from the issuance date of our consolidated financial
statements. However, we can make no assurance regarding our ability to achieve
our forecasts, which are materially dependent on our financial performance and
the ever-changing market.

2023 Notes

On October 25, 2018, we issued $400.0 million of 2023 Notes under an indenture,
dated as of October 25, 2018 (the "2023 Notes Indenture"), by and among us,
including certain of our subsidiaries, and Wells Fargo, National Association, as
Trustee. The 2023 Notes bore interest at annual rate of 8.750% payable on May 1
and November 1 of each year. The 2023 Notes were senior unsecured obligations
and were fully and unconditionally guaranteed on a senior unsecured basis by
each of our current domestic subsidiaries and by certain future subsidiaries.

The 2023 Notes Indenture contained covenants that limited our ability and the
ability of our restricted subsidiaries to engage in certain activities. We were
in compliance with the provisions of the 2023 Notes Indenture at December 31,
2022.

We repurchased approximately $13.0 million of 2023 Notes at a repurchase price
of approximately $10.1 million in cash for the year ended December 31, 2022. We
also repurchased approximately $26.3 million of 2023 Notes at a repurchase price
of approximately $8.4 million in cash for the year ended December 31, 2021.

On February 1, 2023, all of the outstanding 2023 Notes were redeemed at a
redemption price of 100.0% of the principal amount thereof ($307.3 million),
plus accrued and unpaid interest ($6.7 million), and the 2023 Notes Indenture
was discharged as of January 30, 2023.

For additional information on the 2023 Notes, see Note 9 - Debt Obligations included in Item 8 of Part II of this Annual Report.

Units Offering and 2028 Notes

On January 30, 2023, we completed our public offering of Units and issued 300,000 Units with an aggregate stated amount of $300.0 million. Each Unit consists of $1,000 principal amount of the 2028 Notes and five shares of our common


                                       43
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stock. We received proceeds of $279.8 million from the Units offering, after deducting underwriting discounts and commission, which was used to fund a portion of the redemption price of the 2023 Notes.



Each Unit will be separated into its constituent securities (the 2028 Notes and
the shares of our common stock) automatically on October 27, 2023, or, if
earlier, on the date, if any, on which a change of control or event of default
(each as defined in the indenture governing the 2028 Notes) occurs.

A holder of Units may elect to separate its Units into its constituent securities, in whole but not in part, on or after March 31, 2023. Prior to such date, the Units may not be separated at the option of the holder.



On January 30, 2023, we, and certain of our subsidiaries entered into an
indenture, dated as of January 30, 2023 (the "2028 Notes Indenture"), with U.S.
Bank Trust Company, National Association, as the trustee and as notes collateral
agent, pursuant to which the 2028 Notes, which form a part of the Units, were
issued. The 2028 Notes will mature on February 1, 2028 and bear interest at an
annual rate of 13.000% payable in cash semi-annually in arrears on each of
February 1 and August 1, commencing August 1, 2023. The 2028 Notes are our
senior secured obligations and are guaranteed on a senior secured basis by each
of our current domestic subsidiaries and by certain future subsidiaries, subject
to agreed guaranty and security principles and certain exclusions.

On each May 15 and November 14, commencing November 14, 2023 (each, an "Excess
Cash Flow Offer Date"), we are required to make an offer (an "Excess Cash Flow
Offer") to all holders of the 2028 Notes and, if required by the terms of any
Pari Passu Notes Lien Indebtedness (as defined in the 2028 Notes Indenture), to
any holders of any Pari Passu Notes Lien Indebtedness to purchase, prepay or
redeem, together on a pro-rata basis, the maximum principal amount of the 2028
Notes and any such Pari Passu Notes Lien Indebtedness (plus all accrued interest
(including additional interest, if any) on the 2028 Notes and any such Pari
Passu Notes Lien Indebtedness and the amount of all fees and expenses, including
premiums, incurred in connection therewith) that may be purchased, prepaid or
redeemed using an amount of cash equal to the Excess Cash Flow Amount (as
defined in the 2028 Notes Indenture and which is 75.0% of Excess Cash Flow (as
defined in the 2028 Notes Indenture), as determined immediately prior to the
Excess Cash Flow Offer Date), if any, subject to certain exceptions set forth in
the 2028 Notes Indenture. The offer price in any such offer will be equal to
100% of the principal amount of the 2028 Notes and any such Pari Passu Notes
Lien Indebtedness (or, in respect of any such Pari Passu Notes Lien
Indebtedness, such lesser price, if any, as may be provided for by the terms of
such Pari Passu Notes Lien Indebtedness), plus accrued and unpaid interest and
additional interest, if any, to, but excluding, the date of purchase, prepayment
or redemption, subject to the rights of holders of the 2028 Notes or any such
Pari Passu Notes Lien Indebtedness on the relevant record date to receive
interest due on an interest payment date that is on or prior to the date of
purchase, prepayment or redemption, and will be payable in cash.

The 2028 Notes Indenture contains covenants that, among other things and subject
to certain exceptions and qualifications, limit our ability and the ability of
our restricted subsidiaries to engage in certain activities.

For additional information on the Units and the 2028 Notes, see Note 9 - Debt Obligations included in Item 8 of Part II of this Annual Report.

ABL Credit Facility



On October 25, 2018, we entered into a credit agreement dated as of October 25,
2018 (the "2018 ABL Credit Agreement"), that permitted aggregate borrowings of
up to $200.0 million, subject to a borrowing base, including a Canadian tranche
with a sub-limit of up to $25.0 million and a sub-limit of $50.0 million for
letters of credit (the "ABL Credit Facility"). Pursuant to the 2018 ABL Credit
Agreement, the ABL Credit Facility was set to mature on October 25, 2023 or, if
earlier, on the date that is 180 days before the scheduled maturity date of the
2023 Notes if they had not been redeemed or repurchased by such date.

On January 17, 2023, we entered into the First Amendment to Credit Agreement
(the "ABL Facility Amendment") with JP Morgan Chase Bank, N.A., as
administrative agent, and the lender parties thereto, which amends certain terms
of the 2018 ABL Credit Agreement (as amended the "ABL Credit Agreement"). The
ABL Facility Amendment became effective on January 30, 2023.

Pursuant to the ABL Facility Amendment, the maturity date of the ABL Credit
Facility was extended from October 25, 2023 to January 29, 2027. In addition,
the ABL Facility Amendment, among other changes, revised the terms of the ABL
Credit Facility as follows: (a) decreased the size of the ABL Credit Facility
from $200.0 million to $150.0 million, subject to the borrowing base, (b)
changed the interest rate benchmark from London Interbank Offered Rate to Term
Secured Overnight Financing Rate with a 10 basis point spread adjustment and
increased pricing from the existing range of 1.75% to 2.25% to a range of 2.00%
to 2.50%, in each case depending on our leverage ratio, (c) modified the
financial covenant, enhanced reporting
                                       44
--------------------------------------------------------------------------------

and cash dominion triggers in the ABL Credit Facility from the existing minimum
availability threshold of the greater of $18.75 million and 12.5% of the loan
limit to a minimum availability threshold of (i) $12.5 million from January 30,
2023 until May 31, 2023 and (ii) the greater of $17.5 million and 12.5% of the
loan limit thereafter, (d) decreased the Canadian tranche sub-limit from $25.0
million to $5.0 million, (e) decreased the letter of credit sub-limit from $50.0
million to $10.0 million and (f) made satisfaction of the Payment Conditions (as
defined in the ABL Facility Amendment) a condition to an Excess Cash Flow Offer
in addition to a condition to voluntary payments of the 2028 Notes. The Payment
Conditions in summary are (A) no default or event of default on a pro forma
basis and (B) immediately after and at all times and at all times during the 30
days prior, on a pro forma basis, (1) (x) availability under the ABL Credit
Facility shall not be less than the greater of 15% of the loan limit and $22.5
million and (y) the fixed charge coverage ratio shall be at least 1.00 to 1.00
or (2) availability under the ABL Credit Facility shall not be less than the
greater of 20% of the loan limit and $30.0 million.

The 2018 ABL Credit Agreement contained, and the ABL Credit Agreement contains,
various affirmative and negative covenants, including financial reporting
requirements and limitations on indebtedness, liens, mergers, consolidations,
liquidations and dissolutions, sales of assets, dividends and other restricted
payments, investments (including acquisitions) and transactions with affiliates.
We were in compliance with all covenants under the 2018 ABL Credit Agreement as
of December 31, 2022.

Pursuant to the 2018 ABL Credit Agreement, all of the obligations under the ABL
Credit Facility were, and pursuant to the ABL Credit Agreement, all obligations
under the ABL Credit Facility are, secured by security interests (subject to
permitted liens) in substantially all of the personal property of our domestic
subsidiaries, excluding certain assets. The obligations under the Canadian
tranche were and are further secured by security interests (subject to permitted
liens) in substantially all of the personal property of Nine Energy Canada,
Inc., a corporation organized under the laws of Alberta, Canada, and its
restricted subsidiaries, excluding certain assets.

Both the ABL Credit Facility and the Units collateralization were completed within 30 days after closing in accordance with the terms of the ABL Facility Amendment and the Units offering.



At December 31, 2022, we had $32.0 million of borrowings under the ABL Credit
Facility, and our availability under the ABL Credit Facility was approximately
$66.6 million, net of outstanding letters of credit of $1.3 million. On January
27, 2023, we borrowed an additional $40.0 million under the ABL Credit Facility
to pay for the redemption price of the 2023 Notes and to pay for fees and
expenses related to the Units offering.

Cash Flows



Our cash flows for the years ended December 31, 2022, and 2021 are presented
below:

                                                Year Ended December 31,
                                                  2022               2021
                                                    (in thousands)
Operating activities                      $     16,672            $ (40,416)
Investing activities                           (25,417)             (11,921)
Financing activities                             4,849                5,048
Impact of foreign exchange rate on cash           (168)                 

(66)


Net change in cash and cash equivalents   $     (4,064)           $ (47,355)


Operating Activities

Net cash provided by operating activities was $16.7 million in 2022 compared to
$40.4 million in net cash used in operating activities in 2021. The $57.1
million increase in net cash provided by operating activities was primarily a
result of an $85.5 million increase in cash flow provided by operations,
adjusted for any non-cash items, and primarily driven by an increase in revenue
and income in comparison to 2021. The increase in net cash provided by operating
activities was offset by a $28.4 million decrease in cash provided by working
capital, including an increase in accounts receivable from increased product and
service sales, which has the effect of lagging cash collections, in each case,
in comparison to 2021.

Investing Activities

Net cash used in investing activities was $25.4 million in 2022 compared to
$11.9 million in net cash used in investing activities in 2021. The $13.5
million increase was primarily due to a $13.1 million increase in cash purchases
of property and equipment, coupled with $0.4 million decrease in proceeds from
the sale of property and equipment (including insurance), in each case, in
comparison to 2021.
                                       45
--------------------------------------------------------------------------------

Financing Activities



Net cash provided by financing activities was $4.8 million in 2022 compared to
$5.0 million in net cash provided by financing activities in 2021. The $0.2
million decrease was primarily related to a $7.0 million payment on the ABL
Credit Facility in 2022 that did not occur in 2021 as well as a $2.2 million
increase in payments on short-term debt in comparison to 2021. The decrease was
partially offset by a $9.0 million increase in proceeds from the ABL Credit
Facility in 2022 in comparison to 2021.

Critical Accounting Estimates



The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with GAAP. The preparation of our financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. We evaluate our estimates and assumptions on a regular basis.
We base our estimates on historical experience and various other assumptions
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates and assumptions used in preparation of our financial
statements.

We consider the significant accounting policies identified below to be "critical accounting estimates" due to the following:

•The policies are dependent on estimates and assumptions made by us about matters that are inherently uncertain.



•The policies involve judgments and uncertainties to such an extent that there
is a reasonable likelihood that materially different amounts could have been
reported under different conditions, or if different assumptions had been used.

For additional information on our significant accounting policies, see Note 2 -
Significant Accounting Policies included in Item 8 of Part II of this Annual
Report.

Property and Equipment

Property and equipment is stated at cost and depreciated under the straight-line
method over the estimated useful life of the asset. Equipment held under finance
leases is stated at the present value of its future minimum lease payments and
is depreciated under the straight-line method over the shorter of the lease term
or the estimated useful life of the asset. Estimated useful lives requires
significant judgment which is influenced by our historical experience in
operating property and equipment, technological developments, and expectations
of future demand. Should our estimates be too long or too short, we could report
a disproportionate amount of losses or gains from sale or retirement.

Valuation of Long-Lived Assets



Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. In performing the review for impairment, future cash flows expected
to result from the use of the asset and its eventual disposal are estimated. If
the undiscounted future cash flows are less than the carrying amount of the
assets, there is an indication that the asset may be impaired. The amount of the
impairment is measured as the difference between the carrying value and the
Level 3 fair value of the asset. The Level 3 fair value is determined either
through the use of an external valuation, or by means of an analysis of
discounted future cash flows based on expected utilization. Determining fair
value requires the use of estimates and assumptions. Such estimates and
assumptions include revenue growth rates, operating profit margins, weighted
average costs of capital, terminal growth rates, future market share, the impact
of new product development, and future market conditions, among others. We
believe that the estimates and assumptions used in impairment assessments are
reasonable and appropriate. Impairment losses are reflected in "Income (loss)
from operations" in our Consolidated Statements of Income and Comprehensive
Income (Loss).

Recognition of Provisions for Contingencies



In the ordinary course of business, we are subject to various claims, suits, and
complaints. We, in consultation with internal and external advisors, will
provide for a contingent loss in the financial statements if it is probable that
a liability has been incurred at the date of the financial statements and the
amount can be reasonably estimated. Reasonable estimates are based upon an
analysis of potential results, assuming a combination of litigation and
settlement strategies. The accuracy of these estimates is impacted by, among
other things, the complexity of the issues and the amount of due diligence we
have been able to perform. If it is determined that the reasonable estimate of
the loss is a range and that there is no best estimate within the
                                       46
--------------------------------------------------------------------------------

range, provision will be made for the lower amount of the range. If the actual settlement costs, final judgments, or fines, after appeals, differ from our estimates, there may be a material adverse effect on our future financial results.

Stock-based Compensation and Fair Market Value Determination



We account for awards of stock-based compensation at fair value on the date
granted to employees and recognize the compensation expense in the financial
statements over the requisite service period. Forfeitures are recorded as they
occur. All stock-based compensation expense is recorded using the straight-line
method and is included in "General and administrative expenses" in our
Consolidated Statements of Income and Comprehensive Income (Loss).

Fair value of all the options outstanding was measured using the Black-Scholes
model. Determining the appropriate fair value model and calculating the fair
value of options requires the input of highly subjective assumptions, including
the expected volatility of the price of our stock, the risk-free rate, the
expected term of the options, and the expected dividend yield of our common
stock. These estimates involve inherent uncertainties and the application of
management's judgment. If factors change and different assumptions are used, our
stock-based compensation expense could be materially different in the future.
The Black-Scholes option pricing model requires estimates of key assumptions
based on both historical information and management judgment regarding market
factors and trends.

Expected Life - The expected term of stock options represents the period the
stock options are expected to remain outstanding and is based on the simplified
method, which is the weighted average vesting term plus the original contractual
term, divided by two.

Expected Volatility - We develop our expected volatility based upon a weighted average volatility of our peer group.



Risk-free Interest Rate - The risk-free interest rates for options granted are
based on the average of five year and seven year constant maturity Treasury bond
rates whose term is consistent with the expected term of an option from the date
of grant.

Expected Term - The expected term is based on the midpoint between the vesting
date and contractual term of an option. The expected term represents the period
that our stock-based awards are expected to be outstanding.

Expected Dividend Yield - We do not anticipate paying cash dividends on our shares of common stock; therefore, the expected dividend yield is assumed to be zero.

Fair value of the stock-based compensation for all of the performance share units as well as performance cash awards outstanding was measured using a Monte Carlo simulation model.

Recent Accounting Pronouncements



For additional information on recent accounting pronouncements, see Note 2 -
Significant Accounting Policies included in Item 8 of Part II of this Annual
Report.

Emerging Growth Company Status



We are an "emerging growth company" as defined in the JOBS Act. Under Section
107 of the JOBS Act, as an emerging growth company, we are taking advantage of
an extended transition period for the adoption of new or revised financial
accounting standards, including the reduced reporting requirements and
exemptions, and the longer phase-in periods for the adoption of new or revised
financial accounting standards, until we are no longer an emerging growth
company. Our election to use the longer phase-in periods permitted by this
election may make it difficult to compare our financial statements to those of
non-emerging growth companies and other emerging growth companies that have
opted out of the longer phase-in periods under Section 107 of the JOBS Act and
who will comply with new or revised financial accounting standards. If we were
to subsequently elect instead to comply with these public company effective
dates, such election would be irrevocable pursuant to Section 107 of the JOBS
Act.

Smaller Reporting Company Status

We are a "smaller reporting company" as defined by the SEC. As such, we are eligible to comply with the scaled disclosure requirements in several Regulation S-K and Regulation S-X items. Our disclosures in this Annual Report reflect these scaled requirements.


                                       47
--------------------------------------------------------------------------------

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As a "smaller reporting company," as defined under the Exchange Act, we are not required to provide the information required by this Item.

Item 8. Financial Statements and Supplementary Data



                   Index to Consolidated Financial Statements

  Report of Independent Registered Public Accounting Firm (PCAOB ID
  238  )                                                                                 F-  1
  Consolidated Balance Sheets as of December 31, 2022 and 2021                           F-  2

Consolidated Statements of Income and Comprehensive Income (Loss) for the Years Ended December 31, 2022 and 2021

                                                   F-  3

Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended December 31, 2022 and 2021

                                                         F-  4

Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021


             F-  5
  Notes to Consolidated Financial Statements                                             F-  7


                                       48

--------------------------------------------------------------------------------

            Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Nine Energy Service, Inc.

Opinion on the Financial Statements



We have audited the accompanying consolidated balance sheets of Nine Energy
Service, Inc. and its subsidiaries (the "Company") as of December 31, 2022 and
2021, and the related consolidated statements of income and comprehensive income
(loss), consolidated statements of stockholders' equity (deficit), and
consolidated statements of cash flows for the years then ended, including the
related notes (collectively referred to as the "consolidated financial
statements"). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of
December 31, 2022 and 2021, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

Basis for Opinion



These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the Company's
consolidated financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance
with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of our audits we
are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness
of the Company's internal control over financial reporting. Accordingly, we
express no such opinion.

Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audits provide a reasonable basis for
our opinion.

/s/ PricewaterhouseCoopers LLP
Houston, TX
March 7, 2023

We have served as the Company's auditor since 2011.


                                      F-1
--------------------------------------------------------------------------------

                           NINE ENERGY SERVICE, INC.
                          CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)

                                                                                  December 31,
                                                                             2022               2021
Assets
Current assets
Cash and cash equivalents                                                $  17,445          $  21,509
Accounts receivable, net                                                   105,277             64,025
Income taxes receivable                                                        741              1,393
Inventories, net                                                            62,045             42,180
Prepaid expenses and other current assets                                   11,217             10,195
Total current assets                                                       196,725            139,302
Property and equipment, net                                                 89,717             86,958
Operating lease right of use assets, net                                    36,336             35,117
Finance lease right of use assets, net                                         547              1,445
Intangible assets, net                                                     101,945            116,408
Other long-term assets                                                       1,564              2,383
Total assets                                                             $ 426,834          $ 381,613
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable                                                         $  42,211          $  28,680
Accrued expenses                                                            28,391             18,519
Current portion of long-term debt                                            2,267              2,093
Current portion of operating lease obligations                               7,956              6,091
Current portion of finance lease obligations                                   178              1,070
Total current liabilities                                                   81,003             56,453
Long-term liabilities
Long-term debt                                                             338,031            332,314
Long-term operating lease obligations                                       29,370             30,435
Long-term finance lease obligations                                              -                 65
Other long-term liabilities                                                  1,937              1,613
Total liabilities                                                          450,341            420,880
Commitments and contingencies (Note 12)
Stockholders' equity (deficit)
Common stock (120,000,000 shares authorized at $0.01 par value;
33,221,266 and 32,826,325 shares issued and outstanding at December 31,
2022 and 2021 respectively)                                                    332                328
Additional paid-in capital                                                 775,006            773,350
Accumulated other comprehensive loss                                        (4,828)            (4,535)
Accumulated deficit                                                       (794,017)          (808,410)
Total stockholders' equity (deficit)                                       (23,507)           (39,267)
Total liabilities and stockholders' equity (deficit)                     $ 

426,834 $ 381,613

The accompanying notes are an integral part of these consolidated financial


                                  statements.
                                      F-2
--------------------------------------------------------------------------------

                           NINE ENERGY SERVICE, INC.
       CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
               (In thousands, except share and per share amounts)

                                                                                  Year Ended December 31,
                                                                                  2022                   2021
Revenues
Service                                                                   $     455,364              $  248,618
Product                                                                         138,018                 100,801
                                                                                593,382                 349,419
Cost and expenses
Cost of revenues (exclusive of depreciation and amortization shown
separately below)
Service                                                                         350,733                 228,290
Product                                                                         106,360                  79,702
General and administrative expenses                                              51,653                  45,301
Depreciation                                                                     26,784                  28,905
Amortization of intangibles                                                      13,463                  16,116
Loss on revaluation of contingent liability                                         454                     460
Loss on sale of property and equipment                                              367                     660
Income (loss) from operations                                                    43,568                 (50,015)
Interest expense                                                                 32,486                  32,527
Interest income                                                                    (305)                    (26)
Gain on extinguishment of debt                                                   (2,843)                (17,618)
Other income                                                                       (709)                   (298)
Income (loss) before income taxes                                                14,939                 (64,600)
Provision (benefit) for income taxes                                                546                     (25)
Net income (loss)                                                         $      14,393              $  (64,575)
Earnings (loss) per share
Basic                                                                     $        0.47              $    (2.13)
Diluted                                                                   $        0.45              $    (2.13)
Weighted average shares outstanding
Basic                                                                               30,930,890          30,302,925
Diluted                                                                             32,251,398          30,302,925
Other comprehensive loss, net of tax
Foreign currency translation adjustments, net of $0 tax in each period    $        (293)             $      (34)
Total other comprehensive loss, net of tax                                         (293)                    (34)
Total comprehensive income (loss)                                         $      14,100              $  (64,609)

The accompanying notes are an integral part of these consolidated financial


                                  statements.

                                      F-3
--------------------------------------------------------------------------------


                           NINE ENERGY SERVICE, INC.
           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                      (In thousands, except share amounts)

                                                                                                            Accumulated              Retained                 Total
                                                                                      Additional               Other                 Earnings             Stockholders'
                                                     Common Stock                       Paid-in            Comprehensive           (Accumulated               Equity
                                               Shares                Amounts            Capital            Income (Loss)             Deficit)               (Deficit)
Stockholders' equity (deficit) as of
December 31, 2020                              31,557,809          $    316          $  768,429          $       (4,501)         $    (743,835)         $        20,409
Issuance of common stock under stock
compensation plan, net of forfeitures           1,457,626                14                 (14)                      -                      -                        -
Stock-based compensation expense                        -                 -               5,406                       -                      -          

5,406


Vesting of restricted stock and stock
units                                            (189,110)               (2)               (471)                      -                      -                     (473)
Other comprehensive loss                                -                 -                   -                     (34)                     -                      (34)
Net loss                                                -                 -                   -                       -                (64,575)                 (64,575)
Stockholders' equity (deficit) as of
December 31, 2021                              32,826,325          $    328          $  773,350          $       (4,535)         $    (808,410)         $       (39,267)
Issuance of common stock under stock
compensation plan, net of forfeitures             623,328                 7                  (7)                      -                      -                        -
Stock-based compensation expense                        -                 -               2,440                       -                      -          

2,440


Vesting of restricted stock and stock
units                                            (228,387)               (3)               (777)                      -                      -                     (780)
Other comprehensive loss                                -                 -                   -                    (293)                     -                     (293)
Net income                                              -                 -                   -                       -                 14,393                   14,393
Stockholders' equity (deficit) as of
December 31, 2022                              33,221,266          $    332          $  775,006          $       (4,828)         $    (794,017)         $       (23,507)


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


                                      F-4

--------------------------------------------------------------------------------


                           NINE ENERGY SERVICE, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

                                                                                      Year Ended December 31,
                                                                                      2022                   2021
Cash flows from operating activities
Net income (loss)                                                             $     14,393               $ (64,575)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities
Depreciation                                                                        26,784                  28,905
Amortization of intangibles                                                         13,463                  16,116
Amortization of operating leases                                                     8,670                   8,020
Amortization of deferred financing costs                                             2,545                   2,602
Recovery for doubtful accounts                                                        (166)                   (229)
Provision for inventory obsolescence                                                 2,966                   4,831
Stock-based compensation expense                                                     2,440                   5,406
Gain on extinguishment of debt                                                      (2,843)                (17,618)
Loss on sale of property and equipment                                                 367                     660
Loss on revaluation of contingent liability                                            454                     460
Abandonment of in-process research and development                                   1,000                       -
Changes in operating assets and liabilities
Accounts receivable, net                                                           (41,114)                (22,540)
Inventories, net                                                                   (22,968)                 (8,608)
Prepaid expenses and other current assets                                             (818)                  3,350
Accounts payable and accrued expenses                                               19,476                  12,447
Income taxes receivable/payable                                                        655                       -
Other assets and liabilities                                                        (8,632)                 (9,643)
Net cash provided by (used in) operating activities                                 16,672                 (40,416)
Cash flows from investing activities
Proceeds from sales of property and equipment                                        2,959                   3,492
Proceeds from property and equipment casualty losses                                   175                       -
Purchases of property and equipment                                                (28,551)                (15,413)
Net cash used in investing activities                                              (25,417)                (11,921)
Cash flows from financing activities
Proceeds from ABL Credit Facility                                                   24,000                  15,000
Payments on ABL Credit Facility                                                     (7,000)                      -
Purchases of 2023 Notes                                                            (10,081)                 (8,355)
Payments on Magnum Promissory Notes                                                 (1,125)                   (844)
Proceeds from short-term debt                                                        4,086                   1,513
Payments of short-term debt                                                         (2,787)                   (545)
Payments on finance leases                                                          (1,269)                 (1,094)
Payments of contingent liability                                                      (195)                   (154)
Vesting of restricted stock and stock units                                           (780)                   (473)
Net cash provided by financing activities                                            4,849                   5,048
Impact of foreign currency exchange on cash                                           (168)                    (66)
Net decrease in cash and cash equivalents                                           (4,064)                (47,355)
Cash and cash equivalents
Cash and cash equivalents at beginning of period                                    21,509                  68,864


                                      F-5
--------------------------------------------------------------------------------

Year Ended December 31,


                                                                              2022                 2021
Cash and cash equivalents at end of period                              $   

17,445 $ 21,509

Supplemental disclosures of cash flow information: Cash paid for interest

$      29,708          $  30,085
Cash refunded for income taxes                                          $         116          $      24
Supplemental schedule of non-cash activities:
Capital expenditures in accounts payable and accrued expenses           $       3,443          $      63
Receivable from property and equipment sale (including insurance)       $   

701 $ 497




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


                                      F-6

--------------------------------------------------------------------------------

                           NINE ENERGY SERVICE, INC.
                       NOTES TO THE FINANCIAL STATEMENTS

1. Company and Organization

Company Description

Nine Energy Service, Inc. (the "Company" or "Nine"), a Delaware corporation, is
an oilfield services business that provides services integral to the completion
of unconventional wells through a full range of tools and methodologies. The
Company is headquartered in Houston, Texas.

The Company's chief operating decision maker, which is its Chief Executive
Officer, and its board of directors allocate resources and assess performance
based on financial information presented at a consolidated level. Accordingly,
the Company determined that it operates as one reportable segment, known as
Completion Solutions.

Risks and Uncertainties



The Company's business depends, to a significant extent, on the level of
unconventional resource development activity and corresponding capital spending
of oil and natural gas companies. These activity and spending levels are
strongly influenced by the current and expected oil and natural gas prices.
Following an extreme decline in activity levels and pricing in 2020, the Company
has been focused on strategically implementing price increases and gaining
market share. In 2022, oil and natural gas prices improved, and activity levels
increased compared to 2021, resulting in higher demand for the Company's
products and services. Due to a heightened competition for qualified labor, an
under-supply of equipment, and other supply chain-related constraints, the
Company implemented price increases in most service lines. Finding and retaining
qualified labor continues to be a challenge resulting in wage inflation,
offsetting some of the price increases. Going forward, the Company's earnings
will be affected by its customers' activity plans (which are strongly influenced
by commodity prices), the Company's ability to implement further price
increases, the impact of wage and labor inflation, and labor shortage and supply
chain constraints. Additionally, activity levels could be affected as oilfield
service providers continue to raise prices and customers are impacted by cost
inflation to drill, complete, and produce oil and natural gas wells.

2. Significant Accounting Policies

Basis of Presentation



The accompanying consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States of America
("GAAP").

Principles of Consolidation

The consolidated financial statements as of December 31, 2022 and 2021, and for
the years ended December 31, 2022 and 2021, include the accounts of Nine and its
wholly owned subsidiaries. All inter-company balances and transactions have been
eliminated in the consolidation.

Use of Estimates



The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. These estimates are based on management's best knowledge
of current events and actions that the Company may undertake in the future. Such
estimates include fair value assumptions used in analyzing long-lived assets for
possible impairment, useful lives used in depreciation and amortization expense,
recognition of provisions for contingencies, and stock-based compensation fair
value. It is at least reasonably possible that the estimates used will change
within the next year.

Revenue Recognition

The Company recognizes revenue under Accounting Standards Codification Topic 606
("ASC 606") when products are received by a customer's domestic common carrier
at the Company's facility or when the product is received by the customer's
international carrier. The Company believes this recognition policy reflects the
point at which the customer obtains control of the product as required by ASC
606.
                                      F-7
--------------------------------------------------------------------------------

Performance Obligations



A performance obligation is a promise in a contract to transfer a distinct good
or service to the customer and is the unit of account in ASC 606. A contract's
transaction price is allocated to each distinct performance obligation and
recognized as revenue when, or as, the performance obligation is satisfied. The
Company excludes sales taxes, value added taxes, and other taxes it collects
concurrent with revenue-producing activities from revenue.

The Company's revenue is derived from the sale of products and services which
are sold directly to customers or are consumed by customers on their well sites.
For domestic product sales, the Company typically recognizes revenue when it
meets its performance obligation upon the shipment of the products from its
facilities to its customer. For international product sales, the Company
typically recognizes revenue when it meets its performance obligation upon
receipt of the products by the customer's international carrier. The Company
recognizes service revenue over the time the service is performed as the
customer consumes and benefits from the use of the Company's products and
services for well service. Service revenues represent revenue recognized over
time, as the Company's customer arrangements typically provide agreed upon
hourly or daily fixed-rates, and the Company recognizes service revenue based
upon the number of hours or days services have been performed.

Contracts for the Company's products and services are negotiated on a per-job
basis at a regional level. Contracts vary in nature but typically have a
duration of less than a month and have a single performance obligation either
for a job, a series of distinct jobs, or a period the Company stands ready to
provide its services to its client as needed.

The Company's payment terms vary by the type and location of its customers and
type of product and service offered. The Company receives cash equal to the
invoice amount for most services and product sales, and payment terms typically
range from 30 to 60 days from the date the Company invoices a customer. Since
the period between the delivery of the Company's products and services and the
Company's receipt of customer payment for these products and services is not
expected to exceed one year, the Company has elected not to calculate or
disclose a financing component for its customer contracts.

Contract Estimates



The Company receives reimbursements from its customers for the purchase of
supplies, equipment, personnel services, and other services provided at a
customer's request. Reimbursable revenues are subject to uncertainty as the
timing of the receipt of these amounts is dependent on factors outside of the
Company's influence. Accordingly, these revenues are not recognized until the
uncertainty is resolved, which typically occurs when the related costs are
incurred on behalf of the customer. The Company is considered a principal in
these transactions and records the associated revenues at the gross amount
billed to the customer.

Changes and modifications to contracts are routine in the performance of the
Company's contracts due to the dynamic nature of well operations and the
services the Company provides for its customers. The Company considers contract
modifications to exist when the modification either creates a new contract or
changes the existing enforceable rights and obligations of a contract. Most of
the Company's contract modifications are for services or goods that are not
distinct from existing contracts due to the significant integration provided or
significant interdependencies in the context of the contract and are accounted
for as if they were part of the original contract.

Contract Balances



Any contract assets are included in "Accounts receivable, net" in the Company's
Consolidated Balance Sheets. Contract assets arise when recorded revenues for a
contract exceed the amounts billed under the terms of the contracts. The Company
classifies contract liabilities as unearned income which is included in "Accrued
expenses" in the Company's Consolidated Balance Sheets. Such deferred revenue
typically results from advance payments received on well service orders prior to
performance of the service.

For information regarding the Company's revenue, see Note 3 - Revenues.

Leases



The Company determines if an arrangement is a lease at inception. To the extent
an arrangement represents a lease, the Company classifies that lease as an
operating lease or a finance lease under Accounting Standards Update ("ASU")
2016-02, Leases (Topic 842) and its related ASUs ("ASC 842").

The Company capitalizes operating leases on its Consolidated Balance Sheets
through a Right of Use ("ROU") asset and a corresponding lease liability. ROU
assets represent the Company's right to use an underlying asset for the lease
term, and
                                      F-8
--------------------------------------------------------------------------------

lease liabilities represent the Company's obligation to make lease payments
arising from the operating lease. Operating lease ROU assets and obligations are
recognized at the commencement date of an arrangement based on the present value
of lease payments over the lease term utilizing an interest rate that the
Company would have incurred to borrow over a similar term the funds necessary to
purchase the leased asset.

Operating leases are included in "Operating lease right of use assets, net,"
"Current portion of operating lease obligations," and "Long-term operating lease
obligations" in the Company's Consolidated Balance Sheets as of December 31,
2022 and 2021. Lease expense for operating leases is recognized on a
straight-line basis over the lease term for 2022 and 2021.

Finance leases are included in the line items "Finance lease right of use
assets, net," "Current portion of finance lease obligations," and "Long-term
finance lease obligations" in the Company's Consolidated Balance Sheets as of
December 31, 2022 and 2021.

For additional information regarding the Company's leases, see Note 6 - Leases.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with a maturity of three months or less when purchased to be cash equivalents. Throughout the year, the Company maintained cash balances that were in excess of their federally insured limits. The Company has not experienced any losses in such accounts.



Cash flows from the Company's Canadian subsidiary are calculated based on its
functional currency. As a result, amounts related to changes in assets and
liabilities reported in the Company's Consolidated Statements of Cash Flows will
not necessarily agree to changes in the corresponding balances in the Company's
Consolidated Balance Sheets.

Foreign Currency

The Company's functional currency is the United States Dollar ("USD"). The
financial position and results of operations of the Company's Canadian
subsidiary are measured using the local currency as the functional currency.
Revenues and expenses of the subsidiary have been translated into USD at average
exchange rates prevailing during the period. Assets and liabilities have been
translated at the rates of exchange on the date of the Company's Consolidated
Balance Sheets. The resulting translation gain and loss adjustments have been
recorded as a separate component of other comprehensive income (loss) in the
Company's Consolidated Statements of Income and Comprehensive Income (Loss) and
its Consolidated Statements of Stockholders' Equity (Deficit).

Accounts Receivable



The Company extends credit to customers in the normal course of business.
Accounts receivable are carried at their estimated collectible amount. Trade
credit is generally extended on a short-term basis; thus, receivables do not
bear interest, although a finance charge may be applied to amounts past due. The
Company maintains an allowance for doubtful accounts for estimated losses that
may result from the inability of its customers to make required payments. Such
allowances are based upon several factors including, but not limited to, credit
approval practices, industry and customer historical experience, as well as the
current and projected financial condition of the specific customer. Accounts
receivable outstanding longer than contractual terms are considered past due.
The Company writes off accounts receivable to the allowance for doubtful
accounts when they become uncollectible. Any payments subsequently received on
receivables previously written off are credited to bad debt expense.

The Company had $105.3 million and $64.0 million of "Accounts receivable, net"
at December 31, 2022 and 2021, respectively. The Company maintains an allowance
for doubtful accounts based on the expected collectability of accounts
receivable, which is included in "Accounts receivable, net" on the Company's
Consolidated Balance Sheets. The Company had an allowance for doubtful accounts
of $0.2 million and $2.8 million at December 31, 2022 and 2021, respectively.
Bad debt expense recovery was $0.2 million for both the years ended December 31,
2022 and 2021.

Concentration of Credit Risk



The Company derives a significant portion of its revenues from companies in the
exploration and production ("E&P") industry, and its customer base includes a
broad range of integrated and independent domestic E&P companies and
international E&P companies operating in the markets that the Company serves.
While current energy prices are important contributors to positive cash flow for
the customers, expectations about future prices and price volatility are
generally more important for determining future spending levels. Any prolonged
increase or decrease in oil and natural gas prices affects the levels of
exploration, development, and production activity as well as the entire health
of the oil and natural gas industry and
                                      F-9
--------------------------------------------------------------------------------

can therefore negatively impact spending by the Company's customers. No customer
accounted for more than 10% of the revenues for the years ended December 31,
2022 and 2021.

Concentration of Supplier Risk

Purchases during the years ended December 31, 2022 and 2021 did not include purchases from any supplier that individually represented more than 10% of total operating purchases.



Property and Equipment

Property and equipment is stated at cost and depreciated under the straight-line
method over the estimated useful lives of the assets. Equipment held under
capital leases is stated at the present value of its future minimum lease
payments and is depreciated under the straight-line method over the shorter of
the lease term or the estimated useful life of the asset. When assets are
retired or otherwise disposed of, the cost and related accumulated depreciation
are removed from the accounts, and any resulting gain or loss is recognized
within operating expenses. Normal repair and maintenance costs are charged to
operating expense as incurred. Significant renewals and betterments are
capitalized.

Valuation of Long-Lived Assets



Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. In performing the review for impairment, future cash flows expected
to result from the use of the asset and its eventual disposal are estimated. If
the undiscounted future cash flows are less than the carrying amount of the
assets, there is an indication that the asset may be impaired. The amount of the
impairment is measured as the difference between the carrying value and the
Level 3 fair value of the asset. The Level 3 fair value is determined either
through the use of an external valuation, or by means of an analysis of
discounted future cash flows based on expected utilization. Determining fair
value requires the use of estimates and assumptions. Such estimates and
assumptions include revenue growth rates, operating profit margins, weighted
average costs of capital, terminal growth rates, future market share, the impact
of new product development, and future market conditions, among others. The
Company believes that the estimates and assumptions used in impairment
assessments are reasonable and appropriate. Impairment losses are reflected in
"Income (loss) from operations" in the Company's Consolidated Statements of
Income and Comprehensive Income (Loss).

Valuation of Intangible Assets



Intangible assets with definite lives include technology, customer
relationships, and non-compete agreements. The Level 3 fair value of technology
and the Level 3 fair value of customer relationships are estimated using the
income approach, specifically the multi-period excess earnings method. The
multi-period excess earnings method consists of isolating the cash flows
attributed to the intangible asset, which are then discounted to present value
to calculate the Level 3 fair value of the intangible asset. The Level 3 fair
value of non-compete agreements is estimated using a with and without scenario
where cash flows are projected through the term of the non-compete agreement
assuming the non-compete agreement is in place and compared to cash flows
assuming the non-compete agreement is not in place.

Intangible assets with definite lives are amortized based on the estimated consumption of the economic benefit over their estimated useful lives. Intangible assets with definite lives are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.



Intangible assets with indefinite useful lives are not subject to amortization.
For intangible assets with indefinite useful lives, an assessment for impairment
is performed annually on December 31 or when there is an indication an
impairment may have occurred. Intangible assets with indefinite useful lives are
reviewed for impairment by comparing the carrying value of the intangible asset
to the Level 3 fair value of the intangible asset. The Level 3 fair value of
intangible assets with indefinite useful lives is estimated using the
relief-from-royalty method of the income approach. This approach is based on the
assumption that in lieu of ownership, a company would be willing to pay a
royalty in order to exploit the related benefits of this intangible asset.
Determining fair value requires the use of estimates and assumptions. Such
estimates and assumptions include revenue growth rates, operating profit
margins, royalty rates, weighted average costs of capital, terminal growth
rates, future market share, the impact of new product development, and future
market conditions, among others. The Company believe that the estimates and
assumptions used in impairment assessments are reasonable and appropriate. The
Company recognizes an indefinite-lived intangible asset impairment charge of the
amount by which the carrying value of the intangible asset exceeds the Level 3
fair value of the intangible asset. Impairment losses are reflected in "Income
(loss) from operations" in the Company's Consolidated Statements of Income and
Comprehensive Income (Loss).
                                      F-10
--------------------------------------------------------------------------------

Stock-based Compensation



The Company has stock-based compensation plans for certain of its employees. The
Company measures employee stock-based compensation awards at fair value on the
date they are granted to employees and recognizes compensation cost in its
financial statements over the requisite service period. As a result of the
adoption of ASU No. 2016-09, the Company elected to account for stock-based
compensation forfeitures as they occur.

Restricted Stock and Restricted Stock Units



Compensation expense is recorded for restricted stock and restricted stock units
over the applicable vesting period based on the Company's closing stock price as
of the grant date.

Performance Stock Units and Performance Cash Awards



Performance stock units and performance cash awards are recorded at their fair
value and expensed over their performance period. Fair value for performance
stock units and performance cash awards is measured using a Monte Carlo
simulation model.

Options



Options are issued with an exercise price equal to the fair value of the stock
on the date of grant. Compensation expense is recorded for the fair value of the
stock options and is recognized over the period of the underlying security's
vesting schedule. Consideration paid on the exercise of stock options is
credited to share capital and additional paid-in capital. For options, fair
value of the stock-based compensation is measured by use of the Black-Scholes
pricing model. The following discusses the assumptions used related to the
Black-Scholes pricing model.

•The expected term of stock options represents the period the stock options are
expected to remain outstanding and is based on the simplified method, which is
the weighted average vesting term plus the original contractual term, divided by
two.

•Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. The Company developed its expected volatility based upon a weighted average volatility of its peer group.



•At the time of the issuance of the options, the Company did not plan to pay
cash dividends in the foreseeable future. Therefore, a zero expected dividend
yield was used in the valuation model.

•The risk-free interest rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.

Income Taxes



The Company accounts for income taxes under Accounting Standards Codification
740, Income Taxes ("ASC 740"). Under this method, deferred income tax assets and
liabilities are determined based upon temporary differences between the carrying
amounts and tax bases of the Company's assets and liabilities at the balance
sheet date and are measured using enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The effect on deferred tax
assets and liabilities of a change in the tax rates is recognized in income in
the period in which the change occurs. The Company records a valuation reserve
in each reporting period when management believes that it is more likely than
not that any deferred tax asset created will not be realized.

The Company recognizes the financial statement benefit of a tax position only
after determining that the relevant tax authority would more likely than not
sustain the position following an audit. If a tax position meets the "more
likely than not" recognition criteria, the tax position is measured at the
largest amount of benefit greater than 50% likely of being realized upon
ultimate settlement.
                                      F-11
--------------------------------------------------------------------------------

Fair Value of Financial Instruments



The carrying amounts for financial instruments classified as current assets and
current liabilities approximate fair value, due to the short maturity of such
instruments.

For financial assets and liabilities disclosed at fair value, fair value is
determined as the exit price, or the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The established fair value hierarchy
divides fair value measurement into three levels:

•Level 1 - inputs are quoted prices (unadjusted) in active markets for identical
assets or liabilities that the reporting entity has the ability to access at the
measurement date;

•Level 2 - inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly or indirectly; and

•Level 3 - inputs are unobservable for the asset or liability, which reflect the best judgment of management.

Financial assets and liabilities that are disclosed at fair value are categorized in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment.



The fair value of the Company's debt obligations is classified as Level 2 in the
fair value hierarchy and is established based on observable inputs in less
active markets. For additional information on the fair value of the Company's
debt obligations, see Note 9 - Debt Obligations.

The fair value of the Company's contingent consideration is classified as Level
3 in the fair value hierarchy and is established on unobservable markets which
reflect the best judgment of management. For additional information on the fair
value of the Company's contingent consideration, see Note 12 - Commitments and
Contingencies.

Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated by dividing net income (loss) by
the weighted average number of common shares outstanding during the period.
Diluted earnings (loss) per share is calculated by dividing net income (loss) by
the weighted average number of common shares outstanding during the period,
taking into effect, if any, the exercise of potentially dilutive stock options
assumed to be purchased from the proceeds using the average market price of the
Company's stock for each of the periods presented as well as potentially
dilutive restricted stock, restricted stock units, and performance stock units.
There was no dilutive effect for the year ended December 31, 2021 as the Company
was in a net loss position. For additional information on earnings (loss) per
share, see Note 14 - Earnings (Loss) Per Share.

Accounting Pronouncements Recently Adopted



In December 2019, the Financial Accounting Standards Board (the "FASB") issued
ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes, which is
intended to simplify various aspects related to accounting for income taxes. ASU
2019-12 removes certain exceptions to the general principles and clarifies and
amends existing guidance to improve consistent application. ASU 2019-12 is
effective for public businesses for fiscal years beginning after December 15,
2020 and interim periods within those fiscal years. As an emerging growth
company, the Company is permitted, and adopted, the new standard for fiscal
years beginning after December 15, 2021 and interim periods within fiscal years
beginning after December 15, 2022. The adoption of this standard did not have a
material impact on the Company's consolidated financial statements included in
this Annual Report.

Accounting Pronouncements Not Yet Adopted



In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13
requires a financial asset (or a group of financial assets) measured at
amortized cost basis to be presented at the net amount expected to be collected.
The amendments in ASU 2016-13 replace the current incurred loss impairment
methodology in current GAAP with a methodology that reflects expected credit
losses and requires consideration of a broader range of reasonable and
supportable information. ASU 2016-13 is effective for Securities and Exchange
Commission filers, excluding smaller reporting companies, for fiscal years
beginning after December 15, 2019, including interim periods within those fiscal
years. As an emerging growth company, the Company is permitted, and plans, to
adopt the new standard for the fiscal years beginning after December 15, 2022,
including interim periods within those fiscal years. The Company does not expect
the standard to have a material impact on its financial position, results of
operations, or
                                      F-12
--------------------------------------------------------------------------------


liquidity.

3. Revenues

Disaggregation of Revenues

Disaggregated revenue for the years ended December 31, 2022 and 2021 was as
follows:

                       Year Ended December 31,
                         2022               2021
                           (in thousands)
Cement           $     229,409           $ 114,181
Tools                  138,018             100,801
Wireline               107,352              72,436
Coiled tubing          118,603              62,001
Total revenues   $     593,382           $ 349,419

The Company recognizes revenues from the sales of products at a point in time and revenues from the sales of services over time.

Performance Obligations

At December 31, 2022 and December 31, 2021, the amount of remaining performance obligations was not material.



Contract Balances

At December 31, 2022 and December 31, 2021, contract assets and contract liabilities were not material.

4. Inventories



Inventories, consisting primarily of finished goods and raw materials, are
stated at the lower of cost or net realizable value. Cost is determined on an
average cost basis. The Company reviews its inventory balances and writes down
its inventory for estimated obsolescence or excess inventory equal to the
difference between the cost of inventory and the estimated market value based
upon assumptions about future demand and market conditions. The reserve for
obsolescence was $6.7 million and $9.0 million at December 31, 2022 and
2021, respectively.

Inventories, net as of December 31, 2022 and 2021 were comprised of the
following:

                                  December 31,
                               2022          2021
                                 (in thousands)
Raw materials               $ 39,249      $ 31,153
Work in progress                 161           675
Finished goods                29,345        19,323
Inventories                   68,755        51,151
Reserve for obsolescence      (6,710)       (8,971)
Inventories, net            $ 62,045      $ 42,180


                                      F-13

--------------------------------------------------------------------------------

5. Property and Equipment



Property and equipment amounts as of December 31, 2022 and 2021 were as follows:

                                                               December 31,
                                        Estimated
                                      Useful Lives         2022           2021
                                                              (in thousands)
Operating equipment                   1 to 12 years     $ 321,315      $ 299,602
Autos and trucks                      1 to 7 years          4,140          4,168
Furniture, fixtures, and equipment    2 to 12 years         3,843          4,059
Shop equipment                        3 to 15 years        14,552         14,555
Buildings                             7 to 39 years         4,599          8,994
Leasehold improvements                3 to 11 years         2,017          1,443
Land                                   indefinite           1,348            828
                                                          351,814        333,649
Less: Accumulated depreciation                           (262,097)      (246,691)
Property and equipment, net                             $  89,717      $  86,958

Depreciation expense was $26.8 million and $28.9 million for the years ended December 31, 2022 and 2021, respectively.

6. Leases



Under ASC 842, the Company determines if an arrangement is a lease at inception.
Leases with an initial term of 12 months or less are not recorded in the
Company's Consolidated Balance Sheets. Lease with an initial term greater than
12 months are recognized in the Company's Consolidated Balance Sheets based on
lease classification as either operating or financing. Some of the Company's
lease agreements include lease and non-lease components for which the Company
has elected to not separate for all classes of underlying assets. The Company's
lease agreements do not contain any material residual value guarantees or
material restrictive covenants. The Company may sublease its real estate to
third parties, subject to certain provision of the lease, when it has no future
use for the property.

Operating Leases

As a lessee, the Company's operating lease portfolio primarily consists of
operating leases for equipment, vehicles, office space, yard facilities, and
employee housing. Operating lease ROU assets and operating lease obligations are
recognized based on the present value of the future minimum lease payments at
commencement date. As most of the Company's leases do not provide an implicit
borrowing rate, the Company uses its incremental borrowing rate based on the
lease information available at the commencement date in determining the present
value of future payments. The incremental borrowing rate utilized is based upon
the interest rate associated with the Company's ABL Credit Facility (as defined
and described in Note 9 - Debt Obligations) which is utilized to fund its
working capital needs and planned capital expenditures. The Company's leases
have remaining terms of one to ten years and may include options to extend or
terminate the lease. The operating lease ROU assets also include any upfront
lease payments made and exclude lease incentives and initial direct costs
incurred.

The Company leases most of these properties under long-term (greater than one
year) non-cancelable term leases many of which contain renewal options that can
extend the lease term from one to five years and some of which contain
escalation clauses. The Company may also enter into short-term or month-to-month
operating leases. Options to renew these leases are generally not considered
reasonably certain to be exercised due to the nature of the Company's operations
and the markets it serves. Therefore, the periods covered by such optional
periods are not included in the determination of the term of the lease.

The Company also leases supplemental equipment, typically under cancellable
short-term contracts which are less than 30 days. This equipment is typically
required for a specific project and for a short duration. Due to the nature of
the Company's operations, any option to renew these short-term leases is
generally not considered reasonably certain to be exercised. Therefore, the
periods covered by such optional periods are not included in the determination
of the term of the lease, and the lease payments during these periods are
similarly excluded from the calculation of operating lease asset and lease
obligation balances.
                                      F-14
--------------------------------------------------------------------------------

Operating lease expense consists of rent expense related to leases that were
included in ROU assets under ASC 842. The Company recognizes operating lease
expense on a straight-line basis, except for certain variable expenses that are
recognized when the variability is resolved, typically during the period in
which they are paid. Variable operating lease payments typically include charges
for property taxes and insurance, and some leases contain variable payments
related to non-lease components, including common area maintenance and usage of
facilities or office equipment (for example, copiers). The Company does not have
variable expenses.

Additional Information

The following table summarizes the components of the Company's lease expense
recognized for the years ended December 31, 2022 and 2021, excluding variable
lease and prepaid rent costs:

                                                Year Ended December 31,
                                                   2022                2021
                                                     (in thousands)
Operating lease expense
Operating lease right of use assets       $       8,670             $  

8,020


Operating lease non right of use assets           7,697                6,201
Total operating lease expense             $      16,367             $ 14,221

Finance lease expense
Depreciation of right of use assets       $         385             $    399
Interest on lease obligations                       199                  162
Total finance lease expense               $         584             $    561


Operating lease expense is included in the line items "Cost of revenues" and
"General and administrative expenses" in the Company's Consolidated Statements
of Income and Comprehensive Income (Loss) for the years ended December 31, 2022
and 2021.

Supplemental information related to leases was as follows as of December 31,
2022 and 2021:

                                                December 31,
                                            2022             2021
Operating leases
Weighted average remaining lease term       5.3              6.4
Weighted average discount rate              5.0%             5.0%

Finance leases
Weighted average remaining lease term       0.4              1.0
Weighted average discount rate             21.7%             9.8%



                                      F-15
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Supplemental balance sheet information related to leases was as follows as of
December 31, 2022 and 2021:

                                                       December 31,
                                                    2022          2021
                                                      (in thousands)

Operating lease right of use assets Operating lease right of use assets, gross $ 52,947 $ 45,853 Less: Accumulated amortization

                    (16,611)      (10,736)

Operating lease right of use assets, net $ 36,336 $ 35,117

Operating lease obligations Current portion of operating lease obligations $ 7,956 $ 6,091 Long-term operating lease obligations

              29,370        30,435
Total operating lease obligations                $ 37,326      $ 36,526

Finance lease right of use assets Finance lease right of use assets, gross $ 1,057 $ 2,980 Less: Accumulated depreciation

                       (510)       (1,535)
Finance lease right of use assets, net           $    547      $  1,445

Finance lease obligations Current portion of finance lease obligations $ 178 $ 1,070 Long-term finance lease obligations

                     -            65
Total finance lease obligations                  $    178      $  1,135


Future annual minimum lease payments as of December 31, 2022 were as follows:

                                                Operating Lease
                                                  Right of Use
                                                  Obligations             Finance Leases             Total
                                                                        (in thousands)
2023                                           $         9,599          $           219          $     9,818
2024                                                     7,994                        -                7,994
2025                                                     7,047                        -                7,047
2026                                                     6,474                        -                6,474
2027                                                     5,130                        -                5,130
Thereafter                                               6,243                        -                6,243
Total lease payments                           $        42,487          $           219          $    42,706
Less: present value discount                            (5,161)                     (41)              (5,202)
Present value of lease obligations             $        37,326          $   

178 $ 37,504


                                      F-16
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Supplemental cash flow information related to leases for the years ended December 31, 2022 and 2021 were as follows:



                                                                Year Ended December 31,
                                                             2022                      2021
                                                                     (in thousands)

Cash paid for amounts included in the measurement of lease obligations: Operating cash flows from operating leases

            $          8,698          $         8,124
Operating cash flows from finance leases              $            385          $           399
Financing cash flows from finance leases              $          1,269      

$ 1,094



Right of use assets obtained in exchange for lease
obligations:
Operating leases                                      $          8,356          $         5,059
Finance leases                                        $            336          $            28


7. Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2022 and 2021 were as follows:

December 31, 2022


                                                 Gross Carrying           Accumulated           Net Carrying           Weighted Average
                                                     Amount              Amortization              Amount            Amortization Period
                                                          (in thousands,

except weighted average amortization period information) Customer relationships

$     63,270          $      (49,845)         $    13,425                   4.8
Non-compete agreements                                  6,500                  (6,166)                 334                   0.8
Technology                                            125,110                 (36,924)              88,186                   10.7
Total                                            $    194,880          $      (92,935)         $   101,945



                                                                               December 31, 2021
                                           Gross Carrying           Accumulated           Net Carrying           Weighted Average
                                               Amount              Amortization              Amount            Amortization Period
                                                    (in thousands, except weighted average amortization period information)
Customer relationships                     $     63,270          $      (45,187)         $    18,083                   5.3
Non-compete agreements                            6,500                  (5,766)                 734                   2.0
Technology                                      125,110                 (28,519)              96,591                   11.7
In-process research and development               1,000                       -                1,000                Indefinite
Total                                      $    195,880          $      (79,472)         $   116,408

The Company abandoned its "E-Set" tools business and related $1.0 million in-process research and development indefinite-lived intangible asset in the fourth quarter of 2022.



Amortization of Intangibles

Amortization of intangibles was $13.5 million and $16.1 million for the years ended December 31, 2022 and 2021, respectively.


                                      F-17
--------------------------------------------------------------------------------

Future estimated amortization of intangibles is as follows:



Year Ending December 31,    (in thousands)
2023                       $        11,516
2024                                11,183
2025                                11,183
2026                                11,082
2027                                10,315
Thereafter                          46,666
                           $       101,945


8. Accrued Expenses

Accrued expenses as of December 31, 2022 and 2021 consisted of the following:

                                           December 31,
                                        2022          2021
                                          (in thousands)
Accrued interest                        5,012         4,980

Accrued compensation and benefits 10,283 6,897 Accrued bonus

                           3,979         1,125
Accrued legal fees and settlements        145         1,076
Other accrued expenses                  8,972         4,441
Accrued expenses                     $ 28,391      $ 18,519


9. Debt Obligations

The Company's debt obligations as of December 31, 2022 and 2021 were as follows:

                                                    December 31,
                                                2022           2021
                                                   (in thousands)
2023 Notes (1)                               $ 307,339      $ 320,343
ABL Credit Facility (1)                         32,000         15,000
Magnum Promissory Notes (2)                          -          1,125
Other short-term debt (2)                        2,267            968

Total debt before deferred financing costs $ 341,606 $ 337,436 Deferred financing costs

                        (1,308)        (3,029)
Total debt                                   $ 340,298      $ 334,407

Less: Current portion of long-term debt (2,267) (2,093) Long-term debt

$ 338,031      $ 332,314


(1)  Subsequent to December 31, 2022, the Company redeemed all of the
outstanding 2023 Notes and extended the maturity date of the ABL Credit Facility
from October 25, 2023 to January 29, 2027. As such, these obligations are
classified as long-term on the Company's Consolidated Balance Sheet at December
31, 2022. Refer to further disclosure within this footnote for additional
information.

(2) The weighted average interest rate of short-term debt outstanding at December 31, 2022 and 2021, respectively, was 6.0% and 5.1%.

2023 Notes



On October 25, 2018, the Company issued $400.0 million principal amount of
8.750% Senior Notes due 2023 (the "2023 Notes"). The 2023 Notes were issued
under an indenture, dated as of October 25, 2018 (the "2023 Notes Indenture"),
by and among the Company, certain subsidiaries of the Company and Wells Fargo,
National Association, as Trustee. The 2023
                                      F-18
--------------------------------------------------------------------------------

Notes bore interest at an annual rate of 8.750% payable on May 1 and November 1
of each year, commencing May 1, 2019. The 2023 Notes were senior unsecured
obligations of the Company and were fully and unconditionally guaranteed on a
senior unsecured basis by each of the Company's current domestic subsidiaries
and by certain future subsidiaries.

The 2023 Notes Indenture contained covenants that limited the Company's ability
and the ability of its restricted subsidiaries to engage in certain activities.
The Company was in compliance with the provisions of the 2023 Notes Indenture at
December 31, 2022.

Pursuant to the 2023 Notes Indenture, upon an event of default, the trustee or
the holders of at least 25% in aggregate principal amount of then outstanding
2023 Notes may declare the 2023 Notes immediately due and payable, except that a
default resulting from certain events of bankruptcy or insolvency with respect
to the Company, any significant subsidiary or any group of subsidiaries that,
taken together, would constitute a significant subsidiary, would automatically
cause all outstanding 2023 Notes to become due and payable.

Unamortized deferred financing costs associated with the 2023 Notes were $1.3
million and $3.0 million at December 31, 2022 and 2021, respectively. These
costs were direct deductions from the carrying amount of the 2023 Notes and were
amortized through interest expense through the maturity date of the 2023 Notes
using the effective interest method.

Extinguishment of Debt



The Company repurchased approximately $13.0 million of 2023 Notes at a
repurchase price of approximately $10.1 million in cash for the year ended
December 31, 2022. Deferred financing costs associated with these transactions
were $0.1 million for the year ended December 31, 2022. As a result, for the
year ended December 31, 2022, the Company recorded a $2.8 million gain on the
extinguishment of debt, which was calculated as the difference between the
repurchase price and the carrying amount of the 2023 Notes partially offset by
the deferred financing costs.

The Company repurchased approximately $26.3 million of 2023 Notes at a
repurchase price of approximately $8.4 million in cash for the year ended
December 31, 2021. Deferred financing costs associated with these transactions
were $0.3 million for the year ended December 31, 2021. As a result, for the
year ended December 31, 2021, the Company recorded a $17.6 million gain on the
extinguishment of debt, which was calculated as the difference between the
repurchase price and the carrying amount of the 2023 Notes partially offset by
the deferred financing costs.

The gain on extinguishment of debt is included as a separate line item in the
Company's Consolidated Statements of Income and Comprehensive Income (Loss) for
the years ended December 31, 2022 and 2021.

Redemption



On February 1, 2023, with proceeds received from its public offering of Units
(as defined and described below) and borrowings under its ABL Credit Facility
(as defined and described below), the Company redeemed all of the outstanding
2023 Notes at a redemption price of 100.0% of outstanding principal amount
thereof ($307.3 million), plus accrued and unpaid interest ($6.7 million). The
Company also wrote off the unamortized deferred financing costs associated with
the 2023 Notes in conjunction with the redemption.

Units Offering and 2028 Notes

Units



On January 30, 2023, the Company completed its public offering of 300,000 units
with an aggregate stated amount of $300.0 million (the "Units"). Each Unit
consists of $1,000 principal amount of the Company's 13.000% Senior Secured
Notes due 2028 (collectively, the "2028 Notes") and five shares of common stock
of the Company. The Company received proceeds of $279.8 million from the Units
offering, after deducting underwriting discounts and commission, which was used
to fund a portion of the redemption price of the 2023 Notes.

Each Unit will be separated into its constituent securities (the 2028 Notes and
shares of the Company's common stock) automatically on October 27, 2023, or, if
earlier, on the date, if any, on which a change of control or event of default
(each as defined in the indenture governing the 2028 Notes) occurs. A holder of
Units may elect to separate its Units into its constituent securities, in whole
but not in part, on or after March 31, 2023. Prior to such date, the Units may
not be separated at the option of the holder. Once a Unit has been separated
into its constituent securities at the option of a holder, it cannot be
recreated.
                                      F-19
--------------------------------------------------------------------------------

Prior to separating the Units into its constituent securities, a holder thereof
will not be able to participate in any redemption or repurchase of the 2028
Notes, and holders of the 2028 Notes must have separated their Units prior to
the date of any redemption of any offer to repurchase commencement date in order
to participate in such redemption or repurchase.

Holders of Units are entitled to the rights of a holder of the Company's common stock, including, without limitation, the right to vote and consent to or receive notice as a stockholder.

2028 Notes



On January 30, 2023, the Company and certain of its subsidiaries entered into an
indenture, dated as of January 30, 2023 (the "2028 Notes Indenture"), with U.S.
Bank Trust Company, National Association, as the trustee and as notes collateral
agent, pursuant to which the 2028 Notes, which form a part of the Units, were
issued. The 2028 Notes will mature on February 1, 2028 and bear interest at an
annual rate of 13.000% payable in cash semi-annually in arrears on each of
February 1 and August 1, commencing August 1, 2023. The 2028 Notes are senior
secured obligations of the Company and are guaranteed on a senior secured basis
by each of the Company's current domestic subsidiaries and by certain future
subsidiaries, subject to agreed guaranty and security principles and certain
exclusions.

Prior to February 1, 2026, the Company may, on any one or more occasions, redeem
all or a part of the 2028 Notes at a redemption price equal to 100.0% of the
principal amount of the 2028 Notes redeemed, plus a "make-whole" premium, plus
accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In addition, prior to February 1, 2026, the Company may, from time to time,
redeem up to 35.0% of the aggregate principal amount of the 2028 Notes with an
amount of cash not greater than the net cash proceeds of certain equity
offerings at a redemption price equal to 113.0% of the principal amount of the
2028 Notes redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the date of redemption, provided that at least 65.0% of the aggregate
principal amount of the 2028 Notes issued under the 2028 Notes Indenture remains
outstanding immediately after such redemption and the redemption occurs within
180 days of the closing date of such equity offering. Also, prior to February 1,
2026, the Company may redeem during each 12-month period beginning on January
30, 2023, up to 10% of the principal amount of the 2028 Notes on a redemption
price equal to 103.0% of the aggregate principal amount of the 2028 Notes being
redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date
of redemption.

On and after February 1, 2026, the Company may redeem the 2028 Notes, in whole
or in part, at the redemption prices (expressed as percentages of principal
amount of the 2028 Notes to be redeemed) set forth below, plus accrued and
unpaid interest, if any, to, but excluding the date of redemption, if redeemed
during the periods indicated:

                                           Redemption Price
February 1, 2026 to January 31, 2027              106.500  %
February 1, 2027 to October 31, 2027              103.250  %
November 1, 2027 and thereafter                   100.000  %


On each May 15 and November 14, commencing November 14, 2023 (each, an "Excess
Cash Flow Offer Date"), the Company is required to make an offer (an "Excess
Cash Flow Offer") to all holders of the 2028 Notes and, if required by the terms
of any Pari Passu Notes Lien Indebtedness (as defined in the 2028 Notes
Indenture), to any holders of any Pari Passu Notes Lien Indebtedness to
purchase, prepay or redeem, together on a pro-rata basis, the maximum principal
amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (plus
all accrued interest (including additional interest, if any) on the 2028 Notes
and any such Pari Passu Notes Lien Indebtedness and the amount of all fees and
expenses, including premiums, incurred in connection therewith) that may be
purchased, prepaid or redeemed using an amount of cash equal to the Excess Cash
Flow Amount (as defined in the 2028 Notes Indenture and which is 75.0% of Excess
Cash Flow (as defined in the 2028 Notes Indenture), as determined immediately
prior to the Excess Cash Flow Offer Date), if any, subject to certain exceptions
set forth in the 2028 Notes Indenture. The offer price in any such offer will be
equal to 100% of the principal amount of the 2028 Notes and any such Pari Passu
Notes Lien Indebtedness (or, in respect of any such Pari Passu Notes Lien
Indebtedness, such lesser price, if any, as may be provided for by the terms of
such Pari Passu Notes Lien Indebtedness), plus accrued and unpaid interest and
additional interest, if any, to, but excluding, the date of purchase, prepayment
or redemption, subject to the rights of holders of the 2028 Notes or any such
Pari Passu Notes Lien Indebtedness on the relevant record date to receive
interest due on an interest payment date that is on or prior to the date of
purchase, prepayment or redemption, and will be payable in cash.

If the Company experiences certain changes of control, each holder of 2028 Notes
may require the Company to repurchase all or a portion of its 2028 Notes for
cash at a price equal to 101.0% of the principal amount of such 2028 Notes, plus
any accrued but unpaid interest, if any, to, but excluding, the date of
repurchase.
                                      F-20
--------------------------------------------------------------------------------

The 2028 Notes Indenture contains covenants that, among other things and subject
to certain exceptions and qualifications, limit the Company's ability and the
ability of its restricted subsidiaries to (i) incur additional indebtedness and
guarantee indebtedness; (ii) pay dividends or make other distributions of
capital stock; (iii) prepay, redeem or repurchase certain debt; (iv) issue
certain preferred stock or similar equity securities, (v) make loans and
investments; (vi) sell assets; (vii) incur liens; (viii) enter into transactions
with affiliates; (ix) enter into agreements restricting its subsidiaries'
ability to pay dividends; or (x) consolidate, merge, or sell all or
substantially all of its assets.

Upon an event of default, the trustee of the 2028 Notes or the holders of at
least 25% in aggregate principal amount of then outstanding 2028 Notes may
declare the 2028 Notes immediately due and payable, except that a default
resulting from certain events of bankruptcy or insolvency with respect to the
Company, any significant subsidiary or any group of restricted subsidiaries
that, taken together, would constitute a significant subsidiary, will
automatically cause all outstanding 2028 Notes to become due and payable.

ABL Credit Facility

Background



On October 25, 2018, the Company entered into a credit agreement dated as of
October 25, 2018 (the "2018 ABL Credit Agreement"), by and among the Company,
Nine Energy Canada, Inc., JP Morgan Chase Bank, N.A. as administrative agent and
as an issuing lender, and certain other financial institutions party thereto as
lenders and issuing lenders. The 2018 ABL Credit Agreement permitted aggregate
borrowings of up to $200.0 million, subject to a borrowing base, including a
Canadian tranche with a sub-limit of up to $25.0 million and a sub-limit of
$50.0 million for letters of credit (the "ABL Credit Facility"). Pursuant to the
2018 ABL Credit Agreement, the ABL Credit Facility was set to mature on October
25, 2023 or, if earlier, on the date that is 180 days before the scheduled
maturity date of the 2023 Notes if they had not been redeemed or repurchased by
such date.

Pursuant to the 2018 ABL Credit Agreement, loans to the Company and its domestic
related subsidiaries (the "U.S. Credit Parties") under the ABL Credit Facility
were base rate loans or London Interbank Offered Rate ("LIBOR") loans; and loans
to Nine Energy Canada Inc., a corporation organized under the laws of Alberta,
Canada, and its restricted subsidiaries (the "Canadian Credit Parties") under
the Canadian tranche may be Canadian Dollar Offered Rate ("CDOR") loans or
Canadian prime rate loans. The applicable margin for base rate loans and
Canadian prime rate loans varied from 0.75% to 1.25% and the applicable margin
for LIBOR loans or CDOR loans varied from 1.75% to 2.25%, in each depending on
the Company's leverage ratio. In addition, a commitment fee of 0.50% per annum
was charged on the average daily unused portion of the revolving commitments.

On January 17, 2023, the Company entered into the First Amendment to Credit
Agreement (the "ABL Facility Amendment") with JP Morgan Chase Bank, N.A., as
administrative agent, and the lender parties thereto, which amends certain terms
of the 2018 ABL Credit Agreement (as amended the "ABL Credit Agreement"). The
ABL Facility Amendment became effective on January 30, 2023.

Pursuant to the ABL Facility Amendment, the maturity date of the ABL Credit
Facility was extended from October 25, 2023 to January 29, 2027. In addition,
the ABL Facility Amendment, among other changes, revised the terms of the ABL
Credit Facility as follows: (a) decreased the size of the ABL Credit Facility
from $200.0 million to $150.0 million, subject to the borrowing base, (b)
changed the interest rate benchmark from LIBOR to Term Secured Overnight
Financing Rate with a 10 basis point spread adjustment and increased pricing
from the existing range of 1.75% to 2.25% to a range of 2.00% to 2.50%, in each
case depending on the Company's leverage ratio, (c) modified the financial
covenant, enhanced reporting and cash dominion triggers in the ABL Credit
Facility from the existing minimum availability threshold of the greater of
$18.75 million and 12.5% of the loan limit to a minimum availability threshold
of (i) $12.5 million from January 30, 2023 until May 31, 2023 and (ii) the
greater of $17.5 million and 12.5% of the loan limit thereafter, (d) decreased
the Canadian tranche sub-limit from $25.0 million to $5.0 million, (e) decreased
the letter of credit sub-limit from $50.0 million to $10.0 million and (f) made
satisfaction of the Payment Conditions (as defined in the ABL Facility
Amendment) a condition to an Excess Cash Flow Offer in addition to a condition
to voluntary payments of the 2028 Notes. The Payment Conditions in summary are
(A) no default or event of default on a pro forma basis and (B) immediately
after and at all times and at all times during the 30 days prior, on a pro forma
basis, (1) (x) availability under the ABL Credit Facility shall not be less than
the greater of 15% of the loan limit and $22.5 million and (y) the fixed charge
coverage ratio shall be at least 1.00 to 1.00 or (2) availability under the ABL
Credit Facility shall not be less than the greater of 20% of the loan limit and
$30.0 million.

The 2018 ABL Credit Agreement contained and the ABL Credit Agreement contains,
various affirmative and negative covenants, including financial reporting
requirements and limitations on indebtedness, liens, mergers, consolidations,
liquidations and dissolutions, sales of assets, dividends and other restricted
payments, investments (including acquisitions), and
                                      F-21
--------------------------------------------------------------------------------

transactions with affiliates. In addition, the 2018 ABL Credit Agreement
contained a minimum fixed charge ratio covenant of 1.00 to 1.00 that was tested
quarterly when the availability under the ABL Credit Facility dropped below
$18.75 million or a default has occurred until the availability exceeds such
threshold for 30 consecutive days and such default is no longer outstanding. The
Company was in compliance with all covenants under the 2018 ABL Credit Agreement
as of December 31, 2022.

Pursuant to the 2018 ABL Credit Agreement, all of the obligations under the ABL
Credit Facility were, and pursuant to the ABL Credit Agreement, all of the
obligations under the ABL Credit Facility are secured by security interests
(subject to permitted liens) in substantially all of the personal property of
U.S. Credit Parties, excluding certain assets. The obligations under the
Canadian tranche are further secured by security interests (subject to permitted
liens) in substantially all of the personal property of Canadian Credit Parties,
excluding certain assets.

At December 31, 2022, the Company had $32.0 million outstanding borrowings under
the ABL Credit Facility, and its availability under the ABL Credit Facility was
approximately $66.6 million, net of outstanding letters of credit of $1.3
million. On January 27, 2023, the Company borrowed an additional $40.0 million
under the ABL Credit Facility to pay for the redemption price of the 2023 Notes
and to pay for fees and expenses related to the Units offering.

Both the ABL Credit Facility and the Units collateralization were completed within 30 days after closing in accordance with the terms of the ABL Facility Amendment and the Units offering.

Magnum Promissory Notes



On October 25, 2018, pursuant to the terms of a Securities Purchase Agreement,
dated October 15, 2018 (as amended on June 7, 2019, the "Magnum Purchase
Agreement"), the Company acquired all of the equity interests of Magnum Oil
Tools International, LTD, Magnum Oil Tools GP, LLC, and Magnum Oil Tools Canada
Ltd. (such entities collectively, "Magnum"). The Magnum Purchase Agreement
included the potential for additional future payments in cash of (i) up to 60%
of net income (before interest, taxes, and certain gains or losses) for the
"E-Set" tools business in 2019 through 2026 and (ii) up to $25.0 million based
on sales of certain dissolvable plug products in 2019 (the "Magnum Earnout").

On June 30, 2020, pursuant to an amendment to the Magnum Purchase Agreement to
terminate the remaining Magnum Earnout and all obligations related thereto, the
Company issued promissory notes with an aggregated principal amount of
$2.3 million (the "Magnum Promissory Notes") to the sellers of Magnum. The
Magnum Promissory Notes bear interest at a rate of 6.0% per annum. The principal
amount of the Magnum Promissory Notes was paid in equal quarterly installments
which began January 1, 2021. The remaining outstanding balance was paid on
October 1, 2022.

Other Short-Term Debt



In the fourth quarter of 2022, the Company renewed certain insurance policies,
and it financed the premium for its excess policy in the amount of $4.1 million.
At December 31, 2022, the outstanding balance on this premium was $2.3 million.

Fair Value of Debt Instruments

The estimated fair value of the Company's debt obligations as of December 31, 2022 and 2021 was as follows:



                                 December 31,
                             2022           2021
                                (in thousands)
2023 Notes                $ 300,700      $ 153,765
ABL Credit Facility       $  32,000      $  15,000
Magnum Promissory Notes   $       -      $   1,125
Other short-term debt     $   2,267      $     968


The fair value of the 2023 Notes, ABL Credit Facility, the Magnum Promissory
Notes, and other short-term debt is classified as Level 2 in the fair value
hierarchy. The fair value of the 2023 Notes is established based on observable
inputs in less active markets. The fair value of the ABL Credit Facility, the
Magnum Promissory Notes, and other short-term debt approximates their carrying
value.
                                      F-22
--------------------------------------------------------------------------------

10. Defined Contribution Plans

Background



The Company sponsors a defined contribution plan, the Nine Energy Service 401(k)
Plan (the "Nine Plan"), under Section 401(k) of the Internal Revenue Code of
1986, as amended, for all qualified employees.

Contributions

For the years ended December 31, 2022 and 2021, the Company made no employer contributions under the Nine Plan.

11. Stock-based Compensation

Stock Options

Information about stock option activity during the years ended December 31, 2022 and 2021 was as follows:



                           Number of                                Remaining
                           Shares in           Weighted          Weighted Average
                           Underlying          Average           Contractual Life
2022 Activity               Options         Exercise Price           in Years           Intrinsic Value
                                                                                        (in thousands)
Beginning balance         610,410          $        33.52                       3.9    $             -
Granted                         -                       -                 -                          -
Exercised                       -                       -                 -                          -
Forfeited                       -                       -                 -                          -
Expired                   (22,904)                  26.28                 -                          -
Total outstanding         587,506          $        33.80                       3.0    $             -
Options exercisable       587,506          $        33.80                       3.0    $             -



                           Number of                                Remaining
                           Shares in           Weighted          Weighted Average
                           Underlying          Average           Contractual Life
2021 Activity               Options         Exercise Price           in Years           Intrinsic Value
                                                                                        (in thousands)
Beginning balance         702,542          $        32.63                       4.5    $             -
Granted                         -                       -                 -                          -
Exercised                       -                       -                 -                          -
Forfeited                       -                       -                 -                          -
Expired                   (92,132)                  26.71                 -                          -
Total outstanding         610,410          $        33.52                       3.9    $             -
Options exercisable       610,410          $        33.52                       3.9    $             -


The intrinsic value at December 31, 2022 and 2021 is the amount by which the
fair value of the underlying share exceeds the exercise price of an option as of
December 31, 2022 and 2021, respectively.

The Company granted no options in 2022 and 2021.



There was no compensation expense recorded for the years ended December 31, 2022
and 2021. As of December 31, 2022, there is no remaining compensation expense
related to options for the Company to expense. Future stock option grants will
result in additional compensation expense.
                                      F-23
--------------------------------------------------------------------------------

Restricted Stock and Restricted Stock Units

Information about restricted stock and restricted stock unit activity during the years ended December 31, 2022 and 2021 was as follows:




                                                                                                Weighted Average
                                                                   Number of Shares and         Grant Date Fair
2022 Activity                                                             Units                      Value

Nonvested at January 1, 2022                                               2,379,320           $          2.83
Granted                                                                      651,250                      2.80
Vested                                                                    (1,068,092)                     4.13
Forfeited                                                                    (27,922)                     2.02
Nonvested at December 31, 2022                                             1,934,556           $          2.12


                                                                                                Weighted Average
                                                                   Number of Shares and         Grant Date Fair
2021 Activity                                                             Units                      Value

Nonvested at January 1, 2021                                               1,714,398           $          6.69
Granted                                                                    1,509,000                      2.15
Vested                                                                      (792,704)                     9.77
Forfeited                                                                    (51,374)                     4.33
Nonvested at December 31, 2021                                             2,379,320           $          2.83


The total amount of compensation expense related to the restricted stock and
restricted stock units recorded was approximately $2.4 million and $4.9 million
for the years ended December 31, 2022 and 2021, respectively. As of December 31,
2022, the Company expects to record compensation expense related to restricted
stock and restricted stock units of approximately $3.0 million over the
remaining term of approximately 1.9 years. Future restricted stock and
restricted stock unit grants would result in additional compensation expense.

Performance Stock Units



The Company granted performance stock units ("PSUs") in 2019. The number of PSUs
that vested in the first quarter of 2022 was contingent upon the Company's
achievement of certain specified targets. These awards had market conditions and
were valued using a Monte Carlo simulation model.

The volatility of 49.7% was developed based upon the historical volatility of
the Company as well as the volatilities of a group of peer companies, as the
Company's trading history needed to be supplemented with additional data as it
went public in 2018. The risk-free rate, which was derived using the U.S.
Treasury security rates at the grant date, was 2.44%.

                               2022          2021
Nonvested at January 1,       61,900        61,900
Granted (1)                        -             -
Vested                       (42,714)            -
Forfeited                    (19,186)            -
Nonvested at December 31,          -        61,900


(1)   The Company granted PSUs in 2019 that vested in the first quarter of 2022
contingent upon the Company's achievement of certain specified targets based on
a three-year performance period ending December 31, 2021. The nonvested PSU
balance at January 1, 2021 is shown at target level.

The Company did not grant PSUs in 2022 or 2021.

There was no compensation expense related to PSUs for the year ended December 31, 2022, and for the year ended


                                      F-24
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December 31, 2021, the total amount of compensation expense related to PSUs was
approximately $0.5 million. As of December 31, 2022, the Company has no further
compensation expense related to PSUs to record. Future PSU grants will result in
additional compensation expense.

Performance Cash Awards



In May 2022, the Company granted performance cash awards (the "PCAs") that vest
based upon the Company's achievement of certain criteria related to its relative
total shareholder return ("TSR") in comparison to TSR of members of its peer
group (the "Peer Group"), as defined by the PCA grant. These awards, which the
Company granted at a target achievement amount, are subject to three individual
year-long performance periods (the "Performance Periods"), and payment related
to each Performance Period can range from 0% to 200% of the target amount for
that Performance Period.

The PCAs were valued on the date of grant based on the estimated fair value,
which was based on numerous assumptions including the likelihood of the
Company's stock price performance achieving targeted thresholds, using a Monte
Carlo simulation model. The assumptions used to value the awards included the
historical volatility of the Company as well as the volatility of its Peer Group
and the risk-free rate, which was derived using the U.S. Treasury security
rates.

Under the relevant liability accounting, the fair values for each tranche of the
PCAs are remeasured at the end of each reporting period. At December 31, 2022,
the volatility for remeasurement was 123.82%, and the risk-free rate was 4.30%.
Compensation expense related to PCAs for the year ended December 31, 2022 was
approximately $1.8 million. As of December 31, 2022, based upon the valuation of
the PCAs at year end, the Company had remaining compensation expense to
recognize of $1.6 million. Future PCA grants will result in additional
compensation expense.

12. Commitments and Contingencies

Litigation



The Company records accruals related to litigation and other legal proceedings
when they are either known or considered probable and can be reasonably
estimated. Legal proceedings are inherently unpredictable and subject to
significant uncertainties, and significant judgment is required to determine
both probability and the estimated amount. Some of these uncertainties include
the stage of litigation, available facts, uncertainty as to the outcome of any
legal proceedings or settlement discussions, and any novel legal issues
presented. Because of such uncertainties, accruals are based on the best
information available at the time. As additional information becomes available,
the Company reassesses the potential liability related to pending litigation. As
of December 31, 2022 and 2021, the Company recorded a $0.1 million and a $1.1
million accrual, respectively, for liabilities related to legal matters, which
is included under the caption "Accrued expenses" in its Consolidated Balance
Sheets.

From time to time, the Company has various claims, lawsuits, and administrative
proceedings that are pending or threatened with respect to personal injury,
workers' compensation, contractual matters, and other matters. Although no
assurance can be given with respect to the outcome of these claims, lawsuits, or
proceedings or the effect such outcomes may have, the Company believes any
ultimate liability resulting from the outcome of such claims, lawsuits, or
administrative proceedings, to the extent not otherwise provided for or covered
by insurance, will not have a material adverse effect on its business, operating
results, or financial condition.

Self-insurance



The Company uses a combination of third-party insurance and self-insurance for
health insurance claims. The self-insured liability represents an estimate of
the undiscounted ultimate cost of uninsured claims incurred as of the balance
sheet date. The estimate is based on an analysis of trailing months of incurred
medical claims to project the amount of incurred but not reported claims
liability. The estimated liability for self-insured medical claims was $1.2
million and $1.0 million at December 31, 2022 and 2021, respectively, and is
included under the caption "Accrued expenses" on the Company's Consolidated
Balance Sheets.

Although the Company does not expect the amounts ultimately paid to differ
significantly from the estimates, the self-insurance liability could be affected
if future claims experience differs significantly from historical trends and
actuarial assumptions.

Contingent Liabilities

On October 1, 2018, pursuant to the terms and conditions of a Securities Purchase Agreement ("the Frac Tech Purchase Agreement"), the Company acquired Frac Technology AS, a Norwegian private limited company ("Frac Tech")


                                      F-25
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focused on the development of downhole technology, including a casing flotation
tool and a number of patented downhole completion tools. The Frac Tech Purchase
Agreement, as amended, includes, among other things, the potential for
additional future payments, based on certain Frac Tech revenue metrics through
December 31, 2025.

The Company's contingent liability (Level 3) for the years ended December 31,
2022 and 2021 was as follows:

                                   Frac Tech
                                (in thousands)
Balance at December 31, 2020   $           604
Payments                                  (154)
Revaluation adjustments                    460
Balance at December 31, 2021   $           910
Payments                                  (195)
Revaluation adjustments                    454
Balance at December 31, 2022   $         1,169


All contingent liabilities that relate to contingent consideration are reported
at fair value, based on a Monte Carlo simulation model. Significant inputs used
in the fair value measurement include estimated gross margin related to
forecasted sales of the plugs, term of the agreement, and a risk adjusted
discount factor. Contingent liabilities include $0.4 million and $0.1 million
reported in "Accrued expenses" at December 31, 2022 and 2021, respectively, and
$0.8 million reported in "Other long-term liabilities" at both December 31, 2022
and 2021 in the Company's Consolidated Balance Sheets. The impact of the
revaluation adjustments is included in the Company's Consolidated Statements of
Income and Comprehensive Income (Loss).


                                      F-26
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13. Taxes

The components of the provision (benefit) for income taxes for the years ended December 31, 2022 and 2021 were as follows:



                                                     Year Ended December 31,
                                                         2022                 2021
                                                         (in thousands)
Current
U.S. federal                                 $           -                   $   -
U.S. state                                             510                     (56)
Foreign                                                 36                      31
Total current provision (benefit)            $         546                   $ (25)
Deferred
U.S. federal                                 $           -                   $   -
U.S. state                                               -                       -
Foreign                                                  -                       -
Total deferred provision (benefit)                       -                  

-


Total provision (benefit) for income taxes   $         546                  

$ (25)




The provision (benefit) for income taxes for the years ended December 31, 2022
and 2021 differed from the provision (benefit) calculated using the applicable
statutory federal income tax rate as follows:

                                                        Year Ended December 31,
                                                          2022               2021
                                                            (in thousands)

     Tax provision (benefit) at statutory rate    $     3,137             $

(13,570)


     Foreign rate differential                            (16)                  (41)
     State income taxes, net of federal benefit           403                   (44)
     Nondeductible expenses                               912                   413
     Valuation allowance                               (5,823)             

11,350


     Non-cash compensation                              1,879              

1,893


     Other                                                 54                   (26)
     Total provision (benefit) for income taxes   $       546             $     (25)



                                      F-27

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The tax effects of the cumulative temporary differences resulting in the net
deferred tax asset (liabilities) at December 31, 2022 and 2021 were as follows:

                                                         December 31,
                                                     2022           2021
                                                        (in thousands)
Deferred income tax assets:
Inventories                                       $   2,298      $   2,533
Goodwill and intangible assets                       75,617         83,318
Deferred tax benefit from net losses                 79,914         79,690
Stock-based compensation and cash award expense       2,524          4,194
Tax credit carryforwards                                655            695
Accrued expenses                                        678          1,632
Interest carryover                                   13,860          6,824
Lease liability                                       8,441          8,162
Other                                                   163            164
Total deferred income tax assets                    184,150        187,212
Less: Valuation allowance                          (162,888)      (170,747)
Net deferred income tax assets                    $  21,262      $  16,465
Deferred income tax liabilities:
Property and equipment                            $ (12,974)     $  (8,387)
ROU asset                                            (8,288)        (8,078)
Total deferred income tax liabilities               (21,262)       (16,465)

Net deferred income tax asset (liability) $ - $ -




As of December 31, 2022, the Company had federal and state net operating loss
carryforwards ("NOLs") of approximately $442.2 million. The federal NOLs related
to tax years 2017 and prior can be used for a 20-year period and, if unused,
will begin to expire in 2034. The state NOLs can be used from 7 to 20 years and
vary by state. A small portion of state NOLs expired in 2022.

The Company evaluates its deferred tax assets on a quarterly basis to determine
whether a valuation allowance is required. The Company assesses whether a
valuation allowance should be established based on its determination of whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible and prior to the expiration
of its NOL and tax credit carryforwards. The Company considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. Due to recent operating results,
the Company continues to be in a three-year cumulative loss position for the
year ended December 31, 2022. According to ASC 740, cumulative losses in recent
years represent significant negative evidence in considering whether deferred
tax assets are realizable. As a result, the Company continues to record a
valuation allowance against its U.S. domestic and Canadian deferred tax assets.
The 2022 results include a decrease in the Company's valuation allowance of
approximately $7.9 million. If the Company is able to generate sufficient
taxable income in the future, and it becomes more likely than not that the
Company will be able to fully utilize the net deferred tax assets on which a
valuation allowance was recorded, the allowance will be released resulting in a
tax benefit.

The Company is subject to U.S. federal income tax as well as income tax in
multiple state jurisdictions. The earliest period the Company is subject to
examination of federal income tax returns by the Internal Revenue Service is
2019. The state income tax returns and other state tax filings of the Company
are subject to examination by the state taxing authorities for various periods,
generally up to four years after they are filed.
                                      F-28
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The Company accounts for uncertain tax positions in accordance with guidance in
ASC 740, which prescribes the minimum recognition threshold a tax position taken
or expected to be taken in a tax return is required to meet before being
recognized in the financial statements. A reconciliation of the beginning and
ending amount of uncertain tax positions is as follows:

                                                                      2022
                                                                 (in thousands)
    Balance at January 1,                                       $           779

    Additional based on tax positions related to prior years                  -
    Additional based on tax positions related to current year                 -
    Reduction based on tax positions related to prior years                   -
    Lapse of statute of limitations                                           -
    Balance at December 31,                                     $           779


The total amount of unrecognized tax benefits at December 31, 2022 was $0.8
million. The total balance of unrecognized tax benefit would impact the
Company's future effective income tax rate if recognized. The Company recognizes
interest and penalties related to uncertain tax positions within the provision
for income taxes in its Consolidated Statements of Income and Comprehensive
Income (Loss). As of December 31, 2022, no interest and penalties have been
accrued.

14. Earnings (Loss) Per Share



Basic earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding for the period. Diluted
earnings (loss) per share is based on the weighted average number of shares
outstanding during each period and the exercise of potentially dilutive stock
options assumed to be purchased from the proceeds using the average market price
of the Company's stock for each of the periods presented as well as the
potentially dilutive restricted stock, restricted stock units, and performance
stock units.

Basic and diluted earnings (loss) per common share was computed as follows:



                                                                      Year Ended December 31, 2022
                                             Net Income               Average Shares Outstanding           Earnings Per Share
                                                         (in thousands, except for share and per share amounts)
Basic                                    $         14,393                     30,930,890                  $             0.47
Unvested restricted stock and stock
units                                                   -                      1,320,508                                   -
Diluted                                  $         14,393                     32,251,398                  $             0.45


                                                                    Year Ended December 31, 2021
                                              Net Loss                Average Shares Outstanding           Loss Per Share
                                                       (in thousands, except for share and per share amounts)
Basic                                    $        (64,575)                    30,302,925                  $        (2.13)
Unvested restricted stock and stock
units                                                   -                              -                               -
Diluted                                  $        (64,575)                    30,302,925                  $        (2.13)


The diluted earnings (loss) per share calculation excludes all stock options,
unvested restricted stock, unvested restricted stock units, and unvested
performance stock units for 2021 because there is a net loss for the period, and
their inclusion would be anti-dilutive. The average number of securities that
were excluded from diluted earnings (loss) per share that would potentially
dilute earnings (loss) per share for the period in which the Company experienced
a net loss was as follows:

                           2022        2021
Year ended December 31,      -       729,514


                                      F-29

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15. Related Party Transactions



The Company leases office space, yard facilities, and equipment and purchases
building maintenance and repair services from entities owned by David Crombie,
an executive officer of the Company. Total lease expense and building
maintenance and repair expense associated with these entities was $1.3 million
and $0.9 million for the years ended December 31, 2022 and 2021, respectively.
The Company also purchased $2.6 million of products and services for both the
years ended December 31, 2022 and 2021 from an entity in which Mr. Crombie is a
limited partner. There were outstanding payables due to this entity relating to
equipment purchases of $0.1 million and $0.7 million at December 31, 2022 and
2021, respectively.

In addition, the Company currently leases office space in Corpus Christi, Texas
and previously leased office space in Midland, Texas from an entity affiliated
with Warren Lynn Frazier, a beneficial owner of more than 5% of the Company's
stock. In the third quarter of 2020, another entity affiliated with Mr. Frazier
began to sub-lease a portion of such space in Corpus Christi, Texas from the
Company. Total rental expense associated with these office spaces, net of
sub-leasing income, was $1.6 million and $1.4 million for the years ended
December 31, 2022 and 2021, respectively. There were net outstanding payables
due to these entities of $0.1 million at December 31, 2022. Additionally, on
June 30, 2020, the Company issued the Magnum Promissory Notes to the sellers of
Magnum, including Mr. Frazier. At December 31, 2022, there was no outstanding
principal balance payable to Mr. Frazier, and the balance payable to Mr. Frazier
was $1.1 million at December 31, 2021. For additional information regarding the
Magnum Promissory Notes, see Note 9 - Debt Obligations.

The Company purchases chemical additives used in cementing from Select Energy
Services, Inc. ("Select"). One of the Company's directors also served as a
director of Select from November 2017 to November 2022. The Company was billed
$1.5 million and $1.1 million for the years ended December 31, 2022 and 2021,
respectively. There were outstanding payables due to Select of $0.1 million at
both December 31, 2022 and 2021.

The Company provides products and rentals to National Energy Reunited Corp.
("NESR"), where one of the Company's directors serves as a director. The Company
billed NESR $0.8 million and $1.3 million for the years ended December 31, 2022
and 2021, respectively. During the fourth quarter of 2019, the Company sold
coiled tubing equipment for $5.9 million to NESR with payments due in 24 monthly
equal installments beginning on January 31, 2020. Total outstanding receivables
due to the Company from NESR (inclusive of the equipment sale above) were $0.2
million and $0.5 million at December 31, 2022 and 2021, respectively.

Ann G. Fox, President and Chief Executive Officer and a director of the Company,
is a director of Devon Energy Corporation ("Devon"). The Company generated
revenue from Devon of $2.2 million and $3.2 million for the years ended
December 31, 2022 and 2021, respectively. There were outstanding receivables due
from Devon of $0.5 million and $0.4 million at December 31, 2022 and 2021,
respectively.

16. Supplemental Information



Capital expenditures for years ended December 31, 2022 and 2021 were as follows:

                                             Year Ended December 31,
                                                2022                2021
                                                  (in thousands)
               Completion Solutions    $      32,162             $ 14,742
               Corporate                         105                   15
                                       $      32,267             $ 14,757

Total assets by segment as of December 31, 2022 and 2021 were as follows:



                               December 31,
                           2022           2021
                              (in thousands)
Completion Solutions    $ 399,546      $ 349,429
Corporate                  27,288         32,184
                        $ 426,834      $ 381,613



                                      F-30

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Revenue by country for the years ended December 31, 2022 and 2021 were as
follows:

                                                  Year Ended December 31, 2022                    Year Ended December 31, 2021
                                                Amount                Percentage                Amount                Percentage
                                            (in thousands)                                  (in thousands)
United States                               $   591,614                       99.7  %       $   347,445                       99.4  %
Canada                                            1,768                        0.3  %             1,974                        0.6  %
                                            $   593,382                      100.0  %       $   349,419                      100.0  %



Long-lived assets (defined as property and equipment and definite-lived
intangible assets) by country as of December 31, 2022 and 2021 were as follows:

                          December 31,
                      2022           2021
                         (in thousands)
United States      $ 189,962      $ 200,227
Canada and other       1,700          2,139
                   $ 191,662      $ 202,366


                                      F-31

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