The following discussion and analysis of financial condition and results of
operations should be read in conjunction with our unaudited consolidated
financial statements and accompanying notes included in this Quarterly Report.
In addition, the following discussion and analysis also should be read in
conjunction with our   Annual Report on Form 10-K   for the year ended
December 31, 2020 filed with the SEC on March 5, 2021 ("  2020 Annual
Report  "). This discussion includes forward-looking statements that involve
certain risks and uncertainties.
Business Overview
We are a geographically diversified oil and gas services company, focused on
completion fluids and associated products and services, comprehensive water
management, frac flowback and production well testing. We operate through two
reporting segments organized into two Divisions - Completion Fluids & Products
and Water & Flowback Services. In January, we announced our commitment to pursue
low carbon energy initiatives that would leverage our fluids and aqueous
chemistry core competencies, our significant bromine and lithium assets
(including our approximately 31,100 net acres of brine leases in Arkansas) and
technologies, and our leading calcium chloride production capabilities.
After declining to historic lows due to depressed oil prices resulting from
Russia and Saudi Arabia's price war and the COVID-19 pandemic last year, toward
the end of 2020 and into the first quarter of 2021, customer activity levels in
the North America onshore business began to recover as oil prices returned to
over $60 per barrel. Customer activity levels continued to improve during the
second quarter as oil prices remained constructive, increasing into the $70 per
barrel range by the end of the quarter.
Although activity during the second quarter of 2021 for offshore and
international customers remained below prior year levels, our Completion Fluids
and Products business delivered higher revenues sequentially compared to the
first quarter as activity began to ramp back up in the Gulf of Mexico and
internationally. The continued rollout of COVID-19 vaccines and fiscal stimulus
policies are expected to support an ongoing global economic recovery and further
improve the oil demand outlook which, together with continued discipline from
United States operators, should provide support for oil and gas prices and
further increases in offshore activity both in the Gulf of Mexico and
internationally during the second half of the year. However, the current market
conditions resulting from the COVID-19 pandemic could rapidly change and there
could be a new outbreak of a COVID-19 variant or the vaccines may not be as
effective as anticipated, which could negatively impact the demand for our
services and products and our future revenues, results of operations and cash
flows.

With activity levels expected to further increase during the second half of the year, we are continuing to tightly manage our cost structure. Many of the cost reduction initiatives executed in response to unprecedented industry conditions last year remained in effect as of the end of the second quarter. On January 29, 2021 as previously announced in our 2020 Annual Report, we closed the sale of the general partner of CSI Compressco, including incentive distribution rights ("IDRs") in CSI Compressco and approximately 23.1% of the outstanding limited partner interests in CSI Compressco, referred to as the "GP Sale." We recorded a book gain of $120.6 million during 2021 in connection with the GP Sale. This gain, most of which was non-cash, was a function of CSI Compressco having a negative carrying value within our consolidated balance sheet due to our share of cumulative losses and distributions. We have reflected the operations of our former Compression Division as discontinued operations for all periods presented. Following the closing of the transaction, we continue to own approximately 10.9% of the outstanding CSI Compressco common units. See Note 2 - "Discontinued Operations" in the Notes to Consolidated Financial Statements for further information. During the first quarter of 2021, we used proceeds from the GP sale and available cash on hand to pay down $29.3 million on our term loan, which matures in September 2025.


                                       18

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

Table of Contents

© Edgar Online, source Glimpses