CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Our Board adopted a written related person transactions policy prior to the completion of our IPO, under which a Related Person
Transaction is defined pursuant to Item 404 of Regulation S-K. Pursuant to this policy, the Audit Committee expects to review all material facts of all Related Person Transactions and either approve or
disapprove entry into the Related Person Transaction, subject to certain limited exceptions.
In determining whether to approve or
disapprove entry into a Related Person Transaction, the Audit Committee expects to take into account, among other factors, the following: (i) whether the Related Person Transaction is on terms no less favorable than terms generally available to
an unaffiliated third-party under the same or similar circumstances and (ii) the extent of the Related Persons interest in the transaction. Further, the policy would require that all Related Person Transactions required to be disclosed in
our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations.
The Company leases office space, yard
facilities, and equipment and purchases building maintenance services from entities owned by Mr. Crombie. Total lease expense and building maintenance expense associated with these entities was $0.8 million for both the years ended
December 31, 2021 and 2020. The Company also purchased $2.6 million and $1.6 million of products and services for the years ended December 31, 2021 and 2020, respectively, from an entity in which Mr. Crombie is a limited
partner. There were outstanding payables due to this entity relating to equipment purchases of $0.7 million and $0.2 million at December 31, 2021 and 2020, respectively.
In addition, the Company leases office space in Corpus Christi and Midland, Texas from an entity affiliated with Warren Lynn Frazier, a
beneficial owner of more than 5% of the Companys 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 this office space, net of sub-leasing income, was $1.4 million and $1.3 million for the years ended December 31, 2021 and 2020,
respectively. There were net outstanding payables due to this entity of $0.1 million at December 31, 2020. Additionally, on June 30, 2020, the Company issued the Magnum Promissory Notes to the sellers of Magnum, including
Mr. Frazier. At December 31, 2021 and 2020, the outstanding principal balance payable to Mr. Frazier was $1.1 million and $1.9 million, respectively.
The Company purchases cable for its wireline trucks from an entity owned by Forum Energy Technologies (Forum). Previously, two of
the Companys directors served as directors of Forum; both individuals have ended their directorships at Forum as of December 31, 2021. The Company was billed $0.5 million for cable for both the years ended December 31, 2021 and
2020. There were outstanding payables due to the entity of $0.1 million at both December 31, 2021 and 2020, respectively. The Company purchases coiled tubing string from another entity owned by Forum. The Company was billed
$6.2 million and $4.6 million for coiled tubing string during the years ended December 31, 2021 and 2020, respectively. There were outstanding payables due to this entity of $0.6 million and $0.9 million at December 31,
2021 and 2020, respectively.
The Company purchases chemical additives used in cementing from Select Energy Services, Inc.
(Select). One of the Companys directors also serves as a director of Select. The Company was billed $1.1 million and $1.2 million for chemicals during the years ended December 31, 2021 and 2020, respectively. There
were outstanding payables due to this entity of $0.1 million and $0.2 million at December 31, 2021 and 2020, respectively.
The Company provides products and rentals to National Energy Reunited Corp. (NESR). One of the Companys directors also
serves as a director of NESR. The Company billed NESR $1.3 million and $1.6 million for products and rentals during the years ended December 31, 2021 and 2020, respectively. The Company issued credit memos of $ $0.5 million
during the year ended December 31, 2020. The Company did not issue credit memos during the year ended December 31, 2021. 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 $0.5 million and $3.7 million at December 31,
2021 and 2020, respectively.
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