Nine Energy Service (NINE) risk factors, FY2024 10-K

Risks Related to Our Industry

1. 01Our business is cyclical and depends on capital spending and well completions by the onshore oil and natural gas industry, and the level of such activity is volatile. Our business has been, and may continue to be, adversely affected by industry and financial market conditions that are beyond our control
2. 02A decline in oil and natural gas commodity prices may adversely affect the demand for our products and services and the rates we are able to charge
3. 03Our business could be adversely affected by a decline in general economic conditions or a weakening of the broader energy industry, and inflation may adversely affect our financial position and operating results
4. 04Negative public perception of the oil and gas industry could adversely affect our operations and our ability to raise debt and equity capital
5. 05Increased scrutiny of sustainability matters could have an adverse effect on our business and damage our reputation
6. 06appropriately or quickly enough to growing concern for ESG and sustainability issues, regardless of whether there is a regulatory or legal requirement to do so, we may suffer from reputational damage and our business, financial condition and/or stock price could be materially and adversely affected

Risks Related to Our Indebtedness

1. 07Our substantial debt obligations could have significant adverse consequences on our business and future prospects
2. 08We may not be able to generate sufficient cash to service all of our indebtedness
3. 09Restrictions in our debt agreements could limit our growth and our ability to engage in certain activities
4. 10business or the economy in general, or to otherwise conduct necessary corporate activities. We may also be prevented from taking advantage of business opportunities that arise because of the limitations that the restrictive covenants under our debt arrangements may impose on us
5. 11We may be unable to maintain existing prices or implement price increases on our products and services
6. 12The completion services industry is intensely competitive. We compete with major domestic and international oilfield services companies, many of which have greater market recognition and substantially greater financial, technical, marketing, distribution, and other resources than we do
7. 13Our current and potential competitors may have longer operating histories, significantly greater financial or technical resources, and greater name recognition than we do

Operational Risks

1. 14Our operations are subject to conditions inherent in the oilfield services industry
2. 15Our assets require capital for maintenance, upgrades, and refurbishment, and we may require capital expenditures for new equipment
3. 16Seasonal and adverse weather conditions and the physical risks arising from climate change may have a negative impact on our business and result of operations, including by impacting operations, increasing costs, and adversely affecting demand for our products and services

Risks Related to Our Customers and Suppliers

1. 17We are exposed to the credit risk of our customers, and the deterioration of the financial condition of our customers could adversely affect our financial results
2. 18We are dependent on customers in a single industry. The loss of one or more significant customers could adversely affect our financial condition, prospects, and results of operations
3. 19Certain of our product lines are subject to the risk of supplier concentration, and certain of our product lines are subject to exclusive distribution arrangements, which we may not be able to maintain
4. 20Tariffs and other trade measures could adversely affect our business, results of operations, financial position, and cash flows

Regulatory, Compliance, and Legal Risks

1. 21Oilfield anti-indemnity provisions enacted by many states may restrict or prohibit a party’s indemnification of us
2. 22We may be subject to claims for personal injury and property damage or other litigation, which could materially adversely affect our financial condition, prospects, and results of operations
3. 23Delays or restrictions in obtaining, or inability to obtain or renew, permits or authorizations by our customers for their operations or by us for our operations could impair our business
4. 24If we do not perform our operations in accordance with government, industry, customer, or our own stringent occupational safety, health, and environmental standards, we could lose business from our customers, many of whom have an increased focus on environmental and safety issues
5. 25Federal, state, and local legislative and regulatory initiatives relating to hydraulic fracturing could prohibit, restrict, or limit hydraulic fracturing operations, or increase our operating costs
6. 26Studies by either state or federal agencies demonstrating a correlation between earthquakes and oil and natural gas activities could result in increased regulatory and operational burdens
7. 27We are subject to complex U.S. and foreign laws and regulations governing anti-corruption and export controls and economic sanctions
8. 28Changes in transportation regulations may increase our costs and negatively impact our results of operations

Risks Related to Technology

1. 29Our success may be affected by the use and protection of our proprietary technology as well as our ability to enter into license agreements. There are limitations to our intellectual property rights and, thus, our right to exclude others from the use of our proprietary technology
2. 30We may be adversely affected by disputes regarding intellectual property rights, and the value of our intellectual property rights is uncertain
3. 31Our success may be affected by our ability to implement new technologies and services
4. 32equipment could make our equipment less competitive or require significant capital investments to keep our equipment competitive
5. 33We rely on a limited number of manufacturers to produce the proprietary products used in the provision of our services, which exposes us to risks
6. 34Our operations are subject to cybersecurity risks that could have a material adverse effect on our results of operations and financial condition

Risks Related to Human Capital

1. 35Our executive officers and certain key personnel are critical to our business, and these officers and key personnel may not remain with us in the future
2. 36We may be unable to employ, or maintain the employment of, a sufficient number of key employees, technical personnel, and other skilled and qualified workers

Other Material Risks

1. 37We do not intend to pay dividends on our common stock, and our debt agreements place restrictions on our ability to do so. Consequently, a stockholder’s only opportunity to achieve a return on his investment is if the price of our common stock appreciates
2. 38The market price of our common stock could be adversely affected by, and our stockholders may experience dilution as a result of, sales of substantial amounts of common stock in the public or private markets, including sales by the Company or other large holders
3. 39We have operated at a loss in the past, and there is no assurance of our profitability in the future
4. 40Our future financial condition and results of operations could be adversely impacted by long-lived assets or other asset impairment charges
5. 41A terrorist attack or armed conflict could harm our business
6. 42A portion of our revenue is derived from sales to customers outside of the U.S., which exposes us to risks inherent in doing business internationally
7. 43Our charter and bylaws contain provisions that could delay, discourage, or prevent a takeover attempt even if a takeover might be beneficial to our stockholders, and such provisions may adversely affect the market price of our common stock
8. 44As of December 31, 2024, we had federal and state income tax NOLs of approximately $498.7 million, which will