The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and related notes thereto presented
in this Quarterly Report and the consolidated financial statements and related
notes thereto included in our Annual Report on Form 10-K. This discussion
contains forward-looking statements reflecting our current expectations,
estimates and assumptions concerning events and financial trends that may affect
our future operating results or financial position. Actual results and the
timing of events may differ materially from those contained in these
forward-looking statements due to a number of factors, including those discussed
in Item 1A. "Risk Factors" in our Form 10-K for the year ended December 31,
2022, filed with the Securities and Exchange Commission, or the SEC, on February
24, 2023 and the section entitled "Forward-Looking Statements" appearing
elsewhere in this Quarterly Report.

Overview



  We are an integrated, growth-oriented energy services company focused on
providing products and services to enable the exploration and development of
North American onshore unconventional oil and natural gas reserve as well as the
construction and repair of the electric grid for private utilities, public
investor-owned utilities and co-operative utilities through our infrastructure
services businesses. Our primary business objective is to grow our operations
and create value for stockholders through organic growth opportunities and
accretive acquisitions. Our suite of services includes well completion services,
infrastructure services, natural sand proppant services, drilling services and
other services. Our well completion services division provides hydraulic
fracturing, sand hauling and water transfer services. Our infrastructure
services division provides engineering, design, construction, upgrade,
maintenance and repair services to the electrical infrastructure industry. Our
natural sand proppant services division mines, processes and sells natural sand
proppant used for hydraulic fracturing. Our drilling services division currently
provides rental equipment, such as mud motors and operational tools, for both
vertical and horizontal drilling. In addition to these service divisions, we
also provide aviation services, equipment rentals, crude oil hauling services,
remote accommodations and equipment manufacturing. We believe that the services
we offer play a critical role in increasing the ultimate recovery and present
value of production streams from unconventional resources as well as in
maintaining and improving electrical infrastructure. Our complementary suite of
services provides us with the opportunity to cross-sell our services and expand
our customer base and geographic positioning.

  The growth of our industrial businesses is ongoing. We offer infrastructure
engineering services focused on the transmission and distribution industry and
also have equipment manufacturing operations and offer fiber optic services. Our
equipment manufacturing operations provide us with the ability to repair much of
our existing equipment in-house, as well as the option to manufacture certain
new equipment we may need in the future. Our fiber optic services include the
installation of both aerial and buried fiber. We are continuing to explore other
opportunities to expand our industrial business lines.

Although demand across our three largest segments improved during 2022 and
remained strong during the three months ended March 31, 2023, we continue to
address the external challenges in today's economic environment as we remain
disciplined with our spending and are focused on continuing to improve our
operational efficiencies and cost structure and on enhancing value for our
stockholders.

Overview of Our Industries

Oil and Natural Gas Industry

   The oil and natural gas industry has traditionally been volatile and is
influenced by a combination of long-term, short-term and cyclical trends,
including the domestic and international supply and demand for oil and natural
gas, current and expected future prices for oil and natural gas and the
perceived stability and sustainability of those prices, production depletion
rates and the resultant levels of cash flows generated and allocated by
exploration and production companies to their drilling, completion and related
services and products budgets. The oil and natural gas industry is also impacted
by general domestic and international economic conditions, political instability
in oil producing countries, government regulations (both in the United States
and elsewhere), levels of customer demand, the availability of pipeline
capacity, storage capacity, shortages of equipment and materials and other
conditions and factors that are beyond our control.

Demand for most of our oil and natural gas products and services depends
substantially on the level of expenditures by companies in the oil and natural
gas industry. The levels of capital expenditures of our customers are
predominantly driven by the prices of oil and natural gas. In March and April
2020, concurrent with the COVID-19 pandemic and quarantine orders in the U.S.
and worldwide, oil prices dropped sharply to below zero dollars per barrel for
the first time in history due to factors including significantly reduced demand
and a shortage of storage facilities. In 2021, U.S. oil production stabilized as
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commodity prices increased and demand for crude oil rebounded. We saw
improvements in the oilfield services industry and in both pricing and
utilization of our well completion and drilling services during 2022. During the
first quarter of 2023, pricing for crude oil and natural gas declined from
levels seen in 2022, which may slow down completion activities for our customers
and, as a result, reduce demand for our well completion services. Further, the
ongoing war and related humanitarian crisis in Ukraine could continue to have an
adverse impact on the global energy markets and volatility of commodity prices.

In response to market conditions, we have temporarily shut down our cementing
and acidizing operations and flowback operations beginning in July 2019, our
contract drilling operations beginning in December 2019, our rig hauling
operations beginning in April 2020, our coil tubing, pressure control and full
service transportation operations beginning in July 2020 and our crude oil
hauling operations beginning in July 2021. We continue to monitor the market to
determine if and when we can recommence these services.

We are currently operating three of our six pressure pumping fleets. Subject to
market conditions, supply chain constraints and liquidity requirements, we have
plans to upgrade one spread to Tier 4 dual fuel as well as upgrade two fleets to
Tier 2 dual fuel, giving us a total of four dual fuel fleets by year-end 2023.
Continuing supply chain disruptions have resulted in backlogs of equipment and
replacement parts for our and our competitors' pressure pumping fleets, which we
expect to persist through at least the first half of 2023. Any of these factors
may result in the delay of our plans to activate, convert or upgrade our
existing pressure pumping fleets in the second half of 2023, which may adversely
impact our business, financial condition and cash flow.

Natural Sand Proppant Industry



  In our natural sand proppant services business, we experienced a significant
decline in demand for our sand proppant in the second half of 2019 and
throughout 2020 as a result of completion activity falling due to lower oil
demand and pricing, increased capital discipline by our customers, budget
exhaustion and the COVID-19 pandemic. Activity rebounded modestly in 2021 and
continued to increase throughout 2022 as we saw an increase in the volume of
sand sold. Supply constraints from labor shortages have negatively affected West
Texas in-basin mine operations and increased demand for Northern White frac sand
for the region in 2022. Demand from oil and gas companies in Western Canada and
the Marcellus Shale was also strong in 2022. The increase in activity in 2022
resulted in an increase in demand and pricing for our sand, which continued
throughout the first quarter of 2023. However, as discussed above, pricing for
crude oil and natural gas declined from levels seen in 2022, which may impact
completion activities for our customers and demand for our sand proppant
services.

  As a result of adverse market conditions, production at our Muskie sand
facility in Pierce County, Wisconsin has been temporarily idled since September
2018. Our contracted capacity has provided a baseline of business, which has
kept our Taylor and Piranha plants operating and our costs competitive.

Energy Infrastructure Industry



  Our infrastructure services business provides engineering, design,
construction, upgrade, maintenance and repair services to the electrical
infrastructure industry. We offer a broad range of services on electric
transmission and distribution, or T&D, networks and substation facilities, which
include engineering, design, construction, upgrade, maintenance and repair of
high voltage transmission lines, substations and lower voltage overhead and
underground distribution systems. Our commercial services include the
installation, maintenance and repair of commercial wiring. We also provide storm
repair and restoration services in response to storms and other disasters. We
provide infrastructure services primarily in the northeast, southwest, midwest
and western portions of the United States. We currently have agreements in place
with private utilities, public IOUs and Co-Ops.

During 2022, operational improvements combined with increased crew count drove
enhanced results in our infrastructure services division. Although our average
crew count declined slightly from approximately 93 crews throughout the fourth
quarter of 2022 to approximately 88 crews throughout the first quarter of 2023,
operational efficiencies drove improved results. Funding for projects in the
infrastructure space remains strong with added opportunities expected from the
Infrastructure Investment and Jobs Act, which was signed into law on November
15, 2021. We anticipate the federal spending to begin fueling additional
projects in this sector beginning in late 2023. We continue to focus on
operational execution and pursue opportunities within this sector as we
strategically structure our service offerings for growth, intending to increase
our infrastructure services activity and expand both our geographic footprint
and depth of projects, especially in fiber maintenance and installation
projects.

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We work for multiple utilities primarily across the northeastern, southwestern,
midwestern and western portions of the United States. We believe that we are
well-positioned to compete for new projects due to the experience of our
infrastructure management team, combined with our vertically integrated service
offerings. We are seeking to leverage this experience and our service offerings
to grow our customer base and increase our revenues in the continental United
States over the coming years.

Our infrastructure services business has been adversely impacted by the
outstanding amounts owed to us by the Puerto Rico Electric Power Authority, or
PREPA, for services performed by our subsidiary, Cobra Acquisitions LLC, or
Cobra, in Puerto Rico to restore PREPA's electrical grid damaged by Hurricane
Maria. As of March 31, 2023, PREPA owed us approximately $227.0 million for
services performed excluding approximately $163.2 million of interest charged on
these delinquent balances. See Note 2. Basis of Presentation and Significant
Accounting Policies-Accounts Receivable of our unaudited condensed consolidated
financial statements. PREPA is currently subject to bankruptcy proceedings,
which were filed in July 2017 and are currently pending in the U.S. District
Court for the District of Puerto Rico. As a result, PREPA's ability to meet its
payment obligations under the contracts is largely dependent upon funding from
the Federal Emergency Management Agency, or FEMA, or other sources. On September
30, 2019, we filed a motion with the U.S. District Court for the District of
Puerto Rico seeking recovery of the amounts owed to us by PREPA, which motion
was stayed by the Court. On March 25, 2020, we filed an urgent motion to modify
the stay order and allow our recovery of approximately $62 million in claims
related to a tax gross-up provision contained in the first contract. This
emergency motion was denied on June 3, 2020 and the Court extended the stay of
our motion. On December 9, 2020, the Court again extended the stay of our motion
and directed PREPA to file a status report by June 7, 2021. On April 6, 2021, we
filed a motion to lift the stay order. Following this filing, PREPA initiated
discussion with Cobra, which resulted in PREPA and Cobra filing a joint motion
to adjourn all deadlines relative to the April 6, 2021 motion until the June 16,
2021 omnibus hearing as a result of PREPA's understanding that FEMA would be
releasing a report in the near future relating to the first contract. The joint
motion was granted by the Court on April 14, 2021. On May 26, 2021, FEMA issued
a Determination Memorandum related to the first contract between Cobra and PREPA
in which, among other things, FEMA raised two contract compliance issues and, as
a result, concluded that approximately $47 million in costs were not authorized
costs under the contract. On June 14, 2021, the Court issued an order adjourning
Cobra's motion to lift the stay order to a hearing on August 4, 2021 and
directing Cobra and PREPA to meet and confer in good faith concerning, among
other things, (i) the May 26, 2021 Determination Memorandum issued by FEMA and
(ii) whether and when a second determination memorandum is expected. The parties
were further directed to file an additional status report, which was filed on
July 20, 2021. On July 23, 2021, with our aid, PREPA filed an appeal of the
entire $47 million that FEMA de-obligated in the May 26, 2021 Determination
Memorandum. FEMA approved the appeal in part and denied the appeal in part. FEMA
found that staffing costs of $24.4 million are eligible for funding. On August
4, 2021, the Court denied Cobra's April 6, 2021 motion to lift the stay order,
extended the stay of our motion seeking recovery of amounts owed to Cobra and
directed the parties to file an additional joint status report, which was filed
on January 22, 2022. On January 26, 2022, the Court extended the stay and
directed the parties to file a further status report by July 25, 2022. On June
7, 2022, Cobra filed a motion to lift the stay order. On June 29, 2022 the Court
denied Cobra's motion and extended the stay to January 2023. On November 21,
2022, FEMA issued a Determination Memorandum related to the 100% federal funded
portion of the second contract between Cobra and PREPA in which FEMA concluded
that approximately $5.6 million in costs were not authorized costs under the
contract. On December 21, 2022, FEMA issued a Determination Memorandum related
to the 90% federal cost share portion of the second contract between Cobra and
PREPA in which FEMA concluded that approximately $68.1 million in costs were not
authorized costs under the contract. PREPA filed a first-level administrative
appeal of the November 21, 2022 Determination Memorandum and has indicated that
they will review the December 21, 2022 Determination Memorandums and, to the
extent they feel plausible, file a first-level administrative appeal of the
unauthorized amounts. On January 7, 2023, Cobra and PREPA filed a joint status
report with the Court, in which PREPA requested that the Court continue the stay
through July 31, 2023 and Cobra requested that the stay be lifted. On January
18, 2023, the Court entered an order extending the stay and directing the
parties to file a further status report addressing (i) the status of any
administrative appeals in connection with the November and December
determination memorandums regarding the second contract, (ii) the status of the
criminal proceedings against the former Cobra president and the FEMA official
that concluded in December 2022, and (iii) a summary of the outstanding and
unpaid amounts arising from the first and second contracts and whether PREPA
disputes Cobra's entitlement to these amounts with the Court by July 31, 2023.

On January 20, 2023, Cobra submitted a certified claim for approximately $379
million to FEMA pursuant to the federal Contract Disputes Act. On February 1,
2023, FEMA notified Cobra that it had reviewed the claim and determined that no
contract, expressed or implied, exists between FEMA and Cobra. On March 27,
2023, Cobra was notified that FEMA had approved $233 million in Cobra invoices
related to the December 21, 2022 Determination Memorandum. The 90% federal cost
share of this approved amount was $210 million, which was obligated and made
available for draw down on March 27, 2023. Of this $210 million, approximately
$99 million has been represented by both PREPA and FEMA as intended to pay Cobra
for outstanding invoices and the remaining $111 million is a reimbursement to
PREPA for payments already made on Cobra invoices. On March 29, 2023, Cobra
filed a notice of appeal with the Civilian Board of Contract Appeals related to
the certified
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claim submitted in January 2023. On April 25, 2023, FEMA filed a motion to dismiss Cobra's appeal alleging lack of jurisdiction.



We believe all amounts charged to PREPA were in accordance with the terms of the
contracts. Further, we believe these receivables are collectible. However, in
the event PREPA (i) does not have or does not obtain the funds necessary to
satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary
funds but refuses to pay the amounts owed to us or (iii) otherwise does not pay
amounts owed to us for services performed, the receivable may not be collected
and our financial condition, results of operations and cash flows would be
materially and adversely affected. In addition, government contracts are subject
to various uncertainties, restrictions and regulations, including oversight
audits and compliance reviews by government agencies and representatives. In
this regard, on September 10, 2019, the U.S. District Court for the District of
Puerto Rico unsealed an indictment that charged the former president of Cobra
with conspiracy, wire fraud, false statements and disaster fraud. Two other
individuals were also charged in the indictment. The indictment focused on the
interactions between a former FEMA official and the former President of Cobra.
Neither we nor any of our subsidiaries were charged in the indictment. On May
18, 2022, the former FEMA official and the former president of Cobra each pled
guilty to one-count information charging gratuities related to a project that
Cobra never bid upon and was never awarded or received any monies for. On
December 13, 2022, the Court sentenced the former Cobra president to custody of
the Bureau of Prisons for six months and one day, a term of supervised release
of six months and a fine of $25,000. The Court sentenced the FEMA official to
custody of the Bureau of Prisons for six months and one day, a term of
supervised release of six months and a fine of $15,000. The Court also dismissed
the indictment against the two defendants. We do not expect any additional
activity in the criminal proceeding. Given the uncertainty inherent in the
criminal litigation, however, it is not possible at this time to determine the
potential impacts that the sentencings could have on us. PREPA has stated in
Court filings that it may contend the alleged criminal activity affects Cobra's
entitlement to payment under its contracts with PREPA. It is unclear what
PREPA's position will be going forward. See Note 18. Commitments and
Contingencies to our unaudited condensed consolidated financial statements
included elsewhere in this report for additional information regarding these
investigations and proceedings. Further, as noted above, our contracts with
PREPA have concluded and we have not obtained, and there can be no assurance
that we will be able to obtain, one or more contracts with other customers to
replace the level of services that we provided to PREPA.

First Quarter 2023 Financial Overview



•Total revenue for the first quarter of 2023 increased by $54.0 million, or 87%,
to $116.3 million from $62.3 million for the first quarter of 2022. The increase
in total revenue is primarily due to an increase in well completions, driven
primarily by increased utilization and pricing for our services.

•Net income for the first quarter of 2023 was $8.4 million, or $0.17 per diluted share, as compared to net loss of $14.8 million, or $0.32 loss per diluted share, for the first quarter of 2022.



•Net cash flow provided by operating activities for the first quarter of 2023
was $3.2 million, as compared to net cash flow used in operating activities of
$2.4 million for the first quarter of 2022.

•Adjusted EBITDA (as defined and reconciled below) for the first quarter of 2023
increased by $21.4 million, or 230%, to $30.7 million from $9.3 million for the
first quarter of 2022. See "Non-GAAP Financial Measures" below for a
reconciliation of net income to Adjusted EBITDA.






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Results of Operations



Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
                                                                        Three Months Ended
                                                             March 31, 2023            March 31, 2022
                                                                          (in thousands)
Revenue:
Well completion services                                   $         67,300          $        23,874
Infrastructure services                                              28,280                   23,009
Natural sand proppant services                                       12,467                    9,179
Drilling services                                                     1,825                    2,855
Other services                                                        7,032                    4,732
Eliminations                                                           (584)                  (1,351)
Total revenue                                                       116,320                   62,298

Cost of revenue: Well completion services (exclusive of depreciation and amortization of $4,813 and $6,437, respectively, for the three months ended March 31, 2023 and 2022)

                          52,515                   22,870

Infrastructure services (exclusive of depreciation and amortization of $3,372 and $4,306, respectively, for the three months ended March 31, 2023 and 2022)

                          22,487                   18,903

Natural sand proppant services (exclusive of depreciation, depletion and accretion of $1,186 and $1,792, respectively, for the three months ended March 31, 2023 and 2022)

                                                             7,860                    7,788

Drilling services (exclusive of depreciation and amortization of $1,367 and $1,680, respectively, for the three months ended March 31, 2023 and 2022)

                           2,031                    2,532

Other services (exclusive of depreciation and amortization of $2,210 and $2,933, respectively, for the three months ended March 31, 2023 and 2022)

                                        4,684                    3,664
Eliminations                                                           (584)                  (1,277)
Total cost of revenue                                                88,993                   54,480
Selling, general and administrative expenses                          8,383                    8,668
Depreciation, depletion, amortization and accretion                  12,956                   17,167
Gains on disposal of assets, net                                       (361)                    (196)

Operating income (loss)                                               6,349                  (17,821)
Interest expense, net                                                (3,289)                  (2,349)
Other income, net                                                     8,624                    9,041
Income (loss) before income taxes                                    11,684                  (11,129)
Provision for income taxes                                            3,333                    3,688
Net income (loss)                                          $          8,351          $       (14,817)



  Revenue. Revenue for the three months ended March 31, 2023 increased $54.0
million, or 87%, to $116.3 million from $62.3 million for the three months ended
March 31, 2022. The increase in total revenue is primarily attributable to an
increase in well completions revenue during the three months ended March 31,
2023 primarily due to increased utilization and pricing. Revenue derived from
related parties was $0.2 million for the three months ended March 31, 2023 and
$0.3 million for the three months ended March 31, 2022. Revenue by operating
division was as follows:

  Well Completion Services. Well completion services division revenue increased
$43.4 million, or 182%, to $67.3 million for the three months ended March 31,
2023 from $23.9 million for the three months ended March 31, 2022. The increase
in our well completion services revenue was primarily driven by a 189% increase
in the number of stages completed from 699 for the three months ended March 31,
2022 to 2,018 for the three months ended March 31,
                                       31
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2023 as well as an increase in both pricing for our services and sand and
chemical materials revenue. An average of 3.6 of our fleets were active for the
three months ended March 31, 2023 as compared to an average of 1.6 fleets for
the three months ended March 31, 2022.

  Infrastructure Services. Infrastructure services division revenue increased
$5.3 million, or 23%, to $28.3 million for the three months ended March 31, 2023
from $23.0 million for the three months ended March 31, 2022 primarily due to
operational execution, an increase in crew count, improved pricing for our
services and an increase in storm restoration activity. Average crew count was
88 crews for the three months ended March 31, 2023, as compared to 85 crews for
the three months ended March 31, 2022.

  Natural Sand Proppant Services. Natural sand proppant services division
revenue increased $3.3 million, or 36%, to $12.5 million for the three months
ended March 31, 2023, from $9.2 million for the three months ended March 31,
2022 primarily due to an 45% increase in the average price per ton of sand sold
from $21.44 per ton during the three months ended March 31, 2022 to $31.02 per
ton during the three months ended March 31, 2023, and a 19% increase in tons of
sand sold from 328,591 tons for the three months ended March 31,
2022 to 391,439 tons for the three months ended March 31, 2023.

Drilling Services. Drilling services division revenue decreased $1.1 million, or
38%, to $1.8 million for the three months ended March 31, 2023 as compared to
$2.9 million for the three months ended March 31, 2022. The decrease is
primarily due to a decline utilization for our directional drilling business
from 48% for the three months ended March 31, 2022 to 30% for the three months
ended March 31, 2023.

  Other Services. Other services revenue, consisting of revenue derived from our
aviation, equipment rental, remote accommodation and equipment manufacturing
businesses, increased approximately $2.3 million, or 49%, to $7.0 million for
the three months ended March 31, 2023, from $4.7 million for the three months
ended March 31, 2022. Inter-segment revenue, consisting primarily of revenue
derived from our well completion segment, was $0.4 million and $0.3 million for
the three months ended March 31, 2023 and 2022, respectively.

Revenue from our accommodations business increased $1.9 million primarily due to
an increase in rooms rented during the three months ended March 31, 2023
compared to the three months ended March 31, 2022. Additionally, an average of
287 pieces of equipment were rented to customers during the three months ended
March 31, 2023, an increase of 29% from an average of 222 pieces of equipment
rented to customers during the three months ended March 31, 2022, resulting in
an increase to revenue of $0.3 million.

Cost of Revenue (exclusive of depreciation, depletion, amortization and
accretion expense). Cost of revenue, exclusive of depreciation, depletion,
amortization and accretion expense, increased $34.5 million from $54.5 million,
or 87% of total revenue, for the three months ended March 31, 2022 to $89.0
million, or 77% of total revenue, for the three months ended March 31, 2023. The
increase is primarily due to an increase in activity in our well completions
divisions. Cost of revenue by operating division was as follows:

Well Completion Services. Well completion services division cost of revenue,
exclusive of depreciation and amortization expense, increased $29.6 million, or
130%, to $52.5 million for the three months ended March 31, 2023 from $22.9
million for the three months ended March 31, 2022, primarily due to an increase
in utilization and the cost of consumables. As a percentage of revenue, our well
completion services division cost of revenue, exclusive of depreciation and
amortization expense of $4.8 million and $6.4 million for the three months ended
March 31, 2023 and 2022, respectively, was 78% and 96% for the three months
ended March 31, 2023 and 2022, respectively. The decrease as a percentage of
revenue is primarily due to an increase in utilization as well as improved
pricing.

  Infrastructure Services. Infrastructure services division cost of revenue,
exclusive of depreciation and amortization expense, increased $3.6 million, or
19%, to $22.5 million for the three months ended March 31, 2023 from $18.9
million for the three months ended March 31, 2022, primarily due to an increase
in activity. As a percentage of revenue, cost of revenue, exclusive of
depreciation and amortization expense of $3.4 million and $4.3 million for the
three months ended March 31, 2023 and 2022, respectively, was 80% and 82%
for the three months ended March 31, 2023 and 2022, respectively. The decline as
a percentage of revenue is primarily due to improved pricing, an increase in
storm restoration activity as well as a decline in labor related costs as a
result of improved efficiency of our crews.

Natural Sand Proppant Services. Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, increased $0.1 million, to $7.9 million for the three months ended


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March 31, 2023 from $7.8 million for the three months ended March 31, 2022. As a
percentage of revenue, cost of revenue, exclusive of depreciation, depletion and
accretion expense of $1.2 million and $1.8 million for the three months ended
March 31, 2023 and 2022, respectively, was 63% and 85% for the three months
ended March 31, 2023 and 2022, respectively. The decrease as a percentage of
revenue is primarily due to an 45% increase in price per ton of sand sold.

Drilling Services. Drilling services division cost of revenue, exclusive of
depreciation and amortization expense, decreased $0.5 million, or 20%, to $2.0
million for the three months ended March 31, 2023 from $2.5 million for the
three months ended March 31, 2022. As a percentage of revenue, our drilling
services division cost of revenue, exclusive of depreciation and amortization
expense of $1.4 million and $1.7 million for the three months ended March 31,
2023 and 2022, respectively, was 111% and 86% for the three months ended
March 31, 2023 and 2022, respectively. The increase is primarily due to a
decline in utilization.

  Other Services. Other services division cost of revenue, exclusive of
depreciation and amortization expense, increased $1.0 million, or 27%, to $4.7
million for the three months ended March 31, 2023 from $3.7 million for the
three months ended March 31, 2022 primarily due to increased activity. As a
percentage of revenue, cost of revenue, exclusive of depreciation and
amortization expense of $2.2 million and $2.9 million for the three months ended
March 31, 2023 and 2022, respectively, was 67% and 77% for the three months
ended March 31, 2023 and 2022, respectively. The decrease is primarily due to an
increase in utilization.

Selling, General and Administrative Expenses. Selling, general and administrative, or SG&A, expenses represent the costs associated with managing and supporting our operations. The table below presents a breakdown of SG&A expenses for the periods indicated (in thousands):


                                       Three Months Ended
                               March 31, 2023      March 31, 2022
Cash expenses:
Compensation and benefits     $    4,277          $        2,983
Professional services              1,929                   3,637
Other(a)                           1,911                   1,906
Total cash SG&A expense            8,117                   8,526
Non-cash expenses:
Bad debt provision                  (381)                    (99)

Stock based compensation             647                     241
Total non-cash SG&A expense          266                     142
Total SG&A expense            $    8,383          $        8,668

a. Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.




  Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion,
amortization and accretion decreased $4.2 million, or 24%, to $13.0 million for
the three months ended March 31, 2023 from $17.2 million for the three months
ended March 31, 2022. The decrease is primarily attributable to a decline in
property and equipment depreciation expense as a result of existing assets being
fully depreciated.

Gains on Disposal of Assets, Net. Gains on the disposal of assets were $0.4 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively.



  Operating Income (Loss). We reported operating income of $6.3 million for the
three months ended March 31, 2023 compared to an operating loss of $17.8 million
for the three months ended March 31, 2022. The increase in operating income is
primarily due to an increase in activity and pricing for our well completions
division.

  Interest Expense, Net. Interest expense, net increased $1.0 million, or 43%,
to $3.3 million for the three months ended March 31, 2023 from $2.3 million for
the three months ended March 31, 2022. The increase is primarily due to an
increase in the interest rate under our revolving credit facility.

  Other Income, Net. Other income decreased $0.4 million to $8.6 million for the
three months ended March 31, 2023 compared to $9.0 million for the three months
ended March 31, 2022.
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  Income Taxes. We recorded income tax expense of $3.3 million on pre-tax income
of $11.7 million for the three months ended March 31, 2023 compared to $3.7
million on pre-tax losses of $11.1 million for the three months ended March 31,
2022. Our effective tax rates were 29% and 33% for the three months ended
March 31, 2023 and 2022, respectively. The effective tax rates for the three
months ended March 31, 2023 and 2022 differed from the statutory rate of 21%
primarily due to the mix of earnings between the United States and Puerto Rico
as well as changes in the valuation allowance.


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
net income (loss) before depreciation, depletion, amortization and accretion,
gains on disposal of assets, stock based compensation, interest expense, net,
other income (expense), net (which is comprised of interest on trade accounts
receivable and certain legal expenses) and provision for income taxes, further
adjusted to add back interest on trade accounts receivable. We exclude the items
listed above from net income (loss) in arriving at Adjusted EBITDA because these
amounts can vary substantially from company to company within our industries
depending upon accounting methods and book values of assets, capital structures
and the method by which the assets were acquired. Adjusted EBITDA should not be
considered as an alternative to, or more meaningful than, net loss or cash flows
from operating activities as determined in accordance with GAAP or as an
indicator of our operating performance or liquidity. Certain items excluded from
Adjusted EBITDA 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 Adjusted EBITDA. Our computations of Adjusted EBITDA may not
be comparable to other similarly titled measures of other companies. We believe
that Adjusted EBITDA is a widely followed measure of operating performance and
may also be used by investors to measure our ability to meet debt service
requirements.

The following tables provide a reconciliation of Adjusted EBITDA to the GAAP
financial measure of net income or (loss) for each of our operating segments for
the specified periods (in thousands).

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