10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission File Number: 001-36590

Independence Contract Drilling, Inc.

(Exact name of registrant as specified in its charter)

Delaware	37-1653648
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

20475 State Highway 249, Suite 300

Houston, TX 77070

(Address of principal executive offices)

(281) 598-1230

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange where registered
Common Stock, $0.01 par value per share	ICD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	¨	Accelerated Filer	☐
Non-Accelerated Filer	☒	Smaller Reporting Company	☒
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

15,213,277 shares of the registrant’s Common Stock were outstanding as of April 26, 2024.

INDEPENDENCE CONTRACT DRILLING, INC.

Index to Form 10-Q

Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (Unaudited)	4
Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (Unaudited)	5
Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (Unaudited)	6
Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	34
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3. Defaults Upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	35
Item 6. Exhibits	36
Signatures	37

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in this Quarterly Report on Form 10-Q, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future revenues, income and capital spending. Our forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “plan,” “goal,” “will” or other words that convey the uncertainty of future events or outcomes. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, contingencies and uncertainties include, but are not limited to, the following:

● a decline in or substantial volatility of crude oil and natural gas commodity prices;

● a decrease in domestic spending by the oil and natural gas exploration and production industry;

● fluctuation of our operating results and volatility of our industry;

● inability to maintain or increase pricing of our contract drilling services, or early termination of any term contract for which early termination compensation is not paid;

● our backlog of term contracts declining rapidly;

● the loss of any of our customers, customer consolidations, financial distress or management changes of potential customers or failure to obtain contract renewals and additional customer contracts for our drilling services;

● overcapacity and competition in our industry;

● an increase in interest rates and deterioration in the credit markets;

● our inability to comply with the financial and other covenants in debt agreements;

● unanticipated costs, delays and other difficulties in executing our long-term growth strategy;

● the loss of key management personnel;

● new technology that may cause our drilling methods or equipment to become less competitive;

● labor costs or shortages of skilled workers;

● the loss of or interruption in operations of one or more key vendors;

● the effect of operating hazards and severe weather on our rigs, facilities, business, operations and financial results, and limitations on our insurance coverage;

● restrictive covenants under our debt agreements limiting our ability to conduct our operations;

● inability to obtain consents from the holders of our convertible notes necessary to maintain operations of our drilling rigs;

● increased regulation of drilling in unconventional formations;

● risks related to the ongoing conflict between Russia and Ukraine and conflict in Gaza, including the effects of related sanctions and supply chain disruptions or general effects on the global economy;

● risks associated with a global pandemic that would cause a reduction in economic activity or reduction in oil and natural gas demand or prices;

● the incurrence of significant costs and liabilities in the future resulting from our failure to comply with new or existing environmental regulations or an accidental release of hazardous substances into the environment; and

● the potential failure by us to establish and maintain effective internal control over financial reporting and cybersecurity risks.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Form 10-Q and Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

3

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Independence Contract Drilling, Inc.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except par value and share amounts)

	March 31,		December 31,
	2024		2023
Assets
Cash and cash equivalents	$	6,944	$	5,565
Accounts receivable		27,188		31,695
Inventories		1,570		1,557
Prepaid expenses and other current assets		3,697		4,759
Total current assets		39,399		43,576
Property, plant and equipment, net		342,701		348,193
Other long-term assets, net		2,670		2,908
Total assets	$	384,770	$	394,677
Liabilities and Stockholders’ Equity
Liabilities
Current portion of long-term debt	$	1,525	$	1,226
Accounts payable		18,800		22,990
Accrued liabilities		9,783		16,371
Total current liabilities		30,108		40,587
Long-term debt, net		170,378		154,549
Deferred income taxes, net		9,521		9,761
Other long-term liabilities		1,316		8,201
Total liabilities		211,323		213,098
Commitments and contingencies (Note 12)
Stockholders’ equity
Common stock, $0.01 par value, 250,000,000 shares authorized; 15,369,536 and 14,523,124 shares issued, respectively, and 15,213,277 and 14,425,864 shares outstanding, respectively		152		144
Additional paid-in capital		623,174		622,169
Accumulated deficit		(445,780)		(436,794)
Treasury stock, at cost, 156,259 shares and 97,260 shares, respectively		(4,099)		(3,940)
Total stockholders’ equity		173,447		181,579
Total liabilities and stockholders’ equity	$	384,770	$	394,677

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

4

Independence Contract Drilling, Inc.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2024		2023
Revenues	$	46,636	$	63,756
Costs and expenses
Operating costs		30,816		37,460
Selling, general and administrative		4,337		6,727
Depreciation and amortization		11,826		10,854
Gain on disposition of assets, net		(1,004)		(14)
Total costs and expenses		45,975		55,027
Operating income		661		8,729
Interest expense		(9,878)		(8,719)
(Loss) income before income taxes		(9,217)		10
Income tax benefit		(231)		(2)
Net (loss) income	$	(8,986)	$	12
(Loss) income per share:
Basic	$	(0.62)	$	0.00
Diluted	$	(0.62)	$	0.00
Weighted average number of common shares outstanding:
Basic		14,504		13,865
Diluted		14,504		13,881

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

5

Independence Contract Drilling, Inc.

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

				Additional						Total
	Common Stock			Paid-in		Accumulated		Treasury		Stockholders'
	Shares	Amount		Capital		Deficit		Stock		Equity
Balances at December 31, 2023	14,425,864	$	144	$	622,169	$	(436,794)	$	(3,940)	$	181,579
Restricted stock issued	692,607		7		(7)		—		—		—
RSUs vested, net of shares withheld for taxes	153,805		2		(14)		—		—		(12)
Purchase of treasury stock	(58,999)		(1)		—		—		(159)		(160)
Stock-based compensation	—		—		1,026		—		—		1,026
Net loss	—		—		—		(8,986)		—		(8,986)
Balances at March 31, 2024	15,213,277	$	152	$	623,174	$	(445,780)	$	(4,099)	$	173,447

				Additional						Total
	Common Stock			Paid-in		Accumulated		Treasury		Stockholders'
	Shares	Amount		Capital		Deficit		Stock		Equity
Balances at December 31, 2022	13,613,759	$	136	$	617,606	$	(399,097)	$	(3,933)	$	214,712
RSUs vested, net of shares withheld for taxes	448,635		5		(390)		—		—		(385)
Issuance of common stock through at-the-market facility, net of offering costs	—		—		(34)		—		—		(34)
Stock-based compensation	—		—		1,374		—		—		1,374
Net income	—		—		—		12		—		12
Balances at March 31, 2023	14,062,394	$	141	$	618,556	$	(399,085)	$	(3,933)	$	215,679

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

6

Independence Contract Drilling, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities
Net (loss) income	$	(8,986)	$	12
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		11,826		10,854
Stock-based compensation		216		1,672
Gain on disposition of assets, net		(1,004)		(14)
Non-cash interest expense		6,487		11,619
Amortization of deferred financing costs		27		27
Amortization of Convertible Notes debt discount and issuance costs		2,720		2,378
Deferred income taxes		(231)		(13)
Credit loss expense		—		31
Changes in operating assets and liabilities
Accounts receivable		4,507		(2,094)
Inventories		(13)		(35)
Prepaid expenses and other assets		1,208		324
Accounts payable and accrued liabilities		(5,758)		(11,203)
Net cash provided by operating activities		10,999		13,558
Cash flows from investing activities
Purchases of property, plant and equipment		(9,974)		(18,835)
Proceeds from the sale of assets		1,783		748
Net cash used in investing activities		(8,191)		(18,087)
Cash flows from financing activities
Payments to redeem Convertible Notes		(3,500)		—
Borrowings under Revolving ABL Credit Facility		19,624		11,321
Repayments under Revolving ABL Credit Facility		(16,874)		(4,334)
Proceeds from issuance of common stock through at-the-market facility, net of issuance costs		—		(34)
Purchase of treasury stock		(160)		—
Taxes paid for vesting of RSUs		(12)		(385)
Payments for finance lease obligations		(507)		(650)
Net cash (used in) provided by financing activities		(1,429)		5,918
Net increase in cash and cash equivalents		1,379		1,389
Cash and cash equivalents
Beginning of period		5,565		5,326
End of period	$	6,944	$	6,715

7

	Three Months Ended March 31,
(in thousands)	2024		2023
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	549	$	419
Cash paid during the period for taxes	$	110	$	—
Supplemental disclosure of non-cash investing and financing activities
Change in property, plant and equipment purchases in accounts payable	$	(4,135)	$	(5,091)
Additions to property, plant and equipment through finance leases	$	1,513	$	51
Extinguishment of finance lease obligations from sale of assets classified as finance leases	$	(304)	$	—

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

8

INDEPENDENCE CONTRACT DRILLING, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1.Nature of Operations and Recent Events

Except as expressly stated or the context otherwise requires, the terms “we,” “us,” “our,” “ICD,” and the “Company” refer to Independence Contract Drilling, Inc. and its subsidiary.

We provide land-based contract drilling services for oil and natural gas producers targeting unconventional resource plays in the United States. We own and operate a premium fleet comprised of modern, technologically advanced drilling rigs.

We currently focus our operations on unconventional resource plays located in geographic regions that we can efficiently support from our Houston, Texas and Midland, Texas facilities in order to maximize economies of scale. Currently, our rigs are operating in the Permian Basin and the Haynesville Shale; however, our rigs have previously operated in the Eagle Ford Shale, Mid-Continent and Eaglebine regions as well.

Our business depends on the level of exploration and production activity by oil and natural gas companies operating in the United States, and in particular, the regions where we actively market our contract drilling services. The oil and natural gas exploration and production industry is historically cyclical and characterized by significant changes in the levels of exploration and development activities. Oil and natural gas prices and market expectations of potential changes in those prices significantly affect the levels of those activities. Worldwide political, regulatory, economic and military events, as well as natural disasters have contributed to oil and natural gas price volatility historically and are likely to continue to do so in the future. Any prolonged reduction in the overall level of exploration and development activities in the United States and the regions where we market our contract drilling services, whether resulting from changes in oil and natural gas prices or otherwise, could materially and adversely affect our business.

Market Conditions

Oil prices (WTI-Cushing) reached a high of $123.64 per barrel on March 8, 2022; however, prices have fallen since those highs. As of April 22, 2024, oil was $83.82 per barrel.

On August 22, 2022, natural gas prices reached a high of $9.85 per mmcf, but fell to $3.52 per mmcf as of December 31, 2022 and were $2.58 per mmcf as of December 31, 2023 and $1.59 per mmcf as of April 23, 2024. These commodity price declines, as well as take away capacity issues, caused market conditions in the Haynesville Shale to weaken rapidly, which resulted in a reduction in the number of drilling rigs operating in the Haynesville Shale, including a reduction in our operating rigs. At the end of the first quarter of 2023, we began relocating a portion of these rigs to the Permian Basin where market conditions were stronger. However, there can be no assurance that market conditions in the Permian Basin will not decline and will not be adversely affected by recent volatility in oil prices nor any assurance that we will be successful in marketing our rigs in the Permian Basin or that they will be contracted on a timely basis or upon terms that are acceptable to us.

2.Interim Financial Information

These unaudited consolidated financial statements include the accounts of the Company and its subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These consolidated financial statements should be read along with our audited consolidated financial statements for the year ended December 31, 2023, included in our Annual Report on Form 10-K for the year ended December 31, 2023. In management’s opinion, these financial statements contain all adjustments necessary for a fair statement of our financial position, results of operations, cash flows and changes in stockholders’ equity for all periods presented.

As we had no items of other comprehensive income in any period presented, no other components of comprehensive income are presented.

Interim results for the three months ended March 31, 2024 may not be indicative of results that will be realized for the full year ending December 31, 2024.

9

Segment and Geographical Information

Our operations consist of one reportable segment because all of our drilling operations are located in the United States and have similar economic characteristics. Corporate management administers all properties as a whole rather than as discrete operating segments. Operational data is tracked by rig; however, financial performance is measured as a single enterprise and not on a rig-by-rig basis. Further, the allocation of capital resources is employed on a project-by-project basis across our entire asset base to maximize profitability without regard to individual geographic areas.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This guidance requires an entity to disclose significant segment expenses impacting profit and loss that are regularly provided to the Chief Operating Decision Maker (“CODM”) to assess segment performance and to make decisions about resource allocations. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We do not expect the standard to have a material impact on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Also, this guidance requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this guidance are effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact this guidance will have on our financial statement disclosures.

3.Revenue from Contracts with Customers

The following table summarizes revenues from our contracts disaggregated by revenue generating activity contained therein for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
(in thousands)	2024		2023
Dayrate drilling	$	41,645	$	60,242
Mobilization		1,831		1,371
Reimbursables		3,077		1,902
Early termination		53		—
Capital modification		—		218
Other		30		23
Total revenue	$	46,636	$	63,756

Two customers accounted for approximately 25% and 15% of consolidated revenue for the three months ended March 31, 2024. Three customers accounted for approximately 14%, 12%, and 11% of consolidated revenue for the three months ended March 31, 2023.

Accounts receivable is our right to consideration once it becomes unconditional. Payment terms typically range from 30 to 60 days. The following table provides information about receivables and contract liabilities related to contracts with customers. There were no contract assets recorded as of March 31, 2024 or December 31, 2023.

	March 31,		December 31,
(in thousands)	2024		2023
Receivables, which are included in “Accounts receivable”	$	26,869	$	31,380
Contract liabilities, which are included in “Accrued liabilities”	$	(614)	$	(578)

10

The primary changes in contract liabilities balances during the period are as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Revenue recognized that was included in contract liabilities at beginning of period	$	431	$	540
Increase in contract liabilities due to cash received, excluding amounts recognized as revenue	$	(467)	$	(751)

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2024. The estimated revenue does not include amounts of variable consideration that are constrained.

	Year Ending December 31,
(in thousands)	2024		2025		2026		2027
Revenue	$	614	$	—	$	—	$	—

The amounts presented in the table above consist only of fixed consideration related to fees for rig mobilizations and demobilizations, if applicable, which are allocated to the drilling services performance obligation as such performance obligation is satisfied. We have elected the exemption from disclosure of remaining performance obligations for variable consideration. Therefore, dayrate revenue to be earned on a rate scale associated with drilling conditions and level of service provided for each fractional-hour time increment over the contract term and other variable consideration such as penalties and reimbursable revenues, have been excluded from the disclosure.

Contract Costs

We capitalize costs incurred to fulfill our contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy our performance obligations under the contract and (iii) are expected to be recovered through revenue generated under the contract. These costs, which principally relate to rig mobilization costs at the commencement of a new contract, are deferred as a current or noncurrent asset (depending on the length of the contract term), and amortized ratably to contract drilling expense as services are rendered over the initial term of the related drilling contract. Such contract costs, recorded as “Prepaid expenses and other current assets”, amounted to $0.6 million and $0.5 million on our consolidated balance sheets at March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024, contract costs increased by $1.1 million and we amortized $1.0 million of contract costs, respectively. During the three months ended March 31, 2023, contract costs increased by $0.9 million and we amortized $0.5 million of contract costs.

4.Leases

We have multi-year operating and financing leases for corporate office space, field location facilities, land, vehicles and various other equipment used in our operations. We also have a significant number of rentals related to our drilling operations that are day-to-day or month-to-month arrangements.

11

The components of lease expense were as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Operating lease expense	$	299	$	191
Short-term lease expense		2,143		1,730
Variable lease expense		127		162
Finance lease expense:
Amortization of right-of-use assets	$	467	$	555
Interest expense on lease liabilities		73		73
Total finance lease expense		540		628
Total lease expense	$	3,109	$	2,711

Supplemental cash flow information related to leases is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	253	$	196
Operating cash flows from finance leases	$	73	$	73
Financing cash flows from finance leases	$	507	$	650
Right-of-use assets obtained or recorded in exchange for lease obligations:
Operating leases	$	75	$	618
Finance leases	$	1,513	$	51

Supplemental balance sheet information related to leases is as follows:

(in thousands)	March 31, 2024			December 31, 2023
Operating leases:
Other long-term assets, net	$	2,029		$	2,205
Accrued liabilities	$	889		$	934
Other long-term liabilities		1,242			1,375
Total operating lease liabilities	$	2,131		$	2,309
Finance leases:
Property, plant and equipment	$	5,931		$	6,238
Accumulated depreciation		(1,734)			(1,829)
Property, plant and equipment, net	$	4,197		$	4,409
Current portion of long-term debt	$	1,525		$	1,226
Long-term debt		2,204			1,659
Total finance lease liabilities	$	3,729		$	2,885
Weighted-average remaining lease term
Operating leases		3.2 years			3.4 years
Finance leases		2.2 years			2.0 years
Weighted-average discount rate
Operating leases		8.60	%		8.75	%
Finance leases		7.95	%		8.25	%

12

Maturities of lease liabilities at March 31, 2024 were as follows:

(in thousands)	Operating Leases		Finance Leases
2024	$	840		1,395
2025		540		1,486
2026		401		1,118
2027		370		97
2028		285		—
Total cash lease payment		2,436		4,096
Less: imputed interest		(305)		(367)
Total lease liabilities	$	2,131	$	3,729

5.Financial Instruments and Fair Value

Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 Unadjusted quoted market prices for identical assets or liabilities in an active market;

Level 2 Quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets or liabilities; and

Level 3 Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, certain accrued liabilities and our debt. Our debt consists primarily of our Convertible Notes and Revolving ABL Facility as of March 31, 2024 and December 31, 2023. The fair value of cash and cash equivalents, accounts receivable, accounts payable and certain accrued liabilities approximate their carrying value because of the short-term nature of these instruments. We believe the carrying value of our Revolving ABL Facility approximates fair value because the interest rates are variable and reflective of current market rates.

The following table summarizes the carrying value and fair value of our Convertible Notes as of March 31, 2024 and December 31, 2023.

	March 31, 2024				December 31, 2023
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Convertible Notes	$	189,023	$	151,000	$	179,209	$	164,800

The fair value of the Convertible Notes is also determined to be a Level 3 measurement as this instrument is not actively traded and was estimated using a binomial lattice model. The factors used to determine fair value as of March 31, 2024 are subject to management's judgement and expertise and include, but are not limited to our share price, expected price volatility (48.0%), risk-free rate (4.6%), and credit spread (2,855 bps) relative to our credit rating. The factors used to determine fair value as of December 31, 2023 included, but were not limited to our share price, expected price volatility (58.5%), risk-free rate (4.2%) and credit spread (2,702 bps) relative to our credit rating.

There were no transfers between fair value measurement levels during the first quarter of 2024.

See Note 9 “Stock-Based Compensation” for fair value of liability-based awards.

13

Fair value measurements are applied with respect to our non-financial assets and liabilities measured on a non-recurring basis, which would consist of measurements primarily related to the potential impairment of long-lived assets.

6.Inventories

All of our inventory as of March 31, 2024 and December 31, 2023 consisted of supplies held for use in our drilling operations.

7.Supplemental Balance Sheet Information

Prepaid expenses and other current assets consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Prepaid insurance	$	2,390	$	3,502
Deferred mobilization costs		591		467
Prepaid and other current assets		716		790
	$	3,697	$	4,759

Accrued liabilities consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Accrued salaries and other compensation	$	2,643	$	6,625
Insurance		1,859		2,996
Deferred mobilization revenues		614		578
Property and other taxes		1,617		2,124
Interest		46		25
Operating lease liability - current		889		934
Cash-settled SARs liability		1,183		2,054
Other		932		1,035
	$	9,783	$	16,371

8.Long-term Debt

Our long-term debt consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Convertible Notes due March 18, 2026	$	189,023	$	179,209
Revolving ABL Credit Facility due September 30, 2025		8,250		5,500
Finance lease obligations		3,729		2,885
		201,002		187,594
Less: Convertible Notes debt discount and issuance costs		(29,099)		(31,819)
Less: current portion of finance leases		(1,525)		(1,226)
Long-term debt, net	$	170,378	$	154,549

Convertible Notes

On March 18, 2022, we entered into a subscription agreement with affiliates of MSD Partners, L.P. and an affiliate of Glendon Capital Management L.P. (the “Subscription Agreement”) for the placement of $157.5 million aggregate principal amount of convertible secured PIK toggle notes due 2026 (the “Convertible Notes”), and currently have $189.0 million of Convertible Notes outstanding as of March 31, 2024. The Convertible Notes were issued pursuant to an Indenture, dated as of March 18, 2022 (the “Indenture”). The obligations under the Convertible Notes are secured by a first priority lien on collateral other than accounts receivable, deposit accounts and other related collateral pledged as first priority collateral (“Priority Collateral”) under the Revolving ABL Credit Facility (defined below). The Convertible Notes mature on March 18, 2026.

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The Convertible Notes have a cash interest rate of the Secured Overnight Financing Rate plus a 10-basis point credit spread, with a floor of 1% (collectively, “SOFR”) plus 12.5%. The Convertible Notes have a PIK interest rate of SOFR plus 9.5%. We have the right at our option, to PIK interest under the Convertible Notes for the entire term of the Convertible Notes. Interest on the Convertible Notes is due on March 31 and September 30 each year. We elected to PIK outstanding interest as of September 30, 2022, March 31, 2023, September 30, 2023 and March 31, 2024 resulting in the issuance of an additional $50.0 million principal amount of Convertible Notes as of March 31, 2024. We also have elected to PIK outstanding interest that will be due and payable on September 30, 2024. As of March 31, 2024 and December 31, 2023, accrued PIK interest of $0.1 million and $6.8 million, respectively, was classified as “Other Long-Term Liabilities” on our consolidated balance sheets.

The effective conversion price of the Convertible Notes is $4.51 per share (221.72949 shares of Common Stock per $1,000 principal amount of Convertible Notes). We may issue up to $7.5 million of additional Convertible Notes. We may convert all Convertible Notes (including PIK notes) in connection with a Qualified Merger Conversion (as defined in the Indenture) and may issue additional shares of common stock upon conversion of Convertible Notes to the extent the number of shares issuable upon such conversion would exceed the number of shares of common stock issuable at the otherwise then-current conversion price.

Each noteholder has a right to convert our Convertible Notes into shares of ICD common stock at any time after issuance through maturity. The conversion price is $4.51 per share. Under the Indenture, a holder is not entitled to receive shares of our common stock upon conversion of any Convertible Notes to the extent to which the aggregate number of shares of common stock that may be acquired by such beneficial owner upon conversion of Convertible Notes, when added to the aggregate number of shares of common stock deemed beneficially owned, directly or indirectly, by such beneficial owner and each person subject to aggregation of Common Stock with such beneficial owner under Section 13 or Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules promulgated thereunder at such time (an “Aggregated Person”) (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on such beneficial owner’s or such person’s right to convert, exercise or purchase similar to this limitation), as determined pursuant to the rules and regulations promulgated under Section 13(d) of the Exchange Act, would exceed 9.9% (the “Restricted Ownership Percentage”) of the total issued and outstanding shares of Common Stock (the “Section 16 Conversion Blocker”); provided that any holder has the right to elect for the Restricted Ownership Percentage to be 19.9% with respect to such Holder, (x) at any time, in which case, such election will become effective sixty-one days following written notice thereof to us or (y) in the case of a holder acquiring Convertible Notes on the Issue Date, in such Holder’s Subscription Agreement. In lieu of any shares of common stock not delivered to a converting holder by operation of the Restricted Ownership Percentage limitation, we will deliver to such Holder Pre-Funded Warrants in respect of any equal number of shares of common stock. Such Pre-Funded Warrants will contain substantially similar Restricted Ownership Percentage terms.

The Indenture includes a mandatory redemption offer requirement (the “Mandatory Offer Requirement”). The mandatory offer price is an amount in cash equal to the principal amount of such Note plus accrued and unpaid interest on such Note. We redeemed $5.0 million of Convertible Notes plus accrued interest on a quarterly basis June 30, 2023 through December 31, 2023, and redeemed $3.5 million of Convertible Notes plus accrued interest on March 31, 2024. We are obligated to offer to redeem $3.5 million of Convertible Notes on a quarterly basis through March 31, 2025. We have the ability and intent to refinance the mandatory redemption offers that occur within the next twelve months under our Revolving ABL Credit Facility and as a result such amounts have been classified as long-term debt. On each of the mandatory offer payment dates we borrowed the principal amount of such note under our Revolving ABL Credit Facility to refinance the accepted mandatory offerings.

The Indenture contains financial covenants, including a liquidity covenant of $10.0 million; a springing fixed charge coverage ratio covenant of 1.00 to 1.00 that is tested when availability under the Revolving ABL Credit Facility (defined below) is below $5.0 million at any time that the Convertible Notes are outstanding; and capital expenditure limits of $14.8 million during the nine months ended September 30, 2024 and $11.25 million during the nine months ended June 30, 2025, subject to adjustment upward by $500,000 per year for each rig above 17 that operates during each year. In addition, capital expenditures are excluded from this covenant (a) if funded from equity proceeds, (b) if relating to the reactivation of a rig so long as (i) we have a signed contract with a customer with respect to each such rig of at least one year duration providing for early termination payments consistent with past practice equal to at least the expected margin on the contract, (ii) the expected margin on such rig contract will be equal to or exceed such reactivation capital expenditures, and (iii) the reactivation capital expenditures, rig contract and the expected margin calculation are approved by our board of directors or (c) relate to other capital expenditures specifically approved by

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written or electronic consent by both (i) the required holders (which approval may, for the avoidance of doubt, be provided by the required holders in their sole discretion for an amount of capital expenditures to be committed or made by us or a subsidiary of us within 90 days after the date of such consent) and (ii) our Board of Directors. The Indenture also contains other customary affirmative and negative covenants, including limitations on indebtedness, liens, fundamental changes, asset dispositions, restricted payments (including the payment of dividends), investments and transactions with affiliates. The Indenture also provides for customary events of default, including breaches of material covenants, defaults under the Revolving ABL Credit Facility or other material agreements for indebtedness, and a change of control.

At any time on or after September 18, 2024, we may execute an in-substance defeasance of the Convertible Notes and suspend all covenants and related security interests in the Company’s equipment and assets under the Indenture by irrevocably depositing with the trustee funds sufficient funds to pay the principal and interest on the outstanding Convertible Notes through the maturity date of the Convertible Notes. Our Board of Directors has initiated a formal review process to begin evaluating alternatives with respect to refinancing the Convertible Notes and other strategic opportunities and has formed a special committee of independent directors for that purpose. There can be no assurance that this process or evaluation will result in one or more transactions or any particular transaction or strategic outcome.

We are in compliance with our covenants as of March 31, 2024.

Upon a Qualified Merger (defined below), we may elect to convert all, but not less than all, of the Convertible Notes at a Conversion Rate equal to our Conversion Rate on the date on which the relevant “Qualified Merger” is consummated (a “Qualified Merger Conversion”), so long as the “MOIC Condition” is satisfied with respect to such potential Qualified Merger Conversion. A “Qualified Merger” means a Common Stock Change Event consolidation, merger, combination or binding or statutory share exchange of the Company with a Qualified Acquirer. A “Qualified Merger Conversion Date” means the date on which the relevant Qualified Merger is consummated. A “Qualified Acquirer” means any entity that (i) has its common equity listed on the New York Stock Exchange, the NYSE American, Nasdaq Global Market or Nasdaq Global Select Market, or Toronto Stock Exchange, (ii) has an aggregate equity market capitalization of at least $350 million, and (iii) has a “public float” (as defined in Rule 12b-2 under the Securities Act of 1933) of at least $250 million in each case, as determined by the calculation agent based on the last reported sale price of such common equity on date of the signing of the definitive agreement in respect of the relevant Common Stock Change Event. A “Common Stock Change Event” means the occurrence of any: (i) recapitalization, reclassification or change of our common stock (other than (x) changes solely resulting from a subdivision or combination of the common stock, (y) a change only in par value or from par value to no par value or no par value to par value and (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities); (ii) consolidation, merger, combination or binding or statutory share exchange involving us; (iii) sale, lease or other transfer of all or substantially all of the assets of ours and our Subsidiaries, taken as a whole, to any person; or (iv) other similar event, and, as a result of which, the common stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing. A “Company Conversion Rate” means, in respect of any Qualified Merger, the greater of (a) the relevant Conversion Rate, (b) $1,000 divided by our Conversion VWAP, and (c) the lowest rate that would cause the MOIC Condition to be satisfied with respect to the related Qualified Merger Conversion. A “Company Conversion VWAP” means, in respect of any Qualified Merger, the average of daily VWAP over the five (5) VWAP Trading Days prior to the earlier of signing or public announcement (by any party, and whether formal or informal, including for the avoidance of doubt any media reports thereof) of a definitive agreement in respect of such Qualified Merger as calculated by the Calculation Agent. The “MOIC Condition” means, with respect to any potential Qualified Merger Conversion, MOIC is greater than or equal to the MOIC Required Level. The “MOIC Required Level” means $1,350. “MOIC” means, with respect to any potential Qualified Merger Conversion, an amount determined by the Calculation Agent equal to the aggregate return on a hypothetical Note with $1,000 face amount, issued on the Issue Date, from the Issue Date through the potential Qualified Merger Conversion Date, including (x) the aggregate amount of any cash interest paid on such hypothetical Note from the Issue Date through the potential Qualified Merger Conversion Date, (y) the aggregate fair market value of any Conversion Consideration that would be received by the Holder of such hypothetical Note on the relevant Qualified Merger Conversion Date and (z) the aggregate fair market value of any Conversion Consideration that would be received on the relevant Qualified Merger Conversion Date by the Holder of any PIK Notes issued in respect of (or the relevant increase in value of) such hypothetical Note.

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We recorded a debt discount of $37.8 million upon the issuance of the Convertible Notes and issuance costs consisting of cash fees of $7.4 million and a non-cash structuring fee settled in shares of $2.3 million. The debt discount and issuance costs are recorded as a direct deduction from the Convertible Notes in the consolidated balance sheets and are amortized to interest expense using the effective interest rate method over the term of the Convertible Notes. The effective interest rate for the Convertible Notes as of March 31, 2024 is 25.7%. For the three months ended March 31, 2024, the contractual interest expense was $6.9 million and the debt discount and issuance cost amortization was $2.7 million. For the three months ended March 31, 2023, the contractual interest expense was $5.9 million and the debt discount and issuance cost amortization was $2.4 million.

Revolving ABL Credit Facility

On October 1, 2018, we entered into a $40.0 million revolving credit agreement (the “Revolving ABL Credit Facility”), including availability for letters of credit in an aggregate amount at any time outstanding not to exceed $7.5 million. Availability under the Revolving ABL Credit Facility is subject to a borrowing base calculated based on 85% of the net amount of our eligible accounts receivable, minus reserves. The Revolving ABL Credit Facility has a maturity date of September 30, 2025.

Interest under the Revolving ABL Credit Facility is determined by reference, at our option, to either (i) a “base rate” equal to the higher of (a) the floor, or 0.0%, (b) the federal funds effective rate plus 0.05%, (c) term SOFR for a one month tenor plus 1.0% based on availability and (d) the prime rate of Wells Fargo, plus in each case, an applicable base rate margin ranging from 1.0% to 1.5% based on quarterly availability, or (ii) a revolving loan rate equal to SOFR for the applicable interest period plus an applicable SOFR margin ranging from 2.36% to 2.86% based on quarterly availability. We also pay, on a quarterly basis, a commitment fee of 0.375% (or 0.25% at any time when revolver usage is greater than 50% of the maximum credit) per annum on the unused portion of the Revolving ABL Credit Facility commitment.

The Revolving ABL Credit Facility contains a springing fixed charge coverage ratio covenant of 1.00 to 1.00 that is tested when availability is less than 10% of the maximum credit. The Revolving ABL Credit Facility also contains other customary affirmative and negative covenants, including limitations on indebtedness, liens, fundamental changes, asset dispositions, restricted payments (including the payment of dividends), investments and transactions with affiliates. The Revolving ABL Credit Facility also provides for customary events of default, including breaches of material covenants, defaults under the Indenture or other material agreements for indebtedness, and a change of control. We are in compliance with our financial covenants as of March 31, 2024.

The obligations under the Revolving ABL Credit Facility are secured by a first priority lien on Priority Collateral, which includes all accounts receivable and deposit accounts, and a second priority lien on the Indenture, and are unconditionally guaranteed by all of our current and future direct and indirect subsidiaries. As of March 31, 2024, the weighted-average interest rate on our borrowings was 14.87%. As of March 31, 2024, the borrowing base under our Revolving ABL Credit Facility was $21.9 million, and we had $13.5 million of availability remaining of our $40.0 million commitment on that date.

9.Stock-Based Compensation

In June 2019, we adopted the 2019 Omnibus Incentive Plan (the “2019 Plan”) providing for common stock-based awards to employees and non-employee directors. The 2019 Plan permits the granting of various types of awards, including stock options, restricted stock, restricted stock unit awards, and stock appreciation rights (“SARs”), and up to 4.6 million shares were authorized for issuance. Restricted stock and restricted stock units may be granted for no consideration other than prior and future services. The purchase price per share for stock options and SARs may not be less than the market price of the underlying stock on the date of grant. As of March 31, 2024, approximately 306,008 shares were available for future awards under the 2019 Plan. Our policy is to account for forfeitures of share-based compensation awards as they occur.

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A summary of compensation cost recognized for stock-based payment arrangements is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Compensation cost recognized:
Restricted stock, restricted stock units and stock-settled stock appreciation rights	$	1,026	$	1,374
Cash-settled stock appreciation rights and performance-based phantom units		(810)		298
Total stock-based compensation	$	216	$	1,672

Time-based Restricted Stock and Restricted Stock Units

We have granted time-based restricted stock and restricted stock units to key employees under the 2019 Plan.

Time-based Restricted Stock

In the first quarter of 2024, we granted time-based restricted stock awards that vest over one to three years. We recognize compensation expense on a straight-line basis over the vesting period. The fair value of restricted stock awards is determined based on the estimated fair market value of our shares on the grant date. As of March 31, 2024, there was $1.1 million in unrecognized compensation cost related to unvested restricted stock awards. This cost is expected to be recognized over a weighted-average period of 1.4 years.

A summary of the status of our time-based restricted stock awards and of changes in our time-based restricted stock awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	Shares	Per Share
Outstanding at January 1, 2024	—	$	—
Granted	692,607		1.88
Vested	—		—
Forfeited	—		—
Outstanding at March 31, 2024	692,607	$	1.88

Time-based Restricted Stock Units

We have granted one to three-year, time-vested restricted stock unit awards where each unit represents the right to receive, at the end of a vesting period, one share of ICD common stock. The fair value of time-based restricted stock unit awards is determined based on the estimated fair market value of our shares on the grant date. As of March 31, 2024, there was $1.9 million of total unrecognized compensation cost related to unvested time-based restricted stock unit awards. This cost is expected to be recognized over a weighted-average period of 0.5 years.

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A summary of the status of our time-based restricted stock unit awards and of changes in our time-based restricted stock unit awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	RSUs	Per Share
Outstanding at January 1, 2024	753,180	$	4.10
Granted	—		—
Vested and converted	(151,818)		4.02
Forfeited	(4,221)		4.13
Outstanding at March 31, 2024	597,141	$	4.12

Performance-Based and Market-Based Restricted Stock Units

In the first quarter of 2023, we granted certain employees 299,411 three-year performance-based restricted stock unit awards with a market condition. Based on target shares of 173,570, a minimum of 0% and a maximum of 150% of the units could be awarded based upon the measurement of free cash flow (“FCF”) as measured against FCF performance goals determined by the compensation committee of our Board of Directors, during the three-year performance period of January 1, 2023 to December 31, 2025 and vest fully on the third anniversary of the date of the grant subject to continued employment. The payout of the awards will be further adjusted by a TSR multiplier that may adjust the payout between 85% and 115% based upon our relative total shareholder return for the three-year period ending on third anniversary of the date of grant compared to the relative total shareholder return of an eight-company peer group of oilfield service companies for the same period. As these awards are performance-based with a market condition, we utilized a Monte Carlo simulation model to determine grant date fair value per share.

During the restriction period, the performance-based and market-based restricted stock unit awards may not be transferred or encumbered, and the recipient does not receive dividend equivalents or have voting rights until the units vest. As of March 31, 2024, there was $0.3 million of unrecognized compensation cost related to unvested performance-based and market-based restricted stock unit awards, which is expected to be recognized over a weighted-average period of 1.8 years.

The assumptions used to value our FCF restricted stock unit awards on the grant date in the first quarter of 2023 were a risk-free interest rate of 4.15%, an expected volatility of 135.3% and an expected dividend yield of 0.0%. Based on the Monte Carlo simulation, these restricted stock unit awards were valued at $4.47.

A summary of the status of our performance-based and market-based restricted stock unit awards and of changes in our restricted stock unit awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	RSUs	Per Share
Outstanding at January 1, 2024	299,411	$	4.47
Granted	—		—
Vested and converted	(1,987)		4.47
Forfeited	(102,604)		4.47
Outstanding at March 31, 2024	194,820	$	4.47

Phantom Units

In the first quarter of 2024, we granted 279,630 three-year time-vested phantom unit awards where each unit represents the right to receive, at the end of a vesting period, the cash value of one share of ICD common stock. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.5 million. Compensation expense is recognized on a straight-line basis over the performance

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period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $16.0 thousand of compensation expense in the three months ended March 31, 2024.

In the first quarter of 2024, we granted independent directors 66,664 one-year time-vested phantom unit awards where each unit represents the right to receive, at the end of a vesting period, the cash value of one share of ICD common stock. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.1 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $11.0 thousand of compensation expense in the three months ended March 31, 2024.

In the first quarter of 2024, we granted 1,306,415 three-year performance-based phantom units with a market condition. Based on target shares of 649,151, a minimum of 0% and a maximum of 175% of the units could be awarded based upon the measurement of free cash flow (“FCF”) as measured against FCF performance goals determined by the compensation committee of our Board of Directors, during the three-year performance period of January 1, 2024 to December 31, 2026 and vest fully on the third anniversary of the date of the grant subject to continued employment. The payout of the awards will be further adjusted by a TSR multiplier that may adjust the payout upward or downward by up to 15% based upon our relative total shareholder return for the three-year period ending on third anniversary of the date of grant compared to the relative total shareholder return of an eight-company peer group of oilfield service companies for the same period. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units at target was $1.2 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $36.0 thousand of compensation expense in the three months ended March 31, 2024.

In the first quarter of 2023, we granted 94,708 three-year time-vested phantom unit awards where each unit represents the right to receive, at the end of a vesting period, the cash value of one share of ICD common stock. In the first quarter of 2024, 32,544 shares vested and were cash-settled. As of March 31, 2024, there were 60,914 unvested shares outstanding. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.4 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $5.0 thousand of compensation expense in the three months ended March 31, 2024.

In the first quarter of 2023, we granted independent directors 41,665 one-year time-vested phantom unit awards where each unit represents the right to receive, at the end of a vesting period, the cash value of one share of ICD common stock. As of December 31, 2023, there were 33,332 unvested shares outstanding. In the first quarter of 2024, 33,332 shares vested. As of March 31, 2024, there were zero unvested shares outstanding. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.2 million. Compensation expense was recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $6.0 thousand of credit to compensation expense in the three months ended March 31, 2024.

In the first quarter of 2023, we granted 149,709 three-year performance-based phantom units with a market condition. Based on target shares of 86,789, a minimum of 0% and a maximum of 150% of the units could be awarded based upon the measurement of FCF as measured against FCF performance goals determined by the compensation committee of our Board of Directors, during the three-year performance period of January 1, 2023 to December 31, 2025 and vest fully on the third anniversary of the date of grant subject to continued employment. The payout of the awards will be further adjusted by a TSR multiplier that may adjust the payout between 85% and 115% based upon our relative total shareholder return for the three-year period ending on third anniversary of the date of grant compared to the relative total shareholder return of an eight-company peer group of oilfield service companies for the same period. In the first quarter of 2024, 1,389 shares were vested and 50,907 shares were forfeited. As of March 31, 2024, there were 97,413 unvested shares outstanding. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.3 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units

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being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $9.0 thousand of compensation expense in the three months ended March 31, 2024.

Time-Based Stock-Settled Stock Appreciation Rights

In the second quarter of 2022, we granted time-based, stock-settled stock appreciation rights (“SARs”) to certain employees. The SARs have a term of seven years, an exercise price of $5.19 per share, and vested one-third on March 18, 2023 and in equal quarterly increments thereafter, until fully vested on March 18, 2025. Because these SARs are stock-settled, they are classified as an “equity award” which are measured at their fair value at the grant date and are fixed and not revalued unless the award is modified.

The assumptions used in calculating the fair value of time-based stock-settled SARs as of the grant date were a risk-free interest rate of 3.03%, an expected volatility factor of 103.3% and an expected dividend yield of 0.0%.

Changes to our time-based stock-settled SARs outstanding during the three months ended March 31, 2024 are as follows:

		Weighted Average
		Grant Date
		Fair Value
	Stock-settled SARs	Per Share
Outstanding at January 1, 2024	1,421,740	$	2.83
Granted	—		—
Exercised	—		—
Forfeited/Expired	—		—
Outstanding at March 31, 2024	1,421,740	$	2.83
Exercisable at March 31, 2024	947,826	$	2.83
Non-vested at January 1, 2024	592,391	$	2.83
Vested	(118,477)		2.83
Non-vested at March 31, 2024	473,914	$	2.83

As of March 31, 2024, there was $1.4 million of unrecognized compensation cost related to time-based stock-settled SARs that is expected to be recognized over a weighted-average period of 0.5 years and weighted average remaining contractual life of 5.0 years.

Time-Based Cash-Settled Stock Appreciation Rights

In the first quarter of 2021, we granted time-based, cash-settled stock appreciation rights (“SARs”) to certain employees. The SARs have a term of seven years, an exercise price of $5.73 per share, with the market price upon exercise capped at $10.00 per share, and vest ratably on the first, second and third anniversaries of the date of grant. Because these SARs are cash-settled, they are classified as “liability-classified awards” which are remeasured at their fair value at the end of each reporting period until settlement. As of March 31, 2024 and December 31, 2023, we have recorded a liability, classified as “Accrued Liabilities” on our consolidated balance sheets, of $1.2 million and $2.1 million, respectively.

Time-based, cash-settled SARs have no effect on dilutive shares or shares outstanding as any appreciation of our common stock over the exercise price is paid in cash and not in common stock.

The fair value of time-based cash-settled SARs is revalued (mark-to-market) each reporting period using a Monte Carlo simulation model based on period-end stock price. Expected term of the SARs is calculated as the average of each vesting tranche’s midpoint between vesting date and expiration date plus the vesting period. Expected volatility is based on the historical volatility of our stock for the length of time corresponding to the expected term of the SARs. The risk-free interest rate is based on the U.S. treasury yield curve in effect as of the reporting date for the length of time corresponding to the expected term of the SARs.

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The following weighted-average assumptions were used in calculating the fair value of the time-based cash-settled SARs using the Monte Carlo simulation model:

	Three Months Ended		Year Ended
	March 31, 2024		December 31, 2023
Remaining term to maturity	3.9 years		4.1 years
Expected volatility factor	82.9	%	119.5	%
Expected dividend yield	—	%	—	%
Risk-free interest rate	4.27	%	3.88	%

Changes to our time-based cash-settled SARs outstanding during the three months ended March 31, 2024 are as follows:

		Weighted Average
		Exercise Price
	Cash-settled SARs	Per Share
Outstanding at January 1, 2024	2,885,722	$	5.73
Granted	—		—
Exercised	—		—
Forfeited/Expired	—		—
Outstanding at March 31, 2024	2,885,722	$	5.73
Exercisable at March 31, 2024	2,885,722	$	5.73

As of March 31, 2024, there was zero unrecognized compensation cost related to time-based cash-settled SARs.

10.Stockholders’ Equity and Earnings (Loss) per Share

As of March 31, 2024, we had a total of 15,213,277 shares of common stock, $0.01 par value, outstanding. We also had 156,259 shares held as treasury stock. Total authorized common stock is 250,000,000 shares.

Basic earnings (loss) per common share (“EPS”) are computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS are computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period, including potential dilutive securities. When the Convertible Notes are dilutive, interest expense, net of tax, is added back to net income to calculate diluted EPS. A reconciliation of the numerators and denominators of the basic and diluted losses per share computations is as follows:

	Three Months Ended March 31,
(in thousands, except per share data)	2024		2023
Net (loss) income (numerator):	$	(8,986)	$	12
(Loss) income per share:
Basic	$	(0.62)	$	0.00
Diluted	$	(0.62)	$	0.00
Shares (denominator):
Weighted average common shares outstanding - basic		14,504		13,865
Weighted average common shares outstanding - diluted		14,504		13,881

The following number of potential common shares at the end of each period were excluded from the calculation of diluted EPS because their effect would have been anti-dilutive for the periods presented.

	Three Months Ended March 31,
(in thousands)	2024		2023
Potentially dilutive securities excluded as anti-dilutive		40,453		39,230

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11.Income Taxes

Our effective income tax rate fluctuates from the U.S. statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates, the impact of U.S. state and local taxes, the realizability of deferred tax assets and other differences related to the recognition of income and expense between GAAP and tax accounting.

Our effective tax rate was 2.5% for the three months ended March 31, 2024 and (20.0)% for the three months ended March 31, 2023. Our effective tax rate for the three months ended March 31, 2024 and 2023 differed from the statutory federal income tax rate primarily due to the impact of the change in valuation allowance on deferred tax assets, state taxes, and permanent items related to certain debt items that are expensed for book purposes but are not deductible for tax purposes.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, and when necessary, valuation allowances are recorded. 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. We assess the realizability of our deferred tax assets quarterly and consider carryback availability, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In the first quarter of 2024, the effective tax rate takes into consideration the estimated valuation allowance based on forecasted 2024 income.

We continue to monitor income tax developments in the United States. We will incorporate into our future financial statements the impacts, if any, of future regulations and additional authoritative guidance when finalized.

12.Commitments and Contingencies

Purchase Commitments

As of March 31, 2024, we had outstanding purchase commitments to a number of suppliers totaling $5.1 million related primarily to the operation of drilling rigs. All of these commitments relate to equipment and services currently scheduled for delivery in 2024.

Contingencies

We may be the subject of lawsuits and claims arising in the ordinary course of business from time to time. Management cannot predict the ultimate outcome of such lawsuits and claims. While lawsuits and claims are asserted for amounts that may be material should an unfavorable outcome be the result, management does not currently expect that the outcome of any of these known legal proceedings or claims will have a material adverse effect on our financial position or results of operations.

13.Defined Contribution Plan

Substantially all employees may elect to participate in our 401(k) plan by contributing a portion of their earnings. We contribute an amount equal to 100 percent of the first six percent of the participant’s compensation subject to certain limitations. The expense incurred for this defined contribution plan was $0.4 million for three months ended March 31, 2024. The expense incurred for this defined contribution plan for the three months ended March 31, 2023 was $0.4 million.

14.Related Parties

In connection with the issuance of the Convertible Notes on March 18, 2022, we issued to affiliates of MSD Partners, L.P. (the “MSD Investors”) $78.9 million principal amount of Convertible Notes and entered into an Investor’s Rights Agreement permitting MSD Partners to nominate one director to our Board so long as MSD Partners and its affiliates continue to own $25.0 million principal amount of Convertible Notes (the “Sunset Date”). We also entered into an Investor’s Rights Agreement with Glendon Capital Management L.P. (“GCM”) that permits GCM to designate one director on the same terms. In addition, as long as each of such parties continues to have the right to appoint such holder representatives, the two holder representatives will have the right to nominate one additional representative as a

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director, provided that the third representative must be an independent director unless one of the MSD Partners and the GCM representatives is independent for New York Stock Exchange purposes. The proposed representatives are subject to review by our Nominating and Corporate Governance Committee. Following the Sunset Date for the applicable party, MSD Partners and/or GCM, as applicable, will cause its designee to offer to tender his or her resignation, unless otherwise requested by the Board, and the third representative may be removed by the Board. Two holders representatives of the MSD Investors and GCM were initially nominated and appointed to the Board pursuant to the Investor’s Rights Agreement, and the third representative was appointed in connection with an increase in the number of directors from six to seven members effective July 1, 2022.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 28, 2024 (the “Form 10-K”). This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those described in the section titled “Cautionary Statement Regarding Forward-Looking Statements” and those set forth under Part I “Item 1A. Risk Factors” or in other parts of the Form 10-K.

Management Overview

We were incorporated in Delaware on November 4, 2011. We provide land-based contract drilling services for oil and natural gas producers targeting unconventional resource plays in the United States. We own and operate a premium fleet comprised of modern, technologically advanced drilling rigs. Our first rig began drilling in May 2012. As of March 31, 2024, our rig fleet includes 26 AC powered (“AC”) rigs.

We currently focus our operations on unconventional resource plays located in geographic regions that we can efficiently support from our Houston, Texas and Midland, Texas facilities in order to maximize economies of scale. Currently, our rigs are operating in the Permian Basin and the Haynesville Shale; however, our rigs have previously operated in the Eagle Ford Shale, Mid-Continent and Eaglebine regions as well.

Our business depends on the level of exploration and production activity by oil and natural gas companies operating in the United States, and in particular, the regions where we actively market our contract drilling services. The oil and natural gas exploration and production industry is historically cyclical and characterized by significant changes in the levels of exploration and development activities. Oil and natural gas prices and market expectations of potential changes in those prices significantly affect the levels of those activities. Worldwide political, regulatory, economic, and military events, as well as natural disasters have contributed to oil and natural gas price volatility historically, and are likely to continue to do so in the future. Any prolonged reduction in the overall level of exploration and development activities in the United States and the regions where we market our contract drilling services, whether resulting from changes in oil and natural gas prices or otherwise, could materially and adversely affect our business.

Significant Developments

Market Conditions

Oil prices (WTI-Cushing) reached a high of $123.64 per barrel on March 8, 2022; however, prices have fallen since those highs. As of April 22, 2024, oil was $83.82 per barrel.

On August 22, 2022, natural gas prices reached a high of $9.85 per mmcf, but fell to $3.52 per mmcf as of December 31, 2022 and were $2.58 per mmcf as of December 31, 2023 and $1.59 per mmcf as of April 23, 2024. These commodity price declines, as well as take away capacity issues, caused market conditions in the Haynesville Shale to weaken rapidly, which resulted in a reduction in the number of drilling rigs operating in the Haynesville Shale, including a reduction in our operating rigs. At the end of the first quarter of 2023, we began relocating a portion of these rigs to the Permian Basin where market conditions were stronger. However, there can be no assurance that market conditions in the Permian Basin will not decline and will not be adversely affected by recent volatility in oil prices nor any

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assurance that we will be successful in marketing our rigs in the Permian Basin or that they will be contracted on a timely basis or upon terms that are acceptable to us.

Our Revenues

We earn contract drilling revenues pursuant to drilling contracts entered into with our customers. We perform drilling services on a “daywork” basis, under which we charge a specified rate per day, or “dayrate.” The dayrate associated with each of our contracts is a negotiated price determined by the capabilities of the rig, location, depth and complexity of the wells to be drilled, operating conditions, duration of the contract and market conditions. The term of land drilling contracts may be for a defined number of wells or for a fixed time period. We generally receive lump-sum payments for the mobilization of rigs and other drilling equipment at the commencement of a new drilling contract. Revenue and costs associated with the initial mobilization are deferred and recognized ratably over the term of the related drilling contract once the rig spuds. Costs incurred to relocate rigs and other equipment to an area in which a contract has not been secured are expensed as incurred. If a contract is terminated prior to the specified contract term, early termination payments received from the customer are only recognized as revenues when all contractual obligations, such as mitigation requirements, are satisfied. While under contract, our rigs generally earn a reduced rate while the rig is moving between wells or drilling locations, or on standby waiting for the customer. Reimbursements for the purchase of supplies, equipment, trucking and other services that are provided at the request of our customers are recorded as revenue when incurred. The related costs are recorded as operating expenses when incurred. Revenue is presented net of any sales tax charged to the customer that we are required to remit to local or state governmental taxing authorities.

Our Operating Costs

Our operating costs include all expenses associated with operating and maintaining our drilling rigs. Operating costs include all “rig level” expenses such as labor and related payroll costs, repair and maintenance expenses, supplies, workers’ compensation and other insurance, ad valorem taxes and equipment rental costs. Also included in our operating costs are certain costs that are not incurred at the “rig level.” These costs include expenses directly associated with our operations management team as well as our safety and maintenance personnel who are not directly assigned to our rigs but are responsible for the oversight and support of our operations and safety and maintenance programs across our fleet.

How We Evaluate our Operations

We regularly use a number of financial and operational measures to analyze and evaluate the performance of our business and compensate our employees, including the following:

● Safety Performance. Maintaining a strong safety record is a critical component of our business strategy. We measure safety by tracking the total recordable incident rate for our operations. In addition, we closely monitor and measure compliance with our safety policies and procedures, including “near miss” reports and job safety analysis compliance. We believe our Risk-Based HSE management system provides the required control, yet needed flexibility, to conduct all activities safely, efficiently and appropriately.

● Utilization. Rig utilization measures the percentage of time that our rigs are earning revenue under a contract during a particular period. We measure utilization by dividing the total number of Operating Days (defined below) for a rig by the total number of days the rig is available for operation in the applicable calendar period. A rig is available for operation commencing on the earlier of the date it spuds its initial well following construction or when it has been completed and is actively marketed. “Operating Days” represent the total number of days a rig is earning revenue under a contract, beginning when the rig spuds its initial well under the contract and ending with the completion of the rig’s demobilization.

● Revenue Per Day. Revenue per day measures the amount of revenue that an operating rig earns on a daily basis during a particular period. We calculate revenue per day by dividing total contract drilling revenue earned during the applicable period by the number of Operating Days in the period. Revenues attributable to costs reimbursed by customers and early termination revenues are excluded from this measure.

● Operating Cost Per Day. Operating cost per day measures the operating costs incurred on a daily basis during a particular period. We calculate operating cost per day by dividing total operating costs during the applicable period by the number of Operating Days in the period. Operating costs attributable to costs reimbursed by

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customers, reactivation and decommissioning of rigs, including transition costs between basins, and rig construction costs are excluded from this measure.

● Operating Efficiency and Uptime. Maintaining our rigs’ operational efficiency is a critical component of our business strategy. We measure our operating efficiency by tracking each drilling rig’s unscheduled downtime on a daily, monthly, quarterly and annual basis.

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Results of Operations

The following summarizes our financial and operating data for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
(In thousands, except per share data)	2024			2023
Revenues	$	46,636		$	63,756
Costs and expenses
Operating costs		30,816			37,460
Selling, general and administrative		4,337			6,727
Depreciation and amortization		11,826			10,854
Gain on disposition of assets, net		(1,004)			(14)
Total cost and expenses		45,975			55,027
Operating income		661			8,729
Interest expense		(9,878)			(8,719)
(Loss) income before income taxes		(9,217)			10
Income tax benefit		(231)			(2)
Net (loss) income	$	(8,986)		$	12
Other financial and operating data
Number of marketed rigs (end of period)		26			26
Rig operating days (1)		1,376			1,744
Average number of operating rigs (2)		15.1			19.4
Rig utilization (3)		58	%		75	%
Average revenue per operating day (4)	$	30,313		$	34,870
Average cost per operating day (5)	$	18,484		$	19,205
Average rig margin per operating day	$	11,829		$	15,665

(1)Rig operating days represent the number of days our rigs are earning revenue under a contract during the period, including days that standby revenues are earned. During the three months ended March 31, 2024, there were 14.0 operating days in which we earned revenue on a standby basis. During the three months ended March 31, 2023, there were 14.6 days in which we earned revenue on a standby basis.

(2)Average number of operating rigs is calculated by dividing the total number of rig operating days in the period by the total number of calendar days in the period.

(3)Rig utilization is calculated as rig operating days divided by the total number of days our drilling rigs are available during the applicable period.

(4)Average revenue per operating day represents total contract drilling revenues earned during the period divided by rig operating days in the period. Excluded in calculating average revenue per operating day are revenues associated with the reimbursement of (i) out-of-pocket costs paid by customers of $4.9 million and $3.0 million during the three months ended March 31, 2024 and 2023, respectively.

(5)Average cost per operating day represents operating costs incurred during the period divided by rig operating days in the period. The following costs are excluded in calculating average cost per operating day: (i) out-of-pocket costs paid by customers of $4.9 million and $3.0 million during the three months ended March 31, 2024 and 2023, respectively; (ii) overhead costs of $0.4 million and $0.4 million during the three months ended March 31, 2024 and 2023, respectively; and (iii) rig decommissioning costs of zero and $0.6 million during the three months ended March 31, 2024 and 2023, respectively; and (iv) reactivation costs of $0.1 million and zero during the three months ended March 31, 2024 and 2023, respectively.

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Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Revenues

Revenues for the three months ended March 31, 2024 were $46.6 million, representing a 26.9% decrease as compared to revenues of $63.8 million for the three months ended March 31, 2023. This decrease was primarily attributable to decreases in contractual dayrates and a decrease in operating days. Revenue per day decreased by 13.1% to $30,313 during the three months ended March 31, 2024, as compared to revenue per day of $34,870 during the three months ended March 31, 2023. Operating days decreased to 1,376 during the three months ended March 31, 2024 as compared to operating days of 1,744 for the three months ended March 31, 2023.

Operating Costs

Operating costs for the three months ended March 31, 2024 were $30.8 million, representing a 17.7% decrease as compared to operating costs of $37.5 million for the three months ended March 31, 2023. This decrease was primarily attributable to cost cutting initiatives implemented in the first quarter of 2024 as well as a decrease in operating days. Operating costs per day decreased to $18,484 during the three months ended March 31, 2024, representing a 3.8% decrease compared to cost per operating day of $19,205 for the three months ended March 31, 2023. Operating days decreased to 1,376 during the three months ended March 31, 2024 as compared to operating days of 1,744 for the three months ended March 31, 2023.

Selling, General and Administrative

Selling, general and administrative expenses for the three months ended March 31, 2024 were $4.3 million, representing a 35.5% decrease as compared to selling, general and administrative expense of $6.7 million for the three months ended March 31, 2023. This decrease in selling, general and administrative expenses as compared to the prior year comparable period primarily relates to cost cutting initiatives implemented in the first quarter of 2024 as well as decreased stock-based compensation of $1.5 million associated with the variable accounting of phantom awards.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended March 31, 2024 was $11.8 million, representing a 9.0% increase compared to depreciation and amortization expense of $10.9 million for the three months ended March 31, 2023. The increase in depreciation and amortization expense is primarily attributable to asset additions related to upgrades and reactivations in 2023.

Gain on Disposition of Assets, net

A gain on the disposition of assets totaling $1.0 million was recorded for the three months ended March 31, 2024 compared to a gain on the disposition of assets totaling $14.0 thousand for the three months ended March 31, 2023. In the current and prior year period, the gains related to the disposal or sale of miscellaneous drilling equipment.

Interest Expense

Interest expense was $9.9 million for the three months ended March 31, 2024 and $8.7 million for the three months ended March 31, 2023. The increase in the current period interest expense relates primarily to higher principal debt balances on the Convertible Notes compared to the prior year period.

Income Tax Benefit

Our effective income tax rate fluctuates from the U.S. statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates, the impact of U.S. state and local taxes, the realizability of deferred tax assets and other differences related to the recognition of income and expense between GAAP and tax accounting.

Income tax benefit for the three months ended March 31, 2024 amounted to $0.2 million as compared to income tax benefit of $2.0 thousand for the three months ended March 31, 2023. Our effective tax rates for the three months ended March 31, 2024 and 2023 were 2.5% and (20.0)%, respectively. Our effective tax rate for the three

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months ended March 31, 2024 and 2023 differed from the statutory federal income tax rate primarily due to the impact of the change in valuation allowance on deferred tax assets, state taxes, and permanent items related to certain debt items that are expensed for book purposes but are not deductible for tax purposes.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, and when necessary, valuation allowances are recorded. 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. We assess the realizability of our deferred tax assets quarterly and consider carryback availability, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In the first quarter of 2024, the effective tax rate takes into consideration the estimated valuation allowance based on forecasted 2024 income.

We continue to monitor income tax developments in the United States. We will incorporate into our future financial statements the impacts, if any, of future regulations and additional authoritative guidance when finalized.

Liquidity and Capital Resources

Our liquidity as of March 31, 2024 was $20.4 million, consisting of cash on hand of $6.9 million and $13.5 million of availability under our $40.0 million Revolving ABL Credit Facility, based on a borrowing base of $21.9 million.

During the first quarter of 2024, cash flow from operations was positive. On March 31, 2024, we paid in-kind the $13.3 million interest payment due under our Convertible Notes. On March 31, 2024, our noteholders accepted our mandatory offer to redeem $3.5 million of Convertible Notes plus accrued interest. As a result, on March 31, 2024, we paid $3.5 million principal and $0.3 million in accrued interest in cash. We funded the redemption through borrowings under our Revolving ABL Credit Facility. Looking forward, we have elected to pay in-kind interest under our Convertible Notes that is due and payable on September 30, 2024.

We expect our future capital and liquidity needs to be related to operating expenses, maintenance capital expenditures, payment of mandatory offer obligations on our Convertible Notes, working capital and general corporate purposes.

We believe that our cash and cash equivalents, cash flows from operating activities and borrowings under our Revolving Credit Facility will adequately finance all of our anticipated purchase commitments, capital expenditures and other cash requirements over the next twelve months from issuance.

Net Cash Provided by Operating Activities

Cash provided by operating activities was $11.0 million for the three months ended March 31, 2024 compared to cash provided by operating activities of $13.6 million for the three months ended March 31, 2023. Factors affecting changes in operating cash flows are similar to those that impact net earnings, with the exception of non-cash items such as depreciation and amortization, impairments, gains or losses on disposals of assets, gains or losses on extinguishment of debt, non-cash interest expense, non-cash compensation, deferred taxes, and amortization of debt discount and debt issuance costs. Additionally, changes in working capital items such as accounts receivable, inventory, prepaid expense and accounts payable can significantly affect operating cash flows. Cash flows from operating activities during the first three months of 2024 were higher as a result of an increase in net loss of $9.0 million, adjusted for non-cash items, of $20.0 million for the three months ended March 31, 2024, compared to $26.6 million for non-cash items for the three months ended March 31, 2023. Working capital changes increased cash flows from operating activities by $0.1 million for the three months ended March 31, 2024 and decreased cash flows from operating activities by $13.0 million for the three months ended March 31, 2023.

Net Cash Used In Investing Activities

Cash used in investing activities was $8.2 million for the three months ended March 31, 2024 and $18.1 million for the three months ended March 31, 2023. During the first three months of 2024, cash payments of $10.0 million for capital expenditures were offset by proceeds from the sale of property, plant and equipment of $1.8 million. During the 2023 period, cash payments of $18.8 million for capital expenditures were offset by proceeds from the sale of property, plant and equipment of $0.7 million.

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Net Cash (Used In) Provided by Financing Activities

Cash used in financing activities was $1.4 million for the three months ended March 31, 2024 and cash provided by financing activities was $5.9 million for the three months ended March 31, 2023. During the first three months of 2024, we received proceeds from borrowings under our revolving credit facility of $19.6 million. These proceeds were offset by repayments under our revolving credit facility of $16.9 million, redemption of $3.5 million of our Convertible Notes, purchase of treasury stock of $0.2 million, taxes paid for vesting of restricted stock units of $12.0 thousand and payments for finance lease obligations of $0.5 million. During the first three months of 2023, we received proceeds from borrowings under our revolving credit facility of $11.3 million. These proceeds were offset by repayments under our revolving credit facility of $4.3 million, restricted stock units withheld for taxes paid of $0.4 million and payments for finance lease obligations of $0.7 million.

Long-term Debt

On March 18, 2022, we entered into a subscription agreement with affiliates of MSD Partners, L.P. and an affiliate of Glendon Capital Management L.P. (the “Subscription Agreement”) for the placement of $157.5 million aggregate principal amount of convertible secured PIK toggle notes due 2026 (the “Convertible Notes”), and currently have $189.0 million of Convertible Notes outstanding as of March 31, 2024. The Convertible Notes were issued pursuant to an Indenture, dated as of March 18, 2022 (the “Indenture”). The obligations under the Convertible Notes are secured by a first priority lien on collateral other than accounts receivable, deposit accounts and other related collateral pledged as first priority collateral (“Priority Collateral”) under the Revolving ABL Credit Facility (defined below). The Convertible Notes mature on March 18, 2026.

The Convertible Notes have a cash interest rate of the Secured Overnight Financing Rate plus a 10-basis point credit spread, with a floor of 1% (collectively, “SOFR”) plus 12.5%. The Convertible Notes have a PIK interest rate of SOFR plus 9.5%. We have the right at our option, to PIK interest under the Convertible Notes for the entire term of the Convertible Notes. Interest on the Convertible Notes is due on March 31 and September 30 each year. We elected to PIK outstanding interest as of September 30, 2022, March 31, 2023, September 30, 2023 and March 31, 2024, resulting in the issuance of an additional $50.0 million principal amount of Convertible Notes as of March 31, 2024. We also have elected to PIK outstanding interest that will be due and payable on September 30, 2024. As of March 31, 2024 and December 31, 2023, accrued PIK interest of $0.1 million and $6.8 million, respectively, was classified as “Other Long-Term Liabilities” on our consolidated balance sheets.

The effective conversion price of the Convertible Notes is $4.51 per share (221.72949 shares of Common Stock per $1,000 principal amount of Convertible Notes). We may issue up to $7.5 million of additional Convertible Notes. We may convert all Convertible Notes (including PIK notes) in connection with a Qualified Merger Conversion (as defined in the Indenture) and may issue additional shares of common stock upon conversion of Convertible Notes to the extent the number of shares issuable upon such conversion would exceed the number of shares of common stock issuable at the otherwise then-current conversion price.

Each noteholder has a right to convert our Convertible Notes into shares of ICD Common Stock at any time after issuance through maturity. The conversion price is $4.51 per share. Under the Indenture, a holder is not entitled to receive shares of our common stock upon conversion of any Convertible Notes to the extent to which the aggregate number of shares of common stock that may be acquired by such beneficial owner upon conversion of Convertible Notes, when added to the aggregate number of shares of common stock deemed beneficially owned, directly or indirectly, by such beneficial owner and each person subject to aggregation of common stock with such beneficial owner under Section 13 or Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules promulgated thereunder at such time (an “Aggregated Person”) (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on such beneficial owner’s or such person’s right to convert, exercise or purchase similar to this limitation), as determined pursuant to the rules and regulations promulgated under Section 13(d) of the Exchange Act, would exceed 9.9% (the “Restricted Ownership Percentage”) of the total issued and outstanding shares of Common Stock (the “Section 16 Conversion Blocker”); provided that any holder has the right to elect for the Restricted Ownership Percentage to be 19.9% with respect to such Holder, (x) at any time, in which case, such election will become effective sixty-one days following written notice thereof to us or (y) in the case of a holder acquiring Convertible Notes on the Issue Date, in such Holder’s Subscription Agreement. In lieu of any shares of common stock not delivered to a converting holder by operation of the Restricted Ownership Percentage limitation, we will deliver to

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such Holder Pre-Funded Warrants in respect of any equal number of shares of common stock. Such Pre-Funded Warrants will contain substantially similar Restricted Ownership Percentage terms.

The Indenture includes a mandatory redemption offer requirement (the “Mandatory Offer Requirement”). The mandatory offer price is an amount in cash equal to the principal amount of such Note plus accrued and unpaid interest on such Note. We redeemed $5.0 million of Convertible Notes plus accrued interest on a quarterly basis June 30, 2023 through December 31, 2023, and redeemed $3.5 million of Convertible Notes plus accrued interest on March 31, 2024. We are obligated to offer to redeem $3.5 million of Convertible Notes on a quarterly basis through March 31, 2025. We have the ability and intent to refinance the mandatory redemption offers that occur within the next twelve months under our Revolving ABL Credit Facility and as a result such amounts have been classified as long-term debt. On each of the mandatory offer payment dates we borrowed the principal amount of such note under our Revolving ABL Credit Facility to refinance the accepted mandatory offerings.

The Indenture contains financial covenants, including a liquidity covenant of $10.0 million; a springing fixed charge coverage ratio covenant of 1.00 to 1.00 that is tested when availability under the Revolving ABL Credit Facility (defined below) is below $5.0 million at any time that the Convertible Notes are outstanding; and capital expenditure limits of $14.8 million during the nine months ended September 30, 2024 and $11.25 million during the nine months ended June 30, 2025, subject to adjustment upward by $500,000 per year for each rig above 17 that operates during each year. In addition, capital expenditures are excluded from this covenant (a) if funded from equity proceeds, (b) if relating to the reactivation of a rig so long as (i) we have a signed contract with a customer with respect to each such rig of at least one year duration providing for early termination payments consistent with past practice equal to at least the expected margin on the contract, (ii) the expected margin on such rig contract will be equal to or exceed such reactivation capital expenditures, and (iii) the reactivation capital expenditures, rig contract and the expected margin calculation are approved by our board of directors or (c) relate to other capital expenditures specifically approved by written or electronic consent by both (i) the required holders (which approval may, for the avoidance of doubt, be provided by the required holders in their sole discretion for an amount of capital expenditures to be committed or made by us or a subsidiary of us within 90 days after the date of such consent) and (ii) our Board of Directors. The Indenture also contains other customary affirmative and negative covenants, including limitations on indebtedness, liens, fundamental changes, asset dispositions, restricted payments (including the payment of dividends), investments and transactions with affiliates. The Indenture also provides for customary events of default, including breaches of material covenants, defaults under the Revolving ABL Credit Facility or other material agreements for indebtedness, and a change of control.

At any time on or after September 18, 2024, we may execute an in-substance defeasance of the Convertible Notes and suspend all covenants and related security interests in the Company’s equipment and assets under the Indenture by irrevocably depositing with the trustee funds sufficient funds to pay the principal and interest on the outstanding Convertible Notes through the maturity date of the Convertible Notes. Our Board of Directors has initiated a formal review process to begin evaluating alternatives with respect to refinancing the Convertible Notes and other strategic opportunities and has formed a special committee of independent directors for that purpose. There can be no assurance that this process or evaluation will result in one or more transactions or any particular transaction or strategic outcome.

We are in compliance with our covenants as of March 31, 2024.

Upon a Qualified Merger (defined below), we may elect to convert all, but not less than all, of the Convertible Notes at a Conversion Rate equal to our Conversion Rate on the date on which the relevant “Qualified Merger” is consummated (a “Qualified Merger Conversion”), so long as the “MOIC Condition” is satisfied with respect to such potential Qualified Merger Conversion. A “Qualified Merger” means a Common Stock Change Event consolidation, merger, combination or binding or statutory share exchange of the Company with a Qualified Acquirer. A “Qualified Merger Conversion Date” means the date on which the relevant Qualified Merger is consummated. A “Qualified Acquirer” means any entity that (i) has its common equity listed on the New York Stock Exchange, the NYSE American, Nasdaq Global Market or Nasdaq Global Select Market, or Toronto Stock Exchange, (ii) has an aggregate equity market capitalization of at least $350 million, and (iii) has a “public float” (as defined in Rule 12b-2 under the Securities Act of 1933) of at least $250 million in each case, as determined by the calculation agent based on the last reported sale price of such common equity on date of the signing of the definitive agreement in respect of the relevant Common Stock Change Event. A “Common Stock Change Event” means the occurrence of any: (i) recapitalization, reclassification or change of our common stock (other than (x) changes solely resulting from a subdivision or

31

combination of the common stock, (y) a change only in par value or from par value to no par value or no par value to par value and (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities); (ii) consolidation, merger, combination or binding or statutory share exchange involving us; (iii) sale, lease or other transfer of all or substantially all of the assets of ours and our Subsidiaries, taken as a whole, to any person; or (iv) other similar event, and, as a result of which, the common stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing. A “Company Conversion Rate” means, in respect of any Qualified Merger, the greater of (a) the relevant Conversion Rate, (b) $1,000 divided by our Conversion VWAP, and (c) the lowest rate that would cause the MOIC Condition to be satisfied with respect to the related Qualified Merger Conversion. A “Company Conversion VWAP” means, in respect of any Qualified Merger, the average of daily VWAP over the five (5) VWAP Trading Days prior to the earlier of signing or public announcement (by any party, and whether formal or informal, including for the avoidance of doubt any media reports thereof) of a definitive agreement in respect of such Qualified Merger as calculated by the Calculation Agent. The “MOIC Condition” means, with respect to any potential Qualified Merger Conversion, MOIC is greater than or equal to the MOIC Required Level. The “MOIC Required Level” means $1,350. “MOIC” means, with respect to any potential Qualified Merger Conversion, an amount determined by the Calculation Agent equal to the aggregate return on a hypothetical Note with $1,000 face amount, issued on the Issue Date, from the Issue Date through the potential Qualified Merger Conversion Date, including (x) the aggregate amount of any cash interest paid on such hypothetical Note from the Issue Date through the potential Qualified Merger Conversion Date, (y) the aggregate fair market value of any Conversion Consideration that would be received by the Holder of such hypothetical Note on the relevant Qualified Merger Conversion Date and (z) the aggregate fair market value of any Conversion Consideration that would be received on the relevant Qualified Merger Conversion Date by the Holder of any PIK Notes issued in respect of (or the relevant increase in value of) such hypothetical Note.

We recorded a debt discount of $37.8 million upon the issuance of the Convertible Notes and issuance costs consisting of cash fees of $7.4 million and a non-cash structuring fee settled in shares of $2.3 million. The debt discount and issuance costs are recorded as a direct deduction from the Convertible Notes in the consolidated balance sheets and are amortized to interest expense using the effective interest rate method over the term of the Convertible Notes. The effective interest rate for the Convertible Notes as of March 31, 2024 is 25.7%. For the three months ended March 31, 2024, the contractual interest expense was $6.9 million and the debt discount and issuance cost amortization was $2.7 million. For the three months ended March 31, 2023, the contractual interest expense was $5.9 million and the debt discount and issuance cost amortization was $2.4 million.

Revolving ABL Credit Facility

On October 1, 2018, we entered into a $40.0 million revolving credit agreement (the “Revolving ABL Credit Facility”), including availability for letters of credit in an aggregate amount at any time outstanding not to exceed $7.5 million. Availability under the Revolving ABL Credit Facility is subject to a borrowing base calculated based on 85% of the net amount of our eligible accounts receivable, minus reserves. The Revolving ABL Credit Facility has a maturity date of September 30, 2025.

Interest under the Revolving ABL Credit Facility is determined by reference, at our option, to either (i) a “base rate” equal to the higher of (a) the floor, or 0.0%, (b) the federal funds effective rate plus 0.05%, (c) term SOFR for a one month tenor plus 1.0% based on availability and (d) the prime rate of Wells Fargo, plus in each case, an applicable base rate margin ranging from 1.0% to 1.5% based on quarterly availability, or (ii) a revolving loan rate equal to SOFR for the applicable interest period plus an applicable SOFR margin ranging from 2.36% to 2.86% based on quarterly availability. We also pay, on a quarterly basis, a commitment fee of 0.375% (or 0.25% at any time when revolver usage is greater than 50% of the maximum credit) per annum on the unused portion of the Revolving ABL Credit Facility commitment.

The Revolving ABL Credit Facility contains a springing fixed charge coverage ratio covenant of 1.00 to 1.00 that is tested when availability is less than 10% of the maximum credit. The Revolving ABL Credit Facility also contains other customary affirmative and negative covenants, including limitations on indebtedness, liens, fundamental changes, asset dispositions, restricted payments (including the payment of dividends), investments and transactions with affiliates. The Revolving ABL Credit Facility also provides for customary events of default, including breaches of material covenants, defaults under the Indenture or other material agreements for indebtedness, and a change of control. We are in compliance with our financial covenants as of March 31, 2024.

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The obligations under the Revolving ABL Credit Facility are secured by a first priority lien on Priority Collateral, which includes all accounts receivable and deposit accounts, and a second priority lien on the Indenture, and are unconditionally guaranteed by all of our current and future direct and indirect subsidiaries. As of March 31, 2024, the weighted-average interest rate on our borrowings was 14.87%. As of March 31, 2024, the borrowing base under our Revolving ABL Credit Facility was $21.9 million, and we had $13.5 million of availability remaining of our $40.0 million commitment on that date.

Additionally, included in our long-term debt are finance leases. These leases generally have initial terms of 36 months and are paid monthly.

Other Matters

Off-Balance Sheet Arrangements

We are party to certain arrangements defined as “off-balance sheet arrangements” that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. These arrangements relate to non-cancelable operating leases and unconditional purchase obligations not fully reflected on our balance sheets (see Note 4 “Leases” and Note 12 “Commitments and Contingencies” for additional information).

Recent Accounting Pronouncements

See Note 2 “Interim Financial Information – Recent Accounting Pronouncements” for information on recent accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to a variety of market risks including risks related to potential adverse changes in interest rates and commodity prices. We actively monitor exposure to market risk and continue to develop and utilize appropriate risk management techniques. We do not use derivative financial instruments for trading or to speculate on changes in commodity prices.

Interest Rate Risk

Total long-term debt at March 31, 2024 included $197.3 million of floating-rate debt attributed to borrowings at an average interest rate of 14.87%. As a result, our annual interest cost in 2024 will fluctuate based on short-term interest rates. The impact on annual cash flow of a 10% change in the floating-rate (approximately 16.36%) would be approximately $2.9 million annually based on the floating-rate debt and other obligations outstanding at March 31, 2024; however, there are no assurances that possible rate changes would be limited to such amounts.

Commodity Price Risk

Oil and natural gas prices, and market expectations of potential changes in these prices, significantly impact the level of worldwide drilling and production services activities. Reduced demand for oil and natural gas generally results in lower prices for these commodities and may impact the economics of planned drilling projects and ongoing production projects, resulting in the curtailment, reduction, delay or postponement of such projects for an indeterminate period of time. When drilling and production activity and spending decline, both dayrates and utilization have also historically declined. Declines in oil and natural gas prices and the general economy, could materially and adversely affect our business, results of operations, financial condition and growth strategy.

In addition, if oil and natural gas prices decline, companies that planned to finance exploration, development or production projects through the capital markets may be forced to curtail, reduce, postpone or delay drilling activities even further, and also may experience an inability to pay suppliers. Adverse conditions in the global economic environment could also impact our vendors’ and suppliers’ ability to meet obligations to provide materials and services in general. If any of the foregoing were to occur, or if market conditions were depressed for a prolonged period of time, it could have a material adverse effect on our business and financial results and our ability to timely and successfully implement our growth strategy.

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Our business, operating results and financial conditions are subject to various risks outlined in this Current Report on Form 10-Q under Part II, Item 1A “Risk Factors”, as well as the risk factors outlined in our Annual Report on Form 10-K.

Credit and Capital Market Risk

Our customers may finance their drilling activities through cash flow from operations, the incurrence of debt or the issuance of equity. Any deterioration in the credit and capital markets, as currently being experienced, can make it difficult for our customers to obtain funding for their capital needs. A reduction of cash flow resulting from declines in commodity prices, or a reduction of available financing may result in a reduction in customer spending and the demand for our drilling services. This reduction in spending could have a material adverse effect on our business, financial condition, cash flows and results of operations.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2024 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

During the most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM  1. LEGAL PROCEEDINGS

We are the subject of certain legal proceedings and claims arising in the ordinary course of business from time to time. Management cannot predict the ultimate outcome of such legal proceedings and claims. While the legal proceedings and claims may be asserted for amounts that may be material should an unfavorable outcome be the result, management does not currently expect that the resolution of these matters will have a material adverse effect on our financial position or results of operations. In addition, management monitors our legal proceedings and claims on a quarterly basis and establishes and adjusts any reserves as appropriate to reflect our assessment of the then-current status of such matters.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risks related to our business set forth under “Risk Factors” in our Form 10-K for the year ended December 31, 2023. These risks are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially adversely affect our business, financial condition or results of operations.

ITEM  2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

During the first quarter of 2024, we withheld shares of our common stock to satisfy minimum tax withholding obligations in connection with the vesting of certain restricted stock unit awards. These shares are deemed to be “issuer purchases” of shares that are required to be disclosed pursuant to this Item but were not purchased as part of a publicly announced program to purchase common shares. The following table provides information relating to our repurchase of shares of restricted stock unit awards during the three months ended March 31, 2024 (dollars in thousands, except average price paid per share):

	Issuer Purchases of Equity Securities
				Total Number of	Approximate Dollar
				Shares Purchased as	Value of Shares That
	Total Number of	Average Price Paid		Part of Publicly	May Yet be Purchased
Period	Shares Purchased	Per Share		Announced Program	Under the Program (1)
January 1 — January 31	—	$	—	—	$	—
February 1 — February 29	—	$	—	—	$	—
March 1 — March 31	58,999	$	2.69	—	$	—
Total	58,999	$	2.69	—	$	—

(1) We do not have a current share repurchase program authorized by the board of directors.

ITEM  3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM  4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM  5. OTHER INFORMATION

None.

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ITEM  6. EXHIBITS

Exhibit Number	Description
10.1*	Amendment No. 6 to Credit Agreement dated as of April 18, 2024, to Credit Agreement dated as of October 1, 2018 by and among Wells Fargo Bank, National Association, as Agent, the Lenders party thereto, Independence Contract Drilling, Inc., Patriot Saratoga Merger Sub, L.L.C and ICD Operating, L.L.C, as Borrowers
10.2†*	Form of Three-Year Employee Restricted Stock Agreement
10.3†*	Form of Independent Director Restricted Stock Agreement
10.4†*	Form of Cash Settled Free Cash Flow Performance Award Agreement
31.1*	Certification by Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
31.2*	Certification by Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.CAL*	XBRL Calculation Linkbase Document
101.DEF*	XBRL Definition Linkbase Document
101.INS*	XBRL Instance Document
101.LAB*	XBRL Labels Linkbase Document
101.PRE*	XBRL Presentation Linkbase Document
101.SCH*	XBRL Schema Document
104	Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

* Filed with this report

† Indicates a management contract or compensatory plan or arrangement filed pursuant to Item 601(b)(10)(iii) of Regulation S-K

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	INDEPENDENCE CONTRACT DRILLING, INC.
	By:	/s/ J. Anthony Gallegos, Jr.
		Name:	J. Anthony Gallegos, Jr.
		Title:	President and Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Philip A. Choyce
		Name:	Philip A. Choyce
		Title:	Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer)
	By:	/s/ Katherine Kokenes
		Name:	Katherine Kokenes
		Title:	Vice President and Chief Accounting Officer (Principal Accounting Officer)
Date: May 1, 2024

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EX-10.1

AMENDMENT NO. 6 TO credit AGREEMENT

This AMENDMENT NO. 6 TO credit AGREEMENT (the “Amendment”), is dated as of April 18, 2024 and is made by and among INDEPENDENCE CONTRACT DRILLING, INC., a Delaware corporation (“ICD”), SIDEWINDER DRILLING LLC, a Delaware limited liability company (formerly known as ICD Operating LLC, and successor by merger to Patriot Saratoga Merger Sub, LLC) (“ICD Operating”, and together with ICD, each a “Borrower” and collectively, “Borrowers”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent for each member of the Lender Group and the Bank Product Providers  (in such capacity, together with its successors and assigns in such capacity, “Agent”) and the Lenders party hereto.

Recitals

Pursuant to that certain Credit Agreement, dated as of October 1, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Borrowers, Agent and Lenders, Lenders have agreed to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof (capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement).

Borrowers have requested that Agent and Lenders agree to amend the Credit Agreement as set forth herein.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:

1.Interpretation. For purposes of this Amendment, unless otherwise defined herein, all capitalized terms used herein which are defined in the Credit Agreement shall have respective meanings ascribed to such terms in the Credit Agreement.

2.Amendments to Credit Agreement. As of the effective date of this Amendment, the Credit Agreement is amended as follows:

(a)Section 1.1 - Eligible Accounts.  Clause (j) in the definition of “Eligible Accounts”, as set forth in Section 1.1 of the Credit Agreement, is amended and restated in its entirety to read as follows:

(j) (1) Accounts with respect to an Account Debtor (other than as set forth in clauses (j)(2) and (j)(3) below) whose Eligible Accounts owing to Borrowers exceed 15% (such percentage, as applied to a particular Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts, solely to the extent of the obligations owing by such Account Debtor in excess of such percentage, (2) Accounts with respect to [Endeavour]¹, whose Eligible Accounts owing to Borrowers exceed 25% (such percentage, as applied to such Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts, solely to the extent of the obligations owing by such Account Debtor in excess of such percentage, and (3) Accounts with respect to [DiamondBack Energy]², whose Eligible Accounts owing to Borrowers exceed 30% (such percentage, as applied

¹ NTD: To provide full legal name

² NTD: To provide full legal name

7903941.2 06758/1966

to such Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts, solely to the extent of the obligations owing by such Account Debtor in excess of such percentage; provided, that in each case, the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

3.No Other Changes.  Except as explicitly amended by this Amendment, all of the terms and conditions of the Credit Agreement shall remain in full force and effect and shall apply to any Advance thereunder.

4.Conditions Precedent. This effectiveness of this Amendment is subject to the satisfaction of each of the following conditions:

(a) The Agent (or its counsel) shall have received the following, in form and substance acceptable to Agent:

(i)a counterpart of this Amendment signed on behalf of each Loan Party and each Lender;

(ii)an Officer’s Certificate of each Loan Party certifying (i) that the resolutions of such Loan Party, which were certified and delivered to Agent pursuant to the Officer’s Certificate of such Loan Party dated October 1, 2018, continue in full force and effect and have not been terminated, amended or otherwise modified, and such resolutions authorize the execution and delivery of this Amendment, and any other agreement or instruments required hereunder by each Loan Party and the performance by each Loan Party of its obligations hereunder and thereunder, (ii) that the organizational documents of each Loan Party attached to such certificate are true, correct and complete copies of such organizational documents as in effect on the date hereof, and (iii) the names and genuine signatures of each of the officers and agents of such Loan Party who are authorized to execute and deliver this Amendment and all other documents, agreements and certificates on behalf of such Loan Party;

(iii)any and all other documents, instruments, writings, agreements, and information as Agent may reasonably request.

5.Representations and Warranties.  Each Borrower hereby represents and warrants to Agent and Lender as follows:

(a)Such Borrower has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations hereunder, and this Amendment and all such other agreements and instruments have been duly executed and delivered by such Borrower and constitute the legal, valid and binding obligation of such Borrower, enforceable in accordance with its terms, subject to applicable Federal and state bankruptcy and insolvency laws affecting generally the rights of creditors.

(b)The execution, delivery and performance by such Borrower of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to such Borrower, or the articles of incorporation or the by-laws of such Borrower, or

2

7903941.2 06758/1966

(iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which Borrower is a party or by which it or its properties may be bound or affected.

(c)All of the representations and warranties contained in Section 4 of the Credit Agreement are correct on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date in which case such representations and warranties shall be correct in all material respects as of such earlier date.

(d)No Default or Event of Default exists or has occurred and is continuing as of the date of this Amendment.

7.References.  As of the effective date of this Amendment, all references in the Credit Agreement to “this Agreement” shall be deemed to refer to the Credit Agreement as amended hereby; and any and all references in the Loan Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby.

8.No Waiver.  The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreement or other document held by Agent or any Lender, whether or not known to Agent or any Lender and whether or not existing on the date of this Amendment.

9.Release.  Each Borrower hereby absolutely and unconditionally releases and forever discharges Agent and each member of the Lender Group, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which such Borrower has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.

10.Costs and Expenses.  Borrower hereby reaffirms its agreement under the Credit Agreement to pay or reimburse Agent on demand for all costs and expenses incurred by Agent in connection with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel.  Without limiting the generality of the foregoing, Borrower specifically agrees to pay all reasonable fees and disbursements of counsel to Agent for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto.  Borrower hereby agrees that Agent may, at any time or from time to time in its sole discretion and without further authorization by Borrower, make a loan to Borrower under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and expenses.

11.Governing Law.  The rights and obligations hereunder of each of the parties hereto shall be governed by and interpreted and determined in accordance with the laws of the State of New York.

12.Counterparts.  This Amendment may be executed by means of (a) an electronic signature that complies with the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, or any other relevant and applicable electronic signatures law; (b) an original manual signature; or (c) a faxed, scanned, or photocopied manual

3

7903941.2 06758/1966

signature.  Each electronic signature or faxed, scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature.  Agent reserves the right, in its sole discretion, to accept, deny, or condition acceptance of any electronic signature on this Amendment. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.  Delivery of an executed counterpart of a signature page of this Amendment will be as effective as delivery of a manually executed counterpart of the Agreement.

13.Miscellaneous. This Amendment shall be binding upon, inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto. To the extent any provision of this Amendment is prohibited by or invalid under the applicable law of any jurisdiction, such provision shall be ineffective only to the extent of such prohibition or invalidity and only in any such jurisdiction, without prohibiting or invalidating such provision in any other jurisdiction or the remaining provisions of this Amendment in any jurisdiction. For the avoidance of doubt, this Amendment shall be deemed a Loan Document.    

[Signature pages follow]

4

7903941.2 06758/1966

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.

BORROWERS:INDEPENDENCE CONTRACT DRILLING INC.

By:​ ​/s/ Philip A. Choyce​ ​​ ​​ ​

Name:​ ​Philip A. Choyce​ ​​ ​​ ​

Title:​ ​EVP & CFO​ ​​ ​​ ​​ ​

SIDEWINDER DRILLING LLC

By:​ ​/s/ Philip A. Choyce​ ​​ ​​ ​

Name:​ ​Philip A. Choyce​ ​​ ​​ ​

Title:​ ​EVP & CFO​ ​​ ​​ ​​ ​

Amendment No. 5 to Credit Agreement

AGENT AND LENDER:WELLS FARGO BANK, NATIONAL

ASSOCIATION, as Agent and Lender

By:​ ​/s/ Seth Setterberg​ ​​ ​​ ​

Name:Seth Setterberg

Title:Authorized Signatory

Amendment No. 5 to Credit Agreement

EX-10.2

AMENDED AND RESTATED
INDEPENDENCE CONTRACT DRILLING, INC.
2019 OMNIBUS INCENTIVE PLAN

THREE YEAR TIME VESTING AWARD

RESTRICTED STOCK AWARD AGREEMENT

GRANTEE:

This Restricted Stock Award Agreement(this “Agreement”) is made by and between Independence Contract Drilling, Inc., a Delaware corporation (the “Company”), and the grantee named above (the “Grantee”) effective as of ______ ___, 202___ (the “Grant Date”), pursuant to the Amended and Restated Independence Contract Drilling, Inc. 2019 Omnibus Incentive Plan, as amended (the “Plan”), a copy of which previously has been made available to the Grantee and the terms and provisions of which are incorporated by reference herein.  In the event of a conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall control.  

Whereas, the Company desires to grant to the Grantee the shares of the Company’s common stock, $0.01 par value per share, specified herein (the “Shares”), subject to the terms and conditions of this Agreement; and

Whereas, the Grantee desires to have the opportunity to hold the Shares subject to the terms and conditions of this Agreement;

Now, Therefore, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1.Definitions. For purposes of this Agreement, in addition to the defined terms contained in Exhibit A to this Agreement, the following terms shall have the meanings indicated:

(a) “Forfeiture Restrictions” shall mean the prohibitions and restrictions set forth herein with respect to the sale or other disposition of the Shares issued to the Grantee hereunder and the obligation to forfeit and surrender such Shares to the Company.

(b)“Period of Restriction” shall mean the period during which Restricted Shares are subject to Forfeiture Restrictions and during which Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered.

(c)“Restricted Shares” shall mean the Shares that are subject to the Forfeiture Restrictions under this Agreement.

Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan.

2.Grant of Restricted Shares.  Effective as of the Grant Date, the Company shall cause to be issued in the Grantee’s name the following Shares as Restricted Shares:  _______ shares of the Company’s common stock, $.01 par value, which are granted pursuant to the terms of the Plan.  The Company shall cause certificates or electronic book entries evidencing the Restricted Shares, and any shares of Stock or rights to acquire shares of Stock distributed by the Company in respect of Restricted Shares during any Period of Restriction (the “Retained Distributions”), to be issued in the Grantee’s name.  During the Period of Restriction such electronic book entries and certificates shall bear a restrictive legend to the effect that ownership of such Restricted Shares (and any Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions provided in the Plan and this Agreement.  The Grantee shall have the right to vote the Restricted Shares awarded to the Grantee and to receive currently and retain all regular dividends paid in cash or property (other than Retained Distributions), and to exercise all other rights, powers and privileges of a holder of Shares, with respect to such Restricted Shares, with the exception that (a) the Grantee shall not be entitled to delivery of the stock certificate or certificates or electronic book entries representing such Restricted Shares until the Forfeiture Restrictions applicable thereto shall have expired, (b) the Company shall retain custody of all Retained Distributions made or declared with respect to the Restricted Shares (and such Retained Distributions shall be subject to the same restrictions, terms and conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid, or declared shall have become vested, and such Retained Distributions shall not bear interest or be segregated in separate accounts and (c) the Grantee may not sell, assign, transfer, pledge, exchange, encumber, or dispose of the Restricted Shares or any Retained Distributions during the Period of Restriction.  Upon issuance any certificates shall be delivered to such depository as may be designated by the Committee as a depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Shares and any securities constituting Retained Distributions which shall be forfeited in accordance with the Plan and this Agreement.  In accepting the award of Shares set forth in this Agreement the Grantee accepts and agrees to be bound by all the terms and conditions of the Plan and this Agreement.

3.Transfer Restrictions.  The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions.  Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby.  Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable securities laws.  The Grantee also agrees that the Company may (a) refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records of the Company if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law and (b) give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares.

4.Vesting.

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(a)The Shares that are granted hereby shall be subject to the Forfeiture Restrictions.  The Forfeiture Restrictions shall lapse as to the Shares that are awarded hereby in accordance with the following schedule, provided that the Grantee’s employment with the Company and its subsidiaries has not terminated prior to the applicable lapse date:

Lapse Date	Number of Restricted Shares as to Which Forfeiture Restrictions Lapse
first anniversary of Grant Date	___
second anniversary of Grant Date	___
third anniversary of Grant Date	___

(b)Notwithstanding any other provision of this Agreement, Plan or any employment or change of control agreement to the contrary, if, during the Term, a Change of Control occurs or Grantee’s employment with the Company and its Affiliates is terminated by the Company without Cause (other than for death or Disability) or by the Grantee for Good Reason, then any remaining Forfeiture Restrictions shall lapse as to all then unvested Restricted Shares that are granted hereby.  

(c)Upon the lapse of the Forfeiture Restrictions with respect to the Shares granted hereby the Company shall cause to be delivered to the Grantee a stock certificate or electronic book entry representing such Shares, and such Shares shall be transferable by the Grantee (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law).

(d)Except as otherwise provided in Section 4(b) hereof and notwithstanding any other provision of this Agreement or any employment or change of control agreement to the contrary, if the Grantee ceases to be employed by the Company or an Affiliate for any reason (including due to the death or Disability of the Grantee or termination of employment by the Company or Grantee for any reason) before the applicable lapse date, the Forfeiture Restrictions then applicable to the Restricted Shares shall not lapse and all the Restricted Shares shall be immediately forfeited to the Company.

5.Capital Adjustments and Reorganizations.  The existence of the Restricted Shares shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding.

6.Tax Withholding.  To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in income to the Grantee for federal, state, local or foreign income, employment or other tax purposes with respect to which the Company or its subsidiaries or any Affiliate has a withholding obligation, the Grantee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the

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Company or its subsidiaries or any Affiliate may require to meet its obligation under applicable tax laws or regulations, and, if the Grantee fails to do so, the Company or its subsidiaries or any Affiliate is authorized to withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to the Grantee in any capacity any tax required to be withheld by reason of such resulting income, sufficient to satisfy the withholding obligation.

7.Section 83(b) Election.  The Grantee shall not exercise the election permitted under section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Shares without the prior written approval of the General Counsel or the Chief Financial Officer of the Company.  If the General Counsel or the Chief Financial Officer of the Company permits the election, the Grantee shall timely pay the Company the amount necessary to satisfy the Company’s attendant tax withholding obligations, if any, and shall provide a copy of any such filing to the Company promptly after submission to the Internal Revenue Service.

8.No Guarantee of Tax Consequences.  The Company and the Committee make no commitment or guarantee that any federal, state, local or other tax treatment will (or will not) apply or be available to any person eligible for compensation or benefits under this Agreement.  The Grantee has been advised and been provided the opportunity to obtain independent legal and tax advice regarding the granting, vesting and settlement of Restricted Shares pursuant to the Plan and this Agreement.

9.No Fractional Shares.  All provisions of this Agreement concern whole Shares.  If the application of any provision hereunder would yield a fractional share, such fractional share shall be rounded down to the next whole share if it is less than 0.5 and rounded up to the next whole share if it is 0.5 or more.

10.Employment Relationship.  For purposes of this Agreement, the Grantee shall be considered to be in the employment of the Company and its Affiliates as long as the Grantee has an employment relationship with the Company and its Affiliates.  The Committee shall determine any questions as to whether and when there has been a termination of such employment relationship, and the cause of such termination, for purposes of the Plan and the Committee’s determination shall be final and binding on all persons.

11.Not an Employment Agreement.  This Agreement is not an employment or service agreement, and no provision of this Agreement shall be construed or interpreted to create an employment or other service relationship between the Grantee and the Company, its subsidiaries or any of its Affiliates, to guarantee the right to remain employed by the Company, its subsidiaries or any of its Affiliates for any specified term or to require the Company, its subsidiaries or any of its Affiliates to employ the Grantee for any period of time.

12.Legend.  The Grantee consents to the placing on the certificate or electronic book entry for the Shares an appropriate legend restricting resale or other transfer of the Shares except in accordance with all applicable securities laws and rules thereunder.

13.Notices.  Any notice, instruction, authorization, request, demand or other communications required hereunder shall be in writing, and shall be delivered either by personal delivery, by telecopy or similar facsimile means, by certified or registered mail, return receipt

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requested, or by courier or delivery service, addressed to the Company at the Company’s principal business office addressed to the attention of the Company’s General Counsel and to the Grantee at the Grantee’s residential address indicated beneath the Grantee’s signature on the execution page of this Agreement, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth.  Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested.

14.Amendment and Waiver.  Except as otherwise provided herein or in the Plan or as necessary to implement the provisions of the Plan, this Agreement may be amended, modified or superseded only by written instrument executed by the Company and the Grantee.  Only a written instrument executed and delivered by the party waiving compliance hereof shall waive any of the terms or conditions of this Agreement.  Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than the Grantee.  The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same.  No waiver by any party of any term or condition, or the breach of any term or condition contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other condition, or the breach of any other term or condition.

15.Dispute Resolution.  In the event of any difference of opinion concerning the meaning or effect of the Plan or this Agreement, such difference shall be resolved by the Committee.

16.Governing Law and Severability.  The validity, construction and performance of this Agreement shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.  The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect.

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17.Clawback Provisions.   Notwithstanding any other provisions in this Agreement or any other agreement between Grantee and the Company, any incentive-based compensation, or any other compensation, payable pursuant to this Agreement or any other agreement or arrangement with the Company or an affiliate which is subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company or an affiliate pursuant to such law, government regulation or stock exchange listing requirement.)

18.Restrictive Covenants.  Grantee agrees to the restrictive covenants contained in Exhibit B to this Agreement.

19.Successors and Assigns.  Subject to the limitations which this Agreement imposes upon the transferability of the Shares granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and the Grantee, the Grantee’s permitted assigns, executors, administrators, agents, legal and personal representatives.

20.Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be an original for all purposes but all of which taken together shall constitute but one and the same instrument.

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In Witness Whereof, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Grantee has executed this Agreement, all effective as of the date first above written.

INDEPENDENCE CONTRACT DRILLING, INC.

By: ​ ​​ ​
Name:J. Anthony Gallegos
Title:Chief Executive Officer

Address for Notices:

Independence Contract Drilling, Inc.
20475 Hwy 249, Suite 300
Houston, Texas 77070
Attn: Chief Executive Officer

GRANTEE

Name: _______________

Address for Notices:

Executive’s then current address shown in the Company’s records.

Restricted Stock

Irrevocable Stock Power

Know all men by these presents, that the undersigned, For Value Received, has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto the Secretary of Independence Contract Drilling, Inc. a Delaware corporation (the “Company”), the Shares transferred pursuant to the Restricted Stock Award Agreement dated _____, 202__, between the Company and the undersigned; and subject to and in accordance with such Restricted Stock Award Agreement the undersigned does hereby constitute and appoint the Secretary of the Company the undersigned’s true and lawful attorney, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge and make over all or any part of such Shares and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his substitutes shall lawfully do by virtue hereof.

In Witness Whereof, the undersigned has executed this Irrevocable Stock Power effective the ___ day of _______, 202__.

Name:  ________________

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EXHIBIT A

(1) “Change of Control” shall mean:

(i)    the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50 percent or more of either (A) the then outstanding shares of common stock or membership interests of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors or managers (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection A, the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company or any acquisition by the Company; or (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (3) any acquisition by any corporation pursuant to a transaction that complies with clauses (1), (2) and (3) of subsection (i) of this definition; or

(ii)    individuals, who, as of the date hereof constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders or members, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for purpose of this subsection (ii), any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii)    consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Transaction”) in each case, unless, following such Corporate Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 50 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding

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Company Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 20 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or

(iv)    approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, any Permitted Transaction (defined below) that would otherwise constitute a Change of Control under clause (i) or (iii) above as a result of any Permitted Holder(s) (defined below) or its or their Affiliate(s) (as defined in the Plan) acquiring such beneficial ownership interest in the outstanding voting securities of the Company or the surviving company with respect to a Corporate Transaction shall not be considered a Change of Control for purposes of this Agreement.

For purposes of the definition of Change of Control, a “Permitted Holder” shall mean any holder of the Company’s Floating Rate Convertible Senior Secured PIK Toggle Notes due 2026 (the “Convertible Notes”) as of the Effective Date; and “Permitted Transaction” shall mean any transaction or series of transactions involving the repayment, refinancing, exchange, conversion, extension, or extinguishment of the Convertible Notes, or any combination thereof; provided however, a Permitted Transaction shall not include any Corporate Transaction in which either:  (i) the outstanding voting securities of the surviving entity in such Corporate Transaction are not registered under the Securities Act of 1934, as amended, immediately after giving effect to the Corporate Transaction; or (ii) the Permitted Holders and the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction do not beneficially own in the aggregate more than 50% of the outstanding voting securities of the corporation or surviving entity resulting from such Corporate Transaction.

(2)“Cause” shall mean Grantee’s:

(i)willful and continued failure to comply with the reasonable written directives of the Company for a period of thirty (30) days after written notice from the Company;  

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(ii)willful and persistent inattention to duties for a period of thirty (30) days after written notice from the Company, or the commission of acts within employment with the Company amounting to gross negligence or willful misconduct;

(iii)misappropriation of funds or property of the Company or committing any fraud against the Company or against any other person or entity in the course of employment with the Company;

(iv)misappropriation of any corporate opportunity, or otherwise obtaining personal profit from any transaction which is adverse to the interests of the Company or to the benefits of which the Company is entitled;

(v)conviction of a felony involving moral turpitude;

(vi)willful failure to comply in any material respect with the terms of any employment agreement with the Company and such non-compliance continues uncured after thirty (30) days after written notice from the Company; or

(vii)chronic substance abuse, including abuse of alcohol, drugs or other substances or use of illegal narcotics or substances, for which Grantee fails to undertake treatment immediately after requested by the Company or to complete such treatment and which abuse continues or resumes after such treatment period, or possession of illegal narcotics or substances on Company premises or while performing Grantee’s duties and responsibilities.

For purposes of this definition, no act, or failure to act, by Grantee will be considered “willful” if done, or omitted to be done, by Grantee in good faith and in the reasonable belief that the act or omission was in the best interest of the Company or required by applicable law.    Any termination during the employment term by the Company for Cause shall be communicated by Notice of Termination.  For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific provisions in the definition of “cause” or “good reason” relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Grantee's employment under the provision so indicated and (iii) if the date of termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Company to set forth in the notice of termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company from asserting such fact or circumstance in enforcing the Grantee's or the Company's rights hereunder.

(3) “Good Reason” shall mean without the express written consent of Grantee, the occurrence of any of the following, following the occurrence of a Change of Control:

(i)any action or inaction that constitutes a material breach by the Company of this Agreement and such action or inaction continues uncured after thirty (30) days following written notice from the Grantee;

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(ii)a change in the geographic location at which Grantee must perform services to a location more than fifty (50) miles from the location at which Grantee normally performs such services as of the date of the occurrence of the Change of Control; or (iii) a reduction in Grantee’s annual salary or total cash compensation levels in effect immediately prior to the occurrence of the Change of Control or failure of Grantee to participate in the long-term incentive programs of the ultimate parent company following such Change of Control.

(iii) any action or inaction by the Company that would constitute good reason as expressly defined under the employment agreement, if any, between Company and Grantee in effect on Effective Date hereof

Notwithstanding anything herein to the contrary, the interim assignment of Grantee’s position, authority, duties, or responsibilities to any person while Grantee is absent from his duties during any period of disability shall not constitute a Good Reason for Grantee to terminate his employment with the Company.  In addition, the Grantee’s termination of employment shall not constitute Good Reason unless Grantee notifies the Company of the condition or event constituting Good Reason within ninety days (90) days of the condition’s occurrence (unless unknown to Grantee) and the Company fails to cure the conditions, to the extent curable, specified in the notice within thirty (30) days following such notification. Any termination of employment by the Grantee for Good Reason shall be communicated by a Notice of Termination.  

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Exhibit B

Restrictive Covenants

In consideration for the grant of Shares hereunder, which are expected to vest during Grantee’s employment with the Company over the vesting period, as well as the protection of the Company’s goodwill and Confidential Information, Grantee agrees to the following:

(a)Certain Definitions. For purposes of this Exhibit B, the following terms shall have the following meanings:

(i)“Confidential Information” means any information, knowledge or data of any nature and in any form (including information that is electronically transmitted or stored on any form of magnetic or electronic storage media) relating to the past, current or prospective business or operations of the Company, that is not generally known to persons engaged in a business similar to that conducted by the Company, whether produced by the Company or any of its consultants, agents or independent contractors or by Grantee, and whether or not marked confidential.   Confidential information does not include information that (1) at the time of disclosure is, or thereafter becomes, generally available to the public, (2) prior to or at the time of disclosure was already in the possession of Grantee, (3) is obtained by Grantee from a third party not in violation of any contractual, legal or fiduciary obligation to the Company with respect to that information or (3) is independently developed by Grantee, but not including the confidential information provided by the Company.

(ii)“Restricted Business” means the oil and natural gas land contract drilling business conducted in Texas or its contiguous states.  

(b)Nondisclosure of Confidential Information.  Grantee shall hold in a fiduciary capacity for the benefit of the Company all Confidential Information which shall have been obtained by Grantee during Grantee’s employment and shall not use such Confidential Information other than within the scope of Grantee’s employment with and for the exclusive benefit of the Company.  Following any termination of employment with the Company, Grantee agrees (i) not to communicate, divulge or make available to any person or entity (other than the Company) any such Confidential Information, except (A) upon the prior written authorization of the Company, (B) as may be required by law or legal process, (C) as reasonably necessary in connection with the enforcement of any right or remedy related to this Agreement, or (D) unless no longer Confidential Information, and (ii) to deliver promptly to the Company any Confidential Information in Grantee’s possession, including any duplicates thereof and any notes or other records Grantee has prepared with respect thereto. In the event that the provisions of any applicable law or the order of any court would require Grantee to disclose or otherwise make available any Confidential Information then Grantee shall, to the extent practicable, give the Company prior written notice of such required disclosure and an opportunity to contest the requirement of such disclosure or apply for a protective order with respect to such Confidential Information by appropriate proceedings.  

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(c)Limited Covenant Not to Compete.  In the event Grantee’s employment is terminated, Grantee agrees that during the period beginning on the date of such termination and ending on the twelve (12) month anniversary of the date of such termination.:  

(i)if Grantee’s employment is terminated for Cause, Grantee shall not, directly or indirectly, for himself or others, own, manage, operate, control or participate in the ownership, management, operation or control of any business, whether in corporate, proprietorship or partnership form or otherwise, that is engaged, directly or indirectly, in the United States in the Restricted Business; provided, however, that the restrictions contained herein shall not restrict (A) the acquisition by Grantee of less than 2% of the outstanding capital stock of any publicly traded company engaged in a Restricted Business or (B) Grantee from being employed by an entity in which the majority of such entity’s revenues on a consolidated basis determined in accordance with generally accepted accounting principles are from activities and businesses that do not constitute a Restricted Business and provided that Grantee is only employed by and engaged with divisions and units of such entity that are not engaged in the Restricted Business; and

(ii)Grantee shall not, directly or indirectly (A) solicit any individual, who, at the time of time of such solicitation is an employee of the Company, to leave such employment or hire, employ or otherwise engage any such individual (other than employees of the Company who respond to general advertisements for employment in newspapers or other periodicals of general circulation (including trade journals)), or (B) cause, induce or encourage any material actual or prospective client, customer, supplier, landlord, lessor or licensor of the Company to terminate or modify any such actual or prospective contractual relationship that exists on the date of termination of employment.  

In addition, it is understood that the provisions of this paragraph (c) shall terminate in all respects on the fourth anniversary of the date of the Agreement to which this Exhibit B is a part.

(d)Injunctive Relief; Remedies.  The covenants and undertakings contained in this Exhibit B relate to matters which are of a special, unique and extraordinary character and a violation of any of the terms of this Exhibit B will cause irreparable injury to the Company, the amount of which will be impossible to estimate or determine and which cannot be adequately compensated.  Accordingly, the remedy at law for any breach of this Exhibit B may be inadequate.  Therefore, notwithstanding anything to the contrary, the Company will be entitled to an injunction, restraining order or other equitable relief from any court of competent jurisdiction in the event of any breach of any provision of this Exhibit B without the necessity of proving actual damages or posting any bond whatsoever.  The rights and remedies provided by this Exhibit B are cumulative and in addition to any other rights and remedies which the Company may have hereunder or at law or in equity.  The parties hereto further agree that, if any court of competent jurisdiction in a final nonappealable judgment determines that a time period, a specified business limitation or any other relevant feature of this Exhibit B is unreasonable,

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arbitrary or against public policy, then a lesser time period, geographical area, business limitation or other relevant feature which is determined by such court to be reasonable, not arbitrary and not against public policy may be enforced against the applicable party.  

(e)Governing Law of this Exhibit B; Consent to Jurisdiction. Any dispute regarding the reasonableness of the covenants and agreements set forth in this Exhibit B, or the territorial scope or duration thereof, or the remedies available to the Company upon any breach of such covenants and agreements, shall be governed by and interpreted in accordance with the laws of the state of Texas, without regard to conflict of law provisions thereof, and, with respect to each such dispute, the Company and Grantee each hereby irrevocably consent to the exclusive jurisdiction of the State of Texas for resolution of such dispute, and further agree that service of process may be made upon Grantee in any legal proceeding relating to this Exhibit B by any means allowed under the laws of such state.

(f)Grantee’s Understanding of this Section.  Grantee hereby represents to the Company that Grantee has read and understands, and agrees to be bound by, the terms of this Exhibit B. Grantee acknowledges that the geographic scope and duration of the covenants contained in Exhibit B are the result of arm’s-length bargaining and are fair and reasonable in light of (i) the importance of the functions performed by Grantee and the length of time it would take the Company to find and train a suitable replacement, (ii) the nature and wide geographic scope of the operations of the Company, (iii) Grantee’s level of control over and contact with the Company’s business and operations in all jurisdictions where they are located, and (iv) the fact that the Restricted Business is potentially conducted throughout the geographic area where competition is restricted by this Agreement. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the parties hereto waive any provision of applicable law that would render any provision of this Exhibit B invalid or unenforceable.

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EX-10.3

AMENDED AND RESTATED
INDEPENDENCE CONTRACT DRILLING, INC.
2019 OMNIBUS INCENTIVE PLAN

DIRECTOR ONE-YEAR VESTING

RESTRICTED STOCK AWARD AGREEMENT

GRANTEE: Name

This Restricted Stock Award Agreement(this “Agreement”) is made by and between Independence Contract Drilling, Inc., a Delaware corporation (the “Company”), and the individual named above (the “Grantee”) effective as of _______, 202__ (the “Grant Date”), pursuant to the Amended and Restated Independence Contract Drilling, Inc. 2019 Omnibus Incentive Plan, as amended (the “Plan”), a copy of which previously has been made available to the Grantee and the terms and provisions of which are incorporated by reference herein.  In the event of a conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall control.  

Whereas, the Company desires to grant to the Grantee the shares of the Company’s common stock, $0.01 par value per share, specified herein (the “Shares”), subject to the terms and conditions of this Agreement; and

Whereas, the Grantee desires to have the opportunity to hold the Shares subject to the terms and conditions of this Agreement;

Now, Therefore, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1.Definitions. For purposes of this Agreement, in addition to the defined terms contained in Exhibit A to this Agreement, the following terms shall have the meanings indicated:

(a) “Forfeiture Restrictions” shall mean the prohibitions and restrictions set forth herein with respect to the sale or other disposition of the Shares issued to the Grantee hereunder and the obligation to forfeit and surrender such Shares to the Company.

(b)“Period of Restriction” shall mean the period during which Restricted Shares are subject to Forfeiture Restrictions and during which Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered.

(c)“Restricted Shares” shall mean the Shares that are subject to the Forfeiture Restrictions under this Agreement.

Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan.

2.Grant of Restricted Shares.  Effective as of the Grant Date, the Company shall cause to be issued in the Grantee’s name the following Shares as Restricted Shares:  _____ shares of the Company’s common stock, $.01 par value, which are granted pursuant to the terms of the Plan.  The Company shall cause certificates or electronic book entries evidencing the Restricted Shares, and any shares of Stock or rights to acquire shares of Stock distributed by the Company in respect of Restricted Shares during any Period of Restriction (the “Retained Distributions”), to be issued in the Grantee’s name.  During the Period of Restriction such electronic book entries and certificates shall bear a restrictive legend to the effect that ownership of such Restricted Shares (and any Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions provided in the Plan and this Agreement.  The Grantee shall have the right to vote the Restricted Shares awarded to the Grantee and to receive currently and retain all regular dividends paid in cash or property (other than Retained Distributions), and to exercise all other rights, powers and privileges of a holder of Shares, with respect to such Restricted Shares, with the exception that (a) the Grantee shall not be entitled to delivery of the stock certificate or certificates or electronic book entries representing such Restricted Shares until the Forfeiture Restrictions applicable thereto shall have expired, (b) the Company shall retain custody of all Retained Distributions made or declared with respect to the Restricted Shares (and such Retained Distributions shall be subject to the same restrictions, terms and conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid, or declared shall have become vested, and such Retained Distributions shall not bear interest or be segregated in separate accounts and (c) the Grantee may not sell, assign, transfer, pledge, exchange, encumber, or dispose of the Restricted Shares or any Retained Distributions during the Period of Restriction.  Upon issuance any certificates shall be delivered to such depository as may be designated by the Committee as a depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Shares and any securities constituting Retained Distributions which shall be forfeited in accordance with the Plan and this Agreement.  In accepting the award of Shares set forth in this Agreement the Grantee accepts and agrees to be bound by all the terms and conditions of the Plan and this Agreement.

3.Transfer Restrictions.  The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions.  Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby.  Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable securities laws.  The Grantee also agrees that the Company may (a) refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records of the Company if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law and (b) give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares.

4.Vesting.

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(a)The Shares that are granted hereby shall be subject to the Forfeiture Restrictions.  The Forfeiture Restrictions shall lapse as to the Shares that are awarded hereby in accordance with the following schedule, provided that the Grantee’s employment with the Company and its subsidiaries has not terminated prior to the applicable lapse date:

Lapse Date	Percentage of Restricted Shares as to Which Forfeiture Restrictions Lapse
first anniversary of Grant Date	100%

(b)Notwithstanding any other provision of this Agreement, Plan or any other agreement to the contrary, if, during the Term, upon the occurrence of a Change of Control, any remaining Forfeiture Restrictions shall lapse as to all then unvested Restricted Shares that are granted hereby.  

(c)Upon the lapse of the Forfeiture Restrictions with respect to the Shares granted hereby the Company shall cause to be delivered to the Grantee a stock certificate or electronic book entry representing such Shares, and such Shares shall be transferable by the Grantee (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law).

(d)Except as otherwise provided in Section 4(b) hereof, if the Grantee ceases to serve as a director of the Company or an Affiliate for any reason (including due to the death or Disability of the Grantee) before the applicable lapse date, the Forfeiture Restrictions then applicable to the Restricted Shares shall not lapse and all the Restricted Shares shall be immediately forfeited to the Company.

5.Capital Adjustments and Reorganizations.  The existence of the Restricted Shares shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding.

6.Tax Withholding.  To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in income to the Grantee for federal, state, local or foreign income, employment or other tax purposes with respect to which the Company or its subsidiaries or any Affiliate has a withholding obligation, the Grantee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company or its subsidiaries or any Affiliate may require to meet its obligation under applicable tax laws or regulations, and, if the Grantee fails to do so, the Company or its subsidiaries or any Affiliate is authorized to withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to the Grantee in any capacity any tax required to be withheld by reason of such resulting income, sufficient to satisfy the withholding obligation.

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7.Section 83(b) Election.  The Grantee shall not exercise the election permitted under section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Shares without the prior written approval of the General Counsel or the Chief Financial Officer of the Company.  If the General Counsel or the Chief Financial Officer of the Company permits the election, the Grantee shall timely pay the Company the amount necessary to satisfy the Company’s attendant tax withholding obligations, if any, and shall provide a copy of any such filing to the Company promptly after submission to the Internal Revenue Service.

8.No Guarantee of Tax Consequences.  The Company and the Committee make no commitment or guarantee that any federal, state, local or other tax treatment will (or will not) apply or be available to any person eligible for compensation or benefits under this Agreement.  The Grantee has been advised and been provided the opportunity to obtain independent legal and tax advice regarding the granting, vesting and settlement of Restricted Shares pursuant to the Plan and this Agreement.

9.No Fractional Shares.  All provisions of this Agreement concern whole Shares.  If the application of any provision hereunder would yield a fractional share, such fractional share shall be rounded down to the next whole share if it is less than 0.5 and rounded up to the next whole share if it is 0.5 or more.

10.Not an Employment Agreement.  This Agreement is not an employment or service agreement, and no provision of this Agreement shall be construed or interpreted to create an employment or other service relationship between the Grantee and the Company, its subsidiaries or any of its Affiliates, to guarantee the right to continuing serving as a director of  the Company, its subsidiaries or any of its Affiliates for any specified term or to require the Company, its subsidiaries or any of its Affiliates to employ the Grantee for any period of time.

11.Legend.  The Grantee consents to the placing on the certificate or electronic book entry for the Shares an appropriate legend restricting resale or other transfer of the Shares except in accordance with all applicable securities laws and rules thereunder.

12.Notices.  Any notice, instruction, authorization, request, demand or other communications required hereunder shall be in writing, and shall be delivered either by personal delivery, by telecopy or similar facsimile means, by certified or registered mail, return receipt requested, or by courier or delivery service, addressed to the Company at the Company’s principal business office addressed to the attention of the Company’s General Counsel and to the Grantee at the Grantee’s residential address indicated beneath the Grantee’s signature on the execution page of this Agreement, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth.  Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested.

13.Amendment and Waiver.  Except as otherwise provided herein or in the Plan or as necessary to implement the provisions of the Plan, this Agreement may be amended, modified

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or superseded only by written instrument executed by the Company and the Grantee.  Only a written instrument executed and delivered by the party waiving compliance hereof shall waive any of the terms or conditions of this Agreement.  Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than the Grantee.  The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same.  No waiver by any party of any term or condition, or the breach of any term or condition contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other condition, or the breach of any other term or condition.

14.Dispute Resolution.  In the event of any difference of opinion concerning the meaning or effect of the Plan or this Agreement, such difference shall be resolved by the Committee.

15.Governing Law and Severability.  The validity, construction and performance of this Agreement shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.  The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect.

16.Clawback Provisions.   Notwithstanding any other provisions in this Agreement or any other agreement between Grantee and the Company, any incentive-based compensation, or any other compensation, payable pursuant to this Agreement or any other agreement or arrangement with the Company or an affiliate which is subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company or an affiliate pursuant to such law, government regulation or stock exchange listing requirement.)

17.Successors and Assigns.  Subject to the limitations which this Agreement imposes upon the transferability of the Shares granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and the Grantee, the Grantee’s permitted assigns, executors, administrators, agents, legal and personal representatives.

18.Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be an original for all purposes but all of which taken together shall constitute but one and the same instrument.

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In Witness Whereof, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Grantee has executed this Agreement, all effective as of the date first above written.

INDEPENDENCE CONTRACT DRILLING, INC.

By: ​ ​​ ​
Name:J. Anthony Gallegos
Title:Chief Executive Officer

Address for Notices:

Independence Contract Drilling, Inc.
20475 Hwy 249, Suite 300
Houston, Texas 77070
Attn: Chief Executive Officer

GRANTEE

Name:

Address for Notices:

Executive’s then current address shown in the Company’s records.

Restricted Stock

Irrevocable Stock Power

Know all men by these presents, that the undersigned, For Value Received, has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto the Secretary of Independence Contract Drilling, Inc. a Delaware corporation (the “Company”), the Shares transferred pursuant to the Restricted Stock Award Agreement dated _________, 202__, between the Company and the undersigned; and subject to and in accordance with such Restricted Stock Award Agreement the undersigned does hereby constitute and appoint the Secretary of the Company the undersigned’s true and lawful attorney, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge and make over all or any part of such Shares and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his substitutes shall lawfully do by virtue hereof.

In Witness Whereof, the undersigned has executed this Irrevocable Stock Power effective the ___ day of _____, 202__.

Name:  

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EXHIBIT A

(1) “Change of Control” shall mean:

(i)    the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50 percent or more of either (A) the then outstanding shares of common stock or membership interests of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors or managers (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection A, the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company or any acquisition by the Company; or (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (3) any acquisition by any corporation pursuant to a transaction that complies with clauses (1), (2) and (3) of subsection (i) of this definition; or

(ii)    individuals, who, as of the date hereof constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders or members, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for purpose of this subsection (ii), any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii)    consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Transaction”) in each case, unless, following such Corporate Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 50 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding

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Company Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 20 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or

(iv)    approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, any Permitted Transaction (defined below) that would otherwise constitute a Change of Control under clause (i) or (iii) above as a result of any Permitted Holder(s) (defined below) or its or their Affiliate(s) (as defined in the Plan) acquiring such beneficial ownership interest in the outstanding voting securities of the Company or the surviving company with respect to a Corporate Transaction shall not be considered a Change of Control for purposes of this Agreement.

For purposes of the definition of Change of Control, a “Permitted Holder” shall mean any holder of the Company’s Floating Rate Convertible Senior Secured PIK Toggle Notes due 2026 (the “Convertible Notes”) as of the Effective Date; and “Permitted Transaction” shall mean any transaction or series of transactions involving the repayment, refinancing, exchange, conversion, extension, or extinguishment of the Convertible Notes, or any combination thereof; provided however, a Permitted Transaction shall not include any Corporate Transaction in which either:  (i) the outstanding voting securities of the surviving entity in such Corporate Transaction are not registered under the Securities Act of 1934, as amended, immediately after giving effect to the Corporate Transaction; or (ii) the Permitted Holders and the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction do not beneficially own in the aggregate more than 50% of the outstanding voting securities of the corporation or surviving entity resulting from such Corporate Transaction.

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INDEPENDENCE CONTRACT DRILLING, INC.

PERFORMANCE UNIT AWARD AGREEMENT

FREE CASH FLOW / TOTAL SHAREHOLDER RETURN

100% CASH SETTLEMENT

Grantee:____

1.Grant of Performance Unit Award.  

(a)As of ______, 202__ (the “Effective Date”), the date of this agreement (this “Agreement”), Independence Contract Drilling, Inc., a Delaware corporation (the “Company”), hereby grants to the Grantee (identified above) ____ restricted stock units (the “RSUs”) pursuant to the Amended and Restated Independence Contract Drilling, Inc. 2019 Omnibus Incentive Plan, as may be amended from time to time (the “Plan”).  The number of RSUs hereunder that are considered target RSUs shall be _____ (the “Target RSUs”).  Each RSU represents the opportunity to receive a cash payment equivalent to the fair market value of a share of Common Stock on the date of vesting based upon satisfaction of certain Free Cash Flow/TSR targets and the “Payout Multiplier” as defined in Exhibit A, subject to Exhibit C. The actual number of shares of Common Stock that may be issued pursuant to the terms of this Agreement will be between 0% and 201.25% of the number of Target RSUs (as defined in Exhibit A).    

(b)To determine the number, if any, of RSUs that shall be deemed earned (“Earned RSUs”), the methodology on Exhibit A shall be followed, subject to Exhibit C.  For purposes of this Agreement, there shall be three performance periods:  (a) “Performance Period I” shall be deemed to begin on January 1, 202__ and end on December 31, 202__ (the “Performance Period 1 Determination Date”); (b) “Performance Period II” shall be deemed to begin on January 1, 202__ and end on December 31, 202__ (the “Performance Period II Determination Date”, and (c) “Performance Period III” shall be deemed to begin on January 1, 202__ and end on December 31, 202__ (the “Performance Period III Determination Date”).  

For purposes of this Agreement, each of Performance Period I, Performance Period II and Performance Period III shall be considered a “Performance Period”, and each of Performance Period I Determination Date, Performance Period II Determination Date and Performance Period III Determination Date shall be considered a “Determination Date”.

It is understood that Earned RSU’s are also subject to a three-year time-based vesting requirement that begins on the Effective Date, as described in paragraph 3 below.  

2.Definitions.  Exhibits A, B and C are incorporated into this Agreement by reference.  Unless otherwise provided, all capitalized terms used herein shall have the meanings set forth in

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the Plan, or as set forth in Exhibits A, B and C.  In the event of a conflict between the terms of the Plan and terms of this Agreement, the terms of the Plan shall control.  

3.Vesting and Forfeiture.  Subject to Grantee’s continued employment with the Company or its affiliates (the “Company Group”), and subject further to Exhibits A, B and C, or any employment agreement between Grantee and a member of the Company Group, only RSUs that become Earned RSUs shall have the opportunity to vest, and Earned RSUs shall vest, if at all, at the end of the business day on the third anniversary of the Effective Date (the “Vesting Date”).  RSUs with respect to a Performance Period that fail to become Earned RSUs as of the respective Determination Date (as determined by the Committee) shall immediately and automatically be forfeited for no consideration.  Additionally, except to the extent a change of control or employment agreement between Grantee and a member of the Company Group provides otherwise, a failure of Grantee to continue his or her employment through the Vesting Date shall result in an immediate and automatic forfeiture of outstanding RSUs and Earned RSUs under this Agreement.    

4.Purchase Price.  No consideration shall be payable by the Grantee to the Company for the RSUs.

5.Restrictions on RSUs and Settlement of Vested RSUs.  

(a)No Dividend Equivalents are granted with respect to any RSUs.

(b)The Company shall settle vested Earned RSUs within 30 days of the date such Earned RSUs become vested in accordance with Section 3.  Vested Earned RSUs shall be settled in cash in amount equal to the Fair Market Value of the Common Stock on the Vesting Date for each vested Earned RSU.  Fractional shares shall be rounded downward. Notwithstanding the foregoing, in the event the stockholders of the Company vote to increase the number of shares authorized under the 2019 Plan to specifically settle RSU’s granted hereunder in shares of Common Stock, then vested Earned RSUs shall be settled in shares of Common Stock and entitle the Grantee to receive one share of Common Stock for each vested Earned RSUs. Notwithstanding the foregoing, if payment of such amount (when aggregated with any other payments related to stock appreciation rights exercised under the Plan), would jeopardize the ability of the Company to continue as a going concern, the Company may delay a portion of such payment until such time at which making such payment and any other payments owed in respect of cash settled FCF/ TSR awards granted on the date hereof to other Plan participants would no longer have such effect.

(c)Nothing in this Agreement or the Plan shall be construed to:

(i)give the Grantee any right to be awarded any further RSUs or any other Award in the future, even if RSUs or other Awards are granted on a regular or repeated basis, as grants of RSUs and other Awards are completely voluntary and made solely in the discretion of the Committee;

(ii)give the Grantee or any other person any interest in any fund or in any specified asset or assets of the Company or any Affiliate; or

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(iii)confer upon the Grantee the right to continue in the employment or service of the Company or any Affiliate, or affect the right of the Company or any Affiliate to terminate the employment or service of the Grantee at any time or for any reason.

(d)The Grantee shall not have any voting rights with respect to the RSUs.

6.Independent Legal and Tax Advice.  Grantee acknowledges that the Company has advised Grantee to obtain independent legal and tax advice regarding the grant, holding, vesting and settlement of the RSUs in accordance with this Agreement and any disposition of any such Awards or the shares of Common Stock issued with respect thereto.

7.Reorganization of Company.  The existence of this Agreement shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue or bonds, debentures, preferred stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.  Except as otherwise provided herein, in the event of a Corporate Change as defined in the Plan, Section 4.5 of the Plan shall be applicable.

8.Investment Representation.  Grantee will enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with any federal or state securities law.  Moreover, any stock certificate for any shares of stock issued to Grantee hereunder may contain a legend restricting their transferability as determined by the Company in its discretion.  Grantee agrees that the Company shall not be obligated to take any affirmative action in order to cause the issuance or transfer of shares of Stock hereunder to comply with any law, rule or regulation that applies to the shares subject to this Agreement.

9.No Guarantee of Employment.  This Agreement shall not confer upon Grantee any right to continued employment with the Company or any Affiliate thereof.

10.Withholding of Taxes.  The Company or an Affiliate shall be entitled to satisfy, pursuant to Section 16.3 of the Plan, any and all tax withholding requirements with respect to RSUs.

11.General.

(a)Notices.  All notices under this Agreement shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their signatures below or at such other address as may be designated in writing by either of the parties to one another, or to their permitted transferees if applicable.  Notices shall be effective upon receipt.

(b)Transferability of Award.  The rights of the Grantee pursuant to this Agreement are not transferable by Grantee.  No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities, obligations or torts of Grantee or any permitted transferee thereof. Any purported assignment, alienation, pledge, attachment, sale, transfer or other encumbrance of the RSUs, prior to the lapse of restrictions, that does not satisfy the requirements hereunder shall be void and unenforceable against the Company.

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(c)Amendment and Termination.  No amendment, modification or termination of this Agreement shall be made at any time without the written consent of Grantee and the Company.

(d)No Guarantee of Tax Consequences.  The Company and the Committee make no commitment or guarantee that any federal, state, local or other tax treatment will (or will not) apply or be available to any person eligible for compensation or benefits under this Agreement.  The Grantee has been advised and been provided the opportunity to obtain independent legal and tax advice regarding the granting, vesting and settlement of RSUs pursuant to the Plan and this Agreement and the disposition of any Common Stock acquired thereby.

(e)Section 409A.  The award of RSUs hereunder is intended to either comply with or be exempt from Section 409A, and the provisions of this Agreement shall be administered, interpreted and construed accordingly. If the award of RSUs is not exempt from Section 409A and the Grantee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code on the date on which the Grantee has a “separation from service” (other than due to death) within the meaning of Section 1.409A-1(h) of the Treasury Regulations, then notwithstanding the provisions of this Agreement, any transfer of shares or other compensation payable on account of Grantee’s separation from service that constitute deferred compensation under Section 409A shall take place on the earlier of (i) the first business day following the expiration of six months from the Grantee’s separation from service, or (ii) such earlier date as complies with the requirements of Section 409A. To the extent required under Section 409A, the Grantee shall be considered to have terminated employment with the Company or its affiliates (the “Company Group”) when the Grantee incurs a “separation from service” with respect to the Company Group within the meaning of Section 409A(a)(2)(A)(i) of the Code.

(f)Severability.  In the event that any provision of this Agreement shall be held illegal, invalid or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the Agreement, and the Agreement shall be construed and enforced as if the illegal, invalid or unenforceable provision had not been included therein.

(g)Supersedes Prior Agreements.  This Agreement shall supersede and replace all prior agreements and understandings, oral or written, between the Company and the Grantee regarding the grant of the RSUs covered hereby.

(h)Governing Law.  This Agreement shall be construed in accordance with the laws of the State of Delaware without regard to its conflict of law provisions, to the extent federal law does not supersede and preempt Delaware law.

(i)No Trust or Fund Created.  This Agreement shall not create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Grantee or any other Person.  To the extent that any Person acquires a right to receive payments from the Company or any Affiliates pursuant to this Agreement, such right shall be no greater than the right of any general unsecured creditor of the Company or any Affiliate.

(j)Clawback Provisions.  Notwithstanding any other provisions in this Agreement or the Change of Control Agreement to the contrary, any incentive-based compensation, or any other compensation, payable pursuant to this Agreement or any other agreement or arrangement

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with the Company or an affiliate which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company or an affiliate pursuant to such law, government regulation or stock exchange listing requirement).  

(k)Restrictive Covenants.  Grantee agrees to the restrictive covenants contained in Exhibit D to this Agreement.

(l)Other Laws.  The Company retains the right to refuse to issue or transfer any Stock if it determines that the issuance or transfer of such shares might violate any applicable law or regulation or entitle the Company to recover under Section 16(b) of the Securities Exchange Act of 1934.

(m)Binding Effect.  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Grantee.

[SIGNATURES ON NEXT PAGE]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and Grantee has hereunto executed this Agreement as of the date set forth above.

INDEPENDENCE CONTRACT DRILLING, INC.

By: ​ ​​ ​
Name:J. Anthony Gallegos, Jr.
Title:Executive Vice President & Chief Financial Officer

Address for Notices:

Independence Contract Drilling, Inc.
20475 Hwy 249, Suite 300
Houston, Texas 77070
Attn: Chief Executive Officer

GRANTEE

Address for Notices:

Executive’s then current address shown in the Company’s records.

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Exhibit A

Methodology for Calculating Earned RSUs

1. Definitions. For purposes of determining the number of RSUs that are deemed to be Earned RSUs and the number of Earned RSUs that shall vest on the Vesting Date, the following definitions shall apply:

(a)Peer Group means the following eight companies to the extent such entities or their successors are in existence and publicly traded as of the Performance End Date:  _____.

(b)Total Shareholder Return or TSR means shall be defined and calculated as follows, where “Beginning Price” is (1) with respect to the Company or with respect to members of the Peer Group, the average closing price on the New York Stock Exchange (“NYSE”) for the last 20 NYSE trading days prior to and including the Effective Date, and “Ending Price” is the average closing price on the NYSE for the last 20 NYSE trading prior to and including the applicable Determination Date, in each case as applied to the applicable equity security:

TSR = (Ending Price – Beginning Price + cash dividends (if any) per share paid*)

Beginning Price

* Stock dividends paid in securities rather than cash in which there is a distribution of less than 25 percent of the outstanding shares (as calculated prior to the distribution) shall be treated as cash for purposes of this calculation.

To the extent a security of the Company or any member of the Peer Group is not listed or traded on the NYSE, “NYSE” as used above shall mean the principal national securities exchange or quotation service on which the security is listed or quoted.  TSR of the Company or of any member of the Peer Group shall be equitably adjusted, as determined by the Committee, to reflect any spin-off, stock split, reverse stock split, stock dividend, recapitalization, reclassification or other similar change in the number of outstanding shares of common stock.

(c)Free Cash Flow during an applicable Performance Period means an amount equal to Adjusted EBITDA less Capital Expenditures.

(d)Adjusted EBITDA means net income plus/(minus) tax expense/(benefit), depreciation expense, interest expense, stock-based compensation and deferred compensation expense, (gain)/loss on sale of assets, non-cash impairments and other non-cash charges, and other expenses specifically approved by the Committee, in each case calculated in good faith by the Company based upon the Company’s audited financial statements for the applicable Performance Period.

(e)Capital Expenditures during an applicable Performance Period shall mean capital expenditures accrued and incurred in accordance with generally accepted accounting principles applied consistently by the Company less any Excluded Capital Expenditures and less

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proceeds from any disposition or disposal of equipment or assets whether by sale, trade or exchange.

(f)Excluded Capital Expenditures during an applicable Performance Period shall mean capital expenditures relating to reactivation or upgrade of a drilling rig not included or contemplated in the Annual Budget and which is approved by resolution of the Committee.  Excluded Capital Expenditures also shall include capital expenditures reimbursed by third parties such as third-party customers or insurers.

(g)Annual Budget for an applicable Performance Period shall mean the Annual Operating and Capital Budget of the fiscal year applicable to such Performance Period as approved by resolution of the Company’s Board of  Directors, which Annual Operating and Capital Budget shall specifically contain and reference a budgeted calculation of Free Cash Flow for such Performance Period.

(h)TSR Performance Period shall mean the period beginning on the Effective Date and ending on the three-year anniversary of the Effective Date.

2. Committee Methodology.  The RSUs and Target RSUs shall be trifurcated into three equal parts, with one-third being allocated to each Performance Period (to avoid partial shares, the portion of RSUs and Target RSUs allocated to a specific Performance Period shall be reduced to the nearest whole number, with the excess rolling forward into the next sequentially ordered Performance Period).  The Committee shall calculate the number of Earned RSU’s applicable to each Performance Period as soon as reasonably practicable following expiration of the applicable Performance Period and issuance of the Company’s audited financial statements for the applicable Performance Period, and in all events as soon as practicable in order to determine the number of Earned RSU’s existing on the Vesting Date.    

Calculation of Earned RSUs

Subject to Exhibit C, for the applicable Performance Period, the Committee shall calculate the number of Earned RSUs for such Performance Period as follows:

i. Performance Period I:  Multiply the number of Target RSUs allocable to Performance Period I by the Multiplier in the FCF Chart below, with such answer being the Earned RSUs for the Performance Period I.  To the extent the number of RSUs allocated to Performance Period I exceed the Earned RSU’s for Performance Period I, such excess RSUs shall be immediately and automatically forfeited.

ii. Performance Period II:  Multiply the number of Target RSUs allocable to Performance Period II by the FCF Multiplier in the chart below, with such answer being the Earned RSUs for the Performance Period II. To the extent the number of

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RSUs allocated to Performance Period II exceed the Earned RSU’s for Performance Period II, such excess RSUs shall be immediately and automatically forfeited.

iii. Performance Period III:  Multiply the number of Target RSUs allocable to Performance Period III by the Free Cash Flow Multiplier in the chart above, with such answer being the Earned RSUs for the Performance Period III. To the extent the number of RSUs allocated to Performance Period III exceed the Earned RSU’s for Performance Period III, such excess RSUs shall be immediately and automatically forfeited.

FREE CASH FLOW MULTIPLIER
BELOW ENTRY: Free Cash Flow below 80% of the applicable Annual Budget Free Cash Flow	ENTRY: Free Cash Flow equal to 80% of the applicable Annual Budget Free Cash Flow	TARGET: Free Cash Flow equal to the applicable Annual Budget Cash Flow	OA: Free Cash Flow equal or exceeding 120% of the applicable Annual Budget Free Cash Flow
FCF Multiplier = 0%	FCF Multiplier = 25%	FCF Multiplier = 100%	FCF Multiplier = 175%

If Free Cash Flow calculated during an applicable Performance Period falls between Entry, Target, or OA as set forth in the table below, the FCF Multiplier for such Performance Period shall be calculated based upon interpolation.

If any calculation with respect to the number of RSUs that are earned, and thus the number of shares of Common Stock to be issued hereunder or cash to be paid would result in a fractional share or dollar amount, the number of shares of Common Stock to be issued or dollar amount to be paid shall be rounded down to the nearest whole share.

Calculation of the TSR Multiplier

Subject to Exhibit C, for purposes of determining the number of vested Earned RSUs on the Vesting Date, the Committee shall:

(a)Calculate the Total Shareholder Return for the Company and each member of the Peer Group for the TSR Performance Period.

(b)Rank the Company and each member of the Peer Group based on Total Shareholder Return with the entity having the highest Total Shareholder Return ranking in the first position and the entity with the lowest Total Shareholder Return ranking in the ninth position.

(c)Determine the TSR Multiplier to be utilized in determining the number of Earned RSUs that vest based on the TSR Multiplier Schedule below:

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TSR Multiplier Schedule
F	Payout Multiplier
1	1.15
2	1.15
3	1.10
4	1.05
5	1.00
6	0.95
7	0.90
8	0.85
9	0.85

Determining the Number of Vested Earned RSUs

Subject to Exhibit C, the Committee shall calculate the number of Earned RSUs that vest by summing the total number of Earned RSUs applicable to Performance Period 1, Performance Period II and Performance Period III (the “Aggregate Earned RSUs”).

To determine the total number of Earned RSUs that vest on the Vesting Date, the Committee shall multiply the number of Aggregate Earned RSUs by the TSR Multiplier.   Any RSUs granted hereunder that do no vest shall be immediately forfeited.

3.Peer Group Changes.

If a member of the Peer Group declares bankruptcy or ceases to be publicly traded as a result of bankruptcy, it shall be deemed to remain in the Peer Group until the expiration of the Performance Period and shall occupy the lowest ranking in the Payout Schedule. If, as a result of a merger, acquisition or a similar corporate transaction, in which any member of the Peer Group ceases to be publicly traded, the Committee may in its sole discretion, revise the makeup of the Peer Group and calculate the resulting Total Shareholder Return for such affected member of the Peer Group, adjusting accordingly, the associated TSR Multipliers in a manner consistent with the methodologies contained herein.  

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Exhibit B

Certain Definitions.

(1) “Change of Control” shall mean:

(i)    the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50 percent or more of either (A) the then outstanding shares of common stock or membership interests of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors or managers (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection A, the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company or any acquisition by the Company; or (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; or (3) any acquisition by any corporation pursuant to a transaction that complies with clauses (1), (2) and (3) of subsection (i) of this definition; or

(ii)    individuals, who, as of the date hereof constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders or members, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for purpose of this subsection (ii), any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii)    consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Corporate Transaction”) in each case, unless, following such Corporate Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 50 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting

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Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 20 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (3) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or

(iv)    approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, any Permitted Transaction (defined below) that would otherwise constitute a Change of Control under clause (i) or (iii) above as a result of any Permitted Holder(s) (defined below) or its or their Affiliate(s) (as defined in the Plan) acquiring such beneficial ownership interest in the outstanding voting securities of the Company or the surviving company with respect to a Corporate Transaction shall not be considered a Change of Control for purposes of this Agreement.

For purposes of the definition of Change of Control, a “Permitted Holder” shall mean any holder of the Company’s Floating Rate Convertible Senior Secured PIK Toggle Notes due 2026 (the “Convertible Notes”) as of the Effective Date; and “Permitted Transaction” shall mean any transaction or series of transactions involving the repayment, refinancing, exchange, conversion, extension, or extinguishment of the Convertible Notes, or any combination thereof; provided however, a Permitted Transaction shall not include any Corporate Transaction in which either:  (i) the outstanding voting securities of the surviving entity in such Corporate Transaction are not registered under the Securities Act of 1934, as amended, immediately after giving effect to the Corporate Transaction; or (ii) the Permitted Holders and the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction do not beneficially own in the aggregate more than 50% of the outstanding voting securities of the corporation or surviving entity resulting from such Corporate Transaction.

(2)“Cause” shall mean Grantee’s:

(i)willful and continued failure to comply with the reasonable written directives of the Company for a period of thirty (30) days after written notice from the Company;  

(ii)willful and persistent inattention to duties for a period of thirty (30) days after written notice from the Company, or the commission of acts within employment with the Company amounting to gross negligence or willful misconduct;

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(iii)misappropriation of funds or property of the Company or committing any fraud against the Company or against any other person or entity in the course of employment with the Company;

(iv)misappropriation of any corporate opportunity, or otherwise obtaining personal profit from any transaction which is adverse to the interests of the Company or to the benefits of which the Company is entitled;

(v)conviction of a felony involving moral turpitude;

(vi)willful failure to comply in any material respect with the terms of any employment agreement with the Company and such non-compliance continues uncured after thirty (30) days after written notice from the Company; or

(vii)chronic substance abuse, including abuse of alcohol, drugs or other substances or use of illegal narcotics or substances, for which Grantee fails to undertake treatment immediately after requested by the Company or to complete such treatment and which abuse continues or resumes after such treatment period, or possession of illegal narcotics or substances on Company premises or while performing Grantee’s duties and responsibilities.

For purposes of this definition, no act, or failure to act, by Grantee will be considered “willful” if done, or omitted to be done, by Grantee in good faith and in the reasonable belief that the act or omission was in the best interest of the Company or required by applicable law.    Any termination for Cause shall be communicated by Notice of Termination.  For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific provisions in the definition of “cause” or “good reason” relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Grantee's employment under the provision so indicated and (iii) if the date of termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Company to set forth in the notice of termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company from asserting such fact or circumstance in enforcing the Grantee's or the Company's rights hereunder.

(3) “Good Reason” shall mean without the express written consent of Grantee, the occurrence of any of the following:

(i)any action or inaction that constitutes a material breach by the Company of this Agreement and such action or inaction continues uncured after thirty (30) days following written notice from the Grantee;

(ii)a change in the geographic location at which Grantee must perform services to a location more than fifty (50) miles from the location at which Grantee normally performs such services as of the date of the occurrence of the Change of Control; or (iii) a reduction in Grantee’s annual salary or total cash compensation levels in effect immediately prior to the occurrence of the Change of Control or failure of Grantee to participate in the

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long-term incentive programs of the ultimate parent company following such Change of Control; or

(iii) any action or inaction by the Company that would constitute good reason as expressly defined under the employment agreement, if any, between Company and Grantee in effect on Effective Date hereof.

Notwithstanding anything herein to the contrary, the interim assignment of Grantee’s position, authority, duties, or responsibilities to any person while Grantee is absent from his duties during any period of disability shall not constitute a Good Reason for Grantee to terminate his employment with the Company.  In addition, the Grantee’s termination of employment shall not constitute Good Reason unless Grantee notifies the Company of the condition or event constituting Good Reason within ninety days (90) days of the condition’s occurrence (unless unknown to Grantee) and the Company fails to cure the conditions, to the extent curable, specified in the notice within thirty (30) days following such notification. Any termination of employment by the Grantee for Good Reason shall be communicated by a Notice of Termination.  

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Exhibit C

Change of Control

If prior to the Vesting Date, a Change of Control occurs, and the Grantee has remained continuously employed by the Company Group from the Effective Date to the date of such Change of Control, then, notwithstanding any other provision of this Agreement to the contrary, the following shall apply with respect to the number of RSUs that vest on the date of the Change of Control.

a.If the Change of Control occurs prior to the Performance Period I Determination Date, all Target RSUs (to the extent not previously forfeited) in all Performance Periods shall be deemed vested as of the date of the Change of Control.  Any unvested RSUs shall be deemed immediately forfeited.

b.If the Change of Control occurs prior to the Performance Period II Determination Date, all Earned RSUs (to the extent not previously forfeited)  subject to Performance Period I as well as all Target RSUs subject to Performance Period II (to the extent not previously forfeited) and all Target RSUs subject to Performance Period III (to the extent not previously forfeited) shall be deemed vested as of the date of the Change of Control. Any unvested RSUs shall be deemed immediately forfeited.

c.If the Change of Control occurs after the Performance Period II Determination Date all Earned RSUs subject to Performance Period I (to the extent not previously forfeited) and Performance Period II (to the extent not previously forfeited) and all Target RSUs subject to Performance Period III (to the extent not previously forfeited) shall be deemed vested as of the date of the Change of Control.  Any unvested RSUs shall be deemed immediately forfeited.

Termination without Cause or for Good Reason.

Notwithstanding any other provision of this Agreement to the contrary, if, Company Group terminates Grantee’s employment with the Company Group without “Cause” or Grantee terminates employment with the Company for “Good Reason”, the following shall apply with respect to the number of RSUs that vest on the date of such termination of employment (the “Termination Date”).

a. If the Termination Date occurs prior to the Performance Period I Determination Date, all Target RSUs (to the extent not previously forfeited) in all Performance Periods shall be deemed vested as of the Termination Date.  Any unvested RSUs shall be deemed immediately forfeited.

b. If the Termination Date occurs prior to the Performance Period II Determination Date, all Earned RSUs (to the extent not previously forfeited)  subject to Performance Period I as well as all Target RSUs subject to Performance Period II (to the extent not previously forfeited) and all Target RSUs subject to Performance Period III (to the extent not previously forfeited) shall be deemed vested as of the

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date of the Termination Date. Any unvested RSUs shall be deemed immediately forfeited.

c. If the Termination Date occurs after the Performance Period II Determination Date, all Earned RSUs subject to Performance Period I (to the extent not previously forfeited) and Performance Period II (to the extent not previously forfeited) and all Target RSUs subject to Performance Period III (to the extent not previously forfeited) shall be deemed vested. Any unvested RSUs shall be deemed immediately forfeited.

For purposes of this Agreement, “Cause” and “Good Reason” shall have the meaning assigned to in Exhibit B to this Agreement.

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Exhibit D

Restrictive Covenants

In consideration for the grant of RSU’s hereunder, which are expected to vest during Grantee’s employment with the Company Group over the vesting period, as well as the protection of the Company Group’s goodwill and Confidential Information, Grantee agrees to the following:

(a)Certain Definitions. For purposes of this Exhibit D, the following terms shall have the following meanings:

(i)“Confidential Information” means any information, knowledge or data of any nature and in any form (including information that is electronically transmitted or stored on any form of magnetic or electronic storage media) relating to the past, current or prospective business or operations of the Company Group, that is not generally known to persons engaged in a business similar to that conducted by the Company Group, whether produced by the Company Group or any of its consultants, agents or independent contractors or by Grantee, and whether or not marked confidential.   Confidential information does not include information that (1) at the time of disclosure is, or thereafter becomes, generally available to the public, (2) prior to or at the time of disclosure was already in the possession of Grantee, (3) is obtained by Grantee from a third party not in violation of any contractual, legal or fiduciary obligation to the Company Group with respect to that information or (3) is independently developed by Grantee, but not including the confidential information provided by the Company Group.

(ii)“Restricted Business” means the oil and natural gas land contract drilling business conducted in Texas or its contiguous states.  

(b)Nondisclosure of Confidential Information.  Grantee shall hold in a fiduciary capacity for the benefit of the Company Group all Confidential Information which shall have been obtained by Grantee during Grantee’s employment and shall not use such Confidential Information other than within the scope of Grantee’s employment with and for the exclusive benefit of the Company Group.  Following any termination of employment with the Company Group, Grantee agrees (i) not to communicate, divulge or make available to any person or entity (other than the Company Group) any such Confidential Information, except (A) upon the prior written authorization of the Company Group, (B) as may be required by law or legal process, (C) as reasonably necessary in connection with the enforcement of any right or remedy related to this Agreement, or (D) unless no longer Confidential Information, and (ii) to deliver promptly to the Company Group any Confidential Information in Grantee’s possession, including any duplicates thereof and any notes or other records Grantee has prepared with respect thereto. In the event that the provisions of any applicable law or the order of any court would require Grantee to disclose or otherwise make available any Confidential Information then Grantee shall, to the extent practicable, give the Company prior written notice of such required disclosure and an opportunity

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to contest the requirement of such disclosure or apply for a protective order with respect to such Confidential Information by appropriate proceedings.  

(c)Limited Covenant Not to Compete.  In the event Grantee’s employment is terminated by Grantee for any reason or by the Company Group for any reason other than Cause or Grantee terminates employment from the Company Group for any reason other than Good Reason, Grantee agrees that during the period beginning on the date of such termination and ending on the twelve (12) month anniversary of the date of such termination:  

(i)Grantee shall not, directly or indirectly, for himself or others, own, manage, operate, control or participate in the ownership, management, operation or control of any business, whether in corporate, proprietorship or partnership form or otherwise, that is engaged, directly or indirectly, in the United States in the Restricted Business; provided, however, that the restrictions contained herein shall not restrict (A) the acquisition by Grantee of less than 2% of the outstanding capital stock of any publicly traded company engaged in a Restricted Business or (B) Grantee from being employed by an entity in which the majority of such entity’s revenues on a consolidated basis determined in accordance with generally accepted accounting principles are from activities and businesses that do not constitute a Restricted Business and provided that Grantee is only employed by and engaged with divisions and units of such entity that are not engaged in the Restricted Business; and

(ii)Grantee shall not, directly or indirectly (A) solicit any individual, who, at the time of time of such solicitation is an employee of the Company Group, to leave such employment or hire, employ or otherwise engage any such individual (other than employees of the Company Group who respond to general advertisements for employment in newspapers or other periodicals of general circulation (including trade journals)), or (B) cause, induce or encourage any material actual or prospective client, customer, supplier, landlord, lessor or licensor of the Company Group to terminate or modify any such actual or prospective contractual relationship that exists on the date of termination of employment.  

For purposes of clarity, it is understood that the provisions of this paragraph (c) are not applicable if Grantee’s employment with the Company Group is terminated by the Company Group without Cause or Grantee terminates employment with the Company Group for Good Reason.

In addition, it is understood that the provisions of this paragraph C shall terminate in all respects on the fourth anniversary of the date of the Agreement to which this Exhibit D is a part.

(d)Injunctive Relief; Remedies.  The covenants and undertakings contained in this Exhibit D relate to matters which are of a special, unique and extraordinary character and a violation of any of the terms of this Exhibit D will cause irreparable injury to the Company Group, the amount of which will be impossible to estimate or determine and which cannot be adequately compensated.  Accordingly, the remedy at law for any breach of this Exhibit D may be inadequate.  Therefore, notwithstanding anything to the contrary, the Company will be entitled to an injunction, restraining order or other equitable relief from any court of competent jurisdiction in the event of

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any breach of any provision of this Exhibit C without the necessity of proving actual damages or posting any bond whatsoever.  The rights and remedies provided by this Exhibit D are cumulative and in addition to any other rights and remedies which the Company Group may have hereunder or at law or in equity.  The parties hereto further agree that, if any court of competent jurisdiction in a final nonappealable judgment determines that a time period, a specified business limitation or any other relevant feature of this Exhibit D is unreasonable, arbitrary or against public policy, then a lesser time period, geographical area, business limitation or other relevant feature which is determined by such court to be reasonable, not arbitrary and not against public policy may be enforced against the applicable party.  

(e)Governing Law of this Exhibit D; Consent to Jurisdiction. Any dispute regarding the reasonableness of the covenants and agreements set forth in this Exhibit D, or the territorial scope or duration thereof, or the remedies available to the Company upon any breach of such covenants and agreements, shall be governed by and interpreted in accordance with the laws of the state of Texas, without regard to conflict of law provisions thereof, and, with respect to each such dispute, the Company and Grantee each hereby irrevocably consent to the exclusive jurisdiction of the State of Texas for resolution of such dispute, and further agree that service of process may be made upon Grantee in any legal proceeding relating to this Exhibit D by any means allowed under the laws of such state.

(f)Grantee’s Understanding of this Section.  Grantee hereby represents to the Company that Grantee has read and understands, and agrees to be bound by, the terms of this Exhibit D. Grantee acknowledges that the geographic scope and duration of the covenants contained in Exhibit D are the result of arm’s-length bargaining and are fair and reasonable in light of (i) the importance of the functions performed by Grantee and the length of time it would take the Company Group to find and train a suitable replacement, (ii) the nature and wide geographic scope of the operations of the Company Group, (iii) Grantee’s level of control over and contact with the Company Group’s business and operations in all jurisdictions where they are located, and (iv) the fact that the Restricted Business is potentially conducted throughout the geographic area where competition is restricted by this Agreement. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permitted under applicable law, whether now or hereafter in effect and therefore, to the extent permitted by applicable law, the parties hereto waive any provision of applicable law that would render any provision of this Exhibit D invalid or unenforceable.

* * * * *

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EX-31.1

Exhibit 31.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO

RULE 13a-14(a) AND 15d-14(a) UNDER THE EXCHANGE ACT

I, J. Anthony Gallegos, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2024 of Independence Contract Drilling, Inc. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2024

/s/ J. Anthony Gallegos, Jr.

J. Anthony Gallegos, Jr.

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER PURSUANT TO

RULE 13a-14(a) AND 15d-14(a) UNDER THE EXCHANGE ACT

I, Philip A. Choyce, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2024 of Independence Contract Drilling, Inc. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2024

/s/ Philip A. Choyce

Philip A. Choyce

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Independence Contract Drilling, Inc. (the “Company”) on Form 10-Q for the quarter ending March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, J. Anthony Gallegos, Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 1, 2024

/s/J. Anthony Gallegos, Jr.

J. Anthony Gallegos, Jr.

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Independence Contract Drilling, Inc. (the “Company”) on Form 10-Q for the quarter ending March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philip A. Choyce, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1)          The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 1, 2024

/s/ Philip A. Choyce

Philip A. Choyce

Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2024	Apr. 26, 2024
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-36590
Entity Registrant Name	Independence Contract Drilling, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	37-1653648
Entity Address, Address Line One	20475 State Highway 249
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77070
City Area Code	281
Local Phone Number	598-1230
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	ICD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		15,213,277
Entity Central Index Key	0001537028
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Assets
Cash and cash equivalents	$ 6,944	$ 5,565
Accounts receivable	27,188	31,695
Inventories	1,570	1,557
Prepaid expenses and other current assets	3,697	4,759
Total current assets	39,399	43,576
Property, plant and equipment, net	342,701	348,193
Other long-term assets, net	2,670	2,908
Total assets	384,770	394,677
Liabilities
Current portion of long-term debt	1,525	1,226
Accounts payable	18,800	22,990
Accrued liabilities	9,783	16,371
Total current liabilities	30,108	40,587
Long-term debt, net	170,378	154,549
Deferred income taxes, net	9,521	9,761
Other long-term liabilities	1,316	8,201
Total liabilities	211,323	213,098
Commitments and contingencies (Note 12)
Stockholders' equity
Common stock, $0.01 par value, 250,000,000 shares authorized; 15,369,536 and 14,523,124 shares issued, respectively, and 15,213,277 and 14,425,864 shares outstanding, respectively	152	144
Additional paid-in capital	623,174	622,169
Accumulated deficit	(445,780)	(436,794)
Treasury stock, at cost, 156,259 shares and 97,260 shares, respectively	(4,099)	(3,940)
Total stockholders' equity	173,447	181,579
Total liabilities and stockholders' equity	$ 384,770	$ 394,677

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Consolidated Balance Sheets
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	250,000,000	250,000,000
Common stock, shares issued (in shares)	15,369,536	14,523,124
Common stock, shares outstanding (in shares)	15,213,277	14,425,864
Treasury stock (in shares)	156,259	97,260

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Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Consolidated Statements of Operations
Revenues	$ 46,636	$ 63,756
Costs and expenses
Operating costs	30,816	37,460
Selling, general and administrative	4,337	6,727
Depreciation and amortization	11,826	10,854
Gain on disposition of assets, net	(1,004)	(14)
Total costs and expenses	45,975	55,027
Operating income	661	8,729
Interest expense	(9,878)	(8,719)
(Loss) income before income taxes	(9,217)	10
Income tax benefit	(231)	(2)
Net (loss) income	$ (8,986)	$ 12
(Loss) income per share:
Basic (in dollars per share)	$ (0.62)	$ 0.00
Diluted (in dollars per share)	$ (0.62)	$ 0.00
Weighted average number of common shares outstanding:
Basic (in shares)	14,504	13,865
Diluted (in shares)	14,504	13,881

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock	Total
Beginning balance at Dec. 31, 2022	$ 136	$ 617,606	$ (399,097)	$ (3,933)	$ 214,712
Beginning balance (in shares) at Dec. 31, 2022	13,613,759
Increase (Decrease) in Stockholders' Equity [Roll Forward]
RSUs vested, net of shares withheld for taxes	$ 5	(390)			(385)
RSUs vested, net of shares withheld for taxes (in shares)	448,635
Issuance of common stock through at-the-market facility, net of offering costs		(34)			(34)
Stock-based compensation		1,374			1,374
Net Income (Loss)			12		12
Ending balance at Mar. 31, 2023	$ 141	618,556	(399,085)	(3,933)	215,679
Ending balance (in shares) at Mar. 31, 2023	14,062,394
Beginning balance at Dec. 31, 2023	$ 144	622,169	(436,794)	(3,940)	181,579
Beginning balance (in shares) at Dec. 31, 2023	14,425,864
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock issued	$ 7	(7)
Restricted stock issued (in shares)	692,607
RSUs vested, net of shares withheld for taxes	$ 2	(14)			(12)
RSUs vested, net of shares withheld for taxes (in shares)	153,805
Purchase of treasury stock	$ (1)			(159)	(160)
Purchase of treasury stock (in shares)	(58,999)
Stock-based compensation		1,026			1,026
Net Income (Loss)			(8,986)		(8,986)
Ending balance at Mar. 31, 2024	$ 152	$ 623,174	$ (445,780)	$ (4,099)	$ 173,447
Ending balance (in shares) at Mar. 31, 2024	15,213,277				15,213,277

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities
Net (loss) income	$ (8,986)	$ 12
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization	11,826	10,854
Stock-based compensation	216	1,672
Gain on disposition of assets, net	(1,004)	(14)
Non-cash interest expense	6,487	11,619
Amortization of deferred financing costs	27	27
Amortization of Convertible Notes debt discount and issuance costs	2,720	2,378
Deferred income taxes	(231)	(13)
Credit loss expense		31
Changes in operating assets and liabilities
Accounts receivable	4,507	(2,094)
Inventories	(13)	(35)
Prepaid expenses and other assets	1,208	324
Accounts payable and accrued liabilities	(5,758)	(11,203)
Net cash provided by operating activities	10,999	13,558
Cash flows from investing activities
Purchases of property, plant and equipment	(9,974)	(18,835)
Proceeds from the sale of assets	1,783	748
Net cash used in investing activities	(8,191)	(18,087)
Cash flows from financing activities
Payments to redeem Convertible Notes	(3,500)
Borrowings under Revolving ABL Credit Facility	19,624	11,321
Repayments under Revolving ABL Credit Facility	(16,874)	(4,334)
Proceeds from issuance of common stock through at-the-market facility, net of issuance costs		(34)
Purchase of treasury stock	(160)
Taxes paid for vesting of RSUs	(12)	(385)
Payments for finance lease obligations	(507)	(650)
Net cash (used in) provided by financing activities	(1,429)	5,918
Net increase in cash and cash equivalents	1,379	1,389
Cash and cash equivalents
Beginning of period	5,565	5,326
End of period	6,944	6,715
Supplemental disclosure of cash flow information
Cash paid during the period for interest	549	419
Cash paid during the period for taxes	110
Supplemental disclosure of non-cash investing and financing activities
Change in property, plant and equipment purchases in accounts payable	(4,135)	(5,091)
Additions to property, plant and equipment through finance leases	1,513	$ 51
Extinguishment of finance lease obligations from sale of assets classified as finance leases	$ (304)

XML

Nature of Operations and Recent Events

3 Months Ended

Mar. 31, 2024

Nature of Operations and Recent Events

Nature of Operations and Recent Events

1.Nature of Operations and Recent Events

Except as expressly stated or the context otherwise requires, the terms “we,” “us,” “our,” “ICD,” and the “Company” refer to Independence Contract Drilling, Inc. and its subsidiary.

We provide land-based contract drilling services for oil and natural gas producers targeting unconventional resource plays in the United States. We own and operate a premium fleet comprised of modern, technologically advanced drilling rigs.

We currently focus our operations on unconventional resource plays located in geographic regions that we can efficiently support from our Houston, Texas and Midland, Texas facilities in order to maximize economies of scale. Currently, our rigs are operating in the Permian Basin and the Haynesville Shale; however, our rigs have previously operated in the Eagle Ford Shale, Mid-Continent and Eaglebine regions as well.

Our business depends on the level of exploration and production activity by oil and natural gas companies operating in the United States, and in particular, the regions where we actively market our contract drilling services. The oil and natural gas exploration and production industry is historically cyclical and characterized by significant changes in the levels of exploration and development activities. Oil and natural gas prices and market expectations of potential changes in those prices significantly affect the levels of those activities. Worldwide political, regulatory, economic and military events, as well as natural disasters have contributed to oil and natural gas price volatility historically and are likely to continue to do so in the future. Any prolonged reduction in the overall level of exploration and development activities in the United States and the regions where we market our contract drilling services, whether resulting from changes in oil and natural gas prices or otherwise, could materially and adversely affect our business.

Market Conditions

Oil prices (WTI-Cushing) reached a high of $123.64 per barrel on March 8, 2022; however, prices have fallen since those highs. As of April 22, 2024, oil was $83.82 per barrel.

On August 22, 2022, natural gas prices reached a high of $9.85 per mmcf, but fell to $3.52 per mmcf as of December 31, 2022 and were $2.58 per mmcf as of December 31, 2023 and $1.59 per mmcf as of April 23, 2024. These commodity price declines, as well as take away capacity issues, caused market conditions in the Haynesville Shale to weaken rapidly, which resulted in a reduction in the number of drilling rigs operating in the Haynesville Shale, including a reduction in our operating rigs. At the end of the first quarter of 2023, we began relocating a portion of these rigs to the Permian Basin where market conditions were stronger. However, there can be no assurance that market conditions in the Permian Basin will not decline and will not be adversely affected by recent volatility in oil prices nor any assurance that we will be successful in marketing our rigs in the Permian Basin or that they will be contracted on a timely basis or upon terms that are acceptable to us.

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Interim Financial Information

3 Months Ended

Mar. 31, 2024

Interim Financial Information

Interim Financial Information

2.Interim Financial Information

These unaudited consolidated financial statements include the accounts of the Company and its subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These consolidated financial statements should be read along with our audited consolidated financial statements for the year ended December 31, 2023, included in our Annual Report on Form 10-K for the year ended December 31, 2023. In management’s opinion, these financial statements contain all adjustments necessary for a fair statement of our financial position, results of operations, cash flows and changes in stockholders’ equity for all periods presented.

As we had no items of other comprehensive income in any period presented, no other components of comprehensive income are presented.

Interim results for the three months ended March 31, 2024 may not be indicative of results that will be realized for the full year ending December 31, 2024.

Segment and Geographical Information

Our operations consist of one reportable segment because all of our drilling operations are located in the United States and have similar economic characteristics. Corporate management administers all properties as a whole rather than as discrete operating segments. Operational data is tracked by rig; however, financial performance is measured as a single enterprise and not on a rig-by-rig basis. Further, the allocation of capital resources is employed on a project-by-project basis across our entire asset base to maximize profitability without regard to individual geographic areas.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This guidance requires an entity to disclose significant segment expenses impacting profit and loss that are regularly provided to the Chief Operating Decision Maker (“CODM”) to assess segment performance and to make decisions about resource allocations. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We do not expect the standard to have a material impact on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Also, this guidance requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this guidance are effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact this guidance will have on our financial statement disclosures.

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Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2024

Revenue from Contracts with Customers

Revenue from Contracts with Customers

3.Revenue from Contracts with Customers

The following table summarizes revenues from our contracts disaggregated by revenue generating activity contained therein for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
(in thousands)	2024		2023
Dayrate drilling	$	41,645	$	60,242
Mobilization		1,831		1,371
Reimbursables		3,077		1,902
Early termination		53		—
Capital modification		—		218
Other		30		23
Total revenue	$	46,636	$	63,756

Two customers accounted for approximately 25% and 15% of consolidated revenue for the three months ended March 31, 2024. Three customers accounted for approximately 14%, 12%, and 11% of consolidated revenue for the three months ended March 31, 2023.

Accounts receivable is our right to consideration once it becomes unconditional. Payment terms typically range from 30 to 60 days. The following table provides information about receivables and contract liabilities related to contracts with customers. There were no contract assets recorded as of March 31, 2024 or December 31, 2023.

	March 31,		December 31,
(in thousands)	2024		2023
Receivables, which are included in “Accounts receivable”	$	26,869	$	31,380
Contract liabilities, which are included in “Accrued liabilities”	$	(614)	$	(578)

The primary changes in contract liabilities balances during the period are as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Revenue recognized that was included in contract liabilities at beginning of period	$	431	$	540
Increase in contract liabilities due to cash received, excluding amounts recognized as revenue	$	(467)	$	(751)

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2024. The estimated revenue does not include amounts of variable consideration that are constrained.

	Year Ending December 31,
(in thousands)	2024		2025		2026		2027
Revenue	$	614	$	—	$	—	$	—

The amounts presented in the table above consist only of fixed consideration related to fees for rig mobilizations and demobilizations, if applicable, which are allocated to the drilling services performance obligation as such performance obligation is satisfied. We have elected the exemption from disclosure of remaining performance obligations for variable consideration. Therefore, dayrate revenue to be earned on a rate scale associated with drilling conditions and level of service provided for each fractional-hour time increment over the contract term and other variable consideration such as penalties and reimbursable revenues, have been excluded from the disclosure.

Contract Costs

We capitalize costs incurred to fulfill our contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy our performance obligations under the contract and (iii) are expected to be recovered through revenue generated under the contract. These costs, which principally relate to rig mobilization costs at the commencement of a new contract, are deferred as a current or noncurrent asset (depending on the length of the contract term), and amortized ratably to contract drilling expense as services are rendered over the initial term of the related drilling contract. Such contract costs, recorded as “Prepaid expenses and other current assets”, amounted to $0.6 million and $0.5 million on our consolidated balance sheets at March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024, contract costs increased by $1.1 million and we amortized $1.0 million of contract costs, respectively. During the three months ended March 31, 2023, contract costs increased by $0.9 million and we amortized $0.5 million of contract costs.

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Leases

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Leases

4.Leases

We have multi-year operating and financing leases for corporate office space, field location facilities, land, vehicles and various other equipment used in our operations. We also have a significant number of rentals related to our drilling operations that are day-to-day or month-to-month arrangements.

The components of lease expense were as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Operating lease expense	$	299	$	191
Short-term lease expense		2,143		1,730
Variable lease expense		127		162
Finance lease expense:
Amortization of right-of-use assets	$	467	$	555
Interest expense on lease liabilities		73		73
Total finance lease expense		540		628
Total lease expense	$	3,109	$	2,711

Supplemental cash flow information related to leases is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	253	$	196
Operating cash flows from finance leases	$	73	$	73
Financing cash flows from finance leases	$	507	$	650
Right-of-use assets obtained or recorded in exchange for lease obligations:
Operating leases	$	75	$	618
Finance leases	$	1,513	$	51

Supplemental balance sheet information related to leases is as follows:

(in thousands)	March 31, 2024			December 31, 2023
Operating leases:
Other long-term assets, net	$	2,029		$	2,205
Accrued liabilities	$	889		$	934
Other long-term liabilities		1,242			1,375
Total operating lease liabilities	$	2,131		$	2,309
Finance leases:
Property, plant and equipment	$	5,931		$	6,238
Accumulated depreciation		(1,734)			(1,829)
Property, plant and equipment, net	$	4,197		$	4,409
Current portion of long-term debt	$	1,525		$	1,226
Long-term debt		2,204			1,659
Total finance lease liabilities	$	3,729		$	2,885
Weighted-average remaining lease term
Operating leases		3.2 years			3.4 years
Finance leases		2.2 years			2.0 years
Weighted-average discount rate
Operating leases		8.60	%		8.75	%
Finance leases		7.95	%		8.25	%

Maturities of lease liabilities at March 31, 2024 were as follows:

(in thousands)	Operating Leases		Finance Leases
2024	$	840		1,395
2025		540		1,486
2026		401		1,118
2027		370		97
2028		285		—
Total cash lease payment		2,436		4,096
Less: imputed interest		(305)		(367)
Total lease liabilities	$	2,131	$	3,729

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Financial Instruments and Fair Value

3 Months Ended

Mar. 31, 2024

Financial Instruments and Fair Value

Financial Instruments and Fair Value

5.Financial Instruments and Fair Value

Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 Unadjusted quoted market prices for identical assets or liabilities in an active market;

Level 2 Quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets or liabilities; and

Level 3 Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, certain accrued liabilities and our debt. Our debt consists primarily of our Convertible Notes and Revolving ABL Facility as of March 31, 2024 and December 31, 2023. The fair value of cash and cash equivalents, accounts receivable, accounts payable and certain accrued liabilities approximate their carrying value because of the short-term nature of these instruments. We believe the carrying value of our Revolving ABL Facility approximates fair value because the interest rates are variable and reflective of current market rates.

The following table summarizes the carrying value and fair value of our Convertible Notes as of March 31, 2024 and December 31, 2023.

	March 31, 2024				December 31, 2023
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Convertible Notes	$	189,023	$	151,000	$	179,209	$	164,800

The fair value of the Convertible Notes is also determined to be a Level 3 measurement as this instrument is not actively traded and was estimated using a binomial lattice model. The factors used to determine fair value as of March 31, 2024 are subject to management's judgement and expertise and include, but are not limited to our share price, expected price volatility (48.0%), risk-free rate (4.6%), and credit spread (2,855 bps) relative to our credit rating. The factors used to determine fair value as of December 31, 2023 included, but were not limited to our share price, expected price volatility (58.5%), risk-free rate (4.2%) and credit spread (2,702 bps) relative to our credit rating.

There were no transfers between fair value measurement levels during the first quarter of 2024.

See Note 9 “Stock-Based Compensation” for fair value of liability-based awards.

Fair value measurements are applied with respect to our non-financial assets and liabilities measured on a non-recurring basis, which would consist of measurements primarily related to the potential impairment of long-lived assets.

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Inventories

3 Months Ended

Mar. 31, 2024

Inventories

Inventories

6.Inventories

All of our inventory as of March 31, 2024 and December 31, 2023 consisted of supplies held for use in our drilling operations.

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Supplemental Balance Sheet Information

3 Months Ended

Mar. 31, 2024

Supplemental Balance Sheet Information

Supplemental Balance Sheet Information

7.Supplemental Balance Sheet Information

Prepaid expenses and other current assets consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Prepaid insurance	$	2,390	$	3,502
Deferred mobilization costs		591		467
Prepaid and other current assets		716		790
	$	3,697	$	4,759

Accrued liabilities consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Accrued salaries and other compensation	$	2,643	$	6,625
Insurance		1,859		2,996
Deferred mobilization revenues		614		578
Property and other taxes		1,617		2,124
Interest		46		25
Operating lease liability - current		889		934
Cash-settled SARs liability		1,183		2,054
Other		932		1,035
	$	9,783	$	16,371

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Long-term Debt

3 Months Ended

Mar. 31, 2024

Long-term Debt.

Long-term Debt

8.Long-term Debt

Our long-term debt consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Convertible Notes due March 18, 2026	$	189,023	$	179,209
Revolving ABL Credit Facility due September 30, 2025		8,250		5,500
Finance lease obligations		3,729		2,885
		201,002		187,594
Less: Convertible Notes debt discount and issuance costs		(29,099)		(31,819)
Less: current portion of finance leases		(1,525)		(1,226)
Long-term debt, net	$	170,378	$	154,549

Convertible Notes

On March 18, 2022, we entered into a subscription agreement with affiliates of MSD Partners, L.P. and an affiliate of Glendon Capital Management L.P. (the “Subscription Agreement”) for the placement of $157.5 million aggregate principal amount of convertible secured PIK toggle notes due 2026 (the “Convertible Notes”), and currently have $189.0 million of Convertible Notes outstanding as of March 31, 2024. The Convertible Notes were issued pursuant to an Indenture, dated as of March 18, 2022 (the “Indenture”). The obligations under the Convertible Notes are secured by a first priority lien on collateral other than accounts receivable, deposit accounts and other related collateral pledged as first priority collateral (“Priority Collateral”) under the Revolving ABL Credit Facility (defined below). The Convertible Notes mature on March 18, 2026.

The Convertible Notes have a cash interest rate of the Secured Overnight Financing Rate plus a 10-basis point credit spread, with a floor of 1% (collectively, “SOFR”) plus 12.5%. The Convertible Notes have a PIK interest rate of SOFR plus 9.5%. We have the right at our option, to PIK interest under the Convertible Notes for the entire term of the Convertible Notes. Interest on the Convertible Notes is due on March 31 and September 30 each year. We elected to PIK outstanding interest as of September 30, 2022, March 31, 2023, September 30, 2023 and March 31, 2024 resulting in the issuance of an additional $50.0 million principal amount of Convertible Notes as of March 31, 2024. We also have elected to PIK outstanding interest that will be due and payable on September 30, 2024. As of March 31, 2024 and December 31, 2023, accrued PIK interest of $0.1 million and $6.8 million, respectively, was classified as “Other Long-Term Liabilities” on our consolidated balance sheets.

The effective conversion price of the Convertible Notes is $4.51 per share (221.72949 shares of Common Stock per $1,000 principal amount of Convertible Notes). We may issue up to $7.5 million of additional Convertible Notes. We may convert all Convertible Notes (including PIK notes) in connection with a Qualified Merger Conversion (as defined in the Indenture) and may issue additional shares of common stock upon conversion of Convertible Notes to the extent the number of shares issuable upon such conversion would exceed the number of shares of common stock issuable at the otherwise then-current conversion price.

Each noteholder has a right to convert our Convertible Notes into shares of ICD common stock at any time after issuance through maturity. The conversion price is $4.51 per share. Under the Indenture, a holder is not entitled to receive shares of our common stock upon conversion of any Convertible Notes to the extent to which the aggregate number of shares of common stock that may be acquired by such beneficial owner upon conversion of Convertible Notes, when added to the aggregate number of shares of common stock deemed beneficially owned, directly or indirectly, by such beneficial owner and each person subject to aggregation of Common Stock with such beneficial owner under Section 13 or Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules promulgated thereunder at such time (an “Aggregated Person”) (other than by virtue of the ownership of securities or rights to acquire securities that have limitations on such beneficial owner’s or such person’s right to convert, exercise or purchase similar to this limitation), as determined pursuant to the rules and regulations promulgated under Section 13(d) of the Exchange Act, would exceed 9.9% (the “Restricted Ownership Percentage”) of the total issued and outstanding shares of Common Stock (the “Section 16 Conversion Blocker”); provided that any holder has the right to elect for the Restricted Ownership Percentage to be 19.9% with respect to such Holder, (x) at any time, in which case, such election will become effective sixty-one days following written notice thereof to us or (y) in the case of a holder acquiring Convertible Notes on the Issue Date, in such Holder’s Subscription Agreement. In lieu of any shares of common stock not delivered to a converting holder by operation of the Restricted Ownership Percentage limitation, we will deliver to such Holder Pre-Funded Warrants in respect of any equal number of shares of common stock. Such Pre-Funded Warrants will contain substantially similar Restricted Ownership Percentage terms.

The Indenture includes a mandatory redemption offer requirement (the “Mandatory Offer Requirement”). The mandatory offer price is an amount in cash equal to the principal amount of such Note plus accrued and unpaid interest on such Note. We redeemed $5.0 million of Convertible Notes plus accrued interest on a quarterly basis June 30, 2023 through December 31, 2023, and redeemed $3.5 million of Convertible Notes plus accrued interest on March 31, 2024. We are obligated to offer to redeem $3.5 million of Convertible Notes on a quarterly basis through March 31, 2025. We have the ability and intent to refinance the mandatory redemption offers that occur within the next twelve months under our Revolving ABL Credit Facility and as a result such amounts have been classified as long-term debt. On each of the mandatory offer payment dates we borrowed the principal amount of such note under our Revolving ABL Credit Facility to refinance the accepted mandatory offerings.

The Indenture contains financial covenants, including a liquidity covenant of $10.0 million; a springing fixed charge coverage ratio covenant of 1.00 to 1.00 that is tested when availability under the Revolving ABL Credit Facility (defined below) is below $5.0 million at any time that the Convertible Notes are outstanding; and capital expenditure limits of $14.8 million during the nine months ended September 30, 2024 and $11.25 million during the nine months ended June 30, 2025, subject to adjustment upward by $500,000 per year for each rig above 17 that operates during each year. In addition, capital expenditures are excluded from this covenant (a) if funded from equity proceeds, (b) if relating to the reactivation of a rig so long as (i) we have a signed contract with a customer with respect to each such rig of at least one year duration providing for early termination payments consistent with past practice equal to at least the expected margin on the contract, (ii) the expected margin on such rig contract will be equal to or exceed such reactivation capital expenditures, and (iii) the reactivation capital expenditures, rig contract and the expected margin calculation are approved by our board of directors or (c) relate to other capital expenditures specifically approved by

written or electronic consent by both (i) the required holders (which approval may, for the avoidance of doubt, be provided by the required holders in their sole discretion for an amount of capital expenditures to be committed or made by us or a subsidiary of us within 90 days after the date of such consent) and (ii) our Board of Directors. The Indenture also contains other customary affirmative and negative covenants, including limitations on indebtedness, liens, fundamental changes, asset dispositions, restricted payments (including the payment of dividends), investments and transactions with affiliates. The Indenture also provides for customary events of default, including breaches of material covenants, defaults under the Revolving ABL Credit Facility or other material agreements for indebtedness, and a change of control.

At any time on or after September 18, 2024, we may execute an in-substance defeasance of the Convertible Notes and suspend all covenants and related security interests in the Company’s equipment and assets under the Indenture by irrevocably depositing with the trustee funds sufficient funds to pay the principal and interest on the outstanding Convertible Notes through the maturity date of the Convertible Notes. Our Board of Directors has initiated a formal review process to begin evaluating alternatives with respect to refinancing the Convertible Notes and other strategic opportunities and has formed a special committee of independent directors for that purpose. There can be no assurance that this process or evaluation will result in one or more transactions or any particular transaction or strategic outcome.

We are in compliance with our covenants as of March 31, 2024.

Upon a Qualified Merger (defined below), we may elect to convert all, but not less than all, of the Convertible Notes at a Conversion Rate equal to our Conversion Rate on the date on which the relevant “Qualified Merger” is consummated (a “Qualified Merger Conversion”), so long as the “MOIC Condition” is satisfied with respect to such potential Qualified Merger Conversion. A “Qualified Merger” means a Common Stock Change Event consolidation, merger, combination or binding or statutory share exchange of the Company with a Qualified Acquirer. A “Qualified Merger Conversion Date” means the date on which the relevant Qualified Merger is consummated. A “Qualified Acquirer” means any entity that (i) has its common equity listed on the New York Stock Exchange, the NYSE American, Nasdaq Global Market or Nasdaq Global Select Market, or Toronto Stock Exchange, (ii) has an aggregate equity market capitalization of at least $350 million, and (iii) has a “public float” (as defined in Rule 12b-2 under the Securities Act of 1933) of at least $250 million in each case, as determined by the calculation agent based on the last reported sale price of such common equity on date of the signing of the definitive agreement in respect of the relevant Common Stock Change Event. A “Common Stock Change Event” means the occurrence of any: (i) recapitalization, reclassification or change of our common stock (other than (x) changes solely resulting from a subdivision or combination of the common stock, (y) a change only in par value or from par value to no par value or no par value to par value and (z) stock splits and stock combinations that do not involve the issuance of any other series or class of securities); (ii) consolidation, merger, combination or binding or statutory share exchange involving us; (iii) sale, lease or other transfer of all or substantially all of the assets of ours and our Subsidiaries, taken as a whole, to any person; or (iv) other similar event, and, as a result of which, the common stock is converted into, or is exchanged for, or represents solely the right to receive, other securities, cash or other property, or any combination of the foregoing. A “Company Conversion Rate” means, in respect of any Qualified Merger, the greater of (a) the relevant Conversion Rate, (b) $1,000 divided by our Conversion VWAP, and (c) the lowest rate that would cause the MOIC Condition to be satisfied with respect to the related Qualified Merger Conversion. A “Company Conversion VWAP” means, in respect of any Qualified Merger, the average of daily VWAP over the five (5) VWAP Trading Days prior to the earlier of signing or public announcement (by any party, and whether formal or informal, including for the avoidance of doubt any media reports thereof) of a definitive agreement in respect of such Qualified Merger as calculated by the Calculation Agent. The “MOIC Condition” means, with respect to any potential Qualified Merger Conversion, MOIC is greater than or equal to the MOIC Required Level. The “MOIC Required Level” means $1,350. “MOIC” means, with respect to any potential Qualified Merger Conversion, an amount determined by the Calculation Agent equal to the aggregate return on a hypothetical Note with $1,000 face amount, issued on the Issue Date, from the Issue Date through the potential Qualified Merger Conversion Date, including (x) the aggregate amount of any cash interest paid on such hypothetical Note from the Issue Date through the potential Qualified Merger Conversion Date, (y) the aggregate fair market value of any Conversion Consideration that would be received by the Holder of such hypothetical Note on the relevant Qualified Merger Conversion Date and (z) the aggregate fair market value of any Conversion Consideration that would be received on the relevant Qualified Merger Conversion Date by the Holder of any PIK Notes issued in respect of (or the relevant increase in value of) such hypothetical Note.

We recorded a debt discount of $37.8 million upon the issuance of the Convertible Notes and issuance costs consisting of cash fees of $7.4 million and a non-cash structuring fee settled in shares of $2.3 million. The debt discount and issuance costs are recorded as a direct deduction from the Convertible Notes in the consolidated balance sheets and are amortized to interest expense using the effective interest rate method over the term of the Convertible Notes. The effective interest rate for the Convertible Notes as of March 31, 2024 is 25.7%. For the three months ended March 31, 2024, the contractual interest expense was $6.9 million and the debt discount and issuance cost amortization was $2.7 million. For the three months ended March 31, 2023, the contractual interest expense was $5.9 million and the debt discount and issuance cost amortization was $2.4 million.

Revolving ABL Credit Facility

On October 1, 2018, we entered into a $40.0 million revolving credit agreement (the “Revolving ABL Credit Facility”), including availability for letters of credit in an aggregate amount at any time outstanding not to exceed $7.5 million. Availability under the Revolving ABL Credit Facility is subject to a borrowing base calculated based on 85% of the net amount of our eligible accounts receivable, minus reserves. The Revolving ABL Credit Facility has a maturity date of September 30, 2025.

Interest under the Revolving ABL Credit Facility is determined by reference, at our option, to either (i) a “base rate” equal to the higher of (a) the floor, or 0.0%, (b) the federal funds effective rate plus 0.05%, (c) term SOFR for a one month tenor plus 1.0% based on availability and (d) the prime rate of Wells Fargo, plus in each case, an applicable base rate margin ranging from 1.0% to 1.5% based on quarterly availability, or (ii) a revolving loan rate equal to SOFR for the applicable interest period plus an applicable SOFR margin ranging from 2.36% to 2.86% based on quarterly availability. We also pay, on a quarterly basis, a commitment fee of 0.375% (or 0.25% at any time when revolver usage is greater than 50% of the maximum credit) per annum on the unused portion of the Revolving ABL Credit Facility commitment.

The Revolving ABL Credit Facility contains a springing fixed charge coverage ratio covenant of 1.00 to 1.00 that is tested when availability is less than 10% of the maximum credit. The Revolving ABL Credit Facility also contains other customary affirmative and negative covenants, including limitations on indebtedness, liens, fundamental changes, asset dispositions, restricted payments (including the payment of dividends), investments and transactions with affiliates. The Revolving ABL Credit Facility also provides for customary events of default, including breaches of material covenants, defaults under the Indenture or other material agreements for indebtedness, and a change of control. We are in compliance with our financial covenants as of March 31, 2024.

The obligations under the Revolving ABL Credit Facility are secured by a first priority lien on Priority Collateral, which includes all accounts receivable and deposit accounts, and a second priority lien on the Indenture, and are unconditionally guaranteed by all of our current and future direct and indirect subsidiaries. As of March 31, 2024, the weighted-average interest rate on our borrowings was 14.87%. As of March 31, 2024, the borrowing base under our Revolving ABL Credit Facility was $21.9 million, and we had $13.5 million of availability remaining of our $40.0 million commitment on that date.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Stock-Based Compensation

Stock-Based Compensation

9.Stock-Based Compensation

In June 2019, we adopted the 2019 Omnibus Incentive Plan (the “2019 Plan”) providing for common stock-based awards to employees and non-employee directors. The 2019 Plan permits the granting of various types of awards, including stock options, restricted stock, restricted stock unit awards, and stock appreciation rights (“SARs”), and up to 4.6 million shares were authorized for issuance. Restricted stock and restricted stock units may be granted for no consideration other than prior and future services. The purchase price per share for stock options and SARs may not be less than the market price of the underlying stock on the date of grant. As of March 31, 2024, approximately 306,008 shares were available for future awards under the 2019 Plan. Our policy is to account for forfeitures of share-based compensation awards as they occur.

A summary of compensation cost recognized for stock-based payment arrangements is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Compensation cost recognized:
Restricted stock, restricted stock units and stock-settled stock appreciation rights	$	1,026	$	1,374
Cash-settled stock appreciation rights and performance-based phantom units		(810)		298
Total stock-based compensation	$	216	$	1,672

Time-based Restricted Stock and Restricted Stock Units

We have granted time-based restricted stock and restricted stock units to key employees under the 2019 Plan.

Time-based Restricted Stock

In the first quarter of 2024, we granted time-based restricted stock awards that vest over one to three years. We recognize compensation expense on a straight-line basis over the vesting period. The fair value of restricted stock awards is determined based on the estimated fair market value of our shares on the grant date. As of March 31, 2024, there was $1.1 million in unrecognized compensation cost related to unvested restricted stock awards. This cost is expected to be recognized over a weighted-average period of 1.4 years.

A summary of the status of our time-based restricted stock awards and of changes in our time-based restricted stock awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	Shares	Per Share
Outstanding at January 1, 2024	—	$	—
Granted	692,607		1.88
Vested	—		—
Forfeited	—		—
Outstanding at March 31, 2024	692,607	$	1.88

Time-based Restricted Stock Units

We have granted one to three-year, time-vested restricted stock unit awards where each unit represents the right to receive, at the end of a vesting period, one share of ICD common stock. The fair value of time-based restricted stock unit awards is determined based on the estimated fair market value of our shares on the grant date. As of March 31, 2024, there was $1.9 million of total unrecognized compensation cost related to unvested time-based restricted stock unit awards. This cost is expected to be recognized over a weighted-average period of 0.5 years.

A summary of the status of our time-based restricted stock unit awards and of changes in our time-based restricted stock unit awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	RSUs	Per Share
Outstanding at January 1, 2024	753,180	$	4.10
Granted	—		—
Vested and converted	(151,818)		4.02
Forfeited	(4,221)		4.13
Outstanding at March 31, 2024	597,141	$	4.12

Performance-Based and Market-Based Restricted Stock Units

In the first quarter of 2023, we granted certain employees 299,411 three-year performance-based restricted stock unit awards with a market condition. Based on target shares of 173,570, a minimum of 0% and a maximum of 150% of the units could be awarded based upon the measurement of free cash flow (“FCF”) as measured against FCF performance goals determined by the compensation committee of our Board of Directors, during the three-year performance period of January 1, 2023 to December 31, 2025 and vest fully on the third anniversary of the date of the grant subject to continued employment. The payout of the awards will be further adjusted by a TSR multiplier that may adjust the payout between 85% and 115% based upon our relative total shareholder return for the three-year period ending on third anniversary of the date of grant compared to the relative total shareholder return of an eight-company peer group of oilfield service companies for the same period. As these awards are performance-based with a market condition, we utilized a Monte Carlo simulation model to determine grant date fair value per share.

During the restriction period, the performance-based and market-based restricted stock unit awards may not be transferred or encumbered, and the recipient does not receive dividend equivalents or have voting rights until the units vest. As of March 31, 2024, there was $0.3 million of unrecognized compensation cost related to unvested performance-based and market-based restricted stock unit awards, which is expected to be recognized over a weighted-average period of 1.8 years.

The assumptions used to value our FCF restricted stock unit awards on the grant date in the first quarter of 2023 were a risk-free interest rate of 4.15%, an expected volatility of 135.3% and an expected dividend yield of 0.0%. Based on the Monte Carlo simulation, these restricted stock unit awards were valued at $4.47.

A summary of the status of our performance-based and market-based restricted stock unit awards and of changes in our restricted stock unit awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	RSUs	Per Share
Outstanding at January 1, 2024	299,411	$	4.47
Granted	—		—
Vested and converted	(1,987)		4.47
Forfeited	(102,604)		4.47
Outstanding at March 31, 2024	194,820	$	4.47

Phantom Units

In the first quarter of 2024, we granted 279,630 three-year time-vested phantom unit awards where each unit represents the right to receive, at the end of a vesting period, the cash value of one share of ICD common stock. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.5 million. Compensation expense is recognized on a straight-line basis over the performance

period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $16.0 thousand of compensation expense in the three months ended March 31, 2024.

In the first quarter of 2024, we granted independent directors 66,664 one-year time-vested phantom unit awards where each unit represents the right to receive, at the end of a vesting period, the cash value of one share of ICD common stock. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.1 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $11.0 thousand of compensation expense in the three months ended March 31, 2024.

In the first quarter of 2024, we granted 1,306,415 three-year performance-based phantom units with a market condition. Based on target shares of 649,151, a minimum of 0% and a maximum of 175% of the units could be awarded based upon the measurement of free cash flow (“FCF”) as measured against FCF performance goals determined by the compensation committee of our Board of Directors, during the three-year performance period of January 1, 2024 to December 31, 2026 and vest fully on the third anniversary of the date of the grant subject to continued employment. The payout of the awards will be further adjusted by a TSR multiplier that may adjust the payout upward or downward by up to 15% based upon our relative total shareholder return for the three-year period ending on third anniversary of the date of grant compared to the relative total shareholder return of an eight-company peer group of oilfield service companies for the same period. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units at target was $1.2 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $36.0 thousand of compensation expense in the three months ended March 31, 2024.

In the first quarter of 2023, we granted 94,708 three-year time-vested phantom unit awards where each unit represents the right to receive, at the end of a vesting period, the cash value of one share of ICD common stock. In the first quarter of 2024, 32,544 shares vested and were cash-settled. As of March 31, 2024, there were 60,914 unvested shares outstanding. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.4 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $5.0 thousand of compensation expense in the three months ended March 31, 2024.

In the first quarter of 2023, we granted independent directors 41,665 one-year time-vested phantom unit awards where each unit represents the right to receive, at the end of a vesting period, the cash value of one share of ICD common stock. As of December 31, 2023, there were 33,332 unvested shares outstanding. In the first quarter of 2024, 33,332 shares vested. As of March 31, 2024, there were zero unvested shares outstanding. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.2 million. Compensation expense was recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $6.0 thousand of credit to compensation expense in the three months ended March 31, 2024.

In the first quarter of 2023, we granted 149,709 three-year performance-based phantom units with a market condition. Based on target shares of 86,789, a minimum of 0% and a maximum of 150% of the units could be awarded based upon the measurement of FCF as measured against FCF performance goals determined by the compensation committee of our Board of Directors, during the three-year performance period of January 1, 2023 to December 31, 2025 and vest fully on the third anniversary of the date of grant subject to continued employment. The payout of the awards will be further adjusted by a TSR multiplier that may adjust the payout between 85% and 115% based upon our relative total shareholder return for the three-year period ending on third anniversary of the date of grant compared to the relative total shareholder return of an eight-company peer group of oilfield service companies for the same period. In the first quarter of 2024, 1,389 shares were vested and 50,907 shares were forfeited. As of March 31, 2024, there were 97,413 unvested shares outstanding. The phantom units are cash-settled awards and are accounted for as a liability classified award. The grant date fair value of the phantom units was $0.3 million. Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating as a result of the phantom units

being remeasured to fair value at the end of each reporting period due to their liability-award classification. We recognized $9.0 thousand of compensation expense in the three months ended March 31, 2024.

Time-Based Stock-Settled Stock Appreciation Rights

In the second quarter of 2022, we granted time-based, stock-settled stock appreciation rights (“SARs”) to certain employees. The SARs have a term of seven years, an exercise price of $5.19 per share, and vested one-third on March 18, 2023 and in equal quarterly increments thereafter, until fully vested on March 18, 2025. Because these SARs are stock-settled, they are classified as an “equity award” which are measured at their fair value at the grant date and are fixed and not revalued unless the award is modified.

The assumptions used in calculating the fair value of time-based stock-settled SARs as of the grant date were a risk-free interest rate of 3.03%, an expected volatility factor of 103.3% and an expected dividend yield of 0.0%.

Changes to our time-based stock-settled SARs outstanding during the three months ended March 31, 2024 are as follows:

		Weighted Average
		Grant Date
		Fair Value
	Stock-settled SARs	Per Share
Outstanding at January 1, 2024	1,421,740	$	2.83
Granted	—		—
Exercised	—		—
Forfeited/Expired	—		—
Outstanding at March 31, 2024	1,421,740	$	2.83
Exercisable at March 31, 2024	947,826	$	2.83
Non-vested at January 1, 2024	592,391	$	2.83
Vested	(118,477)		2.83
Non-vested at March 31, 2024	473,914	$	2.83

As of March 31, 2024, there was $1.4 million of unrecognized compensation cost related to time-based stock-settled SARs that is expected to be recognized over a weighted-average period of 0.5 years and weighted average remaining contractual life of 5.0 years.

Time-Based Cash-Settled Stock Appreciation Rights

In the first quarter of 2021, we granted time-based, cash-settled stock appreciation rights (“SARs”) to certain employees. The SARs have a term of seven years, an exercise price of $5.73 per share, with the market price upon exercise capped at $10.00 per share, and vest ratably on the first, second and third anniversaries of the date of grant. Because these SARs are cash-settled, they are classified as “liability-classified awards” which are remeasured at their fair value at the end of each reporting period until settlement. As of March 31, 2024 and December 31, 2023, we have recorded a liability, classified as “Accrued Liabilities” on our consolidated balance sheets, of $1.2 million and $2.1 million, respectively.

Time-based, cash-settled SARs have no effect on dilutive shares or shares outstanding as any appreciation of our common stock over the exercise price is paid in cash and not in common stock.

The fair value of time-based cash-settled SARs is revalued (mark-to-market) each reporting period using a Monte Carlo simulation model based on period-end stock price. Expected term of the SARs is calculated as the average of each vesting tranche’s midpoint between vesting date and expiration date plus the vesting period. Expected volatility is based on the historical volatility of our stock for the length of time corresponding to the expected term of the SARs. The risk-free interest rate is based on the U.S. treasury yield curve in effect as of the reporting date for the length of time corresponding to the expected term of the SARs.

The following weighted-average assumptions were used in calculating the fair value of the time-based cash-settled SARs using the Monte Carlo simulation model:

	Three Months Ended		Year Ended
	March 31, 2024		December 31, 2023
Remaining term to maturity	3.9 years		4.1 years
Expected volatility factor	82.9	%	119.5	%
Expected dividend yield	—	%	—	%
Risk-free interest rate	4.27	%	3.88	%

Changes to our time-based cash-settled SARs outstanding during the three months ended March 31, 2024 are as follows:

		Weighted Average
		Exercise Price
	Cash-settled SARs	Per Share
Outstanding at January 1, 2024	2,885,722	$	5.73
Granted	—		—
Exercised	—		—
Forfeited/Expired	—		—
Outstanding at March 31, 2024	2,885,722	$	5.73
Exercisable at March 31, 2024	2,885,722	$	5.73

As of March 31, 2024, there was zero unrecognized compensation cost related to time-based cash-settled SARs.

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Stockholders' Equity and Earnings (Loss) per Share

3 Months Ended

Mar. 31, 2024

Stockholders' Equity and Earnings (Loss) per Share

Stockholders' Equity and Earnings (Loss) per Share

10.Stockholders’ Equity and Earnings (Loss) per Share

As of March 31, 2024, we had a total of 15,213,277 shares of common stock, $0.01 par value, outstanding. We also had 156,259 shares held as treasury stock. Total authorized common stock is 250,000,000 shares.

Basic earnings (loss) per common share (“EPS”) are computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS are computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period, including potential dilutive securities. When the Convertible Notes are dilutive, interest expense, net of tax, is added back to net income to calculate diluted EPS. A reconciliation of the numerators and denominators of the basic and diluted losses per share computations is as follows:

	Three Months Ended March 31,
(in thousands, except per share data)	2024		2023
Net (loss) income (numerator):	$	(8,986)	$	12
(Loss) income per share:
Basic	$	(0.62)	$	0.00
Diluted	$	(0.62)	$	0.00
Shares (denominator):
Weighted average common shares outstanding - basic		14,504		13,865
Weighted average common shares outstanding - diluted		14,504		13,881

The following number of potential common shares at the end of each period were excluded from the calculation of diluted EPS because their effect would have been anti-dilutive for the periods presented.

	Three Months Ended March 31,
(in thousands)	2024		2023
Potentially dilutive securities excluded as anti-dilutive		40,453		39,230

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Income Taxes

3 Months Ended

Mar. 31, 2024

Income Taxes

Income Taxes

11.Income Taxes

Our effective income tax rate fluctuates from the U.S. statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates, the impact of U.S. state and local taxes, the realizability of deferred tax assets and other differences related to the recognition of income and expense between GAAP and tax accounting.

Our effective tax rate was 2.5% for the three months ended March 31, 2024 and (20.0)% for the three months ended March 31, 2023. Our effective tax rate for the three months ended March 31, 2024 and 2023 differed from the statutory federal income tax rate primarily due to the impact of the change in valuation allowance on deferred tax assets, state taxes, and permanent items related to certain debt items that are expensed for book purposes but are not deductible for tax purposes.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, and when necessary, valuation allowances are recorded. 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. We assess the realizability of our deferred tax assets quarterly and consider carryback availability, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In the first quarter of 2024, the effective tax rate takes into consideration the estimated valuation allowance based on forecasted 2024 income.

We continue to monitor income tax developments in the United States. We will incorporate into our future financial statements the impacts, if any, of future regulations and additional authoritative guidance when finalized.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies.

Commitments and Contingencies

12.Commitments and Contingencies

Purchase Commitments

As of March 31, 2024, we had outstanding purchase commitments to a number of suppliers totaling $5.1 million related primarily to the operation of drilling rigs. All of these commitments relate to equipment and services currently scheduled for delivery in 2024.

Contingencies

We may be the subject of lawsuits and claims arising in the ordinary course of business from time to time. Management cannot predict the ultimate outcome of such lawsuits and claims. While lawsuits and claims are asserted for amounts that may be material should an unfavorable outcome be the result, management does not currently expect that the outcome of any of these known legal proceedings or claims will have a material adverse effect on our financial position or results of operations.

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Defined Contribution Plan

3 Months Ended

Mar. 31, 2024

Defined Contribution Plan

Defined Contribution Plan

13.Defined Contribution Plan

Substantially all employees may elect to participate in our 401(k) plan by contributing a portion of their earnings. We contribute an amount equal to 100 percent of the first six percent of the participant’s compensation subject to certain limitations. The expense incurred for this defined contribution plan was $0.4 million for three months ended March 31, 2024. The expense incurred for this defined contribution plan for the three months ended March 31, 2023 was $0.4 million.

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Related Parties

3 Months Ended

Mar. 31, 2024

Related Parties

Related Parties

14.Related Parties

In connection with the issuance of the Convertible Notes on March 18, 2022, we issued to affiliates of MSD Partners, L.P. (the “MSD Investors”) $78.9 million principal amount of Convertible Notes and entered into an Investor’s Rights Agreement permitting MSD Partners to nominate one director to our Board so long as MSD Partners and its affiliates continue to own $25.0 million principal amount of Convertible Notes (the “Sunset Date”). We also entered into an Investor’s Rights Agreement with Glendon Capital Management L.P. (“GCM”) that permits GCM to designate one director on the same terms. In addition, as long as each of such parties continues to have the right to appoint such holder representatives, the two holder representatives will have the right to nominate one additional representative as a

director, provided that the third representative must be an independent director unless one of the MSD Partners and the GCM representatives is independent for New York Stock Exchange purposes. The proposed representatives are subject to review by our Nominating and Corporate Governance Committee. Following the Sunset Date for the applicable party, MSD Partners and/or GCM, as applicable, will cause its designee to offer to tender his or her resignation, unless otherwise requested by the Board, and the third representative may be removed by the Board. Two holders representatives of the MSD Investors and GCM were initially nominated and appointed to the Board pursuant to the Investor’s Rights Agreement, and the third representative was appointed in connection with an increase in the number of directors from six to seven members effective July 1, 2022.

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Interim Financial Information (Policies)

3 Months Ended

Mar. 31, 2024

Interim Financial Information

Basis of Presentation

These unaudited consolidated financial statements include the accounts of the Company and its subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These consolidated financial statements should be read along with our audited consolidated financial statements for the year ended December 31, 2023, included in our Annual Report on Form 10-K for the year ended December 31, 2023. In management’s opinion, these financial statements contain all adjustments necessary for a fair statement of our financial position, results of operations, cash flows and changes in stockholders’ equity for all periods presented.

As we had no items of other comprehensive income in any period presented, no other components of comprehensive income are presented.

Interim results for the three months ended March 31, 2024 may not be indicative of results that will be realized for the full year ending December 31, 2024.

Segment and Geographical Information

Segment and Geographical Information

Our operations consist of one reportable segment because all of our drilling operations are located in the United States and have similar economic characteristics. Corporate management administers all properties as a whole rather than as discrete operating segments. Operational data is tracked by rig; however, financial performance is measured as a single enterprise and not on a rig-by-rig basis. Further, the allocation of capital resources is employed on a project-by-project basis across our entire asset base to maximize profitability without regard to individual geographic areas.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This guidance requires an entity to disclose significant segment expenses impacting profit and loss that are regularly provided to the Chief Operating Decision Maker (“CODM”) to assess segment performance and to make decisions about resource allocations. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We do not expect the standard to have a material impact on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Also, this guidance requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this guidance are effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact this guidance will have on our financial statement disclosures.

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Revenue from Contracts with Customers (Tables)

3 Months Ended

Mar. 31, 2024

Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes revenues from our contracts disaggregated by revenue generating activity contained therein for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
(in thousands)	2024		2023
Dayrate drilling	$	41,645	$	60,242
Mobilization		1,831		1,371
Reimbursables		3,077		1,902
Early termination		53		—
Capital modification		—		218
Other		30		23
Total revenue	$	46,636	$	63,756

Summary of Contract with Customer, Asset and Liability

Accounts receivable is our right to consideration once it becomes unconditional. Payment terms typically range from 30 to 60 days. The following table provides information about receivables and contract liabilities related to contracts with customers. There were no contract assets recorded as of March 31, 2024 or December 31, 2023.

	March 31,		December 31,
(in thousands)	2024		2023
Receivables, which are included in “Accounts receivable”	$	26,869	$	31,380
Contract liabilities, which are included in “Accrued liabilities”	$	(614)	$	(578)

The primary changes in contract liabilities balances during the period are as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Revenue recognized that was included in contract liabilities at beginning of period	$	431	$	540
Increase in contract liabilities due to cash received, excluding amounts recognized as revenue	$	(467)	$	(751)

Estimated Revenue Expected to be Recognized in the Future

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2024. The estimated revenue does not include amounts of variable consideration that are constrained.

	Year Ending December 31,
(in thousands)	2024		2025		2026		2027
Revenue	$	614	$	—	$	—	$	—

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Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Lease, cost

The components of lease expense were as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Operating lease expense	$	299	$	191
Short-term lease expense		2,143		1,730
Variable lease expense		127		162
Finance lease expense:
Amortization of right-of-use assets	$	467	$	555
Interest expense on lease liabilities		73		73
Total finance lease expense		540		628
Total lease expense	$	3,109	$	2,711

Supplemental cash flow information related to leases is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	253	$	196
Operating cash flows from finance leases	$	73	$	73
Financing cash flows from finance leases	$	507	$	650
Right-of-use assets obtained or recorded in exchange for lease obligations:
Operating leases	$	75	$	618
Finance leases	$	1,513	$	51

Assets and liabilities, lessee

Supplemental balance sheet information related to leases is as follows:

(in thousands)	March 31, 2024			December 31, 2023
Operating leases:
Other long-term assets, net	$	2,029		$	2,205
Accrued liabilities	$	889		$	934
Other long-term liabilities		1,242			1,375
Total operating lease liabilities	$	2,131		$	2,309
Finance leases:
Property, plant and equipment	$	5,931		$	6,238
Accumulated depreciation		(1,734)			(1,829)
Property, plant and equipment, net	$	4,197		$	4,409
Current portion of long-term debt	$	1,525		$	1,226
Long-term debt		2,204			1,659
Total finance lease liabilities	$	3,729		$	2,885
Weighted-average remaining lease term
Operating leases		3.2 years			3.4 years
Finance leases		2.2 years			2.0 years
Weighted-average discount rate
Operating leases		8.60	%		8.75	%
Finance leases		7.95	%		8.25	%

Maturity of finance lease liability

Maturities of lease liabilities at March 31, 2024 were as follows:

(in thousands)	Operating Leases		Finance Leases
2024	$	840		1,395
2025		540		1,486
2026		401		1,118
2027		370		97
2028		285		—
Total cash lease payment		2,436		4,096
Less: imputed interest		(305)		(367)
Total lease liabilities	$	2,131	$	3,729

Maturity of operating lease liability

(in thousands)	Operating Leases		Finance Leases
2024	$	840		1,395
2025		540		1,486
2026		401		1,118
2027		370		97
2028		285		—
Total cash lease payment		2,436		4,096
Less: imputed interest		(305)		(367)
Total lease liabilities	$	2,131	$	3,729

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Financial Instruments and Fair Value (Tables)

3 Months Ended

Mar. 31, 2024

Financial Instruments and Fair Value

Schedule of carrying and fair value of convertible notes

The following table summarizes the carrying value and fair value of our Convertible Notes as of March 31, 2024 and December 31, 2023.

	March 31, 2024				December 31, 2023
	Carrying		Fair		Carrying		Fair
(in thousands)	Value		Value		Value		Value
Convertible Notes	$	189,023	$	151,000	$	179,209	$	164,800

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Supplemental Balance Sheet Information (Tables)

3 Months Ended

Mar. 31, 2024

Supplemental Balance Sheet Information

Schedule of prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Prepaid insurance	$	2,390	$	3,502
Deferred mobilization costs		591		467
Prepaid and other current assets		716		790
	$	3,697	$	4,759

Schedule of accrued Liabilities

Accrued liabilities consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Accrued salaries and other compensation	$	2,643	$	6,625
Insurance		1,859		2,996
Deferred mobilization revenues		614		578
Property and other taxes		1,617		2,124
Interest		46		25
Operating lease liability - current		889		934
Cash-settled SARs liability		1,183		2,054
Other		932		1,035
	$	9,783	$	16,371

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Long-term Debt (Tables)

3 Months Ended

Mar. 31, 2024

Long-term Debt.

Schedule of Long-term Debt

Our long-term debt consisted of the following:

(in thousands)	March 31, 2024		December 31, 2023
Convertible Notes due March 18, 2026	$	189,023	$	179,209
Revolving ABL Credit Facility due September 30, 2025		8,250		5,500
Finance lease obligations		3,729		2,885
		201,002		187,594
Less: Convertible Notes debt discount and issuance costs		(29,099)		(31,819)
Less: current portion of finance leases		(1,525)		(1,226)
Long-term debt, net	$	170,378	$	154,549

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2024

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of Compensation Cost

A summary of compensation cost recognized for stock-based payment arrangements is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Compensation cost recognized:
Restricted stock, restricted stock units and stock-settled stock appreciation rights	$	1,026	$	1,374
Cash-settled stock appreciation rights and performance-based phantom units		(810)		298
Total stock-based compensation	$	216	$	1,672

Schedule of Restricted Stock Activity

A summary of the status of our time-based restricted stock awards and of changes in our time-based restricted stock awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	Shares	Per Share
Outstanding at January 1, 2024	—	$	—
Granted	692,607		1.88
Vested	—		—
Forfeited	—		—
Outstanding at March 31, 2024	692,607	$	1.88

Schedule of Restricted Stock Unit Activity

A summary of the status of our time-based restricted stock unit awards and of changes in our time-based restricted stock unit awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	RSUs	Per Share
Outstanding at January 1, 2024	753,180	$	4.10
Granted	—		—
Vested and converted	(151,818)		4.02
Forfeited	(4,221)		4.13
Outstanding at March 31, 2024	597,141	$	4.12

A summary of the status of our performance-based and market-based restricted stock unit awards and of changes in our restricted stock unit awards outstanding for the three months ended March 31, 2024 is as follows:

		Weighted
		Average
		Grant-Date
		Fair Value
	RSUs	Per Share
Outstanding at January 1, 2024	299,411	$	4.47
Granted	—		—
Vested and converted	(1,987)		4.47
Forfeited	(102,604)		4.47
Outstanding at March 31, 2024	194,820	$	4.47

Stock-settled stock appreciation rights

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Stock Appreciation Rights

Changes to our time-based stock-settled SARs outstanding during the three months ended March 31, 2024 are as follows:

		Weighted Average
		Grant Date
		Fair Value
	Stock-settled SARs	Per Share
Outstanding at January 1, 2024	1,421,740	$	2.83
Granted	—		—
Exercised	—		—
Forfeited/Expired	—		—
Outstanding at March 31, 2024	1,421,740	$	2.83
Exercisable at March 31, 2024	947,826	$	2.83
Non-vested at January 1, 2024	592,391	$	2.83
Vested	(118,477)		2.83
Non-vested at March 31, 2024	473,914	$	2.83

Stock Appreciation Rights (SARs) [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Assumptions Used in Calculation of SARs Granted

The following weighted-average assumptions were used in calculating the fair value of the time-based cash-settled SARs using the Monte Carlo simulation model:

	Three Months Ended		Year Ended
	March 31, 2024		December 31, 2023
Remaining term to maturity	3.9 years		4.1 years
Expected volatility factor	82.9	%	119.5	%
Expected dividend yield	—	%	—	%
Risk-free interest rate	4.27	%	3.88	%

Schedule of Stock Appreciation Rights

Changes to our time-based cash-settled SARs outstanding during the three months ended March 31, 2024 are as follows:

		Weighted Average
		Exercise Price
	Cash-settled SARs	Per Share
Outstanding at January 1, 2024	2,885,722	$	5.73
Granted	—		—
Exercised	—		—
Forfeited/Expired	—		—
Outstanding at March 31, 2024	2,885,722	$	5.73
Exercisable at March 31, 2024	2,885,722	$	5.73

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Stockholders' Equity and Earnings (Loss) per Share (Tables)

3 Months Ended

Mar. 31, 2024

Stockholders' Equity and Earnings (Loss) per Share

Reconciliation of Numerators and Denominators of Basic and Diluted (Loss) Earnings Per Share

	Three Months Ended March 31,
(in thousands, except per share data)	2024		2023
Net (loss) income (numerator):	$	(8,986)	$	12
(Loss) income per share:
Basic	$	(0.62)	$	0.00
Diluted	$	(0.62)	$	0.00
Shares (denominator):
Weighted average common shares outstanding - basic		14,504		13,865
Weighted average common shares outstanding - diluted		14,504		13,881

Schedule of Antidilutive Securities excluded from computation of earnings per share

	Three Months Ended March 31,
(in thousands)	2024		2023
Potentially dilutive securities excluded as anti-dilutive		40,453		39,230

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Nature of Operations and Recent Events (Market Conditions) (Details)						12 Months Ended
	Apr. 23, 2024 $ / MMcf	Apr. 22, 2024 $ / bbl	Dec. 31, 2022 $ / MMcf	Aug. 22, 2022 $ / MMcf	Mar. 08, 2022 $ / bbl	Dec. 31, 2023 $ / MMcf
Market price of oil (in dollars per barrel) | $ / bbl		83.82			123.64
Natural gas price (in dollars per mmcf)			3.52	9.85		2.58
Subsequent Event
Natural gas price (in dollars per mmcf)	1.59

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Interim Financial Information (Details)	3 Months Ended
	Mar. 31, 2024 segment
Segment Reporting [Abstract]
Reportable segments	1

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Revenue from Contracts with Customers (Disaggregation of Revenues) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($) customer	Mar. 31, 2023 USD ($) customer
Disaggregation of Revenue [Line Items]
Revenues	$ 46,636	$ 63,756
Revenue | Customer Concentration Risk
Disaggregation of Revenue [Line Items]
Number of Major Customers | customer	2	3
Revenue | Customer Concentration Risk | Customer One
Disaggregation of Revenue [Line Items]
Concentration Risk, Percentage	25.00%	14.00%
Revenue | Customer Concentration Risk | Customer Two
Disaggregation of Revenue [Line Items]
Concentration Risk, Percentage	15.00%	12.00%
Revenue | Customer Concentration Risk | Customer Three
Disaggregation of Revenue [Line Items]
Concentration Risk, Percentage		11.00%
Dayrate drilling
Disaggregation of Revenue [Line Items]
Revenues	$ 41,645	$ 60,242
Mobilization
Disaggregation of Revenue [Line Items]
Revenues	1,831	1,371
Reimbursables
Disaggregation of Revenue [Line Items]
Revenues	3,077	1,902
Early termination
Disaggregation of Revenue [Line Items]
Revenues	53	0
Capital modification
Disaggregation of Revenue [Line Items]
Revenues		218
Other
Disaggregation of Revenue [Line Items]
Revenues	$ 30	$ 23

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Revenue from Contracts with Customers (Contract Balances) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Contract assets	$ 0	$ 0
Receivables, which are included in "Accounts receivable"	26,869	31,380
Contract liabilities, which are included in "Accrued liabilities"	$ (614)	$ (578)
Minimum
Payment terms (in days)	30 days
Maximum
Payment terms (in days)	60 days

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Revenue from Contracts with Customers (Changes in Contract Liabilities) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenue from Contracts with Customers
Revenue recognized that was included in contract liabilities at beginning of period	$ 431	$ 540
Increase in contract liabilities due to cash received, excluding amounts recognized as revenue	$ (467)	$ (751)

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Revenue from Contracts with Customers (Remaining Performance Obligation) (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 $ in Thousands	Mar. 31, 2024 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 614
Revenue, remaining performance obligation, period	9 months

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Revenue from Contracts with Customers (Contract Costs) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Revenue from Contracts with Customers
Capitalized contract cost, current	$ 0.6		$ 0.5
Capitalized contract cost, increase	1.1	$ 0.9
Amortization of contract costs	$ 1.0	$ 0.5

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Leases (Lease Cost) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Leases [Abstract]
Operating lease expense	$ 299	$ 191
Short-term lease expense	2,143	1,730
Variable lease expense	127	162
Finance lease expense:
Amortization of right-of-use assets	467	555
Interest expense on lease liabilities	73	73
Total finance lease expense	540	628
Total lease expense	3,109	2,711
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	253	196
Operating cash flows from finance leases	73	73
Financing cash flows from finance leases	507	650
Right-of-use assets obtained or recorded in exchange for lease obligations:
Operating leases	75	618
Finance leases	$ 1,513	$ 51

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Leases (Lease Assets and Liabilities) (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Operating leases:
Other long-term assets, net	$ 2,029	$ 2,205
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets, Noncurrent	Other Assets, Noncurrent
Accrued liabilities	$ 889	$ 934
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accrued Liabilities, Current	Accrued Liabilities, Current
Other long-term liabilities	$ 1,242	$ 1,375
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other Liabilities, Noncurrent	Other Liabilities, Noncurrent
Total operating lease liabilities	$ 2,131	$ 2,309
Finance leases:
Property, plant and equipment	5,931	6,238
Accumulated depreciation	(1,734)	(1,829)
Property, plant and equipment, net	$ 4,197	$ 4,409
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Property, plant and equipment, net	Property, plant and equipment, net
Current portion of long-term debt	$ 1,525	$ 1,226
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Long-term Debt and Lease Obligation, Current	Long-term Debt and Lease Obligation, Current
Long-term debt	$ 2,204	$ 1,659
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Long-term Debt and Lease Obligation	Long-term Debt and Lease Obligation
Total finance lease liabilities	$ 3,729	$ 2,885
Weighted-average remaining lease term
Operating leases	3 years 2 months 12 days	3 years 4 months 24 days
Finance leases	2 years 2 months 12 days	2 years
Weighted-average discount rate
Operating leases	8.60%	8.75%
Finance leases	7.95%	8.25%

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Leases (Lease Maturities) (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Operating Leases
2024	$ 840
2025	540
2026	401
2027	370
2028	285
Total cash lease payment	2,436
Less: imputed interest	(305)
Total lease liabilities	2,131	$ 2,309
Finance Leases
2024	1,395
2025	1,486
2026	1,118
2027	97
2028	0
Total cash lease payment	4,096
Less: imputed interest	(367)
Total lease liabilities	$ 3,729	$ 2,885

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Financial Instruments and Fair Value (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value assets transfer	$ 0
Convertible Notes.
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Carrying Value	189,023	$ 179,209
Fair Value	$ 151,000	$ 164,800
Convertible Notes | Volatility rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.480	0.585
Convertible Notes | Risk-free rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.046	0.042
Convertible Notes | Credit Spread
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, measurement input	0.2855	0.2702

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Supplemental Balance Sheet Information (Prepaid Expenses and Other Current Assets) (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Supplemental Balance Sheet Information
Prepaid insurance	$ 2,390	$ 3,502
Deferred mobilization costs	591	467
Prepaid and other current assets	716	790
Prepaid expenses and other current assets	$ 3,697	$ 4,759

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Supplemental Balance Sheet Information (Accrued Liabilities) (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Supplemental Balance Sheet Information
Accrued salaries and other compensation	$ 2,643	$ 6,625
Insurance	1,859	2,996
Deferred mobilization revenues	614	578
Property and other taxes	1,617	2,124
Interest	46	25
Operating lease liability - current	889	934
Cash-settled SARs liability	1,183	2,054
Other	932	1,035
Accrued liabilities	$ 9,783	$ 16,371

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Long-term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Finance lease obligations	$ 3,729	$ 2,885
Long-term debt and finance lease obligations, including current maturities	201,002	187,594
Less: Convertible Notes debt discount and issuance costs	(29,099)	(31,819)
Less: current portion of finance leases	(1,525)	(1,226)
Long-term debt	170,378	154,549
Convertible Notes
Debt Instrument [Line Items]
Long-term debt	189,023	179,209
Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Long-term debt	$ 8,250	$ 5,500

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Long-term Debt (Narrative) (Details)			3 Months Ended
	Mar. 18, 2022 USD ($) D	Oct. 01, 2018 USD ($)	Mar. 31, 2024 USD ($) $ / shares	Dec. 31, 2023 USD ($)	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Jun. 30, 2025 USD ($)	Sep. 30, 2024 USD ($)	Jun. 08, 2022 $ / shares
Debt Instrument [Line Items]
Aggregate principal amount	$ 78,900,000
Interest			$ 46,000	$ 25,000
Amortization of deferred financing costs			27,000				$ 27,000
Principal of convertible notes			3,500,000
Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Convertible debt principal notes			$ 8,250,000	5,500,000
Line of credit
Debt Instrument [Line Items]
Weighted average interest rate			14.87%
Line of credit | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Fixed charge coverage ratio		1.00
Line of credit facility, borrowing base threshold, percentage		85.00%
Commitment fee on unused capacity (as a percent)		0.375%
Line of credit facility, unused commitment fee percentage, revolver contingency		0.25%
Unused commitment fee percentage, maximum credit threshold		50.00%
Fixed charge coverage ratio, maximum credit threshold		10.00%
Borrowing base			$ 21,900,000
Line of credit | Federal funds, effective rate | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Stated interest rate (as a percent)		0.05%
Line of credit | SOFR | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Stated interest rate (as a percent)		1.00%
Revolving ABL Credit Facility | Line of credit | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity		$ 40,000,000.0	40,000,000.0
Remaining availability			13,500,000
Letter of Credit | Line of credit | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Revolving credit facility, maximum borrowing capacity		$ 7,500,000
Minimum | Line of credit | Prime Rate | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Stated interest rate (as a percent)		1.00%
Minimum | Revolving ABL Credit Facility | Line of credit | SOFR | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Stated interest rate (as a percent)		2.36%
Maximum | Line of credit | Prime Rate | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Stated interest rate (as a percent)		1.50%
Maximum | Line of credit | Base Rate | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Interest rate, basis spread (as a percent)		0.00%
Maximum | Revolving ABL Credit Facility | Line of credit | SOFR | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Stated interest rate (as a percent)		2.86%
Convertible Notes
Debt Instrument [Line Items]
Aggregate principal amount			50,000,000.0
Interest			$ 100,000	6,800,000
Conversion ratio			0.22172949
Threshold additional shares to be issued, value			$ 7,500,000
Interest expenses			$ 6,900,000				5,900,000
Convertible conversion price | $ / shares			$ 4.51
Convertible debt principal notes			$ 189,000,000.0
Debt discounts	37,800,000
Cash fee	7,400,000
Non cash structuring fee	$ 2,300,000
Effective interest rate			25.70%
Amortization of debt discount			$ 2,700,000				$ 2,400,000
Principal of convertible notes			$ 3,500,000	$ 5,000,000.0	$ 5,000,000.0	$ 5,000,000.0
Convertible Notes | SOFR
Debt Instrument [Line Items]
Interest rate, basis spread (as a percent)	10.00%
Debt instrument, variable rate, cash interest	12.50%
Debt instrument, decreased variable rate, paid in kind	9.50%
Convertible Notes | Floor Rate
Debt Instrument [Line Items]
Interest rate, basis spread (as a percent)	1.00%
Convertible Notes | Subscription Agreement
Debt Instrument [Line Items]
Aggregate principal amount	$ 157,500,000
Convertible conversion price | $ / shares										$ 4.51
Holder elected restricted ownership percentage	19.90%
Threshold period following written notice after which the election becomes effective	61 days
Principal amount of debt that is used in conversion calculations	$ 1,000
Threshold volume-weighted average price trading days under debt conversion | D	5
MOIC Required Level	$ 1,350
Convertible Notes | Subscription Agreement | Scenario of Redemption of Debt, After March 31, 2025
Debt Instrument [Line Items]
Redemption amount on quarterly basis	3,500,000
Convertible Notes | Subscription Agreement | Line of credit | Revolving ABL Credit Facility.
Debt Instrument [Line Items]
Liquidity covenant	$ 10,000,000.0
Fixed charge coverage ratio	1.00
Minimum availability	$ 5,000,000.0
Capital expenditure limits								$ 11,250,000	$ 14,800,000
Subjective increase in capital expenditures	$ 500,000

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Stock-Based Compensation (Restricted Stock and Restricted Stock Units - Narrative) (Details) $ / shares in Units, $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2024 USD ($) shares	Mar. 31, 2023 item $ / shares shares	Dec. 31, 2023 shares	Jun. 30, 2019 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock outstanding (in shares)			33,332
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	1 year
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Time-Based Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs | $	$ 1.1
Granted (in shares)	692,607
Period for recognition (in years)	1 year 4 months 24 days
Restricted stock outstanding (in shares)	692,607		0
Time-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs | $	$ 1.9
Granted (in shares)	0
Period for recognition (in years)	6 months
Shares received per restricted stock unit (in shares)	1
Restricted stock outstanding (in shares)	597,141		753,180
Time-Based Restricted Stock Units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	1 year
Time-Based Restricted Stock Units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Performance-based and market-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation costs | $	$ 0.3
Granted (in shares)	0
Period for recognition (in years)	1 year 9 months 18 days
Restricted stock outstanding (in shares)	194,820		299,411
Performance-based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)		3 years
Target shares		173,570
Granted (in shares)			299,411
Percent adjusted to payout due to TSR multiplier	15.00%
Number of peer group companies | item		8
Performance-based Restricted Stock Units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of units that can be awarded based upon the measurement of Free cash flow		0.00%
Percent adjusted to payout due to TSR multiplier		85.00%
Performance-based Restricted Stock Units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of units that can be awarded based upon the measurement of Free cash flow		150.00%
Percent adjusted to payout due to TSR multiplier		115.00%
TSR market-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value assumptions, exercise price (in dollars per share) | $ / shares		$ 4.47
Risk-free interest rate (as percent)		4.15%
Expected volatility factor (as percent)		135.30%
Expected dividend yield (as percent)		0.00%
2019 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)				4,600,000
Number of shares available for future awards (in shares)	306,008

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Stock-Based Compensation (Compensation Cost) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 216	$ 1,672
Restricted stock, restricted stock units and stock-settled stock appreciation rights
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	1,026	1,374
Cash-settled stock appreciation rights and performance-based phantom units
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ (810)	$ 298

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Stock-Based Compensation (Restricted Stock and Restricted Stock Units Activity) (Details)	3 Months Ended
	Mar. 31, 2024 $ / shares shares
Shares
Outstanding at Beginning balance (in share)	33,332
Outstanding at Ending balance (in shares)
Time-Based Restricted Stock
Shares
Outstanding at Beginning balance (in share)	0
Granted (in shares)	692,607
Vested (in shares)	0
Forfeited (in shares)	0
Outstanding at Ending balance (in shares)	692,607
Weighted Average Grant-Date Fair Value Per Share
Outstanding at Beginning balance (in dollars per share) | $ / shares	$ 0
Granted (in dollars per share) | $ / shares	1.88
Vested and converted (in dollars per share) | $ / shares	0
Forfeited/Expired (in dollars per share) | $ / shares	0
Outstanding at Ending balance (in dollars per share) | $ / shares	$ 1.88
Time-Based Restricted Stock Units
Shares
Outstanding at Beginning balance (in share)	753,180
Granted (in shares)	0
Vested (in shares)	(151,818)
Forfeited (in shares)	(4,221)
Outstanding at Ending balance (in shares)	597,141
Weighted Average Grant-Date Fair Value Per Share
Outstanding at Beginning balance (in dollars per share) | $ / shares	$ 4.10
Granted (in dollars per share) | $ / shares	0
Vested and converted (in dollars per share) | $ / shares	4.02
Forfeited/Expired (in dollars per share) | $ / shares	4.13
Outstanding at Ending balance (in dollars per share) | $ / shares	$ 4.12
Performance-based and market-based RSUs
Shares
Outstanding at Beginning balance (in share)	299,411
Granted (in shares)	0
Vested (in shares)	(1,987)
Forfeited (in shares)	(102,604)
Outstanding at Ending balance (in shares)	194,820
Weighted Average Grant-Date Fair Value Per Share
Outstanding at Beginning balance (in dollars per share) | $ / shares	$ 4.47
Granted (in dollars per share) | $ / shares	0
Vested and converted (in dollars per share) | $ / shares	4.47
Forfeited/Expired (in dollars per share) | $ / shares	4.47
Outstanding at Ending balance (in dollars per share) | $ / shares	$ 4.47

XML

Stock-Based Compensation (Phantom Units) (Details)	3 Months Ended
	Mar. 31, 2024 USD ($) item shares	Mar. 31, 2023 USD ($) item shares	Dec. 31, 2023 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unvested shares outstanding (in shares)			33,332
Compensation expense | $	$ 216,000	$ 1,672,000
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	1 year
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Performance-based phantom units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	1,306,415	149,709
Vesting period (in years)	3 years	3 years
Target shares	649,151	86,789
Number of peer group companies | item	8	8
Grant date fair value | $	$ 1,200,000	$ 300,000
Compensation expense | $	$ 16,000.0
Performance-based phantom units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	0.00%	0.00%
Payout percentage		85.00%
Performance-based phantom units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	175.00%	150.00%
Payout percentage		115.00%
Target shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards vested	1,389
Shares forfeited	50,907
Unvested shares outstanding (in shares)	97,413
Three-year time-vested phantom unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	279,630	94,708
Vesting period (in years)	3 years	3 years
Shares forfeited	32,544
Unvested shares outstanding (in shares)	60,914
Grant date fair value | $	$ 500,000	$ 400,000
Compensation expense | $	5,000.0	$ 9,000.0
Three-year performance-based phantom unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense | $	$ 36,000.0
One-year time-vested phantom unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	66,664	41,665
Vesting period (in years)	1 year	1 year
Shares forfeited	33,332
Unvested shares outstanding (in shares)	0
Grant date fair value | $	$ 100,000	$ 200,000
Compensation expense | $	$ 11,000.0	$ 6,000.0

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Stock-Based Compensation (Stock-Settled SARs) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Jun. 30, 2022	Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cash-settled SARs liability	$ 1,183		$ 2,054
Stock-settled and Cash-settled SARs
Outstanding at Beginning balance (in share)	33,332
Outstanding at Ending balance (in shares)			33,332
Stock-settled stock appreciation rights
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period (in years)		7 years
Exercise price (in dollars per share)		$ 5.19
Unrecognized compensation costs	$ 1,400
Period for recognition (in years)	6 months
Remaining contractual life (years)	5 years
Weighted-Average Assumptions
Expected volatility factor (as percent)	103.30%
Expected dividend yield (as percent)	0.00%
Risk-free interest rate (as percent)	3.03%
Stock-settled and Cash-settled SARs
Outstanding at Beginning balance (in shares)	1,421,740
Granted (in shares)	0
Exercised (in shares)	0
Forfeited/Expired (in shares)	0
Outstanding at Ending balance (in shares)	1,421,740		1,421,740
Exercisable (in shares)	947,826
Outstanding at Beginning balance (in share)	592,391
Vested (in shares)	(118,477)
Outstanding at Ending balance (in shares)	473,914		592,391
Weighted Average Fair Value Price Per Share
Outstanding at Beginning balance (in dollars per share)	$ 2.83
Granted (in dollars per share)	0
Exercised (in dollars per share)	0
Forfeited/Expired (in dollars per share)	0
Outstanding at Ending balance (in dollars per share)	2.83		$ 2.83
Exercisable (in dollar per share)	2.83
Vested (in dollars per share)	$ 2.83
Stock-settled stock appreciation rights | March 18, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		33.33%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	1 year
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years

XML

Stock-Based Compensation (Cash-Settled SARs) (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2021	Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Accrued liabilities for time-based, cash-settled stock appreciation rights	$ 1,183,000		$ 2,054,000
Stock-settled and Cash-settled SARs
Outstanding at Beginning balance (in share)	33,332
Outstanding at Ending balance (in shares)			33,332
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period (in years)		7 years
Exercise price (in dollars per share)		$ 5.73
Market cap price per share		$ 10.00
Accrued liabilities for time-based, cash-settled stock appreciation rights	$ 1,200,000		$ 2,100,000
Unrecognized compensation costs	$ 0
Vesting period (in years)	5 years
Weighted-Average Assumptions
Remaining term to maturity (in years)	3 years 10 months 24 days		4 years 1 month 6 days
Expected volatility factor (as percent)	82.90%		119.50%
Expected dividend yield (as percent)			0.00%
Risk-free interest rate (as percent)	4.27%		3.88%
Stock-settled and Cash-settled SARs
Outstanding at Beginning balance (in share)	2,885,722
Granted (in shares)	0
Exercised (in shares)	0
Forfeited (in shares)	0
Outstanding at Ending balance (in shares)	2,885,722		2,885,722
Exercisable (in shares)	2,885,722
Weighted Average Grant-Date Fair Value Per Share
Outstanding at Beginning balance (in dollars per share)	$ 5.73
Granted (in dollars per share)	0
Exercised (in dollars per share)	0
Forfeited/Expired (in dollars per share)	0
Outstanding at Ending balance (in dollars per share)	5.73		$ 5.73
Exercisable (in dollar per share)	$ 5.73

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Stockholders' Equity and Earnings (Loss) per Share (Narrative) (Details) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Stockholders' Equity and Earnings (Loss) per Share
Shares outstanding (in shares)	15,213,277
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Treasury stock (in shares)	156,259	97,260
Shares authorized (in shares)	250,000,000	250,000,000

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Stockholders' Equity and Earnings (Loss) per Share (Basic and Diluted Losses per Share Computations) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Stockholders' Equity and Earnings (Loss) per Share
Net (loss) income (numerator):	$ (8,986)	$ 12
(Loss) income per share:
Basic (in dollars per share)	$ (0.62)	$ 0.00
Diluted (in dollars per share)	$ (0.62)	$ 0.00
Shares (denominator):
Weighted average common shares outstanding - basic (in shares)	14,504	13,865
Weighted average common shares outstanding - diluted (in shares)	14,504	13,881

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Stockholders' Equity and Earnings (Loss) per Share (Anti-dilutive) (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Stockholders' Equity and Earnings (Loss) per Share
Potentially dilutive securities excluded as anti-dilutive	40,453	39,230

XML

Income Taxes (Narrative) (Details)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Taxes
Effective tax rate	2.50%	(20.00%)

XML

Commitments and Contingencies (Details) $ in Millions	Mar. 31, 2024 USD ($)
Commitments and Contingencies.
Outstanding purchase commitments	$ 5.1

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Defined Contribution Plan (Details) - 401 (k) Plan - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Defined Contribution Plan
Defined contribution plan, Contribution percentage	100.00%
Defined Contribution Plan, Matching contribution percentage	6.00%
Defined contribution plan, Expense	$ 0.4	$ 0.4

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Related Parties (Details) $ in Millions	Mar. 18, 2022 USD ($) director	Jul. 01, 2022 director
Related Parties
Aggregate principal amount | $	$ 78.9
Number of directors who can be nominated	1
Principal amount | $	$ 25.0
Number of holder representatives that have the right to nominate additional representative as director	2
Number of additional representatives to be appointed as individual director	1
Number of directors	6	7

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (8,986)	$ 12

XML

Insider Trading Arrangements	3 Months Ended
	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false