Fair Value Measurements

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that may differ from the transaction price or market price of the asset or liability.

Under U.S. GAAP, the fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value. Fair value measurements should maximize the use of observable inputs and minimize the use of unobservable inputs, where possible. Observable inputs are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs may be needed to measure fair value in situations where there is little or no market activity for the asset or liability at the measurement date and are developed based on the best information available in the circumstances, which could include the reporting entity’s own judgments about the assumptions market participants would utilize in pricing the asset or liability.

Financial Instruments

Investments

We retained an interest in CSI Compressco, which was acquired by Kodiak on April 1, 2024, and we received shares of Kodiak in exchange for our common units in CSI Compressco in connection with such acquisition. We sold our Kodiak shares in January 2025. See Note 18 - “Subsequent Event” for further information. The Company received stock of Standard Lithium under the terms of its arrangements.

Our investments in Kodiak, Standard Lithium, and, formerly, CSI Compressco, are recorded in investments on our consolidated balance sheets based on the quoted market stock price (Level 1 fair value measurements). The stock component of consideration received from Standard Lithium is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. Changes in the value of stock are recorded in other (income) expense, net in our consolidated statements of operations.

We also hold investments in convertible notes, common units and preferred units issued by two privately-held companies. Our investment in certain preferred units were recorded based on observable market-based inputs for preferred units issued to several investors during August through October 2024 (Level 2 fair value measurement). Our investment in convertible notes, common units and certain preferred units are recorded in our consolidated financial statements based on internal valuations with assistance from a third-party valuation specialist (Level 3 fair value measurement). The valuations are impacted by key assumptions, including the assumed probability and timing of potential debt or equity offerings. One of the convertible notes includes an option to convert the note into equity interests. The change in the fair value of the embedded option, as well as the preferred units and common units, are included in other (income) expense, net in our consolidated statements of operations. The change in the fair value of the convertible note, excluding the embedded option, is included in other comprehensive income (loss) in our consolidated statements of comprehensive income.

The change in our investments for the years ended December 31, 2024, 2023, and 2022 were as follows:

	Year Ended December 31, 2024
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
	(In Thousands)
Investment balance at beginning of period	$	10,154	$	—	$	7,200	$	17,354
Purchase of investments	—		1,000		21		1,021
Reclassification between Level 2 and Level 3 fair value	—		350		(350)		—
Unrealized gain on equity securities	9,407		38		1,130		10,575
Unrealized loss on embedded option	—		—		(1,971)		(1,971)
Unrealized gain on convertible note, excluding embedded option	—		—		1,180		1,180
Investment balance at end of period	$	19,561	$	1,388	$	7,210	$	28,159

	Year Ended December 31, 2023
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Unobservable Inputs
	(Level 1)		(Level 3)		Total
	(In Thousands)
Investment balance at beginning of period	$	8,147	$	6,139	$	14,286
Purchase of investments	—		350		350
Unrealized gain on equity securities	2,007		—		2,007
Unrealized loss on embedded option	—		(16)		(16)
Unrealized gain on convertible note, excluding embedded option	—		727		727
Investment balance at end of period	$	10,154	$	7,200	$	17,354

	Year Ended December 31, 2022
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Unobservable Inputs
	(Level 1)		(Level 3)		Total
	(In Thousands)
Investment balance at beginning of period	$	6,233	$	5,000	$	11,233
Unrealized gain on equity securities	1,914		—		1,914
Unrealized gain on embedded option	—		1,211		1,211
Unrealized loss on convertible note, excluding embedded option	—		(72)		(72)
Investment balance at end of period	$	8,147	$	6,139	$	14,286

Derivative Contracts

We are exposed to financial and market risks that affect our businesses. We have concentrations of credit risk as a result of trade receivables owed to us primarily by companies in the energy industry. We have currency exchange rate risk exposure related to transactions denominated in foreign currencies as well as to investments in certain of our international operations. As a result of our variable rate debt facilities, we face market risk exposure related to changes in applicable interest rates. Our financial risk management activities may at times involve, among other measures, the use of derivative financial instruments, such as swap and collar agreements, to hedge the impact of market price risk exposures.

We entered into, and we may in the future enter into, short-term foreign currency forward derivative contracts with third parties as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. Although contracts pursuant to this program will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period. The fair values of foreign currency derivative instruments are based on quoted market values (a Level 2 fair value measurement). We did not have foreign currency derivative instruments outstanding as of December 31, 2024 or 2023. During the years ended December 31, 2024, 2023, and 2022, we recognized zero, zero, and $0.4 million of net losses, respectively, reflected in other income, net, associated with our foreign currency derivative program.

A summary of significant recurring fair value measurements by valuation hierarchy as of December 31, 2024 and 2023, is as follows:

			Fair Value Measurements Using
	Total as of		Quoted Prices in Active Markets for Identical Assets or Liabilities	Significant Other Observable Inputs	Significant Unobservable Inputs
Description	Dec 31, 2024		(Level 1)	(Level 2)	(Level 3)
	(In Thousands)
Investments in Kodiak(1)	$	18,393	18,393	—	—
Investments in Standard Lithium	1,168		1,168	—	—
Other investments	8,598		—	1,388	7,210
Investments	$	28,159

(1)        Kodiak acquired CSI Compressco on April 1, 2024.

			Fair Value Measurements Using
	Total as of		Quoted Prices in Active Markets for Identical Assets or Liabilities	Significant Other Observable Inputs	Significant Unobservable Inputs
Description	Dec 31, 2023		(Level 1)	(Level 2)	(Level 3)
	(In Thousands)
Investments in CSI Compressco	$	8,538	8,538	—	—
Investments in Standard Lithium	1,616		1,616	—	—
Other investments	7,200		—	—	7,200
Investments	$	17,354

Impairments of Inventory and Long-Lived Assets

During 2024, we recorded a $0.1 million impairment of our corporate office lease. During 2023, we recorded a $2.1 million impairment of a facility lease in Scotland within our Completion Fluids & Products Division and we recorded a $0.8 million impairment of our corporate office lease. The fair values were estimated based on the discounted cash flows from our lease and sublease agreements (a Level 3 fair value measurement) in accordance with the fair value hierarchy.

During the second quarter of 2022, our Completion Fluids & Products and Water & Flowback Services Divisions each recorded certain inventory and long-lived tangible asset impairments. Our Water & Flowback Services Division recorded impairments, including $1.3 million of equipment, $0.2 million of inventory, and $0.5 million for land and buildings. The Completion Fluids & Products Division also recorded a $0.2 million impairment related to obsolete inventory. The inventory and equipment for both divisions are no longer expected to be used and were written down to zero or scrap value. The fair value of land and buildings of $0.4 million was estimated based on recent sales price per square acre or square foot of comparable properties (a Level 3 fair value measurement in accordance with the fair value hierarchy).

During the fourth quarter of 2022, our Completion Fluids & Products and Water & Flowback Services Divisions recorded additional long-lived tangible asset impairments totaling $0.3 million and $0.1 million, respectively. The Completion Fluids & Products Division impairment relates to equipment that is no longer expected to be used and was written down to estimated scrap value. The long-lived tangible asset impairment recorded by the Water & Flowback Services Division in the fourth quarter of 2022 was a result of storm damage sustained to buildings in December 2022 and remediation work identified during the quarter. The fair value of land and buildings was adjusted to $0.2 million based on recent sales offers (a Level 3 fair value measurement in accordance with the fair value hierarchy).

Other

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings, and long-term debt pursuant to TETRA's Term Credit Agreement, ABL Credit Agreement and Swedish Credit Agreement approximate their carrying amounts.