Related Party Transactions |
6 Months Ended |
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Jun. 30, 2025 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions On February 2, 2022, the Company entered into a long-term supply agreement with ProFrac Services (the “Initial ProFrac Agreement”), upon issuance of $10 million in aggregate principal amount of the convertible notes (the “Contract Consideration Convertible Notes Payable”) to ProFrac Holdings LLC (“ProFrac Holdings”). Under the Initial ProFrac Agreement, ProFrac Services was obligated to order chemicals from the Company at least equal to the greater of (a) the chemicals required for 33% of ProFrac Services’ hydraulic fracturing fleets and (b) a baseline measured by the first ten hydraulic fracturing fleets deployed by ProFrac Services during the term of the Initial ProFrac Agreement. If the minimum volumes are not achieved in any given year, ProFrac Services is required to pay to the Company, as liquidated damages an amount equal to twenty-five percent (25%) of the difference between (i) the aggregate purchase price of the quantity of products comprising the minimum purchase obligation and (ii) the actual purchased volume during such calendar year (“Contract Shortfall Fees”). On May 17, 2022, the Company entered into an amendment to the Initial ProFrac Agreement (the “First Amendment to ProFrac Agreement”) upon issuance of $50 million in aggregate principal amount of Contract Consideration Convertible Notes Payable. The Initial ProFrac Agreement was amended to (a) increase ProFrac Services’ minimum purchase obligation for each year to the greater of 70% of ProFrac Services’ requirements and a baseline measured by ProFrac Services’ first 30 hydraulic fracturing fleets, and (b) increase the term to 10 years. On February 2, 2023, the Company entered into a second amendment to the Initial ProFrac Agreement (the “Second Amendment to ProFrac Agreement” and together with the Initial ProFrac Agreement and the First Amendment to ProFrac Agreement, collectively the “ProFrac Agreement”) effective as of January 1, 2023. The Second Amendment to ProFrac Agreement amended the ProFrac Agreement to (1) provide a ramp-up period from January 1, 2023 to May 31, 2023 for ProFrac Services to increase the number of active hydraulic fracturing fleets to 30 fleets, (2) waive any Contract Shortfall Fee payment relating to any potential order shortfall prior to January 1, 2023, (3) add additional fees to certain products, and (4) provide margin increases based on margins with non-ProFrac Services customers. The current measurement period for Contract Shortfall Fees is January 1, 2025 through December 31, 2025. The Company does not expect that the minimum purchase requirements will be met during the current measurement period, and as a result, related party revenues for the six months ended June 30, 2025 reflect variable consideration for Contract Shortfall Fees of $15.2 million, which will be due in the first quarter of 2026 under the terms of the ProFrac Agreement. The measurement period for 2024 was January 1, 2024 through December 31, 2024. Related party revenues for the six months ended June 30, 2024 included $17.1 million of Contract Shortfall Fees. During the three months ended June 30, 2025 and 2024, the Company’s related party revenues were $33.2 million and $28.0 million, respectively. For the three months ended June 30, 2025 and 2024, these revenues were net of amortization of contract assets of $1.4 million and $1.5 million, respectively. Cost of sales attributable to these revenues were $22.3 million and $19.5 million, respectively, for the three months ended June 30, 2025 and 2024. During the six months ended June 30, 2025 and 2024, the Company’s related party revenues were $64.1 million and $55.2 million, respectively. For the six months ended June 30, 2025 and 2024, these revenues were net of amortization of contract assets of $2.9 million and $2.7 million, respectively. Cost of sales attributable to these revenues were $43.5 million and $38.1 million, respectively, for the six months ended June 30, 2025 and 2024. As of June 30, 2025 and December 31, 2024 our accounts receivable from ProFrac Services was $37.3 million and $52.4 million, respectively, which is recorded in accounts receivable, related party on the consolidated balance sheets. Also during 2023, the Company entered into various related party transactions with ProFrac Holdings and ProFrac Holdings II as described in Note 17, “Related Party Transactions” to the consolidated financial statements from the 2024 Annual Report. As a result of these related party transactions and other purchases by affiliates of ProFrac, ProFrac Holdings or its affiliates owned approximately 61% of the Company’s common stock, including the effects of the June 2022 Warrants and April 2025 Warrant, as of June 30, 2025. PWRtek Transactions and Lease Agreement As described in Note 3, “Asset Acquisition”, on April 28, 2025, the Company entered into a series of transactions with various subsidiaries of ProFrac referred to as the PWRtek Transactions. Total consideration paid by the Company in connection with the PWRtek Transactions was $107.5 million. See Note 3, “Asset Acquisition,” Note 8, “Lease Agreements – Lease Agreement Income,” and Note 10, “Debt” for additional information on the Lease Agreement, April 2025 Warrant and PWRtek Note.
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