The following discussion and analysis should be read together with our condensed
consolidated financial statements and notes to those statements included
elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial
statements and notes to those statements included in our 2022 Annual Report on
Form 10-K in order to understand factors, such as charges and credits, financing
transactions and changes in tax regulations, which may impact comparability from
period to period.

We provide a broad range of manufactured products and services to customers in
the energy, industrial and military sectors through our Offshore/Manufactured
Products, Well Site Services and Downhole Technologies segments. Demand for our
products and services is cyclical and substantially dependent upon activity
levels in the oil and gas industry, particularly our customers' willingness to
invest capital in the exploration for and development of crude oil and natural
gas reserves. Our customers' capital spending programs are generally based on
their cash flows and their outlook for near-term and long-term commodity prices,
making demand for our products and services sensitive to expectations regarding
future crude oil and natural gas prices, as well as economic growth, commodity
demand and estimates of resource production and regulatory pressures related to
environmental, social and governance ("ESG") considerations.

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Recent Developments



Brent and West Texas Intermediate ("WTI") crude oil and natural gas pricing
trends were as follows:


                                                  Average Price(1) for quarter ended                                Average Price(1)
                                                                                                                     for year ended
       Year                   March 31               June 30            September 30           December 31            December 31

Brent Crude (per bbl)
       2023               $     81.01
       2022                    100.87             $   113.84          $      100.71          $      88.77          $        100.99
WTI Crude (per bbl)
       2023               $     75.91
       2022                     95.18             $   108.83          $

93.06 $ 82.79 $ 94.90 Henry Hub Natural Gas (per MMBtu)


       2023               $      2.64
       2022                      4.67             $     7.50          $        8.03          $       5.55          $          6.45


________________

(1)Source: U.S. Energy Information Administration (spot prices).



On April 21, 2023, Brent crude oil, WTI crude oil and natural gas spot prices
closed at $83.36 per barrel, $77.86 per barrel and $2.20 per MMBtu,
respectively. Additionally, as presented in more detail below, the U.S. drilling
rig count reported on April 21, 2023 was 753 rigs - comparable to the first
quarter 2023 average.

In February 2023, we repaid the $17.3 million principal amount, plus accrued
interest, of outstanding 2023 Notes (as defined below). Additionally, our Board
of Directors authorized a $25.0 million stock repurchase plan, which extends
through February 2025. No repurchases have been made under the plan as of
March 31, 2023.

Overview



Current and expected future pricing for WTI crude oil and inflationary costs
increases, along with expectations regarding the regulatory environment in the
regions in which we operate, are factors that will continue to influence our
customers' willingness to invest capital in their businesses. Expectations for
the longer-term price for Brent crude oil will continue to influence our
customers' spending related to global offshore drilling and development and,
thus, a significant portion of the activity of our Offshore/Manufactured
Products segment.

Crude oil prices and levels of demand for crude oil are likely to remain highly
volatile due to numerous factors, including: global uncertainties related to
disruptions in the banking sector, geopolitical conflicts (such as the direction
and outcome of Russia's invasion of Ukraine) and international tensions;
sanctions; the perceived risk of a global economic recession; domestic or
international crude oil production; changes in governmental rules and
regulations; the willingness of operators to invest capital in the exploration
for and development of resources; use of alternative fuels; improved vehicle
fuel efficiency; a more sustained movement to electric vehicles; and the
potential for ongoing supply/demand imbalances. Capital investment by our
customers temporarily declined due to these factors and the desire to generate
sustainable cash flows.

Customer spending in the natural gas shale plays has been limited due to
technological advancements that have led to significant amounts of natural gas
being produced from prolific basins in the Northeastern United States and from
associated gas produced from the drilling and completion of unconventional oil
wells in the United States.

U.S. drilling, completion and production activity and, in turn, our financial
results, are sensitive to near-term fluctuations in commodity prices,
particularly WTI crude oil prices, given the short-term, call-out nature of our
U.S. operations.

Our Offshore/Manufactured Products segment provides technology-driven,
highly-engineered products and services for offshore oil and natural gas
production systems and facilities globally, as well as certain products and
services to the offshore and land-based drilling and completion markets. This
segment also produces a variety of products for use in industrial, military and
other applications outside the traditional energy industry. Additionally, we are
investing in research and product development related to, and have been awarded
select contracts and are bidding on additional projects that facilitate, the
development of alternative energy sources, including offshore wind and deepsea
mineral gathering opportunities. This segment is particularly influenced by
global spending on deepwater drilling and production, which is primarily driven
by our customers' longer-term commodity demand forecasts and outlook for crude
oil and natural gas prices. Approximately 40% of Offshore/Manufactured Products
segment sales in the first three months of 2023 were driven by our customers'
capital spending for products used in exploratory and developmental drilling,
greenfield offshore production infrastructure, and subsea pipeline tie-

                                       19
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in and repair system applications, along with upgraded equipment for existing
offshore drilling rigs and other vessels (referred to herein as "project-driven
products"). Deepwater oil and gas development projects typically involve
significant capital investments and multi-year development plans. Such projects
are generally undertaken by larger exploration, field development and production
companies (primarily international oil companies and state-run national oil
companies) using relatively conservative crude oil and natural gas pricing
assumptions. Given the long lead times associated with field development, we
believe some of these deepwater projects, once approved for development, are
generally less susceptible to change based on short-term fluctuations in the
price of crude oil and natural gas.

Backlog reported by our Offshore/Manufactured Products segment increased to
$326 million as of March 31, 2023 from $308 million as of December 31, 2022 and
$265 million as of March 31, 2022. Bookings totaled $118 million in the first
quarter of 2023, yielding a book-to-bill ratio of 1.2x. The following table sets
forth backlog as of the dates indicated (in millions).
                                                   Backlog as of
                  Year      March 31       June 30       September 30       December 31
                  2023     $     326
                  2022           265      $    241      $         258      $        308
                  2021           226           214                249               260


Our Well Site Services segment provides completion services and, to a much
lesser extent, land drilling services, in the United States (including the Gulf
of Mexico) and the rest of the world. U.S. drilling and completion activity and,
in turn, our Well Site Services results, are sensitive to near-term fluctuations
in commodity prices, particularly WTI crude oil prices, given the short-term,
call-out nature of its operations. We primarily supply equipment and service
personnel utilized in the completion of and initial production from new and
recompleted wells in our U.S. operations, which are dependent primarily upon the
level and complexity of drilling, completion and workover activity in our areas
of operations. Well intensity and complexity have increased with the continuing
transition to multi-well pads, the drilling of longer lateral wells and
increased downhole pressures, along with the increased number of frac stages
completed in horizontal wells.

Our Downhole Technologies segment provides oil and gas perforation systems,
downhole tools and services in support of completion, intervention, wireline and
well abandonment operations. This segment designs, manufactures and markets its
consumable engineered products to oilfield service as well as exploration and
production companies. Product and service offerings for this segment include
innovations in perforation technology through patented and proprietary systems
combined with advanced modeling and analysis tools. This expertise has led to
the optimization of perforation hole size, depth, and quality of tunnels, which
are key factors for maximizing the effectiveness of hydraulic fracturing.
Additional offerings include proprietary frac plug and toe valve products, which
are focused on zonal isolation for hydraulic fracturing of horizontal wells, and
a broad range of consumable products, such as setting tools and bridge plugs,
that are used in completion, intervention and decommissioning applications.
Demand drivers for the Downhole Technologies segment include continued trends
toward longer lateral lengths, increased frac stages and more perforation
clusters to target increased unconventional well productivity, which requires
ongoing technological and product developments.

Demand for our completion-related products and services within each of our
segments is highly correlated to changes in the total number of wells drilled in
the United States, total footage drilled, the number of drilled wells that are
completed and changes in the drilling rig count. The following table sets forth
a summary of the U.S. and international drilling rig count, as measured by Baker
Hughes Company, as of and for the periods indicated.
                                                                                                              Average for the
                                                                                    Three Months Ended March 31,
                                               As of April 21, 2023                                 2023                          2022
United States Rig Count:
Land - Oil                                                          571                                      579                           493
Land - Natural gas and other                                        161                                      155                           123
Offshore                                                             21                                       19                            17
                                                                    753                                      753                           633
International Rig Count:
Land                                                                                                         897                           828
Offshore                                                                                                     226                           193
                                                                                                           1,123                         1,021
                                                                                                           1,876                         1,654


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The U.S. energy industry is primarily focused on crude oil and liquids-rich
exploration and development activities in U.S. shale plays utilizing horizontal
drilling and completion techniques. As of March 31, 2023, oil-directed drilling
accounted for 78% of the total U.S. rig count - with the balance largely natural
gas related. As can be derived from the table above, the average U.S. rig count
for the first three months of 2023 increased by 120 rigs, or 19%, compared to
the average for the first three months of 2022.

We use a variety of domestically produced and imported raw materials and
component products, including steel, in the manufacture of our products. The
United States has imposed tariffs on a variety of imported products, including
steel and aluminum. In response to the U.S. tariffs on steel and aluminum, the
European Union and several other countries, including Canada and China, have
threatened and/or imposed retaliatory tariffs. In addition, in response to
Russia's invasion of Ukraine, governments in the European Union, the United
States, the United Kingdom, Switzerland and other countries have enacted
sanctions against Russia and Russian interests. The effect of these sanctions
and tariffs and the application and interpretation of existing trade agreements
and customs, anti-dumping and countervailing duty regulations continue to
evolve, and we continue to monitor these matters. If we encounter difficulty in
procuring these raw materials and component products, or if the prices we have
to pay for these products increase and we are unable to pass corresponding cost
increases on to our customers, our financial position, cash flows and results of
operations could be adversely affected. Furthermore, uncertainty with respect to
potential costs in the drilling and completion of oil and gas wells could cause
our customers to delay or cancel planned projects which, if this occurred, would
adversely affect our financial position, cash flows and results of operations.

Other factors that can affect our business and financial results include but are
not limited to: the general global economic environment (including disruptions
in the banking sector); competitive pricing pressures; public health crises;
natural disasters; labor market constraints; supply chain disruptions; inflation
in wages, materials, parts, equipment and other costs; climate-related and other
regulatory changes; geopolitical tensions; and changes in tax laws in the United
States and international markets. We continue to monitor the global economy, the
prices of and demand for crude oil and natural gas, and the resultant impact on
the capital spending plans and operations of our customers in order to plan and
manage our business.

Human Capital

For more information on our health and safety, diversity and other workforce
policies, please see "Part I, Item 1. Business - Human Capital" in our Annual
Report on Form 10-K for the year ended December 31, 2022.

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Selected Financial Data



This selected financial data should be read in conjunction with our Unaudited
Condensed Consolidated Financial Statements and related notes included in
"Part I, Item 1. Financial Statements" of this Quarterly Report on Form 10-Q and
in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our Consolidated Financial Statements and related
notes included in "Part II, Item 8. Financial Statements and Supplementary Data"
of our Annual Report on Form 10-K for the year ended December 31, 2022 in order
to understand factors which may impact comparability of the selected financial
data.

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