TETRA TECHNOLOGIES INCTTI
TETRA TECHNOLOGIES INC Fair Value Disclosure
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 our former subsidiary, CSI Compressco LP (“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. In January 2025, we sold our Kodiak shares for proceeds of $19.0 million, net of transaction and broker fees. In addition, the Company received stock of Standard Lithium under the terms of agreements whereby Standard Lithium has the right to explore for, produce and extract lithium in our Arkansas leases and other additional potential resources in the Mojave region of California. 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).
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, 2025, 2024, and 2023 were as follows:
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||
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 | $ | 19,561 | $ | 1,388 | $ | 7,210 | $ | 28,159 | ||||||||||||||||||
Sale of investments | (19,011) | — | — | (19,011) | ||||||||||||||||||||||
| Reclassification between Level 2 and Level 3 fair value | — | (1,388) | 1,388 | — | ||||||||||||||||||||||
Realized and unrealized gain on equity securities | 3,026 | — | 244 | 3,270 | ||||||||||||||||||||||
Unrealized loss on embedded option | — | — | (1,022) | (1,022) | ||||||||||||||||||||||
Unrealized gain on convertible note, excluding embedded option | — | — | 431 | 431 | ||||||||||||||||||||||
| Investment balance at end of period | $ | 3,576 | $ | — | $ | 8,251 | $ | 11,827 | ||||||||||||||||||
| 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 | ||||||||||||||
A summary of significant recurring fair value measurements by valuation hierarchy as of December 31, 2025 and 2024, is as follows:
| Fair Value Measurements Using | ||||||||||||||||||||
| Total as of | Quoted Prices in Active Markets for Identical Assets or Liabilities | Significant Unobservable Inputs | ||||||||||||||||||
| Description | December 31, 2025 | (Level 1) | (Level 3) | |||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| Investments in Standard Lithium | $ | 3,576 | 3,576 | — | ||||||||||||||||
| Other investments | 8,251 | — | 8,251 | |||||||||||||||||
| Investments | $ | 11,827 | ||||||||||||||||||
| 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 | December 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.
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, 2025 or 2024. During the years ended December 31, 2025, 2024, and 2023, we recognized $0.7 million, zero, and zero of
net losses, respectively, reflected in other (income) expense, net, associated with our foreign currency derivative program.
Impairments of Inventory and Long-Lived Assets
During 2025, we recorded a $3.6 million impairment of our former corporate office lease related to the relocation of our corporate headquarters and we recorded $0.6 million impairments of certain long-lived assets and right of use assets, within our Water & Flowback Services Segment. The fair values of right of use assets were estimated based on the discounted cash flows of our lease payments (a Level 3 fair value measurement) in accordance with the fair value hierarchy. The fair values of other long-lived assets was based on the estimated market values of similar equipment (a Level 3 fair value measurement).
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 Segment 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.
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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 4, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.