NOTE 9. VARIABLE INTEREST ENTITY

As a result of our investment in and contractual relationship with Flotek Industries, Inc. ("Flotek"), Flotek meets the definition of a VIE and we are the primary beneficiary. Accordingly, we have consolidated the operating results, assets and liabilities of Flotek. In May 2023, a portion of our Flotek convertible notes matured and were converted into 63.5 million shares of Flotek common stock. As of June 30, 2023, we owned approximately 43% of Flotek's outstanding common stock.

As of June 30, 2023 and December 31, 2022, $73.2 million and $79.2 million, respectively, of Flotek's assets and $59.2 million and $72.0 million, respectively, of Flotek's liabilities are included in our unaudited condensed consolidated balance sheets. These amounts are exclusive of goodwill and are after intercompany eliminations. The assets of Flotek can only be used to settle its obligations and the creditors of Flotek have no recourse to our assets. Our exposure to Flotek is generally limited to the carrying value of our equity and variable interest.