development activities, our customers' operations may be subject to permitting delays, increased costs, project modifications, or, in certain circumstances, suspensions or cancellations, which could have a material adverse impact on our business.
Public health crises, such as pandemics and epidemics, may impact our business
Local, regional, national or international public health crises, such as pandemics and epidemics, could have an adverse effect on local economies and potentially the global economy, which may adversely impact the price of and demand for oil and natural gas (and correspondingly, decrease the demand for our services, which could have a material adverse effect on our business, financial condition, results of operations and cash flows). Such public health crises, pandemics, epidemics and disease outbreaks are continuously evolving and the extent to which our business operations and financial results continue to be affected depends on various factors, such as the duration, severity and geographic spread of any outbreak; the impact and effectiveness of governmental action to reduce the spread and treat such outbreak, including government policies and restrictions; vaccine hesitancy and voluntary or mandatory quarantines; and the global response surrounding any such uncertainty.
The economic climate resulting from the impact of public health crises, pandemics and epidemics and any corresponding emergency measures that may be implemented from time to time by various governments may have significant adverse impacts on Precision including, but not exclusively:
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potential interruptions of our business or operations
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material declines in revenue and cash flows, as our customers are concentrated in the oil and natural gas industry
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future impairment charges to our property, plant and equipment and intangible assets
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risk of non-payment of accounts receivable and customer defaults, and
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additional restructuring charges as we align our structure and personnel to the dynamic environment.
Additionally, such public health crises, if uncontrolled, may result in temporary shortages of staff to the extent our workforce is impacted and may result in temporary interruptions to our business or operations, which may have an adverse effect on our financial condition, results of operations and cash flow.
A successful challenge by the tax authorities of expense deductions could negatively affect the value of our common shares
Taxation authorities may not agree with the classification of expenses we or our subsidiaries have claimed, or they may challenge the amount of interest expense deducted. In addition, tax authorities in the jurisdictions in which we operate may challenge our transfer pricing arrangements, the allocation of income and expenses among jurisdictions, the characterization of intercompany transactions, the availability of tax losses or credits, or the application of tax treaties. Tax authorities may also assert that we have created a permanent establishment in a jurisdiction where we did not previously file or pay taxes, which could subject us to additional income, payroll, withholding or indirect taxes.
Tax audits, reassessments or investigations may cover multiple years and may result in material additional taxes, interest and penalties, including retroactive assessments. If the taxation authorities successfully challenge our classifications or deductions, or otherwise successfully reassess our tax positions, it could have a material adverse effect on our business, financial condition, results of operations and cash flow. Such outcomes could also reduce earnings, increase our effective tax rate, require significant cash payments and adversely affect our liquidity.
Tax laws, regulations and interpretations are subject to change, including as a result of legislative action, administrative practice, judicial decisions or international initiatives aimed at base erosion and profit shifting. Changes in tax laws or their interpretation, including changes implemented on a retroactive basis, could adversely affect our tax position and increase our tax liabilities.
In addition, disputes with tax authorities can be costly, time-consuming and uncertain, and may divert management attention and resources. Adverse outcomes in such disputes, or the perception of increased tax risk, could negatively impact investor confidence and the market price of our common shares.
Unionization efforts and labor regulations could materially increase our costs or limit our flexibility
Efforts may be made from time to time to unionize portions of our workforce. We may be subject to strikes or work stoppages and other labor disruptions in connection with unionization efforts or renegotiation of existing contracts with unions. Unionization efforts, if successful, new collective bargaining agreements or work stoppages could materially increase our labor costs, reduce our revenues and adversely impact our operations and cash flow.
Losing key management could reduce our competitiveness and prospects for future success
Our future success and growth depend partly on the expertise and experience of our key management. There is no assurance that we will be able to retain key management. Losing these individuals could have a material adverse effect on our business, financial condition, results of operations and cash flow.
Our assessment of capital assets for impairment may result in a non-cash charge against our consolidated net income
We are required to assess our capital asset balance for impairment when certain internal and external factors indicate the need for further analysis. When assessing impairment triggers and calculating impairment, it is based on management’s estimates and assumptions. We may consider several factors, including any declines in our share price and market capitalization, lower future cash flow and earnings estimates, significantly reduced or depressed markets in our industry, and general economic
