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Related Party Transactions | 12 Months Ended
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Dec. 31, 2019
Related Party Transactions |
Related Party Transactions | 11. Related Party Transactions When needed, we rent a plane under dry-lease from a company owned by a member of Cactus LLC. These transactions are under short-term rental arrangements and the agreement governing these transactions does not qualify as a lease under ASC 842. We pay a base hourly rent of $1,750 per flight hour of use of the aircraft, payable monthly, for the hours of aircraft operation during the prior calendar month. We are also responsible for employing pilots and certain fuel true up fees. During 2019, 2018 and 2017, expense recognized in connection with these rentals totaled $0.3 million, $0.4 million and $0.3 million, respectively. As of December 31, 2019 and 2018, we owed less than $0.1 million to the related party which are included in accounts payable in the consolidated balance sheets. The TRA agreement is with certain direct and indirect holders of CW Units, including certain of our officers, directors and employees. These TRA Holders have the right in the future to receive 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that Cactus Inc. actually realizes or is deemed to realize in certain circumstances. The total liability from the TRA as of December 31, 2019 was $216.5 million. We pay professional fees to assist with maintenance of the TRA which are reimbursable from the TRA Holders. As of December 31, 2019, we had a $0.3 million balance due from the TRA Holders for fees paid in 2019. The balance is included in accounts receivable, net in the consolidated balance sheet. No such balance existed as of December 31, 2018. Distributions made by Cactus LLC are generally required to be made pro rata among all its members. For the year ended December 31, 2019, Cactus LLC distributed $14.2 million to Cactus Inc. to fund the 2019 TRA liability payments and estimated tax payments and made pro rata distributions to its other members totaling $8.4 million over the same period. For the year ended December 31, 2018, Cactus LLC made $3.8 million in distributions to Cactus Inc. to cover its estimated tax payments and also made an aggregate $5.8 million in pro-rata distributions to its other members over the same period. Prior to our IPO, we were party to a management services agreement with two Cactus LLC members, whereby Cactus paid an annual management fee totaling approximately $0.3 million, payable in four installments, each to be paid quarterly in advance, prorated for any partial year. In conjunction with our IPO, the management services agreement terminated pursuant to its terms. Management fee expense totaled $0.1 million and $0.3 million for 2018 and 2017, respectively. There were no outstanding balances due as of December 31, 2019 and 2018 under the management services agreement. Prior to our IPO, on January 25, 2018, Cactus LLC paid a cash distribution of $26.0 million to holders of CW Units at that time. This distribution was funded by borrowing under a revolving credit facility. The purpose of the distribution was to provide funds to these owners to pay their federal and state tax liabilities associated with taxable income recognized by them for periods prior to the completion of our IPO as a result of their ownership interests in Cactus LLC. The borrowings under this revolving credit facility were repaid during the first quarter of 2018.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 + Details
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