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Contract Assets
 9 Months Ended
Sep. 30, 2024
Revenue Recognition [Abstract]  
Contract Assets Revenue from Contracts with Customers
Disaggregation of Revenue
The Company differentiates revenue based on whether the source of revenue is attributable to product sales or service revenue. Product and service revenues include sales to related parties as described in Note 16, “Related Party Transactions.”
Total revenue disaggregated by revenue source is as follows (in thousands):
 Three months ended September 30,Nine months ended September 30,
 2024202320242023
Revenue:
Products$48,243 $45,865 $132,052 $141,695 
Services1,499 1,403 4,215 4,175 
$49,742 $47,268 $136,267 $145,870 
Disaggregation of Cost of Sales
The Company differentiates cost of sales based on whether the cost is attributable to tangible goods sold, cost of services sold or other costs which cannot be directly attributable to either tangible goods or services.
Total cost of sales disaggregated is as follows (in thousands):
 Three months ended September 30,Nine months ended September 30,
 2024202320242023
Cost of sales:
Tangible goods sold$35,824 $33,350 $95,064 $116,755 
Services91 128 273 425 
Other4,708 4,743 13,822 13,857 
$40,623 $38,221 $109,159 $131,037 
Other cost of sales represent costs directly associated with the generation of revenue but which cannot be attributed directly to tangible goods sold or services. Examples of other costs of sales are certain personnel costs and equipment rental and insurance costs.
Cost of sales, between external and related party, is as follows (in thousands):
 Three months ended September 30,Nine months ended September 30,
 2024202320242023
Cost of sales:
Cost of sales for external customers$14,996 $14,399 $45,436 $42,471 
Cost of sales for related parties25,627 23,822 63,723 88,566 
$40,623 $38,221 $109,159 $131,037 
Contract Assets
Contract assets are as follows (in thousands):
September 30, 2024December 31, 2023
Contract assets$83,060 $83,060 
Less accumulated amortization(12,745)(8,404)
Contract assets, net70,315 74,656 
Less current contract assets(6,480)(5,836)
Contract assets, long term$63,835 $68,820 
In connection with entering into the Initial ProFrac Agreement and Amended ProFrac Agreement on February 2, 2022 and May 17, 2022, respectively, as discussed in Note 9, “Debt and Convertible Notes Payable” and Note 16, “Related Party Transactions,” the Company recognized contract assets of $10.0 million and $69.5 million, respectively, and associated fees of $3.6 million. As of September 30, 2024 and December 31, 2023, $63.8 million and $68.8 million, respectively, of the contract assets were classified as long term based upon our estimate of the forecasted revenues from the ProFrac Agreement which will not be realized within the next twelve months of the ProFrac Agreement. The Company’s estimate of the timing of the future contract revenues is evaluated on a quarterly basis.
During the three months ended September 30, 2024 and 2023, the Company recognized $1.6 million and $1.3 million, respectively, of contract assets amortization which is recorded as a reduction of the transaction price included in the related party revenue in the consolidated statement of operations. During the nine months ended September 30, 2024 and 2023, the Company recognized $4.3 million and $3.7 million, respectively, of contract assets amortization. The below table reflects our estimated amortization per year (in thousands) based on the Company’s current forecasted revenues from the ProFrac Agreement.
Years ending December 31,Amortization
2024 (excluding the nine months ended September 30, 2024)
$1,499 
20256,833 
20268,868 
202710,117 
202810,117 
Thereafter through May 203232,881 
Total contract assets$70,315 
Based on our tests of recoverability, we did not recognize any impairment of such contract assets as of September 30, 2024.