ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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32-0498321
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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14201 Caliber Drive, Suite 300
Oklahoma City, Oklahoma
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(405) 608-6007
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73134
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(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
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(Zip Code)
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Securities registered pursuant to Section 12(b) of The Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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TUSK
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(The Nasdaq Stock Market LLC)
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Large accelerated filer
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Accelerated filer
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ý
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 4.
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Item 5.
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Item 6.
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The following is a glossary of certain oil and natural gas industry terms used in this report:
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Acidizing
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To pump acid into a wellbore to improve a well's productivity or injectivity.
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Blowout
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An uncontrolled flow of reservoir fluids into the wellbore, and sometimes catastrophically to the surface. A blowout may consist of salt water, oil, natural gas or a mixture of these. Blowouts can occur in all types of exploration and production operations, not just during drilling operations. If reservoir fluids flow into another formation and do not flow to the surface, the result is called an underground blowout. If the well experiencing a blowout has significant open-hole intervals, it is possible that the well will bridge over (or seal itself with rock fragments from collapsing formations) down-hole and intervention efforts will be averted.
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Bottomhole assembly
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The lower portion of the drillstring, consisting of (from the bottom up in a vertical well) the bit, bit sub, a mud motor (in certain cases), stabilizers, drill collar, heavy-weight drillpipe, jarring devices (“jars”) and crossovers for various threadforms. The bottomhole assembly must provide force for the bit to break the rock (weight on bit), survive a hostile mechanical environment and provide the driller with directional control of the well. Oftentimes the assembly includes a mud motor, directional drilling and measuring equipment, measurements-while-drilling tools, logging-while-drilling tools and other specialized devices.
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Cementing
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To prepare and pump cement into place in a wellbore.
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Coiled tubing
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A long, continuous length of pipe wound on a spool. The pipe is straightened prior to pushing into a wellbore and rewound to coil the pipe back onto the transport and storage spool. Depending on the pipe diameter (1 in. to 4 1/2 in.) and the spool size, coiled tubing can range from 2,000 ft. to 23,000 ft. (610 m to 6,096 m) or greater length.
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Completion
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A generic term used to describe the assembly of down-hole tubulars and equipment required to enable safe and efficient production from an oil or gas well. The point at which the completion process begins may depend on the type and design of the well.
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Directional drilling
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The intentional deviation of a wellbore from the path it would naturally take. This is accomplished through the use of whipstocks, bottomhole assembly (BHA) configurations, instruments to measure the path of the wellbore in three-dimensional space, data links to communicate measurements taken down-hole to the surface, mud motors and special BHA components and drill bits, including rotary steerable systems, and drill bits. The directional driller also exploits drilling parameters such as weight on bit and rotary speed to deflect the bit away from the axis of the existing wellbore. In some cases, such as drilling steeply dipping formations or unpredictable deviation in conventional drilling operations, directional-drilling techniques may be employed to ensure that the hole is drilled vertically. While many techniques can accomplish this, the general concept is simple: point the bit in the direction that one wants to drill. The most common way is through the use of a bend near the bit in a down-hole steerable mud motor. The bend points the bit in a direction different from the axis of the wellbore when the entire drillstring is not rotating. By pumping mud through the mud motor, the bit turns while the drillstring does not rotate, allowing the bit to drill in the direction it points. When a particular wellbore direction is achieved, that direction may be maintained by rotating the entire drillstring (including the bent section) so that the bit does not drill in a single direction off the wellbore axis, but instead sweeps around and its net direction coincides with the existing wellbore. Rotary steerable tools allow steering while rotating, usually with higher rates of penetration and ultimately smoother boreholes.
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Down-hole
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Pertaining to or in the wellbore (as opposed to being on the surface).
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Down-hole motor
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A drilling motor located in the drill string above the drilling bit powered by the flow of drilling mud. Down-hole motors are used to increase the speed and efficiency of the drill bit or can be used to steer the bit in directional drilling operations. Drilling motors have become very popular because of horizontal and directional drilling applications and the day rates for drilling rigs.
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Drilling rig
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The machine used to drill a wellbore.
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Drillpipe or Drill pipe
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Tubular steel conduit fitted with special threaded ends called tool joints. The drillpipe connects the rig surface equipment with the bottomhole assembly and the bit, both to pump drilling fluid to the bit and to be able to raise, lower and rotate the bottomhole assembly and bit.
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Drillstring or Drill string
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The combination of the drillpipe, the bottomhole assembly and any other tools used to make the drill bit turn at the bottom of the wellbore.
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Flowback
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The process of allowing fluids to flow from the well following a treatment, either in preparation for a subsequent phase of treatment or in preparation for cleanup and returning the well to production.
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Horizontal drilling
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A subset of the more general term “directional drilling,” used where the departure of the wellbore from vertical exceeds about 80 degrees. Note that some horizontal wells are designed such that after reaching true 90-degree horizontal, the wellbore may actually start drilling upward. In such cases, the angle past 90 degrees is continued, as in 95 degrees, rather than reporting it as deviation from vertical, which would then be 85 degrees. Because a horizontal well typically penetrates a greater length of the reservoir, it can offer significant production improvement over a vertical well.
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Hydraulic fracturing
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A stimulation treatment routinely performed on oil and gas wells in low permeability reservoirs. Specially engineered fluids are pumped at high pressure and rate into the reservoir interval to be treated, causing a vertical fracture to open. The wings of the fracture extend away from the wellbore in opposing directions according to the natural stresses within the formation. Proppant, such as grains of sand of a particular size, is mixed with the treatment fluid to keep the fracture open when the treatment is complete. Hydraulic fracturing creates high-conductivity communication with a large area of formation and bypasses any damage that may exist in the near-wellbore area.
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Hydrocarbon
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A naturally occurring organic compound comprising hydrogen and carbon. Hydrocarbons can be as simple as methane, but many are highly complex molecules, and can occur as gases, liquids or solids. Petroleum is a complex mixture of hydrocarbons. The most common hydrocarbons are natural gas, oil and coal.
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Mesh size
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The size of the proppant that is determined by sieving the proppant through screens with uniform openings corresponding to the desired size of the proppant. Each type of proppant comes in various sizes, categorized as mesh sizes, and the various mesh sizes are used in different applications in the oil and natural gas industry. The mesh number system is a measure of the number of equally sized openings per square inch of screen through which the proppant is sieved.
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Mud motors
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A positive displacement drilling motor that uses hydraulic horsepower of the drilling fluid to drive the drill bit. Mud motors are used extensively in directional drilling operations.
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Natural gas liquids
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Components of natural gas that are liquid at surface in field facilities or in gas processing plants. Natural gas liquids can be classified according to their vapor pressures as low (condensate), intermediate (natural gasoline) and high (liquefied petroleum gas) vapor pressure.
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Nitrogen pumping unit
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A high-pressure pump or compressor unit capable of delivering high-purity nitrogen gas for use in oil or gas wells. Two basic types of units are commonly available: a nitrogen converter unit that pumps liquid nitrogen at high pressure through a heat exchanger or converter to deliver high-pressure gas at ambient temperature, and a nitrogen generator unit that compresses and separates air to provide a supply of high pressure nitrogen gas.
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Plugging
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The process of permanently closing oil and gas wells no longer capable of producing in economic quantities. Plugging work can be performed with a well servicing rig along with wireline and cementing equipment; however, this service is typically provided by companies that specialize in plugging work.
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Plug
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A down-hole packer assembly used in a well to seal off or isolate a particular formation for testing, acidizing, cementing, etc.; also a type of plug used to seal off a well temporarily while the wellhead is removed.
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Pounds per square inch
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A unit of pressure. It is the pressure resulting from a one pound force applied to an area of one square inch.
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Pressure pumping
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Services that include the pumping of liquids under pressure.
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Producing formation
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An underground rock formation from which oil, natural gas or water is produced. Any porous rock will contain fluids of some sort, and all rocks at considerable distance below the Earth’s surface will initially be under pressure, often related to the hydrostatic column of ground waters above the reservoir. To produce, rocks must also have permeability, or the capacity to permit fluids to flow through them.
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Proppant
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Sized particles mixed with fracturing fluid to hold fractures open after a hydraulic fracturing treatment. In addition to naturally occurring sand grains, man-made or specially engineered proppants, such as resin-coated sand or high-strength ceramic materials like sintered bauxite, may also be used. Proppant materials are carefully sorted for size and sphericity to provide an efficient conduit for production of fluid from the reservoir to the wellbore.
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Resource play
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Accumulation of hydrocarbons known to exist over a large area.
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Shale
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A fine-grained, fissile, sedimentary rock formed by consolidation of clay- and silt-sized particles into thin, relatively impermeable layers.
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Tight oil
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Conventional oil that is found within reservoirs with very low permeability. The oil contained within these reservoir rocks typically will not flow to the wellbore at economic rates without assistance from technologically advanced drilling and completion processes. Commonly, horizontal drilling coupled with multistage fracturing is used to access these difficult to produce reservoirs.
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Tight sands
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A type of unconventional tight reservoir. Tight reservoirs are those which have low permeability, often quantified as less than 0.1 millidarcies.
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Tubulars
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A generic term pertaining to any type of oilfield pipe, such as drill pipe, drill collars, pup joints, casing, production tubing and pipeline.
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Unconventional resource
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A term for the different manner by which resources are exploited as compared to the extraction of conventional resources. In unconventional drilling, the wellbore is generally drilled to specific objectives within narrow parameters, often across long, lateral intervals within narrow horizontal formations offering greater contact area with the producing formation. Typically, the well is then hydraulically fractured at multiple stages to optimize production.
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Wellbore
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The physical conduit from surface into the hydrocarbon reservoir.
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Well stimulation
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A treatment performed to restore or enhance the productivity of a well. Stimulation treatments fall into two main groups, hydraulic fracturing treatments and matrix treatments. Fracturing treatments are performed above the fracture pressure of the reservoir formation and create a highly conductive flow path between the reservoir and the wellbore. Matrix treatments are performed below the reservoir fracture pressure and generally are designed to restore the natural permeability of the reservoir following damage to the near wellbore area. Stimulation in shale gas reservoirs typically takes the form of hydraulic fracturing treatments.
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Wireline
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A general term used to describe well-intervention operations conducted using single-strand or multi-strand wire or cable for intervention in oil or gas wells. Although applied inconsistently, the term commonly is used in association with electric logging and cables incorporating electrical conductors.
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Workover
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The process of performing major maintenance or remedial treatments on an oil or gas well. In many cases, workover implies the removal and replacement of the production tubing string after the well has been killed and a workover rig has been placed on location. Through-tubing workover operations, using coiled tubing, snubbing or slickline equipment, are routinely conducted to complete treatments or well service activities that avoid a full workover where the tubing is removed. This operation saves considerable time and expense.
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The following is a glossary of certain electrical infrastructure industry terms used in this report:
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Distribution
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The distribution of electricity from the transmission system to individual customers.
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Substation
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A part of an electrical transmission and distribution system that transforms voltage from high to low, or the reverse.
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Transmission
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The movement of electrical energy from a generating site, such as a power plant, to an electric substation.
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•
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business strategy;
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•
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pending or future acquisitions and future capital expenditures;
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•
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ability to obtain permits and governmental approvals;
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•
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outcome of a government investigation relating to the contracts awarded to one of our subsidiaries by the Puerto Rico Electric Power Authority and any resulting litigation;
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•
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outcome of pending litigation discussed in this report;
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•
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technology;
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•
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financial strategy;
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•
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future operating results; and
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•
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plans, objectives, expectations and intentions.
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2019
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2018
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2019
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2018
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||||||||
REVENUE
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(in thousands, except per share amounts)
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||||||||||||||
Services revenue
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$
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85,783
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$
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346,368
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$
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394,645
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$
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1,210,572
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Services revenue - related parties
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15,000
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18,933
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95,910
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108,632
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Product revenue
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9,710
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14,955
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40,381
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67,703
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||||
Product revenue - related parties
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2,924
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3,787
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|
26,439
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|
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24,979
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|
||||
Total revenue
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113,417
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|
384,043
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|
557,375
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1,411,886
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COST AND EXPENSES
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Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $25,749, $77,028, $27,810 and $79,283, respectively, for the three and nine months ended September 30, 2019 and three and nine months ended September 30, 2018)
|
91,813
|
|
|
216,670
|
|
|
382,607
|
|
|
809,932
|
|
||||
Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $0, $0, $0 and $0, respectively, for the three and nine months ended September 30, 2019 and three and nine months ended September 30, 2018)
|
774
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|
|
1,425
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|
|
4,138
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|
|
5,645
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Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $4,019, $11,414, $4,183 and $10,376, respectively, for the three and nine months ended September 30, 2019 and three and nine months ended September 30, 2018)
|
18,547
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|
|
29,470
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|
|
81,475
|
|
|
97,917
|
|
||||
Selling, general and administrative (Note 12)
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14,029
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(45,761
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)
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|
39,726
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|
|
56,916
|
|
||||
Selling, general and administrative - related parties (Note 12)
|
394
|
|
|
437
|
|
|
1,487
|
|
|
1,398
|
|
||||
Depreciation, depletion, amortization and accretion
|
29,791
|
|
|
32,015
|
|
|
88,512
|
|
|
89,718
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|
||||
Impairment of long-lived assets
|
6,542
|
|
|
4,582
|
|
|
6,542
|
|
|
4,769
|
|
||||
Total cost and expenses
|
161,890
|
|
|
238,838
|
|
|
604,487
|
|
|
1,066,295
|
|
||||
Operating (loss) income
|
(48,473
|
)
|
|
145,205
|
|
|
(47,112
|
)
|
|
345,591
|
|
||||
|
|
|
|
|
|
|
|
||||||||
OTHER INCOME (EXPENSE)
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|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(1,398
|
)
|
|
(458
|
)
|
|
(3,472
|
)
|
|
(2,654
|
)
|
||||
Other, net
|
6,368
|
|
|
(400
|
)
|
|
34,944
|
|
|
(914
|
)
|
||||
Total other income (expense)
|
4,970
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|
|
(858
|
)
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|
31,472
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(3,568
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)
|
||||
(Loss) income before income taxes
|
(43,503
|
)
|
|
144,347
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|
(15,640
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)
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|
342,023
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|
||||
(Benefit) provision for income taxes
|
(7,794
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)
|
|
74,835
|
|
|
2,625
|
|
|
174,265
|
|
||||
Net (loss) income
|
$
|
(35,709
|
)
|
|
$
|
69,512
|
|
|
$
|
(18,265
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)
|
|
$
|
167,758
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE (LOSS) INCOME
|
|
|
|
|
|
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|
||||||||
Foreign currency translation adjustment, net of tax of ($49), $134, ($87) and $185, respectively, for the three and nine months ended September 30, 2019 and three and nine months ended September 30, 2018
|
(213
|
)
|
|
327
|
|
|
493
|
|
|
(459
|
)
|
||||
Comprehensive (loss) income
|
$
|
(35,922
|
)
|
|
$
|
69,839
|
|
|
$
|
(17,772
|
)
|
|
$
|
167,299
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income per share (basic) (Note 15)
|
$
|
(0.79
|
)
|
|
$
|
1.55
|
|
|
$
|
(0.41
|
)
|
|
$
|
3.75
|
|
Net (loss) income per share (diluted) (Note 15)
|
$
|
(0.79
|
)
|
|
$
|
1.54
|
|
|
$
|
(0.41
|
)
|
|
$
|
3.73
|
|
Weighted average number of shares outstanding (basic) (Note 15)
|
45,020
|
|
|
44,756
|
|
|
44,984
|
|
|
44,718
|
|
||||
Weighted average number of shares outstanding (diluted) (Note 15)
|
45,020
|
|
|
45,082
|
|
|
44,984
|
|
|
45,012
|
|
||||
Dividends declared per share
|
$
|
—
|
|
|
$
|
0.125
|
|
|
$
|
0.25
|
|
|
$
|
0.125
|
|
|
Three Months Ended September 30, 2019
|
||||||||||||||||
|
|
|
|
|
Accumulated
|
|
|||||||||||
|
|
|
|
Additional
|
Other
|
|
|||||||||||
|
Common Stock
|
Retained
|
Paid-In
|
Comprehensive
|
|
||||||||||||
|
Shares
|
Amount
|
Earnings
|
Capital
|
Loss
|
Total
|
|||||||||||
|
(in thousands)
|
||||||||||||||||
Balance at June 30, 2019
|
45,005
|
|
$
|
450
|
|
$
|
232,990
|
|
$
|
533,151
|
|
$
|
(3,375
|
)
|
$
|
763,216
|
|
Stock based compensation
|
17
|
|
—
|
|
—
|
|
1,133
|
|
—
|
|
1,133
|
|
|||||
Net loss
|
—
|
|
—
|
|
(35,709
|
)
|
—
|
|
—
|
|
(35,709
|
)
|
|||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(213
|
)
|
(213
|
)
|
|||||
Balance at September 30, 2019
|
45,022
|
|
$
|
450
|
|
$
|
197,281
|
|
$
|
534,284
|
|
$
|
(3,588
|
)
|
$
|
728,427
|
|
|
|
|
|
|
|
|
|||||||||||
|
Three Months Ended September 30, 2018
|
||||||||||||||||
|
|
|
|
|
Accumulated
|
|
|||||||||||
|
|
|
|
Additional
|
Other
|
|
|||||||||||
|
Common Stock
|
Retained
|
Paid-In
|
Comprehensive
|
|
||||||||||||
|
Shares
|
Amount
|
Earnings
|
Capital
|
Loss
|
Total
|
|||||||||||
|
(in thousands)
|
||||||||||||||||
Balance at June 30, 2018
|
44,753
|
|
$
|
448
|
|
$
|
100,247
|
|
$
|
528,421
|
|
$
|
(3,447
|
)
|
$
|
625,669
|
|
Stock based compensation
|
3
|
|
—
|
|
—
|
|
1,404
|
|
—
|
|
1,404
|
|
|||||
Net income
|
—
|
|
—
|
|
69,512
|
|
—
|
|
—
|
|
69,512
|
|
|||||
Cash dividends paid ($0.125 per share)
|
—
|
|
—
|
|
(5,594
|
)
|
|
|
(5,594
|
)
|
|||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
327
|
|
327
|
|
|||||
Balance at September 30, 2018
|
44,756
|
|
$
|
448
|
|
$
|
164,165
|
|
$
|
529,825
|
|
$
|
(3,120
|
)
|
$
|
691,318
|
|
|
|
|
|
|
|
|
|||||||||||
|
Nine Months Ended September 30, 2019
|
||||||||||||||||
|
|
|
|
|
Accumulated
|
|
|||||||||||
|
|
|
|
Additional
|
Other
|
|
|||||||||||
|
Common Stock
|
Retained
|
Paid-In
|
Comprehensive
|
|
||||||||||||
|
Shares
|
Amount
|
Earnings
|
Capital
|
Loss
|
Total
|
|||||||||||
|
(in thousands)
|
||||||||||||||||
Balance at December 31, 2018
|
44,877
|
|
$
|
449
|
|
$
|
226,765
|
|
$
|
530,919
|
|
$
|
(4,081
|
)
|
$
|
754,052
|
|
Stock based compensation
|
145
|
|
1
|
|
—
|
|
3,365
|
|
—
|
|
3,366
|
|
|||||
Net loss
|
—
|
|
—
|
|
(18,265
|
)
|
—
|
|
—
|
|
(18,265
|
)
|
|||||
Cash dividends paid ($0.25 per share)
|
—
|
|
—
|
|
(11,219
|
)
|
—
|
|
—
|
|
(11,219
|
)
|
|||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
493
|
|
493
|
|
|||||
Balance at September 30, 2019
|
45,022
|
|
$
|
450
|
|
$
|
197,281
|
|
$
|
534,284
|
|
$
|
(3,588
|
)
|
$
|
728,427
|
|
|
|
|
|
|
|
|
|||||||||||
|
Nine Months Ended September 30, 2018
|
||||||||||||||||
|
|
|
|
|
Accumulated
|
|
|||||||||||
|
|
|
|
Additional
|
Other
|
|
|||||||||||
|
Common Stock
|
Retained
|
Paid-In
|
Comprehensive
|
|
||||||||||||
|
Shares
|
Amount
|
Earnings
|
Capital
|
Loss
|
Total
|
|||||||||||
|
(in thousands)
|
||||||||||||||||
Balance at December 31, 2017
|
44,589
|
|
$
|
446
|
|
$
|
2,001
|
|
$
|
508,010
|
|
$
|
(2,661
|
)
|
$
|
507,796
|
|
Equity based compensation
|
—
|
|
—
|
|
—
|
|
17,487
|
|
—
|
|
17,487
|
|
|||||
Stock based compensation
|
167
|
|
2
|
|
—
|
|
4,328
|
|
—
|
|
4,330
|
|
|||||
Net income
|
—
|
|
—
|
|
167,758
|
|
—
|
|
—
|
|
167,758
|
|
|||||
Cash dividends paid ($0.125 per share)
|
—
|
|
—
|
|
(5,594
|
)
|
—
|
|
—
|
|
(5,594
|
)
|
|||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(459
|
)
|
(459
|
)
|
|||||
Balance at September 30, 2018
|
44,756
|
|
$
|
448
|
|
$
|
164,165
|
|
$
|
529,825
|
|
$
|
(3,120
|
)
|
$
|
691,318
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(18,265
|
)
|
|
$
|
167,758
|
|
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:
|
|
|
|
||||
Equity based compensation (Note 16)
|
—
|
|
|
17,487
|
|
||
Stock based compensation
|
3,367
|
|
|
4,331
|
|
||
Depreciation, depletion, accretion and amortization
|
88,512
|
|
|
89,718
|
|
||
Amortization of coil tubing strings
|
1,236
|
|
|
1,473
|
|
||
Amortization of debt origination costs
|
245
|
|
|
299
|
|
||
Bad debt expense
|
1,230
|
|
|
(14,543
|
)
|
||
Loss (gain) on disposal of property and equipment
|
245
|
|
|
(185
|
)
|
||
Impairment of long-lived assets
|
6,542
|
|
|
4,769
|
|
||
Inventory obsolescence
|
1,349
|
|
|
—
|
|
||
Deferred income taxes
|
(32,183
|
)
|
|
6,418
|
|
||
Other
|
(539
|
)
|
|
—
|
|
||
Changes in assets and liabilities, net of acquisitions of businesses:
|
|
|
|
||||
Accounts receivable, net
|
(33,042
|
)
|
|
(132,553
|
)
|
||
Receivables from related parties
|
2,622
|
|
|
8,453
|
|
||
Inventories
|
1,415
|
|
|
(2,665
|
)
|
||
Prepaid expenses and other assets
|
3,713
|
|
|
1,814
|
|
||
Accounts payable
|
(27,187
|
)
|
|
(5,179
|
)
|
||
Payables to related parties
|
117
|
|
|
24
|
|
||
Accrued expenses and other liabilities
|
(19,121
|
)
|
|
(405
|
)
|
||
Income taxes payable
|
(72,501
|
)
|
|
135,578
|
|
||
Net cash (used in) provided by operating activities
|
(92,245
|
)
|
|
282,592
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(34,637
|
)
|
|
(144,898
|
)
|
||
Purchases of property and equipment from related parties
|
(253
|
)
|
|
(4,632
|
)
|
||
Business acquisitions
|
—
|
|
|
(14,456
|
)
|
||
Contributions to equity investee
|
(680
|
)
|
|
—
|
|
||
Proceeds from disposal of property and equipment
|
2,491
|
|
|
1,213
|
|
||
Net cash used in investing activities
|
(33,079
|
)
|
|
(162,773
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings from lines of credit
|
138,000
|
|
|
77,000
|
|
||
Repayments of lines of credit
|
(58,000
|
)
|
|
(176,900
|
)
|
||
Principal payments on financing leases and equipment financing notes
|
(1,534
|
)
|
|
(219
|
)
|
||
Dividends paid
|
(11,219
|
)
|
|
(5,594
|
)
|
||
Net cash provided by (used in) financing activities
|
67,247
|
|
|
(105,713
|
)
|
||
Effect of foreign exchange rate on cash
|
50
|
|
|
(51
|
)
|
||
Net change in cash and cash equivalents
|
(58,027
|
)
|
|
14,055
|
|
||
Cash and cash equivalents at beginning of period
|
67,625
|
|
|
5,637
|
|
||
Cash and cash equivalents at end of period
|
$
|
9,598
|
|
|
$
|
19,692
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
3,280
|
|
|
$
|
2,726
|
|
Cash paid for income taxes
|
$
|
116,448
|
|
|
$
|
32,269
|
|
Supplemental disclosure of non-cash transactions:
|
|
|
|
||||
Purchases of property and equipment included in accounts payable and accrued expenses
|
$
|
1,203
|
|
|
$
|
21,124
|
|
1.
|
Organization and Nature of Business
|
|
|
At September 30, 2019
|
|
At December 31, 2018
|
||||||||
|
|
Share Count
|
|
% Ownership
|
|
Share Count
|
|
% Ownership
|
||||
Wexford
|
|
21,992,677
|
|
|
48.8
|
%
|
|
21,988,473
|
|
|
49.0
|
%
|
Gulfport
|
|
9,829,548
|
|
|
21.8
|
%
|
|
9,826,893
|
|
|
21.9
|
%
|
Rhino
|
|
—
|
|
|
—
|
%
|
|
104,100
|
|
|
0.2
|
%
|
Outstanding shares owned by related parties
|
|
31,822,225
|
|
|
70.6
|
%
|
|
31,919,466
|
|
|
71.1
|
%
|
Total outstanding
|
|
45,021,461
|
|
|
100.0
|
%
|
|
44,876,649
|
|
|
100.0
|
%
|
2.
|
Basis of Presentation and Significant Accounting Policies
|
Balance, January 1, 2018
|
|
$
|
21,737
|
|
Additions (reductions) charged to bad debt expense
|
|
(14,589
|
)
|
|
Deductions for uncollectible receivables written off
|
|
(1,950
|
)
|
|
Balance, December 31, 2018
|
|
5,198
|
|
|
Additions charged to bad debt expense
|
|
1,230
|
|
|
Deductions for uncollectible receivables written off
|
|
(202
|
)
|
|
Balance, September 30, 2019
|
|
$
|
6,226
|
|
|
REVENUES
|
|
ACCOUNTS RECEIVABLE
|
|||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
At September 30,
|
At December 31,
|
||||||||
|
2019
|
2018
|
|
2019
|
2018
|
|
2019
|
2018
|
||||||
Customer A(a)
|
—
|
%
|
57
|
%
|
|
17
|
%
|
63
|
%
|
|
69
|
%
|
65
|
%
|
Customer B(b)
|
15
|
%
|
6
|
%
|
|
22
|
%
|
9
|
%
|
|
2
|
%
|
3
|
%
|
a.
|
Customer A is a third-party customer. Revenues and the related accounts receivable balances earned from Customer A were derived from the Company's infrastructure services segment. Accounts receivable for Customer A also includes receivables due for interest charged on delinquent accounts receivable.
|
b.
|
Customer B is a related party customer. Revenues and the related accounts receivable balances earned from Customer B were derived from the Company's pressure pumping services segment, natural sand proppant services segment and other businesses.
|
3.
|
Revenues
|
Balance, January 1, 2018
|
|
$
|
15,000
|
|
Deduction for recognition of revenue
|
|
(15,000
|
)
|
|
Increase for deferral of shortfall payments
|
|
4,246
|
|
|
Increase for deferral of customer prepayments
|
|
58
|
|
|
Balance, December 31, 2018
|
|
4,304
|
|
|
Deduction for recognition of revenue
|
|
(3,255
|
)
|
|
Increase for deferral of shortfall payments
|
|
2,735
|
|
|
Increase for deferral of customer prepayments
|
|
674
|
|
|
Deduction of shortfall payments due to contract renegotiations
|
|
(1,350
|
)
|
|
Balance, September 30, 2019
|
|
$
|
3,108
|
|
4.
|
Acquisitions
|
|
ARS
|
|
Brim Equipment Assets
|
||||
Accounts receivable
|
$
|
146
|
|
|
$
|
—
|
|
Property, plant and equipment
|
1,702
|
|
|
1,990
|
|
||
Identifiable intangible assets - trade name(a)
|
120
|
|
|
—
|
|
||
Goodwill(b)
|
694
|
|
|
2,243
|
|
||
Other non-current assets
|
5
|
|
|
—
|
|
||
Total assets acquired
|
$
|
2,667
|
|
|
$
|
4,233
|
|
a.
|
Trade name was valued using a "Relief-from-Royalty" method and will be amortized over 20 years.
|
b.
|
Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recorded in connection with the acquisition is attributable to assembled workforces and future profitability expected to arise from the acquired entity.
|
|
2019
|
|
2018
|
||||||||||||
|
ARS
|
|
Brim Equipment Assets
|
|
ARS
|
|
Brim Equipment Assets
|
||||||||
Revenues
|
$
|
1,719
|
|
|
$
|
2,331
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net loss(a)
|
(328
|
)
|
|
(828
|
)
|
|
(25
|
)
|
|
—
|
|
|
Nine Months Ended September 30, 2018
|
||||||
|
ARS
|
|
Brim Equipment Assets
|
||||
Revenues
|
$
|
2,213
|
|
|
$
|
3,294
|
|
Net income
|
163
|
|
|
1,743
|
|
|
|
WTL
|
||
Property, plant and equipment
|
|
$
|
2,960
|
|
Identifiable intangible assets - customer relationships(a)
|
|
930
|
|
|
Identifiable intangible assets - trade name(a)
|
|
650
|
|
|
Goodwill(b)
|
|
1,567
|
|
|
Total assets acquired
|
|
$
|
6,107
|
|
a.
|
Identifiable intangible assets were measured using a combination of income approaches. Trade names were valued using a "Relief-from-Royalty" method. Non-contractual customer relationships were valued using a "Multi-period excess earnings" method. Identifiable intangible assets will be amortized over 10-20 years.
|
b.
|
Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill recorded in connection with the acquisition is attributable to the assembled workforce and future profitability expected to arise from the acquired entity.
|
|
2019
|
|
2018
|
||||
Revenues
|
$
|
7,251
|
|
|
$
|
7,511
|
|
Net loss(a)
|
(1,462
|
)
|
|
(149
|
)
|
|
Nine Months Ended September 30, 2018
|
||
Revenues
|
$
|
5,998
|
|
Net loss
|
(8
|
)
|
|
|
RTS
|
||
Inventory
|
|
$
|
180
|
|
Property, plant and equipment
|
|
7,787
|
|
|
Goodwill(a)
|
|
133
|
|
|
Total assets acquired
|
|
$
|
8,100
|
|
|
2019
|
|
2018
|
||||
Revenues
|
$
|
2,456
|
|
|
$
|
6,682
|
|
Net loss(a)
|
(5,581
|
)
|
|
(3,210
|
)
|
|
Nine Months Ended September 30, 2018
|
||
Revenues
|
$
|
14,398
|
|
Net loss
|
(1,841
|
)
|
5.
|
Inventories
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||||
Supplies
|
|
$
|
10,035
|
|
|
$
|
12,571
|
|
Raw materials
|
|
290
|
|
|
199
|
|
||
Work in process
|
|
4,601
|
|
|
3,273
|
|
||
Finished goods
|
|
2,377
|
|
|
5,259
|
|
||
Total inventories
|
|
$
|
17,303
|
|
|
$
|
21,302
|
|
6.
|
Property, Plant and Equipment
|
|
|
|
September 30,
|
|
December 31,
|
||||
|
Useful Life
|
|
2019
|
|
2018
|
||||
Assets held and used:
|
|
|
|
|
|
||||
Pressure pumping equipment
|
3-5 years
|
|
$
|
216,610
|
|
|
$
|
208,968
|
|
Drilling rigs and related equipment
|
3-15 years
|
|
124,040
|
|
|
122,198
|
|
||
Machinery and equipment
|
7-20 years
|
|
196,006
|
|
|
173,867
|
|
||
Buildings
|
15-39 years
|
|
16,945
|
|
|
16,887
|
|
||
Vehicles, trucks and trailers
|
5-10 years
|
|
135,253
|
|
|
132,337
|
|
||
Coil tubing equipment
|
4-10 years
|
|
29,846
|
|
|
29,128
|
|
||
Land
|
N/A
|
|
13,687
|
|
|
14,235
|
|
||
Land improvements
|
15 years or life of lease
|
|
10,135
|
|
|
9,614
|
|
||
Rail improvements
|
10-20 years
|
|
13,802
|
|
|
13,806
|
|
||
Other property and equipment
|
3-12 years
|
|
14,030
|
|
|
13,614
|
|
||
|
|
|
770,354
|
|
|
734,654
|
|
||
Deposits on equipment and equipment in process of assembly(a)
|
|
|
7,409
|
|
|
16,865
|
|
||
|
|
|
777,763
|
|
|
751,519
|
|
||
Less: accumulated depreciation
|
|
|
417,396
|
|
|
337,514
|
|
||
Total assets held and used, net
|
|
|
360,367
|
|
|
414,005
|
|
||
|
|
|
|
|
|
||||
Assets subject to operating leases:
|
|
|
|
|
|
||||
Buildings
|
15-30 years
|
|
30,369
|
|
|
29,493
|
|
||
Helicopters
|
6 years
|
|
4,943
|
|
|
4,937
|
|
||
|
|
|
35,312
|
|
|
34,430
|
|
||
Less: accumulated depreciation
|
|
|
14,023
|
|
|
11,736
|
|
||
Total assets subject to operating leases, net
|
|
|
21,289
|
|
|
22,694
|
|
||
|
|
|
|
|
|
||||
Total property, plant and equipment, net
|
|
|
$
|
381,656
|
|
|
$
|
436,699
|
|
|
|
|
|
|
|
a.
|
Deposits on equipment and equipment in process of assembly represents deposits placed with vendors for equipment that is in the process of assembly and purchased equipment that is being outfitted for its intended use. The equipment is not yet placed in service.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Depreciation expense
|
$
|
28,123
|
|
|
$
|
28,052
|
|
|
$
|
84,288
|
|
|
$
|
79,508
|
|
Depletion expense
|
1,339
|
|
|
1,552
|
|
|
3,285
|
|
|
2,979
|
|
||||
Amortization expense
|
277
|
|
|
2,396
|
|
|
844
|
|
|
7,186
|
|
||||
Accretion expense
|
52
|
|
|
15
|
|
|
95
|
|
|
45
|
|
||||
Depreciation, depletion, amortization and accretion
|
$
|
29,791
|
|
|
$
|
32,015
|
|
|
$
|
88,512
|
|
|
$
|
89,718
|
|
7.
|
Intangible Assets and Goodwill
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||||
Customer relationships
|
|
$
|
1,980
|
|
|
$
|
2,255
|
|
Trade names
|
|
9,063
|
|
|
9,063
|
|
||
Less: accumulated amortization - customer relationships
|
|
(547
|
)
|
|
(544
|
)
|
||
Less: accumulated amortization - trade names
|
|
(3,648
|
)
|
|
(3,018
|
)
|
||
Intangible assets, net
|
|
$
|
6,848
|
|
|
$
|
7,756
|
|
|
|
Amount
|
||
Remainder of 2019
|
|
$
|
277
|
|
2020
|
|
1,107
|
|
|
2021
|
|
1,107
|
|
|
2022
|
|
1,107
|
|
|
2023
|
|
991
|
|
|
Thereafter
|
|
2,259
|
|
|
|
|
$
|
6,848
|
|
Balance, January 1, 2018
|
|
$
|
99,811
|
|
Additions:
|
|
|
||
WTL acquisition
|
|
1,567
|
|
|
RTS acquisition
|
|
133
|
|
|
ARS acquisition
|
|
694
|
|
|
Brim Equipment Assets acquisition
|
|
2,243
|
|
|
Impairment
|
|
(3,203
|
)
|
|
Balance, December 31, 2018
|
|
101,245
|
|
|
Impairment
|
|
(3,194
|
)
|
|
Balance, September 30, 2019
|
|
$
|
98,051
|
|
8.
|
Equity Method Investment
|
9.
|
Accrued Expenses and Other Current Liabilities
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||||
Accrued compensation, benefits and related taxes
|
|
$
|
10,236
|
|
|
$
|
20,898
|
|
State and local taxes payable
|
|
16,938
|
|
|
18,687
|
|
||
Insurance reserves
|
|
3,659
|
|
|
4,678
|
|
||
Deferred revenue
|
|
3,108
|
|
|
4,304
|
|
||
Financed insurance premiums
|
|
1,728
|
|
|
6,761
|
|
||
Other
|
|
4,883
|
|
|
4,324
|
|
||
Total
|
|
$
|
40,552
|
|
|
$
|
59,652
|
|
10.
|
Debt
|
11.
|
Variable Interest Entities
|
12.
|
Selling, General and Administrative Expense
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cash expenses:
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
$
|
4,777
|
|
|
$
|
14,864
|
|
|
$
|
16,161
|
|
|
$
|
33,541
|
|
Professional services
|
6,104
|
|
|
3,267
|
|
|
12,827
|
|
|
8,835
|
|
||||
Other(a)
|
1,665
|
|
|
3,701
|
|
|
8,290
|
|
|
9,243
|
|
||||
Total cash SG&A expense
|
12,546
|
|
|
21,832
|
|
|
37,278
|
|
|
51,619
|
|
||||
Non-cash expenses:
|
|
|
|
|
|
|
|
||||||||
Bad debt provision(b)
|
964
|
|
|
(68,333
|
)
|
|
1,230
|
|
|
(14,543
|
)
|
||||
Equity based compensation(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
17,487
|
|
||||
Stock based compensation
|
913
|
|
|
1,177
|
|
|
2,705
|
|
|
3,751
|
|
||||
Total non-cash SG&A expense
|
1,877
|
|
|
(67,156
|
)
|
|
3,935
|
|
|
6,695
|
|
||||
Total SG&A expense
|
$
|
14,423
|
|
|
$
|
(45,324
|
)
|
|
$
|
41,213
|
|
|
$
|
58,314
|
|
a.
|
Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
|
b.
|
During the three months ended September 30, 2018, the Company received payment for amounts previously reserved in 2017. As a result, during the three months ended September 30, 2018, the Company reversed bad debt expense of $16.0 million recognized in 2017 and $53.6 million of the bad debt expense recognized in the first half of 2018.
|
c.
|
Represents compensation expense for non-employee awards, which were issued and are payable by certain affiliates of Wexford (the sponsor level). See Note 16 for additional detail.
|
13.
|
Income Taxes
|
14.
|
Leases
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Operating lease expense
|
$
|
5,278
|
|
|
$
|
16,697
|
|
Short-term lease expense
|
135
|
|
|
498
|
|
||
Finance lease expense:
|
|
|
|
||||
Amortization of right-of-use assets
|
312
|
|
|
797
|
|
||
Interest on lease liabilities
|
55
|
|
|
134
|
|
||
Total lease expense
|
$
|
5,780
|
|
|
$
|
18,126
|
|
|
September 30, 2019
|
||
Operating leases:
|
|
||
Operating lease right-of-use assets
|
$
|
47,959
|
|
Current operating lease liability
|
17,142
|
|
|
Long-term operating lease liability
|
30,827
|
|
|
Finance leases:
|
|
||
Property and equipment, net
|
$
|
5,942
|
|
Accrued expenses and other current liabilities
|
1,465
|
|
|
Other liabilities
|
4,145
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
5,222
|
|
|
$
|
16,468
|
|
Operating cash flows from finance leases
|
55
|
|
|
134
|
|
||
Financing cash flows from finance leases
|
391
|
|
|
1,114
|
|
||
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
||||
Operating leases
|
$
|
1,314
|
|
|
$
|
3,249
|
|
Finance leases
|
2,130
|
|
|
3,721
|
|
|
September 30, 2019
|
|
Weighted-average remaining lease term:
|
|
|
Operating leases
|
3.5 years
|
|
Finance leases
|
4.3 years
|
|
Weighted-average discount rate:
|
|
|
Operating leases
|
4.5
|
%
|
Finance leases
|
4.3
|
%
|
|
Operating Leases
|
|
Finance Leases
|
||||
Remainder of 2019
|
$
|
5,060
|
|
|
$
|
447
|
|
2020
|
17,823
|
|
|
1,563
|
|
||
2021
|
13,055
|
|
|
1,254
|
|
||
2022
|
8,949
|
|
|
1,220
|
|
||
2023
|
4,330
|
|
|
1,214
|
|
||
Thereafter
|
2,588
|
|
|
441
|
|
||
Total lease payments
|
51,805
|
|
|
6,139
|
|
||
Less: Present value discount
|
3,836
|
|
|
529
|
|
||
Present value of lease payments
|
$
|
47,969
|
|
|
$
|
5,610
|
|
15.
|
Earnings (Loss) Per Share
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Allocation of earnings (loss):
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(35,709
|
)
|
|
$
|
69,512
|
|
|
$
|
(18,265
|
)
|
|
$
|
167,758
|
|
Weighted average common shares outstanding
|
45,020
|
|
|
44,756
|
|
|
44,984
|
|
|
44,718
|
|
||||
Basic (loss) earnings per share
|
$
|
(0.79
|
)
|
|
$
|
1.55
|
|
|
$
|
(0.41
|
)
|
|
$
|
3.75
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Allocation of earnings (loss):
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(35,709
|
)
|
|
$
|
69,512
|
|
|
$
|
(18,265
|
)
|
|
$
|
167,758
|
|
Weighted average common shares, including dilutive effect(a)
|
45,020
|
|
|
45,082
|
|
|
44,984
|
|
|
45,012
|
|
||||
Diluted (loss) earnings per share
|
$
|
(0.79
|
)
|
|
$
|
1.54
|
|
|
$
|
(0.41
|
)
|
|
$
|
3.73
|
|
a.
|
No incremental shares of potentially dilutive restricted stock awards were included for the three and nine months ended September 30, 2019 as their effect was antidilutive under the treasury stock method.
|
16.
|
Equity Based Compensation
|
17.
|
Stock Based Compensation
|
|
|
Number of Unvested Restricted Shares
|
|
Weighted Average Grant-Date Fair Value
|
|||
Unvested shares as of January 1, 2019
|
|
434,119
|
|
|
$
|
22.78
|
|
Granted
|
|
64,507
|
|
|
9.87
|
|
|
Vested
|
|
(144,812
|
)
|
|
25.28
|
|
|
Forfeited
|
|
(70,002
|
)
|
|
19.16
|
|
|
Unvested shares as of September 30, 2019
|
|
283,812
|
|
|
$
|
23.23
|
|
18.
|
Related Party Transactions
|
|
|
REVENUES
|
|
ACCOUNTS RECEIVABLE
|
|||||||||||||||||
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
At September 30,
|
At December 31,
|
||||||||||||||
|
|
2019
|
2018
|
|
2019
|
2018
|
|
2019
|
2018
|
||||||||||||
Pressure Pumping and Gulfport
|
(a)
|
$
|
13,578
|
|
$
|
15,540
|
|
|
$
|
84,407
|
|
$
|
87,916
|
|
|
$
|
6,231
|
|
$
|
8,175
|
|
Muskie and Gulfport
|
(b)
|
2,924
|
|
3,787
|
|
|
26,439
|
|
24,980
|
|
|
1,153
|
|
1,193
|
|
||||||
SR Energy and Gulfport
|
(c)
|
672
|
|
1,743
|
|
|
8,712
|
|
13,323
|
|
|
536
|
|
1,658
|
|
||||||
Cementing and Gulfport
|
(d)
|
—
|
|
977
|
|
|
—
|
|
5,853
|
|
|
—
|
|
—
|
|
||||||
Aquahawk and Gulfport
|
(e)
|
6
|
|
—
|
|
|
828
|
|
—
|
|
|
6
|
|
—
|
|
||||||
Panther Drilling and El Toro
|
(f)
|
80
|
|
509
|
|
|
573
|
|
854
|
|
|
80
|
|
64
|
|
||||||
Cobra Aviation/ARS/Leopard and Brim Equipment
|
(g)
|
679
|
|
—
|
|
|
1,390
|
|
—
|
|
|
498
|
|
—
|
|
||||||
Other Relationships
|
|
(15
|
)
|
164
|
|
|
—
|
|
685
|
|
|
38
|
|
74
|
|
||||||
|
|
$
|
17,924
|
|
$
|
22,720
|
|
|
$
|
122,349
|
|
$
|
133,611
|
|
|
$
|
8,542
|
|
$
|
11,164
|
|
a.
|
Pressure Pumping provides pressure pumping, stimulation and related completion services to Gulfport.
|
b.
|
Muskie has agreed to sell and deliver, and Gulfport has agreed to purchase, specified annual and monthly amounts of natural sand proppant, subject to certain exceptions specified in the agreement, and pay certain costs and expenses.
|
c.
|
SR Energy provides rental services to Gulfport.
|
d.
|
Cementing performed well cementing services for Gulfport.
|
e.
|
Aquahawk provides water transfer services for Gulfport pursuant to a master service agreement.
|
f.
|
Panther provides directional drilling services for El Toro, an entity controlled by Wexford, pursuant to a master service agreement.
|
g.
|
Cobra Aviation, ARS and Leopard lease helicopters to Brim Equipment pursuant to aircraft lease and management agreements.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
At September 30,
|
At December 31,
|
||||||||||||||
|
|
2019
|
2018
|
|
2019
|
2018
|
|
2019
|
2018
|
||||||||||||
|
|
COST OF REVENUE
|
|
COST OF REVENUE
|
|
ACCOUNTS PAYABLE
|
|||||||||||||||
Cobra Aviation/ ARS/Leopard and Brim Equipment
|
(a)
|
$
|
739
|
|
$
|
—
|
|
|
$
|
4,103
|
|
$
|
—
|
|
|
$
|
366
|
|
$
|
—
|
|
Cobra and T&E
|
(b)
|
—
|
|
1,281
|
|
|
—
|
|
4,042
|
|
|
—
|
|
—
|
|
||||||
Higher Power and T&E
|
(b)
|
—
|
|
144
|
|
|
—
|
|
1,603
|
|
|
—
|
|
—
|
|
||||||
Other
|
|
35
|
|
—
|
|
|
35
|
|
—
|
|
|
35
|
|
240
|
|
||||||
|
|
$
|
774
|
|
$
|
1,425
|
|
|
$
|
4,138
|
|
$
|
5,645
|
|
|
$
|
401
|
|
$
|
240
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
SELLING, GENERAL AND ADMINISTRATIVE COSTS
|
|
SELLING, GENERAL AND ADMINISTRATIVE COSTS
|
|
|
|
||||||||||||||
The Company and Wexford
|
(c)
|
$
|
109
|
|
$
|
267
|
|
|
$
|
551
|
|
$
|
740
|
|
|
$
|
—
|
|
$
|
100
|
|
The Company and Caliber
|
(d)
|
201
|
|
116
|
|
|
589
|
|
462
|
|
|
64
|
|
3
|
|
||||||
Cobra Aviation/ ARS/Leopard and Brim Equipment
|
(a)
|
43
|
|
—
|
|
|
209
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Other
|
|
41
|
|
54
|
|
|
138
|
|
196
|
|
|
8
|
|
27
|
|
||||||
|
|
$
|
394
|
|
$
|
437
|
|
|
$
|
1,487
|
|
$
|
1,398
|
|
|
$
|
72
|
|
$
|
130
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
CAPITAL EXPENDITURES
|
|
CAPITAL EXPENDITURES
|
|
|
|
||||||||||||||
Leopard and Brim Equipment
|
(a)
|
$
|
48
|
|
$
|
—
|
|
|
$
|
266
|
|
$
|
—
|
|
|
$
|
13
|
|
$
|
—
|
|
Cobra and T&E
|
(b)
|
—
|
|
116
|
|
|
—
|
|
1,247
|
|
|
|
—
|
|
|||||||
Higher Power and T&E
|
(b)
|
—
|
|
187
|
|
|
—
|
|
2,960
|
|
|
|
—
|
|
|||||||
|
|
$
|
48
|
|
$
|
303
|
|
|
$
|
266
|
|
$
|
4,207
|
|
|
$
|
13
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
$
|
486
|
|
$
|
370
|
|
a.
|
Cobra Aviation, ARS and Leopard lease helicopters to Brim Equipment pursuant to aircraft lease and management agreements.
|
b.
|
Cobra and Higher Power purchased materials and services from T&E, an entity in which a member of management's family owned a minority interest. T&E ceased to be a related party as of September 30, 2018.
|
c.
|
Wexford provides certain administrative and analytical services to the Company and, from time to time, the Company pays for goods and services on behalf of Wexford.
|
d.
|
Caliber leases office space to Mammoth.
|
19.
|
Commitments and Contingencies
|
Year ended December 31:
|
|
Capital Spend Commitments
|
|
Minimum Purchase Commitments(a)
|
||||
Remainder of 2019
|
|
$
|
1,007
|
|
|
$
|
5,234
|
|
2020
|
|
—
|
|
|
20,650
|
|
||
2021
|
|
—
|
|
|
656
|
|
||
2022
|
|
—
|
|
|
91
|
|
||
2023
|
|
—
|
|
|
8
|
|
||
Thereafter
|
|
—
|
|
|
—
|
|
||
|
|
$
|
1,007
|
|
|
$
|
26,639
|
|
a.
|
Included in these amounts are sand purchase commitments of $19.5 million. Pricing for certain sand purchase agreements is variable and, therefore, the total sand purchase commitments could be as much as $23.1 million. The minimum amount due in the form of shortfall fees under certain sand purchase agreements was $1.8 million as of September 30, 2019.
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||||
Environmental remediation
|
|
$
|
4,182
|
|
|
$
|
3,877
|
|
Insurance programs
|
|
4,105
|
|
|
4,105
|
|
||
Rail car commitments
|
|
455
|
|
|
455
|
|
||
Total letters of credit
|
|
$
|
8,742
|
|
|
$
|
8,437
|
|
20.
|
Reporting Segments
|
Three months ended September 30, 2019
|
Infrastructure
|
Pressure Pumping
|
Sand
|
All Other
|
Eliminations
|
Total
|
||||||||||||
Revenue from external customers
|
$
|
37,289
|
|
$
|
43,887
|
|
$
|
12,634
|
|
$
|
19,607
|
|
$
|
—
|
|
$
|
113,417
|
|
Intersegment revenues
|
—
|
|
725
|
|
5,727
|
|
367
|
|
(6,819
|
)
|
—
|
|
||||||
Total revenue
|
37,289
|
|
44,612
|
|
18,361
|
|
19,974
|
|
(6,819
|
)
|
113,417
|
|
||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
|
36,940
|
|
33,059
|
|
18,547
|
|
22,588
|
|
—
|
|
111,134
|
|
||||||
Intersegment cost of revenues
|
—
|
|
6,054
|
|
326
|
|
439
|
|
(6,819
|
)
|
—
|
|
||||||
Total cost of revenue
|
36,940
|
|
39,113
|
|
18,873
|
|
23,027
|
|
(6,819
|
)
|
111,134
|
|
||||||
Selling, general and administrative
|
7,322
|
|
3,669
|
|
1,314
|
|
2,118
|
|
—
|
|
14,423
|
|
||||||
Depreciation, depletion, amortization and accretion
|
7,953
|
|
10,176
|
|
4,022
|
|
7,640
|
|
—
|
|
29,791
|
|
||||||
Impairment of long-lived assets
|
—
|
|
—
|
|
—
|
|
6,542
|
|
—
|
|
6,542
|
|
||||||
Operating (loss) income
|
(14,926
|
)
|
(8,346
|
)
|
(5,848
|
)
|
(19,353
|
)
|
—
|
|
(48,473
|
)
|
||||||
Interest expense, net
|
599
|
|
316
|
|
43
|
|
440
|
|
—
|
|
1,398
|
|
||||||
Other (income) expense, net
|
(6,239
|
)
|
(3
|
)
|
99
|
|
(225
|
)
|
—
|
|
(6,368
|
)
|
||||||
(Loss) income before income taxes
|
$
|
(9,286
|
)
|
$
|
(8,659
|
)
|
$
|
(5,990
|
)
|
$
|
(19,568
|
)
|
$
|
—
|
|
$
|
(43,503
|
)
|
Three months ended September 30, 2018
|
Infrastructure
|
Pressure Pumping
|
Sand
|
All Other
|
Eliminations
|
Total
|
||||||||||||
Revenue from external customers
|
$
|
237,052
|
|
$
|
93,360
|
|
$
|
18,742
|
|
$
|
34,889
|
|
$
|
—
|
|
$
|
384,043
|
|
Intersegment revenues
|
—
|
|
809
|
|
18,268
|
|
781
|
|
(19,858
|
)
|
—
|
|
||||||
Total revenue
|
237,052
|
|
94,169
|
|
37,010
|
|
35,670
|
|
(19,858
|
)
|
384,043
|
|
||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
|
128,267
|
|
55,490
|
|
29,470
|
|
34,338
|
|
—
|
|
247,565
|
|
||||||
Intersegment cost of revenues
|
37
|
|
19,002
|
|
546
|
|
263
|
|
(19,848
|
)
|
—
|
|
||||||
Total cost of revenue
|
128,304
|
|
74,492
|
|
30,016
|
|
34,601
|
|
(19,848
|
)
|
247,565
|
|
||||||
Selling, general and administrative
|
(54,200
|
)
|
4,508
|
|
1,618
|
|
2,750
|
|
—
|
|
(45,324
|
)
|
||||||
Depreciation, depletion, amortization and accretion
|
6,591
|
|
12,720
|
|
4,184
|
|
8,520
|
|
—
|
|
32,015
|
|
||||||
Impairment of long-lived assets
|
—
|
|
143
|
|
—
|
|
4,439
|
|
—
|
|
4,582
|
|
||||||
Operating income (loss)
|
156,357
|
|
2,306
|
|
1,192
|
|
(14,640
|
)
|
(10
|
)
|
145,205
|
|
||||||
Interest expense, net
|
159
|
|
150
|
|
37
|
|
112
|
|
—
|
|
458
|
|
||||||
Other expense, net
|
181
|
|
2
|
|
199
|
|
18
|
|
—
|
|
400
|
|
||||||
Income (loss) before income taxes
|
$
|
156,017
|
|
$
|
2,154
|
|
$
|
956
|
|
$
|
(14,770
|
)
|
$
|
(10
|
)
|
$
|
144,347
|
|
Nine months ended September 30, 2019
|
Infrastructure
|
Pressure Pumping
|
Sand
|
All Other
|
Eliminations
|
Total
|
||||||||||||
Revenue from external customers
|
$
|
187,831
|
|
$
|
217,456
|
|
$
|
66,820
|
|
$
|
85,268
|
|
$
|
—
|
|
$
|
557,375
|
|
Intersegment revenues
|
—
|
|
3,936
|
|
29,795
|
|
1,610
|
|
(35,341
|
)
|
—
|
|
||||||
Total revenue
|
187,831
|
|
221,392
|
|
96,615
|
|
86,878
|
|
(35,341
|
)
|
557,375
|
|
||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
|
140,768
|
|
157,106
|
|
81,475
|
|
88,871
|
|
—
|
|
468,220
|
|
||||||
Intersegment cost of revenues
|
1
|
|
31,388
|
|
2,513
|
|
1,499
|
|
(35,401
|
)
|
—
|
|
||||||
Total cost of revenue
|
140,769
|
|
188,494
|
|
83,988
|
|
90,370
|
|
(35,401
|
)
|
468,220
|
|
||||||
Selling, general and administrative
|
19,874
|
|
9,544
|
|
4,214
|
|
7,581
|
|
—
|
|
41,213
|
|
||||||
Depreciation, depletion, amortization and accretion
|
23,490
|
|
30,244
|
|
11,423
|
|
23,355
|
|
—
|
|
88,512
|
|
||||||
Impairment of long-lived assets
|
—
|
|
—
|
|
—
|
|
6,542
|
|
—
|
|
6,542
|
|
||||||
Operating income (loss)
|
3,698
|
|
(6,890
|
)
|
(3,010
|
)
|
(40,970
|
)
|
60
|
|
(47,112
|
)
|
||||||
Interest expense, net
|
1,024
|
|
965
|
|
145
|
|
1,338
|
|
—
|
|
3,472
|
|
||||||
Other (income) expense, net
|
(35,108
|
)
|
5
|
|
67
|
|
92
|
|
—
|
|
(34,944
|
)
|
||||||
Income (loss) before income taxes
|
$
|
37,782
|
|
$
|
(7,860
|
)
|
$
|
(3,222
|
)
|
$
|
(42,400
|
)
|
$
|
60
|
|
$
|
(15,640
|
)
|
Nine months ended September 30, 2018
|
Infrastructure
|
Pressure Pumping
|
Sand
|
All Other
|
Eliminations
|
Total
|
||||||||||||
Revenue from external customers
|
$
|
922,761
|
|
$
|
290,272
|
|
$
|
92,684
|
|
$
|
106,169
|
|
$
|
—
|
|
$
|
1,411,886
|
|
Intersegment revenues
|
—
|
|
6,441
|
|
48,186
|
|
4,974
|
|
(59,601
|
)
|
—
|
|
||||||
Total revenue
|
922,761
|
|
296,713
|
|
140,870
|
|
111,143
|
|
(59,601
|
)
|
1,411,886
|
|
||||||
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion
|
532,532
|
|
183,695
|
|
97,917
|
|
99,350
|
|
—
|
|
913,494
|
|
||||||
Intersegment cost of revenues
|
2,582
|
|
50,578
|
|
5,851
|
|
590
|
|
(59,601
|
)
|
—
|
|
||||||
Total cost of revenue
|
535,114
|
|
234,273
|
|
103,768
|
|
99,940
|
|
(59,601
|
)
|
913,494
|
|
||||||
Selling, general and administrative
|
17,437
|
|
27,993
|
|
5,049
|
|
7,835
|
|
—
|
|
58,314
|
|
||||||
Depreciation, depletion, amortization and accretion
|
13,092
|
|
40,535
|
|
10,381
|
|
25,710
|
|
—
|
|
89,718
|
|
||||||
Impairment of long-lived assets
|
—
|
|
143
|
|
—
|
|
4,626
|
|
—
|
|
4,769
|
|
||||||
Operating income (loss)
|
357,118
|
|
(6,231
|
)
|
21,672
|
|
(26,968
|
)
|
—
|
|
345,591
|
|
||||||
Interest expense, net
|
341
|
|
995
|
|
193
|
|
1,125
|
|
—
|
|
2,654
|
|
||||||
Other expense, net
|
513
|
|
94
|
|
222
|
|
85
|
|
—
|
|
914
|
|
||||||
Income (loss) before income taxes
|
$
|
356,264
|
|
$
|
(7,320
|
)
|
$
|
21,257
|
|
$
|
(28,178
|
)
|
$
|
—
|
|
$
|
342,023
|
|
|
Infrastructure
|
Pressure Pumping
|
Sand
|
All Other
|
Eliminations
|
Total
|
||||||||||||
As of September 30, 2019:
|
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
427,798
|
|
$
|
212,882
|
|
$
|
197,196
|
|
$
|
115,807
|
|
$
|
69,406
|
|
$
|
1,023,089
|
|
Goodwill
|
$
|
3,828
|
|
$
|
86,043
|
|
$
|
2,684
|
|
$
|
5,496
|
|
$
|
—
|
|
$
|
98,051
|
|
As of December 31, 2018:
|
|
|
|
|
|
|
||||||||||||
Total assets
|
$
|
366,457
|
|
$
|
254,278
|
|
$
|
177,870
|
|
$
|
122,442
|
|
$
|
152,044
|
|
$
|
1,073,091
|
|
Goodwill
|
$
|
3,828
|
|
$
|
86,043
|
|
$
|
2,684
|
|
$
|
8,690
|
|
$
|
—
|
|
$
|
101,245
|
|
21.
|
Subsequent Events
|
•
|
Net loss of $35.7 million, or $0.79 per diluted share, for the three months ended September 30, 2019.
|
•
|
Adjusted EBITDA of ($3.8) million for the three months ended September 30, 2019. See "Non-GAAP Financial Measures" below for a reconciliation of net income to adjusted EBITDA.
|
•
|
Formed an infrastructure engineering company focused on the transmission and distribution industry and commenced oilfield equipment manufacturing operations.
|
|
Three Months Ended
|
||||||
|
September 30, 2019
|
|
September 30, 2018
|
||||
|
(in thousands)
|
||||||
Revenue:
|
|
|
|
||||
Infrastructure services
|
$
|
37,289
|
|
|
$
|
237,052
|
|
Pressure pumping services
|
44,612
|
|
|
94,169
|
|
||
Natural sand proppant services
|
18,361
|
|
|
37,010
|
|
||
Other services
|
19,974
|
|
|
35,670
|
|
||
Eliminations
|
(6,819
|
)
|
|
(19,858
|
)
|
||
Total revenue
|
113,417
|
|
|
384,043
|
|
||
|
|
|
|
||||
Cost of revenue:
|
|
|
|
||||
Infrastructure services (exclusive of depreciation and amortization of $7,947 and $6,582, respectively, for the three months ended September 30, 2019 and 2018)
|
36,940
|
|
|
128,304
|
|
||
Pressure pumping services (exclusive of depreciation and amortization of $10,165 and $12,711, respectively, for the three months ended September 30, 2019 and 2018)
|
39,113
|
|
|
74,492
|
|
||
Natural sand proppant services (exclusive of depreciation, depletion and accretion of $4,019 and $4,183, respectively, for the three months ended September 30, 2019 and 2018)
|
18,873
|
|
|
30,016
|
|
||
Other services (exclusive of depreciation and amortization of $7,637 and $8,517, respectively, for the three months ended September 30, 2019 and 2018)
|
23,027
|
|
|
34,601
|
|
||
Eliminations
|
(6,819
|
)
|
|
(19,848
|
)
|
||
Total cost of revenue
|
111,134
|
|
|
247,565
|
|
||
Selling, general and administrative expenses
|
14,423
|
|
|
(45,324
|
)
|
||
Depreciation, depletion, amortization and accretion
|
29,791
|
|
|
32,015
|
|
||
Impairment of long-lived assets
|
6,542
|
|
|
4,582
|
|
||
Operating (loss) income
|
(48,473
|
)
|
|
145,205
|
|
||
Interest expense, net
|
(1,398
|
)
|
|
(458
|
)
|
||
Other income (expense), net
|
6,368
|
|
|
(400
|
)
|
||
(Loss) income before income taxes
|
(43,503
|
)
|
|
144,347
|
|
||
(Benefit) provision for income taxes
|
(7,794
|
)
|
|
74,835
|
|
||
Net (loss) income
|
$
|
(35,709
|
)
|
|
$
|
69,512
|
|
|
Three Months Ended
|
||||||
|
September 30, 2019
|
|
September 30, 2018
|
||||
Cash expenses:
|
|
|
|
||||
Compensation and benefits
|
$
|
4,777
|
|
|
$
|
14,864
|
|
Professional services
|
6,104
|
|
|
3,267
|
|
||
Other(a)
|
1,665
|
|
|
3,701
|
|
||
Total cash SG&A expense
|
12,546
|
|
|
21,832
|
|
||
Non-cash expenses:
|
|
|
|
||||
Bad debt provision(b)
|
964
|
|
|
(68,333
|
)
|
||
Stock based compensation
|
913
|
|
|
1,177
|
|
||
Total non-cash SG&A expense
|
1,877
|
|
|
(67,156
|
)
|
||
Total SG&A expense
|
$
|
14,423
|
|
|
$
|
(45,324
|
)
|
a.
|
Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
|
b.
|
During the three months ended September 30, 2018, we received payment for amounts previously reserved in 2017. As a result, during the three months ended September 30, 2018, we reversed bad debt expense of $16.0 million recognized in 2017 and $53.6 million of the bad debt expense recognized in the first half of 2018.
|
|
Nine Months Ended
|
||||||
|
September 30, 2019
|
|
September 30, 2018
|
||||
|
(in thousands)
|
||||||
Revenue:
|
|
|
|
||||
Infrastructure services
|
$
|
187,831
|
|
|
$
|
922,761
|
|
Pressure pumping services
|
221,392
|
|
|
296,713
|
|
||
Natural sand proppant services
|
96,615
|
|
|
140,870
|
|
||
Other services
|
86,878
|
|
|
111,143
|
|
||
Eliminations
|
(35,341
|
)
|
|
(59,601
|
)
|
||
Total revenue
|
557,375
|
|
|
1,411,886
|
|
||
|
|
|
|
||||
Cost of revenue:
|
|
|
|
||||
Infrastructure services (exclusive of depreciation and amortization of $23,471 and $13,071, respectively, for the nine months ended September 30, 2019 and 2018)
|
140,769
|
|
|
535,114
|
|
||
Pressure pumping services (exclusive of depreciation and amortization of $30,211 and $40,508, respectively, for the nine months ended September 30, 2019 and 2018)
|
188,494
|
|
|
234,273
|
|
||
Natural sand proppant services (exclusive of depreciation, depletion and accretion of $11,414 and $10,376, respectively, for the nine months ended September 30, 2019 and 2018)
|
83,988
|
|
|
103,768
|
|
||
Other services (exclusive of depreciation and amortization of $23,346 and $25,704, respectively, for the nine months ended September 30, 2019 and 2018)
|
90,370
|
|
|
99,940
|
|
||
Eliminations
|
(35,401
|
)
|
|
(59,601
|
)
|
||
Total cost of revenue
|
468,220
|
|
|
913,494
|
|
||
Selling, general and administrative expenses
|
41,213
|
|
|
58,314
|
|
||
Depreciation, depletion, amortization and accretion
|
88,512
|
|
|
89,718
|
|
||
Impairment of long-lived assets
|
6,542
|
|
|
4,769
|
|
||
Operating (loss) income
|
(47,112
|
)
|
|
345,591
|
|
||
Interest expense, net
|
(3,472
|
)
|
|
(2,654
|
)
|
||
Other income (expense), net
|
34,944
|
|
|
(914
|
)
|
||
(Loss) income before income taxes
|
(15,640
|
)
|
|
342,023
|
|
||
Provision (benefit) for income taxes
|
2,625
|
|
|
174,265
|
|
||
Net (loss) income
|
$
|
(18,265
|
)
|
|
$
|
167,758
|
|
|
Nine Months Ended
|
||||||
|
September 30, 2019
|
|
September 30, 2018
|
||||
Cash expenses:
|
|
|
|
||||
Compensation and benefits
|
$
|
16,161
|
|
|
$
|
33,541
|
|
Professional services
|
12,827
|
|
|
8,835
|
|
||
Other(a)
|
8,290
|
|
|
9,243
|
|
||
Total cash SG&A expense
|
37,278
|
|
|
51,619
|
|
||
Non-cash expenses:
|
|
|
|
||||
Bad debt provision(b)
|
1,230
|
|
|
(14,543
|
)
|
||
Equity based compensation(c)
|
—
|
|
|
17,487
|
|
||
Stock based compensation
|
2,705
|
|
|
3,751
|
|
||
Total non-cash SG&A expense
|
3,935
|
|
|
6,695
|
|
||
Total SG&A expense
|
$
|
41,213
|
|
|
$
|
58,314
|
|
a.
|
Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
|
b.
|
During the nine months ended September 30, 2018, we received payment for amounts previously reserved in 2017. As a result, during the nine months ended September 30, 2018, we reversed bad debt expense of $16.0 million recognized in 2017.
|
c.
|
Represents compensation expense for non-employee awards, which were issued and are payable by certain affiliates of Wexford (the sponsor level).
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net (loss) income
|
$
|
(35,709
|
)
|
|
$
|
69,512
|
|
|
$
|
(18,265
|
)
|
|
$
|
167,758
|
|
Depreciation, depletion, accretion and amortization expense
|
29,791
|
|
|
32,015
|
|
|
88,512
|
|
|
89,718
|
|
||||
Impairment of long-lived assets
|
6,542
|
|
|
4,582
|
|
|
6,542
|
|
|
4,769
|
|
||||
Inventory obsolescence charges
|
1,349
|
|
|
—
|
|
|
1,349
|
|
|
—
|
|
||||
Acquisition related costs
|
—
|
|
|
99
|
|
|
45
|
|
|
130
|
|
||||
Public offering costs
|
—
|
|
|
260
|
|
|
—
|
|
|
991
|
|
||||
Equity based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
17,487
|
|
||||
Stock based compensation
|
1,134
|
|
|
1,415
|
|
|
3,367
|
|
|
4,331
|
|
||||
Interest expense, net
|
1,398
|
|
|
458
|
|
|
3,472
|
|
|
2,654
|
|
||||
Other (income) expense, net
|
(6,368
|
)
|
|
400
|
|
|
(34,944
|
)
|
|
914
|
|
||||
Interest on trade accounts receivable
|
5,896
|
|
|
—
|
|
|
34,865
|
|
|
—
|
|
||||
(Benefit) provision for income taxes
|
(7,794
|
)
|
|
74,835
|
|
|
2,625
|
|
|
174,265
|
|
||||
Adjusted EBITDA
|
$
|
(3,761
|
)
|
|
$
|
183,576
|
|
|
$
|
87,568
|
|
|
$
|
463,017
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net (loss) income
|
$
|
(10,763
|
)
|
|
$
|
78,405
|
|
|
$
|
31,113
|
|
|
$
|
178,064
|
|
Depreciation and amortization expense
|
7,953
|
|
|
6,591
|
|
|
23,490
|
|
|
13,092
|
|
||||
Acquisition related costs
|
—
|
|
|
—
|
|
|
12
|
|
|
(4
|
)
|
||||
Public offering costs
|
—
|
|
|
123
|
|
|
—
|
|
|
483
|
|
||||
Stock based compensation
|
217
|
|
|
555
|
|
|
688
|
|
|
1,618
|
|
||||
Interest expense
|
599
|
|
|
159
|
|
|
1,024
|
|
|
341
|
|
||||
Other (income) expense, net
|
(6,239
|
)
|
|
181
|
|
|
(35,108
|
)
|
|
513
|
|
||||
Interest on trade accounts receivable
|
5,896
|
|
|
—
|
|
|
34,865
|
|
|
—
|
|
||||
Provision for income taxes
|
1,477
|
|
|
77,612
|
|
|
6,670
|
|
|
178,200
|
|
||||
Adjusted EBITDA
|
$
|
(860
|
)
|
|
$
|
163,626
|
|
|
$
|
62,754
|
|
|
$
|
372,307
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net (loss) income
|
$
|
(8,659
|
)
|
|
$
|
2,154
|
|
|
$
|
(7,860
|
)
|
|
$
|
(7,320
|
)
|
Depreciation and amortization expense
|
10,176
|
|
|
12,720
|
|
|
30,244
|
|
|
40,535
|
|
||||
Impairment of long-lived assets
|
—
|
|
|
143
|
|
|
—
|
|
|
143
|
|
||||
Acquisition related costs
|
—
|
|
|
6
|
|
|
18
|
|
|
39
|
|
||||
Public offering costs
|
—
|
|
|
62
|
|
|
—
|
|
|
264
|
|
||||
Equity based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
17,487
|
|
||||
Stock based compensation
|
503
|
|
|
423
|
|
|
1,402
|
|
|
1,294
|
|
||||
Interest expense
|
316
|
|
|
150
|
|
|
965
|
|
|
995
|
|
||||
Other (income) expense, net
|
(3
|
)
|
|
2
|
|
|
5
|
|
|
94
|
|
||||
Adjusted EBITDA
|
$
|
2,333
|
|
|
$
|
15,660
|
|
|
$
|
24,774
|
|
|
$
|
53,531
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
Reconciliation of Adjusted EBITDA to net (loss) income:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net (loss) income
|
$
|
(5,990
|
)
|
|
$
|
956
|
|
|
$
|
(3,222
|
)
|
|
$
|
21,257
|
|
Depreciation, depletion, accretion and amortization expense
|
4,022
|
|
|
4,184
|
|
|
11,423
|
|
|
10,381
|
|
||||
Acquisition related costs
|
—
|
|
|
—
|
|
|
8
|
|
|
(38
|
)
|
||||
Public offering costs
|
—
|
|
|
49
|
|
|
—
|
|
|
144
|
|
||||
Stock based compensation
|
216
|
|
|
211
|
|
|
656
|
|
|
602
|
|
||||
Interest expense
|
43
|
|
|
37
|
|
|
145
|
|
|
193
|
|
||||
Other expense, net
|
99
|
|
|
199
|
|
|
67
|
|
|
222
|
|
||||
Adjusted EBITDA
|
$
|
(1,610
|
)
|
|
$
|
5,636
|
|
|
$
|
9,077
|
|
|
$
|
32,761
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
Reconciliation of Adjusted EBITDA to net loss:
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(10,297
|
)
|
|
$
|
(11,993
|
)
|
|
$
|
(38,356
|
)
|
|
$
|
(24,243
|
)
|
Depreciation and amortization expense
|
7,640
|
|
|
8,520
|
|
|
23,355
|
|
|
25,710
|
|
||||
Impairment of long-lived assets
|
6,542
|
|
|
4,439
|
|
|
6,542
|
|
|
4,626
|
|
||||
Inventory obsolescence charges
|
1,349
|
|
|
—
|
|
|
1,349
|
|
|
—
|
|
||||
Acquisition related costs
|
—
|
|
|
93
|
|
|
7
|
|
|
133
|
|
||||
Public offering costs
|
—
|
|
|
26
|
|
|
—
|
|
|
100
|
|
||||
Stock based compensation
|
198
|
|
|
226
|
|
|
621
|
|
|
817
|
|
||||
Interest expense, net
|
440
|
|
|
112
|
|
|
1,338
|
|
|
1,125
|
|
||||
Other (income) expense, net
|
(225
|
)
|
|
18
|
|
|
92
|
|
|
85
|
|
||||
Benefit for income taxes
|
(9,271
|
)
|
|
(2,777
|
)
|
|
(4,045
|
)
|
|
(3,935
|
)
|
||||
Adjusted EBITDA
|
$
|
(3,624
|
)
|
|
$
|
(1,336
|
)
|
|
$
|
(9,097
|
)
|
|
$
|
4,418
|
|
a.
|
Includes results for our contract land and directional drilling, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, full service transportation, crude oil hauling and remote accommodations services and corporate related activities. Our corporate related activities do not generate revenue.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Net (loss) income, as reported
|
$
|
(35,709
|
)
|
|
$
|
69,512
|
|
|
$
|
(18,265
|
)
|
|
$
|
167,758
|
|
Equity based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
17,487
|
|
||||
Adjusted net (loss) income
|
$
|
(35,709
|
)
|
|
$
|
69,512
|
|
|
$
|
(18,265
|
)
|
|
$
|
185,245
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per share, as reported
|
$
|
(0.79
|
)
|
|
$
|
1.55
|
|
|
$
|
(0.41
|
)
|
|
$
|
3.75
|
|
Equity based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
0.39
|
|
||||
Adjusted basic (loss) earnings per share
|
$
|
(0.79
|
)
|
|
$
|
1.55
|
|
|
$
|
(0.41
|
)
|
|
$
|
4.14
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) earnings per share, as reported
|
$
|
(0.79
|
)
|
|
$
|
1.54
|
|
|
$
|
(0.41
|
)
|
|
$
|
3.73
|
|
Equity based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
0.39
|
|
||||
Adjusted diluted (loss) earnings per share
|
$
|
(0.79
|
)
|
|
$
|
1.54
|
|
|
$
|
(0.41
|
)
|
|
$
|
4.12
|
|
|
September 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
9,598
|
|
|
$
|
67,625
|
|
Revolving credit facility availability
|
184,809
|
|
|
184,233
|
|
||
Less long-term debt
|
(80,000
|
)
|
|
—
|
|
||
Less letter of credit facilities (environmental remediation)
|
(4,182
|
)
|
|
(3,877
|
)
|
||
Less letter of credit facilities (insurance programs)
|
(4,105
|
)
|
|
(4,105
|
)
|
||
Less letter of credit facilities (rail car commitments)
|
(455
|
)
|
|
(455
|
)
|
||
Net working capital (less cash)(a)
|
275,922
|
|
|
148,108
|
|
||
Total
|
$
|
381,587
|
|
|
$
|
391,529
|
|
a.
|
Net working capital (less cash) is a non-GAAP measure and is calculated by subtracting total current liabilities of $128 million and cash and cash equivalents of $10 million from total current assets of $413 million as of September 30, 2019. As of December 31, 2018, net working capital (less cash) is calculated by subtracting total current liabilities of $234 million and cash and cash equivalents of $68 million from total current assets of $450 million.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net cash provided by (used in) operating activities
|
$
|
9,610
|
|
|
$
|
56,141
|
|
|
$
|
(92,245
|
)
|
|
$
|
282,592
|
|
Net cash used in investing activities
|
(4,644
|
)
|
|
(41,530
|
)
|
|
(33,079
|
)
|
|
(162,773
|
)
|
||||
Net cash (used in) provided by financing activities
|
(2,578
|
)
|
|
(5,668
|
)
|
|
67,247
|
|
|
(105,713
|
)
|
||||
Effect of foreign exchange rate on cash
|
(35
|
)
|
|
47
|
|
|
50
|
|
|
(51
|
)
|
||||
Net change in cash
|
$
|
2,353
|
|
|
$
|
8,990
|
|
|
$
|
(58,027
|
)
|
|
$
|
14,055
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Infrastructure services(a)
|
$
|
122
|
|
|
$
|
21,737
|
|
|
$
|
5,553
|
|
|
$
|
78,293
|
|
Pressure pumping services(b)
|
2,963
|
|
|
8,042
|
|
|
14,305
|
|
|
24,141
|
|
||||
Natural sand proppant services(c)
|
728
|
|
|
3,145
|
|
|
2,703
|
|
|
15,803
|
|
||||
Other(d)
|
857
|
|
|
7,821
|
|
|
12,329
|
|
|
31,293
|
|
||||
Total capital expenditures
|
$
|
4,670
|
|
|
$
|
40,745
|
|
|
$
|
34,890
|
|
|
$
|
149,530
|
|
a.
|
Capital expenditures primarily for truck, tooling and other equipment for the nine months ended September 30, 2019 and 2018.
|
b.
|
Capital expenditures primarily for pressure pumping and water transfer equipment for the nine months ended September 30, 2019 and 2018.
|
c.
|
Capital expenditures primarily for maintenance for the nine months ended September 30, 2019 and plant upgrades for the nine months ended September 30, 2018.
|
d.
|
Capital expenditures primarily for equipment for our rental business and upgrades to our rig fleet for the nine months ended September 30, 2019 and 2018.
|
Year ended December 31:
|
|
Capital Spend Commitments
|
|
Minimum Purchase Commitments(a)
|
||||
Remainder of 2019
|
|
$
|
1,007
|
|
|
$
|
5,234
|
|
2020
|
|
—
|
|
|
20,650
|
|
||
2021
|
|
—
|
|
|
656
|
|
||
2022
|
|
—
|
|
|
91
|
|
||
2023
|
|
—
|
|
|
8
|
|
||
Thereafter
|
|
—
|
|
|
—
|
|
||
|
|
$
|
1,007
|
|
|
$
|
26,639
|
|
a.
|
Included in these amounts are sand purchase commitments of $20 million. Pricing for certain sand purchase agreements is variable and, therefore, the total sand purchase commitments could be as much as $23 million. The minimum amount due in the form of shortfall fees under certain sand purchase agreements was $2 million as of September 30, 2019.
|
|
|
|
|
Incorporated By Reference
|
|
|
|
||||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
Commission File No.
|
|
Filing Date
|
|
Exhibit No.
|
|
Filed Herewith
|
Furnished Herewith
|
|
|
8-K
|
|
001-37917
|
|
11/15/2016
|
|
3.1
|
|
|
|
||
|
|
8-K
|
|
001-37917
|
|
11/15/2016
|
|
3.2
|
|
|
|
||
|
|
S-1/A
|
|
333-213504
|
|
10/3/2016
|
|
4.1
|
|
|
|
||
|
|
8-K
|
|
001-37917
|
|
11/15/2016
|
|
4.1
|
|
|
|
||
|
|
8-K
|
|
001-37917
|
|
11/15/2016
|
|
4.2
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
|
||
|
|
|
|
|
|
|
|
|
|
X
|
|
||
101.1
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAMMOTH ENERGY SERVICES, INC.
|
Date:
|
November 8, 2019
|
|
By:
|
|
/s/ Arty Straehla
|
|
|
|
|
|
Arty Straehla
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
Date:
|
November 8, 2019
|
|
By:
|
|
/s/ Mark Layton
|
|
|
|
|
|
Mark Layton
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LENDER and AGENT:
PNC BANK, NATIONAL ASSOCIATION
|
|
By: /s/ Ronald Eckhoff
Name: Ronald Eckhoff
Title: Vice President
|
|
LENDER:
BARCLAYS BANK PLC
|
|
|
|
By: /s/ Sydney G. Dennis
Name: Sydney G. Dennis
Title: Director
|
|
|
|
|
LENDER:
CREDIT SUISSE AG, Cayman Islands Branch
|
By: /s/ Nupur Kumar
Name: Nupur Kumar
Title: Authorized Signatory
By: /s/ Christopher Zybrick
Name: Christopher Zybrick
Title: Authorized Signatory
|
LENDER:
UMB BANK, N.A.
|
By: /s/ Brian Pillmore
Name: Brian Pillmore
Title: President, Oklahoma
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Mammoth Energy Services, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
MAMMOTH ENERGY SERVICES, INC.
|
|
By:
|
|
/s/ Arty Straehla
|
|
|
|
Arty Straehla
|
|
|
|
Chief Executive Officer
|
|
|
|
November 8, 2019
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Mammoth Energy Services, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
MAMMOTH ENERGY SERVICES, INC.
|
|
By:
|
|
/s/ Mark Layton
|
|
|
|
Mark Layton
|
|
|
|
Chief Financial Officer
|
|
|
|
November 8, 2019
|
|
|
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
MAMMOTH ENERGY SERVICES, INC.
|
|
By:
|
|
/s/ Arty Straehla
|
|
|
|
Arty Straehla
|
|
|
|
Chief Executive Officer
|
|
|
|
November 8, 2019
|
|
|
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
MAMMOTH ENERGY SERVICES, INC.
|
|
By:
|
|
/s/ Mark Layton
|
|
|
|
Mark Layton
|
|
|
|
Chief Financial Officer
|
|
|
|
November 8, 2019
|
|
|
|
|
•
|
Section 104 S&S Citations: Citations received from MSHA under section 104 of the Mine Act for violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard.
|
•
|
Section 104(b) Orders: Orders issued by MSHA under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.
|
•
|
Section 104(d) Citations and Orders: Citations and orders issued by MSHA under section 104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards.
|
•
|
Section 110(b)(2) Violations: Flagrant violations issued by MSHA under section 110(b)(2) of the Mine Act.
|
•
|
Section 107(a) Orders: Orders issued by MSHA under section 107(a) of the Mine Act for situations in which MSHA determined an “imminent danger” (as defined by MSHA) existed.
|
Mine(a)
|
Section 104
S&S
Citations(#)
|
Section104(b)Orders (#)
|
Section104(d)Citations and Orders(#)
|
Section 110(b)(2) Violations(#)
|
Section107(a)Orders (#)
|
Proposed Assessments(b)($, amounts in dollars)
|
Mining Related Fatalities (#)
|
||||||||
Taylor, WI
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
Menomonie, WI
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
New Auburn, WI
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
$
|
—
|
|
—
|
|
a.
|
The definition of mine under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting minerals, such as land, structures, facilities, equipment, machines, tools and minerals preparation facilities. Unless otherwise indicated, any of these other items associated with a single mine have been aggregated in the totals for that mine. MSHA assigns an identification number to each mine and may or may not assign separate identification numbers to related facilities such as preparation facilities. We are providing the information in the table by mine rather than MSHA identification number because that is how we manage and operate our mining business and we believe this presentation will be more useful to investors than providing information based on MSHA identification numbers.
|
b.
|
Represents the total dollar value of proposed assessments from MSHA under the Mine Act relating to any type of citation or order issued during the quarter ended September 30, 2019.
|