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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q

(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 001-37988
NexTier Oilfield Solutions Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 38-4016639
(State or Other Jurisdiction of
Incorporation or Organization) 		(I.R.S. Employer
Identification No.)
3990 Rogerdale Rd. Houston Texas 77042
(Address of Principal Executive Offices) (Zip Code)
(713) 325-6000
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange On Which Registered
Common Stock, $0.01, par value NEX New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒     No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
☐
Accelerated Filer
☒
Non-accelerated Filer
☐
Smaller Reporting Company
☐
Emerging Growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒  
As of November 5, 2021, the registrant had 241,968,848 shares of common stock outstanding.


TABLE OF CONTENTS
PART I.
FINANCIAL INFORMATION
3
Item 1.
4
5
6
7
9
11
Item 2.
34
Item 3.
46
Item 4.
47
PART II.
48
Item 1.
48
Item 1A.
48
Item 2.
48
Item 3.
48
Item 4.
48
Item 5.
49
Item 6.
50
51



REFERENCES WITHIN THIS QUARTERLY REPORT
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to (i) the terms “Company,” “NexTier,” “we,” “us” and “our” refer to NexTier Oilfield Solutions Inc. and its consolidated subsidiaries; (ii) the term “Keane Group” refers to Keane Group Holdings, LLC and its consolidated subsidiaries; (iii) the term “Keane Investor” refers to Keane Investor Holdings LLC; (iv) the term “Cerberus” refers to Cerberus Capital Management, L.P. and its controlled affiliates and investment funds; (v) the term “C&J” refers to C&J Energy Services, Inc.; (vi) the term “C&J Merger” refers to the consummation of the transactions described in that certain Agreement and Plan of Merger, dated as of June 16, 2019 (the “Merger Agreement”), by and among the C&J, us and King Merger Sub Corp., one of our wholly owned subsidiaries; and (v) the term "Alamo" refers to Alamo Pressure Pumping, LLC and its consolidated subsidiaries. As used in this Quarterly Report on Form 10-Q, capacity in the hydraulic fracturing business refers to the total number of hydraulic horsepower, regardless of whether such hydraulic horsepower is active and deployed, active and not deployed or inactive. While the equipment and amount of hydraulic horsepower required for a customer project varies, we calculate our total number of fleets, as used in this Quarterly Report on Form 10-Q, by dividing our total hydraulic horsepower by approximately 49,000 hydraulic horsepower.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future operating results and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. Our forward-looking statements are generally accompanied by words such as "may," "should," "expect," "believe," "plan," "anticipate," "could," "intend," "target," "goal," "project," "contemplate," "believe," "estimate," "predict," "potential," or "continue," or the negative of these terms or other similar expressions. Any forward-looking statements contained in this Quarterly Report on Form 10-Q speak only as of the date on which we make them and are based upon our historical performance and on current plans, estimates and expectations. Except as required by law, we have no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•the impact of the COVID-19 pandemic and the evolving response thereto, including the impact of social distancing, shelter-in-place, shutdowns of non-essential businesses, extended absences and similar measures imposed or undertaken by governments, private businesses or others;
•changing regional, national or global economic conditions, including oil and gas supply and demand, trucking and logistics issues, labor market and inflation;
•our business strategy;
•our plans, objectives, expectations and intentions;
•the competitive nature of the industry in which we conduct our business, including pricing pressures;
•our future operating results;
•crude oil and natural gas commodity prices;
•demand for services in our industry;
•our ability to maintain the right level of commitments under our supply agreements;
•the market price and availability of materials or equipment, including loss of equipment due to age, maintenance downtime, casualty event or longer lead times (due to shipping delays, shortages of components, or other);
•the effect of a loss of, or interruption in operations of, one or more key suppliers;
•the impact of pipeline and storage capacity constraints;
•the impact of adverse weather conditions;
•the effects of government regulation and administrative or political policies;
•changes in tax laws;
•legal proceedings, liability claims and effect of external investigations;
•the effect of a loss of, or the financial distress of, one or more customers;
•our ability to obtain or renew customer contracts;
•our ability to recover insurance proceeds, including those related to a casualty event;
3

•our ability to employ a sufficient number of skilled and qualified workers, including any related wage inflation;
•our ability to obtain permits, approvals and authorizations from governmental and third parties;
•planned acquisitions, divestitures, and future capital expenditures;
•the impact of new technology;
•our ability to maintain effective information technology security systems;
•our ability to maintain an effective system of internal controls over financial reporting;
•our ability to service our debt obligations;
•financial strategy, liquidity or capital required for our ongoing operations and acquisitions, and our ability to raise additional capital;
•the market volatility of our stock;
•our ability or intention to pay dividends or to effectuate repurchases of our common stock;
•the impact of ownership by Cerberus (through Keane Investor); and
•the impact of our corporate governance structure.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section entitled Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2020. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, circumstances, plans, intentions or expectations reflected in any forward-looking statements will be achieved or occur. Actual results, events or circumstances could differ materially from those described in such forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make, except as specifically set forth herein.
This Quarterly Report on Form 10-Q includes market and industry data and certain other statistical information based on third-party sources including independent industry publications, government publications and other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, we have not independently verified the accuracy or completeness of this information. Some data is also based on our own good faith estimates, which are supported by our management's knowledge of and experience in the markets and businesses in which we operate.
While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed above and in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020.
PART I
Item 1. Condensed Consolidated Financial Statements (Unaudited)
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
September 30,
2021 		December 31,
2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$ 135,525  $ 275,990 
Trade and other accounts receivable, net
265,388  122,584 
Inventories, net
38,108  30,068 
Assets held for sale
6,495  126 
Prepaid and other current assets
51,352  58,011 
Total current assets
496,868  486,779 
Operating lease right-of-use assets
22,980  37,157 
Finance lease right-of-use assets
35,746  1,132 
Property and equipment (net of accumulated depreciation of $964,005 and $929,290)
592,112  470,711 
Goodwill
192,446  104,198 
Intangible assets (net of accumulated amortization of $54,159 and $46,496)
69,527  51,182 
Other noncurrent assets
8,296  6,729 
Total assets
$ 1,417,975  $ 1,157,888 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$ 179,203  $ 61,259 
Accrued expenses
222,720  134,230 
Customer contract liabilities
26,798  266 
Current maturities of long-term operating lease liabilities
8,725  18,551 
Current maturities of long-term finance lease liabilities
10,438  606 
Current maturities of long-term debt
11,186  2,252 
Other current liabilities
2,543  2,993 
Total current liabilities
461,613  220,157 
Long-term operating lease liabilities, less current maturities
20,580  24,232 
Long-term finance lease liabilities, less current maturities
25,053  504 
Long-term debt, net of unamortized deferred financing costs and unamortized debt discount, less current maturities
361,836  333,288 
Other noncurrent liabilities
20,722  22,419 
Total noncurrent liabilities
428,191  380,443 
Total liabilities
889,804  600,600 
Stockholders' equity
Common stock, par value $0.01 per share (authorized 500,000 shares, issued and outstanding 241,963 and 214,440 shares, respectively)
2,420  2,144 
Paid-in capital in excess of par value
1,087,618  989,995 
Retained deficit
(552,018) (421,741)
Accumulated other comprehensive loss
(9,849) (13,110)
Total stockholders' equity
528,171  557,288 
Total liabilities and stockholders' equity
$ 1,417,975  $ 1,157,888 
See accompanying notes to unaudited condensed consolidated financial statements.
5

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Amounts in thousands, except for per share amounts)
(Unaudited)
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
Revenue $ 393,164  $ 163,675  $ 913,711  $ 987,527 
Operating costs and expenses:
Cost of services(1)
344,637  150,066  831,674  841,063 
Depreciation and amortization 44,861  73,570  131,400  234,651 
Selling, general and administrative expenses 37,453  25,521  74,256  120,429 
Merger and integration 4,752  7,288  4,930  33,498 
Gain on disposal of assets (1,133) (3,027) (7,742) (11,942)
Impairment expense —  2,681  —  37,008 
Total operating costs and expenses
430,570  256,099  1,034,518  1,254,707 
Operating loss (37,406) (92,424) (120,807) (267,180)
Other income (expense):
Other income (expense), net 585  (3,978) 9,113  (1,303)
Interest expense, net (6,701) (5,524) (16,633) (16,943)
Total other expense (6,116) (9,502) (7,520) (18,246)
Loss before income taxes (43,522) (101,926) (128,327) (285,426)
Income tax expense (472) (507) (1,950) (1,251)
Net loss (43,994) (102,433) (130,277) (286,677)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments 531  (157) 433  596 
Hedging activities (46) (453) 785  (6,068)
Total comprehensive loss $ (43,509) $ (103,043) $ (129,059) $ (292,149)
Net loss per share:
Basic net loss per share $ (0.20) $ (0.48) $ (0.60) $ (1.34)
Diluted net loss per share (0.20) (0.48) (0.60) (1.34)
Weighted-average shares outstanding: basic 224,481  214,251  218,499  213,620 
Weighted-average shares outstanding: diluted 224,481  214,251  218,499  213,620 
(1) Cost of services during the three and nine months ended September 30, 2021 excludes depreciation of $40.5 million and $118.1 million. Cost of services during the three and nine months ended September 30, 2020 excludes depreciation of $68.9 million and $220.9 million, respectively.
See accompanying notes to unaudited condensed consolidated financial statements.
6

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Amounts in thousands)
(Unaudited)
`
Common stock Paid-in capital in excess of par value Retained deficit Accumulated other comprehensive loss Total
Balance as of December 31, 2020 $ 2,144  $ 989,995  $ (421,741) $ (13,110) $ 557,288 
Stock-based compensation 10  5,193  —  —  5,203 
Shares repurchased and retired related to stock-based compensation (1) (1,009) —  —  (1,010)
Other comprehensive income —  —  —  2,349  2,349 
Net loss —  —  (54,502) —  (54,502)
Balance as of March 31, 2021 $ 2,153  $ 994,179  $ (476,243) $ (10,761) $ 509,328 
Stock-based compensation 5  4,884  —  —  4,889 
Shares repurchased and retired related to stock-based compensation (1) (435) —  —  (436)
Other comprehensive loss —  —  —  (267) (267)
Net loss —  —  (31,781) —  (31,781)
Balance as of June 30, 2021 $ 2,157  $ 998,628  $ (508,024) $ (11,028) $ 481,733 
Stock-based compensation 4  7,346  —  —  7,350 
Shares repurchased and retired related to stock-based compensation (1) (419) —  —  (420)
Equity issued in connection with Alamo Acquisition 260  82,063  —  —  82,323 
Other comprehensive loss —  —  —  1,179  1,179 
Net loss —  —  (43,994) —  (43,994)
Balance as of September 30, 2021 $ 2,420  $ 1,087,618  $ (552,018) $ (9,849) $ 528,171 




7

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Amounts in thousands)
(Unaudited)
Common stock Paid-in capital in excess of par value Retained deficit Accumulated other comprehensive loss Total
Balance as of December 31, 2019 $ 2,124  $ 966,762  $ (73,333) $ (8,781) $ 886,772 
Stock-based compensation 11  6,869  —  —  6,880 
Shares repurchased and retired related to stock-based compensation (2) (1,149) —  —  (1,151)
Other comprehensive loss —  —  —  (1,513) (1,513)
Credit losses standard implementation —  —  (1,525) —  (1,525)
Net loss —  —  (71,756) —  (71,756)
Balance as of March 31, 2020 $ 2,133  $ 972,482  $ (146,614) $ (10,294) $ 817,707 
Stock-based compensation 12  9,511  —  —  9,523 
Shares repurchased and retired related to stock-based compensation (4) (789) —  —  (793)
Other comprehensive loss —  —  —  (2,360) (2,360)
Net loss —  —  (112,488) —  (112,488)
Balance as of June 30, 2020 $ 2,141  $ 981,204  $ (259,102) $ (12,654) $ 711,589 
Stock-based compensation 4  4,744  —  —  4,748 
Shares repurchased and retired related to stock-based compensation (1) (48) —  —  (49)
Other comprehensive loss —  —  —  63  63 
Net income —  —  (102,433) —  (102,433)
Balance as of September 30, 2020 $ 2,144  $ 985,900  $ (361,535) $ (12,591) $ 613,918 

See accompanying notes to unaudited condensed consolidated financial statements.


8

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

Nine Months Ended
September 30,
2021 2020
Cash flows from operating activities:
Net loss $ (130,277) $ (286,677)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization
131,400  234,651 
Amortization of deferred financing fees
1,528  1,710 
Gain on disposal of assets (7,742) (11,942)
Loss on impairment of assets
—  37,008 
Unrealized (gain) loss on derivative recognized in other comprehensive loss 785  (6,068)
Loss on financial instrument and derivatives, net 4,142  4,109 
Stock-based compensation
17,442  21,151 
Gain on insurance proceeds recognized in other income
(10,409) — 
Changes in operating assets and liabilities:
Decrease (increase) in trade and other accounts receivable, net (92,184) 208,924 
Decrease (increase) in inventories (9,046) 20,690 
Increase in prepaid and other current assets (10,138) (607)
Decrease in other assets 14,203  20,108 
Increase (decrease) in accounts payable 59,072  (65,149)
Increase (decrease) in accrued expenses 42,951  (87,736)
Increase (decrease) in customer contract liabilities (3,468) 685 
Decrease in other liabilities (27,579) (8,181)
Net cash provided by (used in) operating activities (19,320) 82,676 
Cash flows from investing activities:
Proceeds from sale of business
—  53,666 
Purchase of property and equipment
(132,057) (96,649)
Advances of deposit on equipment
(543) — 
Implementation of software
(2,532) (7,191)
Proceeds from disposal of assets
24,470  24,807 
Acquisition of business (95,082) — 
Payment of consideration liability (6,671) — 
Proceeds from settlement of WSS Notes and make-whole derivative 34,350  — 
Proceeds from insurance recoveries
22,947  58 
Net cash used in investing activities (155,118) (25,309)
Cash flows from financing activities:
Proceeds from asset-based revolver and equipment loan 39,428  175,000 
Payments on the term loan facility and asset-based revolver
(2,625) (177,625)
Payments on finance leases
(1,146) (3,148)
Payment of debt issuance costs
(251) — 
Shares repurchased and retired related to stock-based compensation
(1,866) (1,993)
Net cash provided by (used in) financing activities 33,540  (7,766)
Non-cash effect of foreign translation adjustments 433  596 
Net increase (decrease) in cash, cash equivalents (140,465) 50,197 
Cash and cash equivalents, beginning 275,990  255,015 
Cash and cash equivalents, ending $ 135,525  $ 305,212 
9

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest expense, net $ 16,469  $ 16,122 
Income taxes —  1,206 
Non-cash investing and financing activities:
Change in accrued capital expenditures
$ (19,763) $ 8,643 
Non-cash additions to equity security investments —  5,263 
Non-cash additions to finance right-of-use assets 35,813  — 
Non-cash additions to finance lease liabilities, including current maturities (35,813) — 
Non-cash additions to operating right-of-use assets 3,352  8,715 
Non-cash additions to operating lease liabilities, including current maturities (512) (8,676)
26,000,000 shares of NexTier common stock issued in exchange for Alamo ownership
(82,323) — 
Total contingent consideration (45,944)
Non contingent consideration (7,370)
See accompanying notes to unaudited condensed consolidated financial statements.

10

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements

(1)    Basis of Presentation and Nature of Operations
The accompanying unaudited condensed consolidated financial statements were prepared using United States Generally Accepted Accounting Principles ("GAAP") and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (the "SEC") on February 24, 2021.
The Company’s accounting policies are in accordance with GAAP. The preparation of financial statements in conformity with these accounting principles requires the Company to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and (2) the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from the Company’s estimates. Significant items subject to such estimates and assumptions include the useful lives of property and equipment and intangible assets; allowances for doubtful accounts; inventory reserves; acquisition accounting; contingent liabilities; and the valuation of property and equipment, intangible assets, equity issued as consideration in an acquisition, income taxes, stock-based incentive plan awards and derivatives.
Management believes the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company's financial position as of September 30, 2021 and the results of its operations and cash flows for the three and nine months ended September 30, 2021 and 2020. Such adjustments are of a normal recurring nature. All intercompany transactions and balances have been eliminated.
On October 31, 2019, the Company completed its merger (the “C&J Merger”) with C&J Energy Services, Inc. (“C&J”) and changed its name to "NexTier Oilfield Solutions Inc." Merger and integration related costs were recognized separately from the acquisition of assets and assumptions of liabilities in the C&J Merger. Merger costs consist of legal and professional fees and pre-merger notification fees. Integration costs consist of expenses incurred to integrate C&J’s operations, aligning accounting processes and procedures, and integrating its enterprise resource planning system with those of the Company. All of these costs are recorded within merger and integration costs on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. See Note (3) Mergers and Acquisitions in Part I, "Item 8. Financial Statements and Supplementary" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for further information.
In addition, on March 9, 2020, the Company completed the divestiture of its Well Support Services Segment ("WSS Sale"). For more details regarding the WSS Sale, refer to Note (14) Business Segments.
On August 31, 2021 the Company completed its acquisition (the “Alamo Acquisition”) of Alamo Pressure Pumping, LLC and its wholly owned subsidiaries ("Alamo"). The unaudited condensed consolidated financial statements for the period from January 1, 2020 to August 31, 2021 reflect only the historical results of the Company prior to the completion of the Alamo Acquisition.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(2)    Summary of Significant Accounting Policies
(a) Business Combinations and Asset Acquisitions
Business combinations are accounted for using the acquisition method of accounting in accordance with the Accounting Standards Codification (“ASC”) 805, “Business Combinations”, as amended by Accounting Standards Update (“ASU”) 2017-01, “Business Combinations (Topic 805), Clarifying the Definition of a Business.” The purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Fair value of the acquired assets and liabilities is measured in accordance with the guidance of ASC 820, using discounted cash flows and other applicable valuation techniques. Every reporting period, the Company reassess the value of any contingent consideration assumed as part of a business acquisition. Any acquisition-related costs incurred by the Company are expensed as incurred. Any excess purchase price over the fair value of the net identifiable assets acquired is recorded as goodwill if the definition of a business is met. Operating results of an acquired business are included in the Company’s results of operations from the date of acquisition..
Asset acquisitions are measured based on their cost to the Company, including transaction costs. Asset acquisition costs, or the consideration transferred by the Company, are assumed to be equal to the fair value of the net assets acquired. If the consideration transferred is cash, measurement is based on the amount of cash the Company paid to the seller, as well as transaction costs incurred. Consideration given in the form of non-monetary assets, liabilities incurred or equity interests issued is measured based on either the cost to the Company or the fair value of the assets or net assets acquired, whichever is more clearly evident. The cost of an asset acquisition is allocated to the assets acquired based on their estimated relative fair values. Goodwill is not recognized in an asset acquisition.
Since the acquisition date, Alamo has adopted all of the Company's accounting policies.
(b) Revenue Recognition
The majority of the Company’s performance obligations are satisfied over time. The Company has determined this best represents the transfer of value from its services to the customer as performance by the Company helps to enhance a customer controlled asset (e.g., unplugging a well, enabling a well to produce oil or natural gas). Measurement of the satisfaction of the performance obligation is measured using the output method, which is typically evidenced by a field ticket. A field ticket includes items such as services performed, consumables used, and man hours incurred to complete the job for the customer. Each field ticket is used to invoice customers. Payment terms for invoices issued are in accordance with a master services agreement with each customer, which typically require payment within 30 to 60 days of the invoice issuance.
A portion of the Company’s contracts contain variable consideration; however, this variable consideration is typically unknown at the time of contract inception, and is not known until the job is complete, at which time the variability is resolved. Examples of variable consideration include the number of hours that will be incurred and the amount of consumables (such as chemicals and proppants) that will be used to complete a job.
Remaining Performance Obligations
The Company invoices its customers for the services provided at contractual rates multiplied by the applicable unit of measurement, including volume of consumables used and hours incurred. In accordance with ASC 606, the Company has elected the “Right to Invoice” practical expedient for all contracts, which allows the Company to invoice its customers in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date. With this election, the Company is not required to disclose information about the variable consideration related to its remaining performance obligations. The Company has also elected the practical expedient to expense immediately mobilization costs, as the amortization period would always be less than one year. For those contracts with a term of more than one year, the Company had approximately $30.7 million of unsatisfied performance obligations as of September 30, 2021, which will be recognized as services are performed over the remaining contractual terms.
The Company’s obligations for refunds as well as the warranties and related obligations stated in its contracts with its customers are standard to the industry and are related to the correction of any defectiveness in the execution of its performance obligations.
Contract Balances
12

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
In line with industry practice, the Company bills its customers for its services in arrears, typically when the stage or well is completed or at month-end. The majority of the Company’s jobs are completed in less than 30 days. Furthermore, it is currently not standard practice for the Company to execute contracts with prepayment features. Payment terms after invoicing are typically 30 to 60 days.
The Company does not have any significant contract costs to obtain or fulfill contracts with customers; as such, no amounts are recognized on the consolidated balance sheet. Taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from revenues in the Condensed Consolidated Statements of Operations and Comprehensive Loss and net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.
The following is a description of the Company’s core service lines separated by reportable segments from which the Company generates its revenue. For additional detailed information regarding reportable segments, see Note (14) Business Segments.
Revenue from the Company’s Completion Services, Well Construction and Intervention (“WC&I”), and Well Support Services segments are recognized as follows:
Completion Services
The Company provides hydraulic fracturing, wireline and pumpdown services pursuant to contractual arrangements, such as term contracts and pricing agreements. Revenue from these services are earned as services are rendered, which is generally on a per stage or fixed monthly rate. All revenue is recognized when a contract with a customer exists, the performance obligations under the contract have been satisfied over time, the amount to which the Company has the right to invoice has been determined and collectability of amounts subject to invoice is probable. Contract fulfillment costs, such as mobilization costs and shipping and handling costs, are expensed as incurred and are recorded in cost of services in the Condensed Consolidated Statements of Operations and Comprehensive Loss. To the extent fulfillment costs are considered separate performance obligations that are billable to the customer, the amounts billed are recorded as revenue in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Once a stage has been completed, a field ticket is created that includes charges for the service performed and the chemicals and proppant consumed during the course of the service. The field ticket may also include charges for the mobilization of the equipment to the location, any additional equipment used on the job and other miscellaneous items. The field ticket represents the amounts to which the Company has the right to invoice and to recognize as revenue.
All revenues from Alamo will be recognized in the West Texas region of the Company's Completions segment.
Well Construction and Intervention
The Company provides cementing services pursuant to contractual arrangements, such as term contracts, or on a spot market basis. Revenue is recognized upon the completion of each performance obligation, which for cementing services, represents the portion of the well cemented: surface casing, intermediate casing or production liner. The performance obligations are satisfied over time. Jobs for these services are typically short term in nature, with most jobs completed in a day. Once the well has been cemented, a field ticket is created that includes charges for the services performed and the consumables used during the course of service. The field ticket represents the amounts to which the Company has the right to invoice and to recognize as revenue.
The Company provides a range of coiled tubing services primarily used for fracturing plug drill-out during completion operations and for well workover and maintenance, primarily on a spot market basis. Jobs for these services are typically short-term in nature, lasting anywhere from a few hours to multiple days. Revenue is recognized upon completion of each day’s work based upon a completed field ticket. The field ticket includes charges for the services performed and the consumables used during the course of service. The field ticket may also include charges for the mobilization and set-up of equipment, the personnel on the job, any additional equipment used on the job, and other miscellaneous consumables. The Company typically charges the customer for the services performed and resources provided on an hourly basis at agreed-upon spot market rates, at times, or pursuant to pricing agreements.
Historical Segment: Well Support Services Segment
On March 9, 2020, the Company completed the divestiture of its Well Support Services Segment. For additional information, see Note (14) Business Segments. Through its rig services line, the Company had provided workover and well servicing rigs that were primarily used for routine repair and maintenance of oil and gas wells, re-drilling operations and plug and abandonment operations.
13

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
These services were provided on an hourly basis at prices that approximate spot market rates. A field ticket was generated and revenue is recognized upon the earliest of the completion of a job or at the end of each day. A rig services job can last anywhere from a few hours to multiple days depending on the type of work being performed. The field ticket includes the base hourly rate charge and, if applicable, charges for additional personnel or equipment not contemplated in the base hourly rate. The field ticket may also include charges for the mobilization and set-up of equipment.
Through its fluids management service line, the Company used to provide storage, transportation and disposal services for fluids used in the drilling, completion and workover of oil and gas wells. Rates for these services vary and can be on a per job, per hour, or per load basis, or on the basis of quantities sold or disposed. Revenue is recognized upon the completion of each job or load, or delivered product, based on a completed field ticket.
Through its other special well site service line, the Company used to provide fishing, contract labor and tool rental services for completion and workover of oil and gas wells. Rates for these services vary and can be on a per job, per hour or on the basis of rental days per month. Revenue is recognized based on a field ticket issued upon the completion of each job or on a monthly billing for rental services provided.
Disaggregation of Revenue
Revenue activities during the three and nine months ended September 30, 2021 and 2020 were as follows:
Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
(Thousands of Dollars) (Thousands of Dollars)
Completion Services WC&I Well Support Services Total Completion Services WC&I Well Support Services Total
Geography
Northeast $ 64,140  $ 4,859  $ —  $ 68,999  $ 177,448  $ 16,978  $ —  $ 194,426 
Central 72,861  —  —  72,861  162,410  —  —  162,410 
West Texas 168,176  20,902  —  189,078  407,643  49,511  —  457,154 
West 50,511  1,336  —  51,847  60,794  3,335  —  64,129 
International 10,379  —  —  10,379  35,592  —  —  35,592 
$ 366,067  $ 27,097  $ —  $ 393,164  $ 843,887  $ 69,824  $ —  $ 913,711 

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
(Thousands of Dollars) (Thousands of Dollars)
Completion Services WC&I Well Support Services Total Completion Services WC&I Well Support Services Total
Geography
Northeast $ 58,099  $ 3,704  $ —  $ 61,803  $ 217,752  $ 16,728  $ —  $ 234,480 
Central 20,139  —  —  20,139  100,654  7,478  —  108,132 
West Texas 55,416  5,094  —  60,510  388,413  48,830  8,373  445,616 
West 9,278  861  —  10,139  108,004  10,698  49,556  168,258 
International 11,084  —  —  11,084  31,041  —  31,041 
$ 154,016  $ 9,659  $ —  $ 163,675  $ 845,864  $ 83,734  $ 57,929  $ 987,527 
(c) Long-Lived Assets with Definite Lives
Property and equipment, inclusive of equipment under finance lease, are generally stated at cost.
Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from 13 months to 40 years. Management determines the estimate of the useful lives and salvage values of
14

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
property and equipment on expected utilization, technological change and effectiveness of its maintenance programs. Depreciation methods, useful lives and residual values are reviewed annually or as needed based on activities related to specific assets. When components of an item of property and equipment are identifiable and have different useful lives, they are accounted for separately as major components of property and equipment.
Gains and losses on disposal of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized net within operating costs and expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Major classifications of property and equipment and their respective useful lives are as follows:
Land
Indefinite life
Building and leasehold improvements
13 months – 40 years
Machinery and equipment
13 months – 10 years
Office furniture, fixtures and equipment
3 years – 5 years
Leasehold improvements are assigned a useful life equal to the term of the related lease. Depreciation methods, useful lives and residual values are reviewed annually.
Leasehold improvements are assigned a useful life equal to the term of the related lease, or its expected period of use.
In the first quarter of 2021, the Company reassessed the estimated useful lives of select machinery and equipment, concluding that due to a decrease in service intensity for select machinery and equipment driven by operational parameters required to maximize natural gas substitution and longer major component lives attributable to equipment health monitoring and predictive maintenance from our proprietary digital NexHub platform and data science efforts, the useful lives of select machinery and equipment should be increased by 1-2 years depending on the specific asset class. In accordance with ASC 250, “Accounting Changes and Error Corrections,” the change in the estimated useful lives of the Company’s property and equipment was accounted for as a change in accounting estimate, on a prospective basis, effective January 1, 2021. This change resulted in a decrease in depreciation expense and decrease in net loss during the three and nine months ended September 30, 2021 of $7.5 million and 29.1 million, respectively, in the Consolidated Statement of Operations and Comprehensive Loss.
On May 9, 2021, one of the Company’s hydraulic frac fleets operating in the Permian Basin was involved in an accidental fire, which resulted in a complete loss of the equipment; no parties were injured as a result of this incident. In the second quarter of 2021, the Company recognized a $21.7 million receivable related to insurance proceeds in other current assets for replacement costs of the damaged equipment, which offset the $12.0 million loss recognized on the damaged equipment and costs to remove the equipment. The resulting gain of $9.7 million was recognized in the second quarter of 2021, in other income (expense), net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
During the three months ended September 30, 2021 the Company has received an additional $1.2 million in insurance proceeds, offset by additional costs of $0.5 million. The resulting additional gain of $0.7 million was recognized in the third quarter of 2021 in other income (expense), net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Amortization on definite-lived intangible assets is calculated on the straight-line method over the estimated useful lives of the assets, which range from 2 to 15 years. The majority of the Company's definite lived intangible assets include customer contracts and technology.
Property and equipment and definite-lived intangible assets (“Long-lived Assets”) are evaluated on a quarterly basis to identify events or changes in circumstances, referred to as triggering events that indicate the carrying value of certain property and equipment may not be recoverable or upon the occurrence of a triggering event. An impairment loss is recorded in the period in which it is determined that the carrying amount of Long-lived Asset is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets with such cash flows to be realized over the estimated remaining useful life of the primary asset within the asset group. The Company determined the lowest level of identifiable cash flows that are independent of other asset groups to be primarily at the service line level. The Company's asset groups consist of fracturing services, wireline, cementing, and coiled tubing, except for an entity level asset group for Long-lived Assets that do not have identifiable independent
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
cash flows. Estimates of undiscounted future net cash flows of assets groups are projected based on estimates of projected revenue growth, unit count, utilization, pricing, gross profit rates, SG&A rates, working capital fluctuations and capital expenditures. Forecasted cash flows take into account known market conditions as of the assessment date, and management’s anticipated business outlook. A terminal period is used to reflect an estimate of stable, perpetual growth. If the estimated undiscounted future net cash flows for a given asset group is less than the carrying amount of the asset groups, an impairment loss is determined by comparing the estimated fair value with the carrying value of the related asset groups. The impairment loss is then allocated across the asset group's major classifications.
During the first quarter of 2020, management determined the reductions in commodity prices driven by the potential impact of the novel COVID-19 pandemic and global supply and demand dynamics coupled with the sustained decrease in the Company’s share price were deemed triggering events. As a result of the triggering event, recoverability testing was performed and it was determined that the estimated undiscounted future net cash flow for all asset groups was greater than the carrying amount of their related assets and no impairment loss was recorded.
The Company did not recognize any impairment charges related to the Company’s long-lived assets for the three and nine months ended September 30, 2021 or 2020.
(d) Leases
In accordance with ASU 2016-02, the Company considers any contract that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration to be a lease. The Company determines whether the contract into which it has entered is a lease at the lease commencement date. Rental arrangements with term lengths of one month or less are expensed as incurred, but not recognized as qualifying leases.
For lessees, leases can be classified as finance leases or operating leases, while for lessors, leases can be classified as sales-type leases, direct financing leases or operating leases. As lessee, all leases, with the exception of short-term leases, are capitalized on the balance sheet by recording a lease liability, which represents the Company's obligation to make lease payments arising from the lease and a right-of-use asset, which represents the Company's right to use the underlying asset being leased.
For leases in which the Company is the lessee, the Company uses a collateralized incremental borrowing rate to calculate the lease liability, as for most leases, the implicit rate in the lease is unknown. The collateralized incremental borrowing rate is based on a yield curve over various term lengths that approximates the borrowing rate the Company would receive if it collateralized its lease arrangements with all of its assets. For leases in which the Company is the lessor, the Company uses the rate implicit in the lease.
For finance leases, the Company amortizes the right-of-use asset on a straight-line basis over the earlier of the useful life of the right-of-use asset or the end of the lease term and records this amortization in depreciation and amortization expense on the Condensed Consolidated Statements of Operations and Comprehensive Loss. For finance leases where the Company has determined it is reasonably certain to exercise a purchase option to acquire the underlying asset, the lessee amortizes the ROU asset to the later of the end of the underlying asset’s useful life or lease term and records this amortization in depreciation and amortization expense on the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company adjusts the lease liability to reflect lease payments made during the period and interest incurred on the lease liability using the effective interest method. The incurred interest expense is recorded in interest expense on the Condensed Consolidated Statements of Operations and Comprehensive Loss. For operating leases, the Company recognizes one single lease cost, comprised of the lease payments and amortization of any associated initial direct costs, within rent expense on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Variable lease costs not included in the determination of the lease liability at the commencement of a lease are recognized in the period when the specified target that triggers the variable lease payments becomes probable.

In accordance with ASC 842, the Company has made the following elections for its lease accounting:
•all short-term leases with term lengths of 12 months or less will not be capitalized; the underlying class of assets to which the Company has applied this expedient is primarily its apartment leases;
•for non-revenue contracts containing both lease and non-lease components, both components will be combined and accounted for as one lease component and accounted for under ASC 842; and
•for revenue contracts containing both lease and non-lease components, both components will be combined and accounted for as one component and accounted for under ASC 606.
16

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(e) Derivative Instruments and Hedging Activities
The Company utilizes interest rate derivatives to manage interest rate risk associated with its floating-rate borrowings. The Company recognizes all derivative instruments as either assets or liabilities on the consolidated balance sheets at their respective fair values. For derivatives designated in hedging relationships, changes in the fair value are either offset through earnings against the change in fair value of the hedged item attributable to the risk being hedged or recognized in accumulated other comprehensive loss until the hedged item affects earnings.

The Company only enters into derivative contracts that it intends to designate as hedges for the variability of cash flows to be received or paid related to a recognized asset or liability (i.e. cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the gain or loss on the derivative is reported as a component of other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
The Company discontinues hedge accounting prospectively, when it determines that the derivative is no longer highly effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised, the originally forecasted transaction is no longer probable of occurring or if management decides to remove the designation of the cash flow hedge. The net derivative instrument gain or loss related to a discontinued cash flow hedge shall continue to be reported in accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the originally hedged transaction affects earnings, unless it is probable that the forecasted transaction will not occur by the end of the originally specified time period. When it is probable that the originally forecasted transaction will not occur by the end of the originally specified time period, the Company recognizes immediately, in earnings, any gains and losses related to the hedging relationship that were recognized in accumulated other comprehensive loss. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the consolidated balance sheets and recognizes any subsequent changes in the derivative’s fair value in earnings.
In addition, we evaluate the terms of our operating agreements and other contracts, if any, to determine whether they contain embedded components that are required to be bifurcated and accounted for separately as derivative financial instruments. For additional detailed information regarding derivatives, see Note (8) Derivatives.
(f) Stock-based compensation
The Company recognizes compensation expense for restricted stock awards, restricted stock units to be settled in common stock (“RSUs”), performance-based RSU award (“PSUs”), and non-qualified stock options (“stock options”) based on the fair value of the awards at the date of grant. The fair value of restricted stock awards and RSUs is determined based on the number of shares or RSUs granted and the closing price of the Company’s common stock on the date of grant. The fair value of stock options is determined by applying the Black-Scholes model to the grant-date market value of the underlying common shares of the Company. The fair value of PSUs with market conditions is determined using a Monte Carlo simulation method. The Company has elected to recognize forfeiture credits for these awards as they are incurred, as this method best reflects actual stock-based compensation expense.
Compensation expense from time-based restricted stock awards, RSUs, PSUs, and stock options is amortized on a straight-line basis over the requisite service period, which is generally the vesting period.
Tax deductions on the stock-based compensation awards are not realized until the awards are vested or exercised. The Company recognizes deferred tax assets for stock-based compensation awards that will result in future deductions on its income tax returns, based on the amount of tax deduction for stock-based compensation recognized at the statutory tax rate in the jurisdiction in which the Company will receive a tax deduction. If the tax deduction for a stock-based award is greater than the cumulative GAAP compensation expense for that award upon realization of a tax deduction, an excess tax benefit will be recognized and recorded as a favorable impact on the effective tax rate. If the tax deduction for an award is less than the cumulative GAAP compensation expense for that award upon realization of the tax deduction, a tax shortfall will be recognized and recorded as an unfavorable impact on the effective tax rate. Any excess tax benefits or shortfalls will be recorded as discrete, adjustments in the period in which they occur. The
17

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
cash flows resulting from any excess tax benefit will be classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows.
The Company provides its employees with the option to settle income tax obligations arising from the vesting of their restricted or deferred stock-based compensation awards by withholding shares equal to such income tax obligations. Shares acquired from employees in connection with the settlement of the employees’ income tax obligations are accounted for as treasury shares that are subsequently retired. Restricted stock awards, RSUs, and PSUs are not considered issued and outstanding for purposes of earnings per share calculations until vested.
For additional information, see Note (10) Stock-Based Compensation.
(3) Alamo Acquisition
On August 31, 2021 (the “Alamo Acquisition Date”), the Company completed the Alamo Acquisition in accordance with the terms of the Purchase Agreement, dated as of August 4, 2021 (the “Purchase Agreement”), by and among the Company, NexTier Completion Solutions Inc., Alamo Frac Holdings, LLC, Alamo and the “owner group” identified therein. The Company acquired 100% of Alamo.
The Alamo Acquisition was completed for cash consideration of $100.0 million, equity consideration of 26 million shares of the Company's common stock valued at $82.3 million, post-closing services valued at $30 million, an estimated $15.9 million of contingent consideration, $7.4 million of non contingent consideration, and a net working capital settlement to be finalized in the fourth quarter of 2021. The contingent consideration includes the Tier II Upgrade Payment and the Earnout Payments, which are contingent upon the achievement of certain performance targets, as described in the Purchase Agreement.
The Company accounted for the Alamo Acquisition using the acquisition method of accounting. The aggregate purchase price noted above was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition. The measurements of some assets acquired and liabilities assumed, such as intangible assets and the earnout were based on inputs that are not observable in the market and thus represent Level 3 inputs. The fair value of acquired property and equipment were based on both available market data and a cost approach.
The following table summarizes the fair value of the consideration transferred in the Alamo Acquisition and the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the Alamo Acquisition Date:
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
Total Purchase Consideration (Thousands of Dollars)
Cash consideration(1)
$ 100,000 
Equity consideration 82,323 
Post close services 30,000 
Contingent consideration 15,944 
Non contingent consideration 7,370 
Total purchase consideration 235,637 
Cash
7,419 
Trade and accounts receivable
50,619 
Inventories
1,726 
Prepaid and other current assets
19,654 
 Assets held for sale 3,282 
Property and equipment
114,705 
Intangible assets
27,113 
Finance lease right-of-use assets 35,813 
Other noncurrent assets
1,676 
Total identifiable assets acquired
262,007 
Accounts payable
39,101 
Accrued expenses
38,000 
Current maturities of long-term finance lease liabilities 10,125 
Long-term finance lease liabilities 25,688 
Non-current liabilities
971 
Total liabilities assumed
113,885 
Goodwill
87,515 
Total purchase consideration $ 235,637 
(1) Includes $32.3 million of payments for indebtedness on behalf of Alamo.

Goodwill is calculated as the excess of the consideration transferred over the fair value of the net assets acquired. All the goodwill recognized for the Alamo acquisition is recognized in the Completions segment and is tax deductible with an amortization period of 15 years. The goodwill in this acquisition was primarily attributable to Alamo's organized workforce and potential synergies.
Intangible assets related to the Alamo acquisition consisted of the following:
(Thousands of Dollars)
Weighted average remaining amortization period (Years) Gross Carrying Amounts
Trademarks 1.5 $ 2,409 
Non-compete agreements 3 1,310 
Customer relationships 7.33 23,394 
Total $ 27,113 
For the valuation of the customer relationship intangible asset within the Completions Services segment, management used the income based multi-period excess earning method, which utilized contributory asset charges. Under this method, the Company calculated earnings derived from the existing customer relationships and then deducted portions of the earnings that could be attributed to supporting assets that contribute to the generation of said earnings. Estimated cash flows were discounted at the cost of equity based on the assumption that the intangible asset would be financed with 100% equity. For the valuation of the trademarks intangible asset
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
within the Completions Services segment, management used the relief from royalty method to reflect the after tax royalty savings attributable to owning the intangible asset. Management used the return on asset method to determine an implied royalty rate since a royalty rate was not available in the Company's industry. For the valuation of the non-compete agreements intangible asset within the Completions Services segment, management used the incremental cash flow (''with/without") method.
The Company has recognized $19.0 million in indemnification assets related to an ongoing sales & use tax audit and other indemnified liabilities under the Purchase Agreement.
The following transactions were recognized separately from the acquisition of assets and assumptions of liabilities in the Alamo Acquisition. Merger costs consist of legal and professional fees. Integration costs consist of expenses incurred to integrate Alamo's operations with that of the Company, including retention bonuses and severance payments. The expenses for all these transactions were expensed as incurred and are presented in Merger and integration in the condensed consolidated statements of operations and comprehensive loss.
(Thousands of Dollars)
Transaction Type Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Merger $ 4,552  $ 4,662 
Integration 200  268 
Total merger and integration costs $ 4,752  $ 4,930 
The following combined pro forma information assumes the Alamo Acquisition occurred on January 1, 2020. The pro forma information presented below is for illustrative purposes only and does not reflect future events that occurred after September 30, 2021 or any operating efficiencies or inefficiencies that resulted from the Alamo Acquisition. The information is not necessarily indicative of results that would have been achieved had the Company controlled Alamo during the period presented. Pro forma adjustments related to the elimination of historical interest expense for debt paid off as part of the Alamo Acquisition were $2.7 million and $5.4 million for the nine months ended September 30, 2021 and 2020, respectively.
(Thousands of Dollars)
Unaudited
Nine Months Ended September 30,
2021 2020
Revenue $ 1,124,136  $ 1,170,276 
Net income (loss) (116,291) (266,435)
Net income (loss) per share (basic) (0.48) (1.11)
Net income (loss) per share (diluted) (0.48) (1.11)
The Company’s condensed consolidated statement of operations and comprehensive loss for the three months ended and nine months ended September 30, 2021 includes revenue of $34.8 million and net income of $3.0 million from the Alamo operations, from September 1, 2021 to September 30, 2021.
As of September 30, 2021, there have been no changes to the fair value of the contingent consideration compared to the Acquisition Date.
(4)    Goodwill
Goodwill is allocated across three reporting units: Completion Services, Well Construction and Intervention Services and Well Support Services reporting units. At the reporting unit level, the Company tests goodwill for impairment on an annual basis as of October 31 of each year, or when events or changes in circumstances, referred to as triggering events, indicate the carrying value of goodwill may not be recoverable and that a potential impairment exists.
Judgment is used in assessing whether goodwill should be tested for impairment more frequently than annually. Factors such as unexpected adverse economic conditions, competition, market changes, and other external events may require more frequent assessments.
During the first quarter of 2020, a significant decline in the Company's share price, which resulted in the Company's market capitalization dropping below the book value of equity, as well as reductions in commodity prices driven by the potential impact of the
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
COVID-19 pandemic and global supply and demand dynamics were deemed triggering events that led to a test for goodwill impairment. The impairment testing methodologies for the first quarter 2020 are discussed below.
Income approach
The income approach impairment testing methodology is based on a discounted cash flow model, which utilizes present values of cash flows to estimate fair value. For the Completions and Well Construction and Intervention reporting units, the future cash flows were projected based on estimates of projected revenue growth, unit count, utilization, pricing, gross profit rates, SG&A rates, working capital fluctuations and capital expenditures. Forecasted cash flows took into account known market conditions as of March 31, 2020, and management’s anticipated business outlook. A terminal period was used to reflect an estimate of stable, perpetual growth. The terminal period reflects a terminal growth rate of 2.5%. The future cash flows were discounted using a market-participant risk-adjusted weighted average cost of capital (“WACC”) of 19.9% for the Completions reporting unit and 22.4% for the Well Construction and Intervention reporting unit. These assumptions were derived from both observable and unobservable inputs and combined reflect management’s judgments and assumptions.
Market approach
    The market approach impairment testing methodology is based upon the guideline public company method and the guideline transaction method. The application of the guideline public company method was based upon selected public companies operating within the same industry as the Company. Based on this set of comparable competitor data, operational multiples were derived for the reporting units weighted based on management’s assessment of reliability. The selected market multiples for the guideline public company method were forward-looking enterprise value to revenue and enterprise value to EBITDA multiples, with multiples ranging from 0.5x to 0.6x for revenues and from 3.3x to 6.2x for EBITDA. The application of the guideline transaction method was based upon valuation multiples derived from actual control transactions for comparable companies. Based on this, valuation multiples are derived from historical data of selected transactions, then evaluated and adjusted, if necessary, based on the strengths and weaknesses of the subject reporting unit relative to each acquired guideline company. The selected market multiples for the guideline transaction method were enterprise value to revenue and enterprise value to book value of invested capital, with multiples ranging from 0.7x to 2.1x for revenues and from 0.6x to 1.3x for book value of invested capital.
    The fair value determined under the market approach is sensitive to these market multiples, and a decline in any of the multiples could reduce the estimated fair value of the reporting unit below its carrying value. Earnings estimates were derived from unobservable inputs that require significant estimates, judgments and assumptions as described in the income approach.
Reconciliation of value and goodwill impairment conclusion
    The estimated fair value determined under the income approach was consistent with the estimated fair value determined under the market approach. The concluded fair value for both reporting units consisted of a weighted average, with a 40.0% weighted under the income approach and 60.0% weight under the market approach. Market data in support of the implied control premium were used in this reconciliation to corroborate the estimated reporting unit fair values with the Company's overall market-indicated value. The results of the Step 1 impairment testing for goodwill resulted in the Company recognizing an impairment expense of $32.6 million during the first quarter of 2020, consisting of $32.2 million related to the Completions Services reporting unit and $0.4 million representing the entire balance of goodwill for the Well Construction and Intervention reporting unit.
The Company assessed and determined there were not any triggering events in the first three quarters of 2021.
During the second quarter of 2021, the Company completed an acquisition for total cash consideration of $2.5 million. The transaction resulted in additional goodwill of $0.7 million recorded under the Completion Services reporting unit.
During the third quarter of 2021, the Company acquired Alamo for total transaction valuation of $235.6 million. The transaction resulted in additional goodwill of $87.5 million recorded under the Completion Services reporting unit.
(Thousands of Dollars)
Goodwill as of December 31, 2020 $ 104,198 
Completions Acquisition 733 
Alamo Acquisition 87,515 
Goodwill as of September 30, 2021 $ 192,446 
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(5)    Inventories, net
Inventories, net, consisted of the following as of September 30, 2021 and December 31, 2020:
(Thousands of Dollars)
September 30,
2021 		December 31,
2020
Sand, including freight $ 10,911  $ 5,096 
Chemicals and consumables 4,437  2,993 
Materials and supplies 22,760  21,979 
Total inventory, net $ 38,108  $ 30,068 
Inventories are reported net of obsolescence reserves of $5.4 million and $4.4 million as of September 30, 2021 and December 31, 2020, respectively. The Company recognized $0.6 million and $0.1 million of obsolescence expense during the three months ended September 30, 2021 and 2020, respectively. The Company recognized $1.0 million and $3.8 million of obsolescence expense during the nine months ended September 30, 2021 and 2020. Additionally, during the three and nine months ended September 30, 2020, the Company recognized a $2.7 million write-down in inventory carrying value down to its net realizable value.
(6)    Long-Term Debt
Long-term debt at September 30, 2021 and December 31, 2020 consisted of the following:
(Thousands of Dollars)
September 30,
2021 		December 31,
2020
2018 Term Loan Facility
$ 338,625  $ 341,250 
 2021 Equipment Loan 39,428  — 
Less: Unamortized debt discount and debt issuance costs
(5,031) (5,710)
Total debt, net of unamortized debt discount and debt issuance costs
373,022  335,540 
Less: Current portion
(11,186) (2,252)
Long-term debt, net of unamortized debt discount and debt issuance costs
$ 361,836  $ 333,288 
Below is a summary of the Company’s credit facilities outstanding as of September 30, 2021:
(Thousands of Dollars)
2021 Equipment Loan 2019 ABL Facility 2018 Term Loan Facility
Original facility size $ 46,500  $ 450,000  $ 350,000 
Outstanding balance $ 39,428  $ —  $ 338,625 
Letters of credit issued $ —  $ 23,200  $ — 
Available borrowing base commitment n/a $ 154,131 
n/a
Interest Rate(1)
5.25  %
LIBOR or base rate plus applicable margin
LIBOR or base rate plus applicable margin
Maturity Date June 1, 2025
October 31, 2024
May 25, 2025
(1)    London Interbank Offer Rate (“LIBOR”) is subject to a 1.00% floor
    Maturities of the 2018 Term Loan Facility and the 2021 Equipment Loan for the next five years are presented below:
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(Thousands of Dollars)
Year-end December 31,
2021 $ 2,351 
2022 13,634 
2023 14,187 
2024 14,768 
2025 333,113 
$ 378,053 
ABL Revolving Credit Facility
On October 31, 2019, the Company entered into the Second Amended and Restated Asset-Based Revolving Credit Agreement (“2019 ABL Facility”), modifying the Company’s pre-existing asset-based revolving credit facility (“2017 ABL Facility”). Deferred charges associated with the 2019 ABL Facility were capitalized and totaled $1.2 million. In connection with the modification of the 2017 ABL Facility, the Company wrote off $0.5 million of deferred financing costs. The remaining deferred financing costs related to the 2017 ABL Facility will be amortized over the life of the 2019 ABL Facility. Unamortized deferred charges associated with the 2019 and 2017 ABL Facilities were $2.5 million and $3.1 million as of September 30, 2021 and December 31, 2020, respectively, and are recorded in other noncurrent assets on the consolidated balance sheets. During the first quarter of 2020, the Company provided notice to the lenders to borrow a total of $175 million under the 2019 ABL Facility. The interest rates for the $150.0 million LIBOR borrowing and $25.0 million Base Rate borrowing were 2.125% and 3.75%, respectively. During the second quarter of 2020, the Company repaid the $150.0 million LIBOR borrowing and the $25.0 million Base Rate borrowing and did not incur any penalties.
Equipment Loan
On August 20, 2021, the Company entered into the Master Loan and Security Agreement (the “Master Agreement”) with Caterpillar Financial Services Corporation. The Master Agreement provides for secured equipment financing term loans in an aggregate amount of up to $46.5 million (the “Equipment Loans”). The Equipment Loans may be drawn in multiple tranches, with each loan evidenced by a separate promissory note. On September 3, 2021 entered into a term note for $39.4 million (the “Note”) for an equipment financing loan. The Note will bear interest at a rate of 5.25% per annum and has a maturity date of June 1, 2025. The Company will amortize $0.2 million in debt issuance costs and debt discount over the life of the loan.
(7) Significant Risks and Uncertainties
Subsequent to the sale of the Well Support Services segment, the Company operates in two reportable segments: Completion Services and Well Construction and Intervention with significant concentration in the Completion Services segment. During the three months ended September 30, 2021 and 2020, sales to Completion Services customers represented 93% and 94% of the Company's consolidated revenue, respectively. During the nine months ended September 30, 2021 and 2020, sales to Completion Services customers represented 92% and 86% of the Company's consolidated revenue.
    The Company depends on its customers' willingness to make operating and capital expenditures to explore for, develop and produce oil and natural gas onshore in the U.S. This activity is driven by many factors, including current and expected crude oil and natural gas prices. The U.S. energy industry experienced a significant downturn in the second half of 2014 through early 2016, driven primarily by global oversupply and a decline in commodity prices. From early 2016 through late 2018, the U.S. generally experienced some recovery in commodity prices and drilling and completion activity. Over this time frame, the U.S. active rig count increased from a trough of 404 rigs in May 2016 to a peak of 1,083 rigs in December 2018, driving significant demand for the Company's completion services.
In late 2019 and early 2020, and in response to the oversupply of hydraulic fracturing equipment, an increasing number of horsepower retirements were announced, removing a significant base of equipment from the market. Despite some of these announcements, the oversupply of hydraulic fracturing equipment persisted, resulting in a continuation of highly competitive market conditions into 2020. 
In late first quarter of 2020, the industry faced sudden and unprecedented circumstances, including major shocks to both supply and demand. COVID-19 has resulted in significant demand destruction for oil products, driven by a significant slowdown in economic activity throughout the U.S. and abroad.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
This resulted in a rapid and significant decline in crude oil prices and an increasingly utilized storage network, limiting distribution outlets and optionality for production and further exacerbating price declines. U.S. exploration and production companies responded with drastic reductions in budgets and outright completion stoppages. As a result, from the first quarter of 2020 to the third quarter of 2020, the average U.S. active rig count decreased by approximately 68% to 254 rigs.
Commodity prices have recovered from the 2020 downturn, and oil and natural gas prices are both trading above pre-COVID-19 levels. The rig count averaged 496 in the third quarter of 2021, 95% higher than the third quarter of 2020. The rig count was 521 at the end of the third quarter of 2021.
     Significant customers are those that individually account for 10% or more of the Company's consolidated revenue or total accounts receivable. For the three months ended September 30, 2021, revenue from one customer individually represented more than 10% of the Company's consolidated revenue. This customer represented 15% or $60.8 million of our consolidated revenue in the Completions Services segment. For the three months ended September 30, 2020, revenue from four customers individually represented more than 10% of the Company's consolidated revenue. These customers represented 19% or $30.6 million, 14% or $22.7 million, 13% or $22.2 million and 13% or $21.9 million, respectively, of our consolidated revenue in the Completions Services segment.
For the nine months ended September 30, 2021, revenue from one customer individually represented more than 10% of the Company's consolidated revenue. This customer represented 12% or $113.6 million of our consolidated revenue in the Completions Services segment. For the nine months ended September 30, 2020, revenue from two customers individually represented more than 10% of the Company's consolidated revenue. These customers represented 16% or $161.9 million and 15% and $142.7 million, respectively, of our consolidated revenue in the Completions Services segment.
For the three months ended September 30, 2021, purchases from the Company's top supplier represented approximately 5% of the Company's overall purchases, while for the nine months ended September 30, 2021, the Company's top supplier represented approximately 6% of the Company's overall purchases. For the three months ended September 30, 2020, purchases from the Company's top supplier represented approximately 7% of the Company's overall purchases. For the nine months ended September 30, 2020, purchases from the Company's top supplier represented approximately 5% of the Company's overall purchases.
(8) Derivatives
    The Company uses interest-rate-related derivative instruments to manage its variability of cash flows associated with changes in interest rates on its variable-rate debt.
    On March 9, 2020, the Company sold its Well Support Services segment to Basic Energy Services, Inc. (“Basic”) for $93.7 million of total proceeds, including $59.4 million in cash, before transaction costs, escrowed amounts, and subject to customary working capital adjustments, for a net of $53.3 million received at close, and $34.4 million of par value Senior Secured Notes, with 10.75% coupon rate, (“WSS Notes”) previously issued by Basic. On July 29, 2020, the Company agreed to use the escrowed amount in the final settlement of the working capital reconciliation. Under the terms of the agreement, the WSS Notes were accompanied by a make-whole guarantee at par value, which guaranteed the payment of $34.4 million to NexTier after the WSS Notes were held to the one-year anniversary of March 9, 2021. The cash equivalent make-whole was issued under a fund guarantee by Ascribe III Investments LLC ("Ascribe"), a private equity investment firm with approximately $1.0 billion in assets under management. In the event of a Basic restructuring or a credit rating downgrade in conjunction with a change in control prior to the one-year anniversary, the make-whole guarantee accelerates the WSS Notes to par value of $34.4 million. NexTier was entitled to semi-annual interest payments on the WSS Notes based on the 10.75% annual coupon throughout the holding period. The Company identified the make-whole guarantee as an embedded derivative and bifurcated the valuation of the WSS Note and the make-whole guarantee. The Company elected the fair value option for the WSS Notes at the inception of the transaction. The fair value on the date of the transaction for the make-whole derivative and WSS Notes was $12.2 million and $22.2 million, respectively, and resulted in a gain on divestiture of $8.7 million. The fair value of the WSS Notes and the make-whole guarantee are measured at the end of each reporting period. Gains and losses recognized in relation to these instruments are recognized in net income. The fair value of the WSS Notes and make-whole guarantee were recorded in Other Current Assets. See Note (14) Business Segments for further discussion.
On March 31, 2021, the Company received a $34.4 million cash payment from Ascribe in full settlement of the WSS Notes and the make-whole guarantee. At the time of the cash payment, the WSS Notes and make-whole guarantee had a fair value of $33.6 million, resulting in a realized gain on settlement of $0.8 million. This gain is recorded within other income (expense) on the Consolidated Statements of Operations and Comprehensive Loss.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
    On May 25, 2018, the Company, and certain subsidiaries of the Company as guarantors, entered into a term loan facility (the "2018 Term Loan Facility") with each lender from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent. The 2018 Term Loan Facility has an initial aggregate principal amount of $350.0 million and proceeds were used to repay the Company's pre-existing 2017 term loan facility. The 2018 Term Loan Facility has a variable interest rate based on the London Interbank Offer Rate ("LIBOR"), subject to a 1.0% floor. In June 2018, the Company executed a new off-market interest rate swap effective through March 31, 2025 to hedge 50% of its expected LIBOR exposure matching the swap to the 1-month LIBOR, 1% floor, of the 2018 Term Loan Facility, and terminated the pre-existing interest rate swaps. After completing all appropriate accounting treatment, including the $3.5 million of deferred gains in accumulated other comprehensive loss for the pre-existing interest rate, the new interest rate swap was designated in a new cash flow hedge relationship.
    The following tables present the fair value of the Company's derivative instruments on a gross and net basis as of the periods shown below:
(Thousands of Dollars)
Derivatives
designated as
hedging
instruments 		Derivatives
not
designated as
hedging
instruments 		Gross Amounts
of Recognized
Assets and
Liabilities
Gross
Amounts
Offset in the
Balance
Sheet(1)
Net Amounts
Presented in
the Balance
Sheet(2)
As of September 30, 2021:
Other current liability $ (2,865) $ — $ (2,865) $ — $ (2,865)
Other noncurrent liability
(5,314) — (5,314) — (5,314)
As of December 31, 2020:
Other current asset $ — $ 27,243 $ 27,243 $ — $ 27,243
Other current liability
(2,861) — (2,861) — (2,861)
Other noncurrent liability
(8,260) — (8,260) — (8,260)
(1) Agreements are in place that allow for the financial right of offset for derivative assets and derivative liabilities at settlement or in the event of a default under the agreements.
(2) There are no amounts subject to an enforceable master netting arrangement that are not netted in these amounts. There are no amounts of related financial collateral received or pledged.
The following table presents gains and losses for the Company's interest rate derivatives designated as cash flow hedges (in thousands of dollars):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020 Location
Amount of gain (loss) recognized in total other comprehensive loss on derivative $ (46) $ (453) $ 785  $ (6,068) OCI
Amount of loss reclassified from accumulated other comprehensive loss into earnings (694) (673) (2,043) (1,662) Interest Expense
The gain (loss) recognized in other comprehensive loss for the derivative instrument is presented within hedging activities in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
There were no gains or losses recognized in earnings as a result of excluding amounts from the assessment of hedge effectiveness. Based on recorded values as of September 30, 2021, $2.9 million of net losses will be reclassified from accumulated other comprehensive loss into earnings within the next 12 months.
See Note (9) Fair Value Measurements and Financial Information for discussion on fair value measurements related to the Company's derivative instruments.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(9) Fair Value Measurements and Financial Information
The Company discloses the required fair values of financial instruments in its assets and liabilities under the hierarchy guidelines, in accordance with GAAP. As of September 30, 2021, the Company's financial instruments consisted of cash and cash equivalents, accounts receivable, equity security investments, accounts payable, accrued expenses, derivative instruments, long-term debt and lease obligations. As of September 30, 2021 and December 31, 2020, the carrying values of the Company's financial instruments, included in its condensed consolidated balance sheets, approximated or equaled their fair values.
Recurring Fair Value Measurement
As of September 30, 2021 the Company has four financial instruments measured at fair value on a recurring basis which are its interest rate derivative, see Note (8) Derivatives above, its equity security investment, the Earnout Payments and Tier II Upgrade Payments related to the Alamo acquisition and as described in the Purchase Agreement. The equity security investment is composed primarily of common equity shares in a publicly traded company, acquired at a fair value of $5.3 million. During the three and nine months ended September 30, 2021, the Company recognized an unrealized loss of $0.5 million and an unrealized loss of $3.2 million, respectively, on its equity security investment, which is recorded within other income (expense) on the Condensed Consolidated Statements of Operations and Comprehensive Loss.
As of December 31, 2020, the Company had four financial instrument measured on a recurring basis which was its interest rate derivative, make-whole derivative, WSS Notes, see Note (8) Derivatives above, and equity security investment. The interest rate derivative, make-whole derivative, WSS Notes, and the equity security investment are presented within other current assets in the condensed consolidated balance sheets.
The fair market value of the financial instruments reflected on the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020 were determined using industry-standard models that consider various assumptions, including current market and contractual rates for the underlying instrument, time value, implied volatilities, nonperformance risk as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the instrument and can be supported by observable data.
The following tables present the placement in the fair value hierarchy of assets and liabilities that were measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020 (in thousands of dollars):
Fair value measurements at reporting date using
September 30, 2021 Level 1 Level 2 Level 3
Assets:
 Equity security investment $ 4,702 $ 4,702 $ — $ —
Liabilities:
 Earnout Payments $ (9,424) $ — $ —  $ (9,424)
 Tier II Upgrade Payment $ (6,520) $ — $ (6,520) $ —
Interest rate derivative
$ (8,179) $ — $ (8,179) $ —
Fair value measurements at reporting date using
December 31, 2020 Level 1 Level 2 Level 3
Assets:
Make-whole derivative $ 27,243 $ — $ 27,243 $ —
WSS Note 6,322 — 6,322 —
Equity security investment 11,263 11,263 — —
Liabilities:
Interest rate derivative
$ (11,121) $ — $ (11,121) $ —

Non-Recurring Fair Value Measurement
At March 31, 2020 and September 30, 2020, the Company determined the reductions in commodity prices driven by the impact of the novel COVID-19 virus and global supply and demand dynamics represented triggering events that may indicate that the
26

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
carrying value of the Company's indefinite-lived assets and long-lived assets may not be recoverable. After further evaluation, the Company recognized impairment expense of $32.6 million and no impairment expense in the first and third quarter of 2020, respectively. See Note (4) Goodwill. The Company assessed and determined there were no triggering events during the other two quarters in 2020.
During each quarter of 2021, the Company has assessed and determined there were no triggering events.

Credit Risk
The Company's financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents, derivative contracts and trade receivables.
The Company's cash balances on deposit with financial institutions totaled $135.5 million and $276.0 million as of September 30, 2021 and December 31, 2020, respectively, which exceeded Federal Deposit Insurance Corporation insured limits. The Company regularly monitors these institutions' financial condition.
The credit risk from the derivative contracts derives from the potential failure of the counterparty to perform under the terms of the derivative contracts. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high-quality counterparties, whose Standard & Poor's credit rating is higher than BBB. The derivative instruments entered into by the Company do not contain credit-risk-related contingent features.
The majority of the Company's trade receivables have payment terms of 30 to 60 days. Significant customers are those that individually account for 10% or more of the Company's consolidated revenue or total accounts receivable. As of September 30, 2021, trade receivables from one customer individually represented 13% of the Company's total trade receivables. As of December 31, 2020, trade receivables from the Company's top customer individually represented 17% of the Company's total trade receivables.
The Company mitigates the associated credit risk by performing credit evaluations and monitoring the payment patterns of its customers. The Company has a process in place to collect all receivables within 30 to 60 days of aging. As of September 30, 2021, the Company had $4.9 million in allowance for credit losses. As of December 31, 2020, the Company had $2.7 million in allowance for credit losses, including the increase of $1.5 million from the adoption of ASU 2016-13.
The Company recognized $0.9 million and $2.1 million of bad debts, net of recoveries during the three and nine months ended September 30, 2021, respectively. During the third quarter of 2020, the Company recovered $5.3 million of accounts receivable, which resulted in a net credit in bad debt expense of $4.6 million during the three months ended September 30, 2020 and $0.3 million of bad debt expense during the nine months ended September 30, 2020.
(10) Stock-Based Compensation
Effective as of October 31, 2019, the Company (i) amended and restated the Keane Group, Inc. Equity and Incentive Award Plan under the name NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan (“Equity and Incentive Award Plan”), and (ii) assumed and amended and restated the C&J Energy Services, Inc. 2017 Management Incentive Plan under the name NexTier Oilfield Solutions Inc. (Former C&J Energy) Management Incentive Plan ( “Management Incentive Plan”, and collectively with the Equity and Incentive Award Plan, the “Equity Award Plans”). As part of the C&J Merger, the Company assumed the award agreements outstanding under the Management Incentive Plan on the terms set forth in the Merger agreement.
As of September 30, 2021, the Company has four types of stock-based compensation outstanding under its Equity Award Plans: (i) restricted stock awards issued to independent directors and certain executives and employees, (ii) restricted stock units issued to executive officers and key management employees, (iii) non-qualified stock options issued to executive officers and (iv) performance-based stock units issued to executive officers and key management employees.
The following table summarizes stock-based compensation costs for the three and nine months ended September 30, 2021 and 2020 (in thousands of dollars):
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Restricted stock awards $ 300  $ 406  $ 1,065  $ 1,192 
Restricted stock time-based unit awards 4,100  3,271  10,318  15,985 
Non-qualified stock options —  100  76  804 
Restricted stock performance-based unit awards 2,950  971  5,983  3,170 
Equity-based compensation cost 7,350  4,748  17,442  21,151 
Tax Benefit (1,151) (1,138) (3,573) (5,076)
Equity-based compensation cost, net of tax $ 6,199  $ 3,610  $ 13,869  $ 16,075 
Performance-based RSU awards
During the first and second quarter of 2021, the Company issued 550,899 and 1,473,736 of performance based RSUs to executive officers under its Equity Award Plans, which were fair valued at $3.2 million and $13.7 million using a Monte Carlo simulation method. Each vesting is subject to a payout percentage based on the Company's annualized total stockholder return ranking relative to its total stockholder return peer group achieved during the performance period. The number of shares that may be earned at the end of the vesting period ranges from 0% to 200% of the target award amount, if the performance criteria is met. These performance-based RSUs will be settled in the Company's common stock and are classified as equity awards. The compensation expense associated with these performance-based RSUs will be amortized into earnings on a straight-line basis. As of September 30, 2021, total unamortized compensation cost related to unvested performance-based RSUs was $14.6 million, which the Company expects to recognize over the weighted-average period of 2.25 years.
(11) Earnings per Share
Basic income or (loss) per share is based on the weighted average number of common shares outstanding during the period. Diluted income or (loss) per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect, such as stock awards from the Equity Awards Plans, had been issued. Anti-dilutive securities represent potentially dilutive securities which are excluded from the computation of diluted income or (loss) per share as their impact would be anti-dilutive.
A reconciliation of the numerators and denominators used for the basic and diluted net income (loss) per share computations is as follows (in thousands of dollars):
        
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Numerator:
Net loss $ (43,994) $ (102,433) $ (130,277) $ (286,677)
Denominator:
Basic weighted-average common shares outstanding(1)
224,481  214,251  218,499  213,620 
Dilutive effect of restricted stock awards granted to Board of Directors —  195  214  139 
Dilutive effect of time-based restricted stock awards granted under the Equity Plan 1,166  14  957  16 
Dilutive effect of performance-based restricted stock awards granted under the Equity Plan 511  1,221  321  981 
Diluted weighted-average common shares outstanding(1)
226,158  215,681  219,991  214,756 
(1) As a result of the net loss incurred by the Company for the three and nine months ended September 30, 2021 and 2020, the calculation of diluted net loss per share gives no consideration to the potentially anti-dilutive securities shown in the above reconciliation, and as such is the same as basic net loss per share.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(12) Commitments and Contingencies
As of September 30, 2021 and December 31, 2020, the Company had $0.5 million and $4.9 million of deposits on equipment, including deposits acquired through the C&J Merger, respectively. Outstanding purchase commitments on equipment were $60.3 million and $23.4 million, as of September 30, 2021 and December 31, 2020, respectively.
Aggregate minimum commitments under long-term raw material supply contracts for the next five years as of September 30, 2021 are listed below:
(Thousands of Dollars)
2021 $ 4,204 
2022 19,145 
2023 5,280 
2024 1,190 
2025 — 
$ 29,819 
Litigation
From time to time, the Company is subject to legal and administrative proceedings, settlements, investigations, claims and actions, as is typical of the industry. These claims include, but are not limited to, contract claims, environmental claims, employment related claims, claims alleging injury or claims related to operational issues. The Company's assessment of the likely outcome of litigation matters is based on its judgment of a number of factors, including experience with similar matters, past history, precedents, relevant financial information and other evidence and facts specific to the matter. In accordance with GAAP, the Company accrues for contingencies where the occurrence of a material loss is probable and can be reasonably estimated, based on the Company's best estimate of the expected liability. The Company may increase or decrease its legal accruals in the future, on a matter-by-matter basis, to account for developments in such matters. Notwithstanding the uncertainty as to the final outcome and based upon the information currently available to it, the Company does not currently believe these matters in aggregate will have a material adverse effect on its financial position or results of operations.
Environmental
The Company is subject to various federal, state and local environmental laws and regulations that establish standards and requirements for protection of the environment. The Company cannot predict the future impact of such standards and requirements, which are subject to change and can have retroactive effectiveness. The Company continues to monitor the status of these laws and regulations. Currently, the Company has not been fined, cited or notified of any environmental violations that would have a material adverse effect upon its financial position, liquidity or capital resources. However, management does recognize that by the very nature of the Company's business, material costs could be incurred in the near term to maintain compliance. The amount of such future expenditures is not determinable due to several factors, including the unknown magnitude of possible regulation or liabilities, the unknown timing and extent of the corrective actions which may be required, the determination of the Company's liability in proportion to other responsible parties and the extent to which such expenditures are recoverable from insurance or through indemnification.
Regulatory Audits
Prior to the consummation of the C&J Merger, the Company and C&J had been notified by certain state taxing authorities that these taxing authorities would be conducting routine sales and use tax audits of certain wholly owned operating subsidiaries of the Company for tax periods ranging from January 2011 through December 2019. As of December 31, 2020, the Company had recorded estimates of potential assessments for each audit totaling in the aggregate approximately $33.0 million. For one audit, in particular, the Company disagreed with many aspects of the state’s assessment and began to contest the state’s position through administrative procedures. During the first quarter of 2021, the Company obtained additional information that resulted in a reduction of the Company's accrual related to this tax audit by $13.3 million. During the second quarter of 2021, the Company further reduced the accrual related to this tax audit by $8.8 million, after taking into account additional information obtained, including refund claims relating to such periods. The Company received a final settlement offer from Texas Attorney General Office on September 8, 2021 for $3.7 million, which resulted in an additional reduction to the accrual by $2.8 million. These reductions were recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
Alamo is subject to regulatory audits by state taxing jurisdictions it operates in. There was an ongoing tax audit when the Alamo Acquisition was completed. The Company evaluated the potential assessment and exposures for all taxing jurisdictions and recorded an estimate of $17.7 million. The estimate is included in the purchase price allocation disclosed under Note (3) Alamo Acquisition.
(13) Related Party Transactions
Cerberus Operations and Advisory Company, Cerberus Capital Management, L.P., and Cerberus Technology Solutions LLC, affiliates of the Company's principal equity holder, provide certain consulting services to the Company. The Company paid $0.1 million and $0.3 million during the three months ended September 30, 2021 and 2020, respectively, for these services. The Company paid $0.3 million and $2.1 million during the nine months ended September 30, 2021 and 2020, respectively.
As part of the Purchase Agreement, the Company agreed to provide certain post-closing services to Alamo Frac Holdings, LLC valued at $30.0 million in the aggregate. During the three and nine months ended September 30, 2021, the Company provided services to Alamo Frac Holdings, LLC of $3.2 million as part of the Purchase Agreement. The Company has a remaining customer contract liability related to these services of $26.8 million as of September 30, 2021.
(14) Business Segments
In accordance with Accounting Standard Codification (“ASC”) No. 280, Segment Reporting (“ASC 280”), the Company routinely evaluates whether its separate segments have changed. This determination is made based on the following factors: (1) the Company’s chief operating decision maker (“CODM”) is currently managing each operating segment as a separate business and evaluating the performance of each segment and making resource allocation decisions distinctly and expects to do so for the foreseeable future, and (2) discrete financial information for each operating segment is available.
In 2019, due to the transformative nature of the C&J Merger, the CODM changed the way in which the Company is managed, including the level at which to make performance evaluation and resource allocation decisions. Discrete financial information was created to provide the segment information necessary for the CODM to manage the Company under the revised operating segment structure. On March 9, 2020, the Company announced it had completed the divestiture of its Well Support Services segment. As a result of the changes to operating segments, the Company revised its reportable segments subsequent to the completion of the C&J Merger and Well Support Services segment divestiture. For the period from after the C&J merger and prior to the WSS divestiture, the Company’s revised reportable segments were: (i) Completion Services, (ii) Well Construction and Intervention (“WC&I”) and (iii) Well Support Services. Subsequent to the WSS divestiture, the Company's reportable segments were (i) Completion Services, and (ii) Well Construction and Intervention (“WC&I”) Services. This segment structure reflects the financial information and reports used by the Company’s management, specifically including its CODM, to make decisions regarding the Company’s business, including performance evaluation and resource allocation decisions. As a result of the revised reportable segment structure subsequent to the C&J merger, the Company has restated the corresponding items of segment information for all periods presented.
The following is a description of each reportable segment:
Completion Services
 The Company’s Completion Services segment consists of the following businesses and service lines: (1) fracturing services; (2) wireline and pumpdown services; and (3) completion support services, which includes the Company's research and technology department.
All of Alamo's financial results are included in the Completions Services segment.
Well Construction and Intervention Services
 The Company’s WC&I Services segment consists of the following businesses and service lines: (1) cementing services and (2) coiled tubing services.
 Historical Segment: Well Support Services
 The Company’s Well Support Services segment consisted of the following businesses and service lines: (1) rig services; (2) fluids management services; and (3) other specialty well site services. On March 9, 2020, the Company completed the divestiture of its Well Support Services segment for $93.7 million of total proceeds, including $59.4 million in cash, before transaction costs, escrowed
30

NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
amounts, and subject to customary working capital adjustments, for a net of $53.3 million received at close, and $34.4 million of par value Senior Secured Notes, with 10.75% coupon rate, ("WSS Notes") previously issued by Basic. This resulted in a gain on divestiture of $8.7 million. The gain is recorded within (Gain) Loss on Disposal of Assets on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Income per share for the three months ended March 31, 2020 attributable to the divested Well Support Services segment was less than $0.01. On July 29, 2020, the Company received the escrowed cash amount in final settlement for working capital reconciliation.
On March 31, 2021 the Company received a $34.4 million cash payment from Ascribe in full settlement of the WSS Notes and the make-whole guarantee. At the time of the cash payment, the WSS Notes and make-whole guarantee had a fair value of $33.6 million, resulting in a realized gain on settlement of $0.8 million recorded in other income (expense) on the Consolidated Statements of Operations and Comprehensive Loss.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
The following tables present financial information with respect to the Company’s segments. Corporate and Other represents costs not directly associated with a segment, such as interest expense, income taxes and corporate overhead. Corporate assets include cash, deferred financing costs, derivatives and entity-level machinery equipment.
(Thousands of Dollars)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Operations by business segment
Adjusted gross profit:
Completion Services(1)
$ 46,184  $ 15,145  $ 81,959  $ 144,676 
WC&I(1)
2,905  (785) 7,337  8,811 
Well Support Services(1)
—  —  —  12,338 
Total adjusted gross profit $ 49,089  $ 14,360  $ 89,296  $ 165,825 
(1)    Adjusted gross profit (loss) at the segment level is not considered to be a non-GAAP financial measure as it is the Company's segment measure of profitability and is required to be disclosed under GAAP pursuant to ASC 280. Adjusted gross profit (loss) is defined as revenue less cost of services, further adjusted to eliminate items in cost of services that management does not consider in assessing ongoing performance. 
(Thousands of Dollars)
Three Months Ended September 30, 2021
Nine Months Ended September 30, 2021
Completion Services
WC&I
Well Support Services
Total
Completion Services
WC&I
Well Support Services
Total
Revenue
$ 366,067  $ 27,097  $ —  $ 393,164  $ 843,887  $ 69,824  $ —  $ 913,711 
Cost of Services
320,297  24,340  —  344,637  768,562  63,112  —  831,674 
Gross profit excluding depreciation and amortization
45,770  2,757  —  48,527  75,325  6,712  —  82,037 
Management adjustments associated with cost of services(1)
414  148  —  562  6,634  625  —  7,259 
Adjusted gross profit $ 46,184  $ 2,905  $ —  $ 49,089  $ 81,959  $ 7,337  $ —  $ 89,296 
(1)    Adjustments relate to market-driven severance, leased facility closures, and restructuring costs incurred as a result of significant declines in crude oil prices resulting from demand destruction from the COVID-19 pandemic and global oversupply.
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(Thousands of Dollars)
Three Months Ended September 30, 2020
Nine Months Ended September 30, 2020
Completion Services
WC&I
Well Support Services
Total
Completion Services
WC&I
Well Support Services
Total
Revenue
$ 154,016  $ 9,659  $ —  $ 163,675  $ 845,864  $ 83,734  $ 57,929  $ 987,527 
Cost of Services
139,477  10,589  —  150,066  716,008  79,464  45,591  841,063 
Gross profit excluding depreciation and amortization
14,539  (930) —  13,609  129,856  4,270  12,338  146,464 
Management adjustments associated with cost of services(2)
606  145  —  751  14,820  4,541  —  19,361 
Adjusted gross profit $ 15,145  $ (785) $ —  $ 14,360  $ 144,676  $ 8,811  $ 12,338  $ 165,825 
(2)    Adjustments relate to market-driven severance and restructuring costs incurred as a result of significant declines in crude oil prices resulting from demand destruction from the COVID-19 pandemic and global oversupply.
(Thousands of Dollars)
September 30, 2021 December 31, 2020
Total assets by segment:
Completion Services
$ 1,112,324  $ 689,814 
WC&I
68,087  62,959 
Well Support Services
—  — 
Corporate and Other
237,564  405,115 
Total assets
$ 1,417,975  $ 1,157,888 
Goodwill by segment:
Completion Services
$ 192,446  $ 104,198 
WC&I
—  — 
Well Support Services
—  — 
Corporate and Other
—  — 
Total goodwill
$ 192,446  $ 104,198 
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NEXTIER OILFIELD SOLUTIONS INC. AND SUBSIDIARIES
Notes to the Unaudited Condensed Consolidated Financial Statements
(15) New Accounting Pronouncements
(a) Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board issued ASU No 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company adopted this standard on January 1, 2021, and there was no impact on the financial statements.
(b) Recently Issued Accounting Standards
In October 2021, the FASB issued ASU 2021-08 “Business Combinations (Topic 805) Accounting for Contract Assets and Contact Liabilities from Contracts with Customers”. ASU 2021-08 requires acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. This standard is effective beginning on December 15, 2022. The Company does not expect ASU 2021-08 to have any impact on its consolidated financial statements.
In January 2021, the FASB issued ASU 2021-01 “Reference Rate Reform (Topic 848)”. ASU 2021-01 expands on the US GAAP guidance on contract modifications and hedge accounting related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This standard is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In October 2020, the FASB issued ASU 2020-10 “Codification Improvements”. ASU 2020-10 improves the clarity and consistency of various provisions in the Codification. The Company does not expect ASU 2020-10 to have any impact on the its consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06 “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)” (“ASU 2020-06”). ASU 2020-06 simplifies the guidance on the issuer's accounting for convertible debt instruments and convertible preferred stock. The Company does not expect ASU 2020-06 to have any impact on the Company's consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which is intended to provide temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This standard is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In January 2020, the FASB issued ASU 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)”, which clarifies the interaction between the accounting for investments in equity securities, investment in equity method and certain derivatives instruments. This standard is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This standard is effective for fiscal years beginning after December 15, 2021 and the adoption is not expected to have any impact on the Company's consolidated financial statements.
(16) Subsequent Events
During the third quarter of 2021, negotiations on a contract extension with National Energy Services Reunited Corp. ("NESR") regarding an unconventional fracturing fleet ended with both parties mutually agreeing not to extend the contract for equipment and consulting services. The Company has begun an orderly wind-down for this operation in early fourth quarter of 2021, while continuing to support NESR during the transition period. Additionally, during the fourth quarter of 2021, the Company and NESR signed an agreement for the sale and payment of equipment and accompanying parts inventory. The Company will continue to operate in the Middle East with NESR through a consulting service agreement on another fracturing fleet and will continue to pursue additional partnering opportunities in the Middle East North Africa region as mutually beneficial to the Company and NESR.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related condensed footnotes included within Part I, "Item 1. Condensed Consolidated Financial Statements (Unaudited)" in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2020.
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ORGANIZATIONAL OVERVIEW
NexTier Oilfield Solutions Inc. is an industry-leading U.S. land oilfield focused service company, with a diverse set of well completion and production services across a variety of active and demanding basins. We have a history of growth through acquisition, including the October 31, 2019 C&J Merger. After this business combination, we were organized into three reportable segments:
•Completion Services, which consists of the following businesses and services lines: (1) hydraulic fracturing; (2) wireline and pumpdown services; and (3) completion support services, which includes our innovation centers and activities.
•Well Construction and Intervention Services, which consists of the following businesses and service lines: (1) cementing services and (2) coiled tubing services.
•Well Support Services, which consists of the following businesses and service lines: (1) rig services; (2) fluids management; and (3) other special well site services.
M&A Activity
Our Well Support Services segment was divested in a transaction that closed on March 9, 2020. It focused on post-completion activities at the well site, including rig services, such as workover and plug and abandonment, fluids management services, and other specialty well site services. Subsequent to the Well Support Services divestiture, the Company's reportable segments were (i) Completion Services, and (ii) Well Construction and Intervention (“WC&I”) Services.
On August 31, 2021 the Company completed its acquisition (the “Alamo Acquisition”) of Alamo Pressure Pumping, LLC and its wholly owned subsidiaries (“Alamo”). The Alamo Acquisition was completed for cash consideration of $100.0 million, equity consideration of 26 million shares of the Company's common stock valued at $82.3 million, post-closing services valued at $30 million, an estimated $15.9 million of contingent consideration, and $7.4 million of non contingent consideration. The contingent consideration includes the Tier II Upgrade Payment and the Earnout Payments, which are contingent upon the achievement of certain performance targets, as described in the Purchase Agreement. Alamo's base of operations is in Midland, Texas, and it's pressure pumping business operates almost exclusively in the Permian Basin.
This history impacts the comparability of our operational results from year to year. Additional information on these transactions can be found in Note (14) Business Segments and Note (3) Alamo Acquisition.
OPERATIONAL OVERVIEW
Market Trends and Influences

We provide our services in several of the most active basins in the United States, including the Permian, the Marcellus Shale/Utica, the Eagle Ford, Mid-Continental, and the Bakken/Rockies.
Total North America rig count during the third quarter of 2021 averaged 496 rigs, reflecting an increase of approximately 10% as compared to the second quarter 2021 average of 450 rigs, but is still approximately 37% below the first quarter 2020 average of 785 rigs. North America rig count exited the third quarter of 2021 at 521 rigs. The increase as compared to the second quarter 2021 average was driven by an improvement in economic activity, supportive commodity prices, and modest continued improvements in completions supply/demand dynamics. Crude prices entered and exited the third quarter of 2021 at similar levels, but the exit rate at $75.03 was 21% higher than the intraquarter low of $62.14. Natural gas prices were up 61% from $3.65 on June 30, 2021 to $5.87 on September 30, 2021.
Activity within our business segments is significantly influenced by spending on upstream exploration, development and production programs by our customers. Also driving our activity is the status of the global economy, which is a major factor on oil and natural gas demand. Some of the more significant determinants of current and future spending levels of our customers are oil and natural gas prices, global oil supply and demand, the world economy, the availability of credit, government regulation and global stability, which together drive worldwide drilling activity.
In the third quarter of 2021, we continued to see disciplined increases in oil supply from the Organization of Petroleum Exporting Countries plus (OPEC+) and U.S. shale operators. U.S. onshore completion activity growth continued to trend higher in the third quarter, and we deployed two additional frac fleets during the quarter. With this increased revenue came some related startup inefficiencies, which impacted our results, particularly early in the quarter. Commodity prices have continued to improve, but the discipline of U.S. shale operators has tempered the levels of activity that we would have seen historically at these oil and natural gas prices. We expect fourth quarter activity will continue along a similar trend of disciplined improvements in activity, subject to typical seasonality. Continued improvement in customer activity and utilization remains dependent on macro conditions, including commodity prices, changing political climate, response to the COVID-19 pandemic (including any resurgences in the
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U.S. and abroad), seasonality and potential lasting changes that a prolonged or resurging pandemic may have on supply and demand worldwide.
In addition, we have continued to see some modest improvement in pricing, especially with our duel fuel equipment. But, overall economic conditions in the market, including contract structure, inflation and abundant competition, continue to burden profitability of the fleet. We had adjusted our cost structure over the past year, but the current pricing is still below the levels at which we would expect to deploy significant additional horsepower.

Furthermore, as operators are looking for opportunities to improve well performance and lower costs through innovative techniques, we are seeing a rise in operator initiatives such as simulfrac techniques (we generally refer to these types of initiatives as increasing “frac intensity”). Simulfrac is a process of fracking two or more wells at the same time instead of a single well, for the purpose of increasing operational efficiencies and contributing to well cost savings. These techniques require multi-well pads and advanced complex completion designs, resulting in, among other things, adaption costs, an increase in the amount of equipment related to a particular job, an increase in commodities (such as proppant, logistics, and chemicals), and enhanced maintenance practices and procedures. The increasing complexity and resources required by evolving frac intensity, such as double simulfrac, results in the need to fine-tune our approach in the related commercial agreements, especially around sharing the value created and the commercial risks of these enhanced operations. We're continuing to work with our customers to utilize experiences on these operations to hone our commercial agreements going forward.

We are constantly assessing our approach to ensure that our team and our equipment meets the evolving demands. Customers are increasingly looking for ways to lower their carbon footprint by lower emissions associated with their drilling and completion activity. We have invested to upgrade a significant portion of our fleet to be able to operate using natural gas as a primary fuel source. These dual fuel fleets can be powered using both diesel and natural gas as a fuel source. In addition to lowering emissions, at current diesel and natural gas prices, using natural gas can lower the cost to operate a dual fuel fleet relative to a conventional diesel fleet.

As indicated previously, macro-economic factors are resulting in inflation of materials and other costs, such as employee compensation, contract services, commodity prices and communications expenses. While inflation increases our operating costs, the impact of commodity inflation on the Company to date has been significantly mitigated by the Company's ability to adjust pricing to pass the impact of inflation through to its customers. Additionally, we, our suppliers and contractors are facing a highly competitive domestic labor market. These labor market dynamics create wage inflation, increase recruiting costs due to elevated employee attrition and, with respect to driver shortages, may negatively impact or increase the cost of our logistics service for our customers. The rate and scope of these various aspects of inflation may continue to impact our costs, which may not be readily recoverable in the prices of our services. At this time, we expect this trend to continue through 2021 and likely into 2022. As such, its full financial impact on our business is impractical to quantify at this time.

Global market supply chain and logistics constraints have also impacted our suppliers. We have begun to see a more pronounced delay in lead times for certain components used in equipment, parts and supplies. Additionally, some shipments from overseas suppliers are experiencing transportation delays due to a lack of available containers and a backlog at incoming ports of entry. These delays in shipments could impact our availability to secure parts and inventory, although the ultimate impact is impractical to quantify at this time.

Utilization Tendencies

Historically, our utilization levels have been highly correlated to U.S. onshore spending by our customers, which is heavily driven by the price of oil and natural gas. Generally, as capital spending by our customers increases, drilling, completion and production activity also increases, resulting in increased demand for our services, and therefore more days or hours worked (as the case may be). Conversely, when drilling, completion and production activity levels decline due to lower spending by our customers, we generally provide fewer services, which results in fewer days or hours worked (as the case may be).
Given the volatile and cyclical nature of activity drivers in the U.S. onshore oilfield services industry, coupled with the varying prices we are able to charge for our services and the cost of providing those services, among other factors, operating margins can fluctuate widely depending on supply and demand at a given point in the cycle. Additionally, during periods of decreased spending by our customers and/or high competition, we may be required to discount our rates or provide other pricing concessions to remain competitive and support deployed equipment utilization, which negatively impacts our revenue and operating margins. During periods of pricing weakness for our services, we may not be able to reduce our costs accordingly, and our ability to achieve any cost reductions from our suppliers typically lags behind the decline in pricing for our services, which could further adversely affect our results. Furthermore, when demand for our services increases following a period of low demand, our ability to capitalize on such increased demand may be delayed while we reengage and redeploy equipment and crews that have been idled during a downturn. The mix of customers that we are working for, as well as limited periods of exposure to the spot market, also impacts our deployed equipment utilization. Some smaller operators may not have sufficient programs to support continuous operations or dedicated fleets. To the extent we have a significant percentage of our operations servicing such smaller operators, we may experience lower utilization.
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Strategic Direction

We believe that there is competitive value in providing integrated solutions that align the incentives of operators and service providers. We are pursuing opportunities to leverage our investment in our digital program and diesel substitution technologies (such as duel fuel capabilities), to provide a service strategy targeted at achieving emissions reductions, both for us and our customers. Our recent acquisition of Alamo added 9 hydraulic fracturing fleets, approximately 92% of which is Tier IV dual fuel capable. NexTier has been developing and building its digital program for some time, and our digital platform has been applied to the NexTier operating fleets, with the opportunity to add the digital platform to the Alamo fleets. We are also working toward a natural gas treatment and delivery solution, including natural gas sourcing, compression, transport, decompression, and treatment services, that will power NexTier’s fleet with field gas or compressed natural gas. This service solution seeks to address wellsites where there is not a reliable nearby gas supply, and thus, the full benefit and value of dual fuel or other lower emissions technologies may not otherwise be fully realized. Our integrated natural gas treatment and delivery solution became operational in the second half of 2021. This integrated strategy is designed to provide our customers with a streamlined approach to driving more sustainable, cost effective operations at the wellsite.
We believe our integrated approach and proven capabilities enable us to deliver cost-effective solutions for increasingly complex and technically demanding well completion requirements, which include longer lateral segments, higher pressure rates and proppant intensity and multiple fracturing stages in challenging high-pressure formations. In addition, our technical team and our innovation centers, provide us with the ability to supplement our service offerings with engineered solutions specifically tailored to address customers’ completion requirements and unique challenges. For example, utilizing a lateral science technique resulting in simulfrac stage pairing can reduce the operator’s cost per barrel by taking existing drilling data, analyzing the downhole rock properties, and matching the four or six wells across a simulfrac pad to create an optimized pair for every simulfrac stage. We believe utilization of this technique will ultimately improve injectivity of the frac treatments, improve the long-term production of the treated wells, and lower the equipment costs for each operation. Simulfrac stage pairing can help connect our simulfrac operational experience to real reservoir properties, thereby providing opportunity to deploy a more cost-effective solution that delivers higher production to the operator.
We believe that the safety, quality and efficiency of our service execution and our alignment with customers who recognize the value that we provide are central to our efforts to support utilization and grow our business.
Operating Effectively Through the COVID-19 Pandemic
    We have continued our measures focused on the safety of our partners, employees, and the communities in which we operate, while at the same time seeking to mitigate the impact on our financial position and operations. In August the Company experienced higher levels of employee absenteeism as a result of the surge in COVID-19 cases associated with the Delta variant. While this trend improved as we exited the third quarter, it is possible that these negative effects will reoccur until infection rates decline. We continue to encourage our workforce to practice safe behaviors in the workplace and while away from work to help prevent community spread of COVID-19. In addition, a new federal mandate was implemented in November 2021 requiring companies with 100 or more employees to ensure that workers are either fully vaccinated or test negative for COVID-19 at least once per week. The extent of the impact of this and any other regulatory actions at the federal, state or local level is unclear and could have an adverse impact on the availability and cost related to labor.
Contingency plans remain in place in the event of significant impacts from COVID-19 infection resurgences, but there are no guarantees that such plans will be sufficient. Additional information regarding the actions we've taken since the onset of the COVID-19 pandemic and the increased risks to our business related to the COVID-19 pandemic can be found in our Annual Report on Form 10-K for the year ended December 31, 2020.





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RESULTS OF OPERATIONS IN 2021 COMPARED TO 2020
The following is a comparison of our results of operations for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.
Three Months Ended September 30, 2021 Compared with Three Months Ended September 30, 2020
Three Months Ended September 30,
(Thousands of Dollars)
As a % of Revenue
Variance 
Description
2021 2020 2021 2020 $ %
Completion Services $ 366,067  $ 154,016  93  % 94  % $ 212,051  138  %
WC&I 27,097  9,659  7  % 6  % 17,438  181  %
Revenue
393,164  163,675  100  % 100  % 229,489  140  %
Completion Services 320,297  139,477  81  % 85  % 180,820  130  %
WC&I 24,340  10,589  6  % 6  % 13,751  130  %
Costs of services
344,637  150,066  88  % 92  % 194,571  130  %
Depreciation and amortization
44,861  73,570  11  % 45  % (28,709) (39  %)
Selling, general and administrative expenses
37,453  25,521  10  % 16  % 11,932  47  %
Merger and integration
4,752  7,288  1  % 4  % (2,536) (35  %)
(Gain) loss on disposal of assets
(1,133) (3,027) 0  % (2  %) 1,894  (63  %)
Impairment
—  2,681  0  % 2  % (2,681) (100  %)
Operating income (loss) (37,406) (92,424) (10  %) (56  %) 55,018  (60  %)
Other income (expense), net
585  (3,978) 0  % (2  %) 4,563  (115  %)
Interest expense
(6,701) (5,524) (2  %) (3  %) (1,177) 21  %
Total other income (expense)
(6,116) (9,502) (2  %) (6  %) 3,386  (36  %)
Income tax expense (472) (507) 0  % 0  % 35  (7  %)
Net income (loss) $ (43,994) $ (102,433) (11  %) (63  %) $ 58,439  (57  %)
Revenue:     Total revenue is comprised of revenue from our Completion Services and Well Construction and Intervention Services segments. Revenue during the three months ended September 30, 2021 increased by $229.5 million, or 140%, to $393.2 million from $163.7 million during the three months ended September 30, 2020. This change in revenue by reportable segment is discussed below.
Completion Services:     Revenue for Completion Services during the three months ended September 30, 2021 increased by $212.1 million, or 138%, to $366.1 million from $154.0 million during the three months ended September 30, 2020. The segment revenue increase is primarily attributable to more than doubling the number of fully utilized hydraulic fracturing fleets, increases in wireline and pump down services, and the acquisition of Alamo on August 31, 2021. Higher global commodity prices led to increased customer activity and modest price improvements in all operating basins as market conditions showed signs of improvement from low commodity prices and the COVID-19 pandemic. Fracturing Services increased to 24 fully utilized fleets, including 3 fully utilized Alamo fleets, during the three months ended September 30, 2021 from 11 fully utilized fleets during the three months ended September 30, 2020.
Well Construction and Intervention Services:     Well Construction and Intervention Services segment revenue increased $17.4 million, or 181%, to $27.1 million during the three months ended September 30, 2021 from $9.7 million during the three months ended September 30, 2020. The increase in revenue is primarily due to higher activity, improved pricing, and increased utilization in our cementing and coil tubing services.
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Cost of Services:     Cost of services during the three months ended September 30, 2021 increased by $194.6 million, or 130%, to $344.6 million from $150.1 million during the three months ended September 30, 2020. The increase is primarily due to significantly increased activity and utilization, as explained in Revenue above, in addition to input costs inflation.
Equipment Utilization:     Depreciation and amortization expense decreased $28.7 million, or 39%, to $44.9 million during the three months ended September 30, 2021 from $73.6 million, during the three months ended September 30, 2020. The decrease in depreciation and amortization is due to more equipment nearing the end of its useful lives in addition to the change in estimated useful life of equipment in the first quarter of 2021, which consisted mostly of increases to the expected life of our fracturing equipment. Gain on disposal of assets decreased $1.9 million, or 63%, to a gain of $1.1 million during the three months ended September 30, 2021 from $3.0 million during the three months ended September 30, 2020.
Selling, general and administrative expense:      Selling, general and administrative (“SG&A”) expense, which represents costs associated with managing and supporting our operations, increased by $11.9 million, or 47%, to $37.5 million during the three months ended September 30, 2021 from $25.5 million during the three months ended September 30, 2020, primarily due to the contingent liability related to the Basic Energy Services bankruptcy filing, in addition to the increase in an accrual related to litigation costs.
Merger and integration expense:     Merger and integration expense decreased by $2.5 million, or 35%, to $4.8 million during the three months ended September 30, 2021 from $7.3 million during the three months ended September 30, 2020. The merger and integration costs related to the C&J Merger were a lot more significant, even quarters after the transaction occurred, compared to the Alamo Acquisition merger and integration costs.
Effective tax rate: Our effective tax rate on continuing operations for the three months ended September 30, 2021 was (1.1)% for $0.5 million of recorded income tax expense. The difference between the effective tax rate and the U.S. federal statutory rate is due to foreign withholding taxes and change in valuation allowance. After considering all available positive and negative evidence, we determined that it is unlikely that we will utilize our net deferred tax assets in the foreseeable future and continued to maintain a full valuation allowance.
RESULTS OF OPERATIONS IN 2021 COMPARED TO 2020
The following is a comparison of our results of operations for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.
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Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020
Nine Months Ended September 30,
(Thousands of Dollars)
As a % of Revenue
Variance 
Description 2021 2020 2021 2020 $ %
Completion Services 843,887  $ 845,864  92  % 86  % $ (1,977) 0  %
WC&I 69,824  83,734  8  % 8  % (13,910) (17  %)
Well Support Services —  57,929  0  % 6  % (57,929) (100  %)
Revenue 913,711  987,527  100  % 100  % (73,816) (7  %)
Completion Services 768,562  716,008  84  % 73  % 52,554  7  %
WC&I 63,112  79,464  7  % 8  % (16,352) (21  %)
Well Support Services —  45,591  0  % 5  % (45,591) (100  %)
Costs of services 831,674  841,063  91  % 85  % (9,389) (1  %)
Depreciation and amortization 131,400  234,651  14  % 24  % (103,251) (44  %)
Selling, general and administrative expenses 74,256  120,429  8  % 12  % (46,173) (38  %)
Merger and integration 4,930  33,498  1  % 3  % (28,568) (85  %)
(Gain) loss on disposal of assets (7,742) (11,942) (1  %) (1  %) 4,200  (35  %)
Impairment —  37,008  0  % 4  % (37,008) (100  %)
Operating income (loss) (120,807) (267,180) (13  %) (27  %) 146,373  (55  %)
Other income (expense), net 9,113  (1,303) 1  % 0  % 10,416  (799  %)
Interest expense (16,633) (16,943) (2  %) (2  %) 310  (2  %)
Total other income (expense) (7,520) (18,246) (1  %) (2  %) 10,726  (59  %)
Income tax expense (1,950) (1,251) 0  % 0  % (699) 56  %
Net income (loss) $ (130,277) $ (286,677) (14  %) (29  %) $ 156,400  (55  %)
Revenue:     Total revenue is comprised of revenue from our Completion Services, Well Construction and Intervention Services, and Well Support Services segments. Revenue during the nine months ended September 30, 2021 decreased by $73.8 million, or 7%, to $913.7 million from $987.5 million during the nine months ended September 30, 2020. This change in revenue by reportable segment is discussed below.
Completion Services:     Revenue for Completion Services during the nine months ended September 30, 2021 decreased by $2.0 million, or 0%, to $843.9 million from $845.9 million during the nine months ended September 30, 2020. The segment revenue decrease is primarily attributable to a 22% decrease in wireline and pump down services from less activity and lower pricing, partially offset by an increase of 5% in fracturing services driven by increased logistics services and the acquisition of Alamo. Fracturing Services increased to 18 fully utilized fleets, including Alamo, during the nine months ended September 30, 2021 from 16 fully utilized fleets during the nine months ended September 30, 2020.
Well Construction and Intervention Services:     Well Construction and Intervention Services segment revenue decreased $13.9 million, or 17%, to $69.8 million during the nine months ended September 30, 2021 from $83.7 million during the nine months ended September 30, 2020. The decrease in revenue is mostly attributable to less activity, lower utilization, and price reductions in both our cementing and coil tubing services resulting from lower customer demand as a result of the COVID-19 pandemic and weakened market conditions.
Cost of Services:     Cost of services during the nine months ended September 30, 2021 decreased by $9.4 million, or 1%, to $831.7 million from $841.1 million during the nine months ended September 30, 2020. The reduction is primarily due to significantly less activity and lower utilization, as explained in Revenue above, combined with higher sand and freight
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costs as a result of increased logistics services in our Completions Segment, and increased repair and maintenance expenses related to startup costs of fleet re-deployments, in addition to input costs inflation.
Equipment Utilization:     Depreciation and amortization expense decreased $103.3 million, or 44%, to $131.4 million during the nine months ended September 30, 2021 from $234.7 million, during the nine months ended September 30, 2020. The decrease in depreciation and amortization is due to more equipment nearing the end of its useful lives in addition to the change in estimated useful life of equipment in the first quarter of 2021, which consisted mostly of increases to the expected life of our fracturing equipment. Gain on disposal of assets decreased $4.2 million, or 35%, to $7.7 million during the nine months ended September 30, 2021 from a gain of $11.9 million during the nine months ended September 30, 2020.
Selling, general and administrative expense:      Selling, general and administrative (“SG&A”) expense, which represents costs associated with managing and supporting our operations, decreased by $46.2 million, or 38%, to $74.3 million during the nine months ended September 30, 2021 from $120.4 million during the nine months ended September 30, 2020, primarily due to the $24.9 million accrual reduction for our regulatory audit estimate and our business transformation results to structurally drive out costs and increase efficiencies in our support function processes.
Merger and integration expense:     Merger and integration expense decreased by $28.6 million, or 85%, to $4.9 million during the nine months ended September 30, 2021 from $33.5 million during the nine months ended September 30, 2020 primarily due to the C&J merger and integration related expenses in the earlier part of 2020, which were larger in comparison to the Alamo Acquisition merger and integration related expenses.
Effective tax rate: Our effective tax rate on continuing operations for the nine months ended September 30, 2021 was (1.5)% for $(2.0) million of recorded income tax expense. The difference between the effective tax rate and the U.S. federal statutory rate is due to foreign withholding taxes, change in valuation allowance and discrete tax effect related to indefinite-lived assets. After considering all available positive and negative evidence, we determined that it is unlikely that we will utilize our net deferred tax assets in the foreseeable future and continued to maintain a full valuation allowance.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity represents a company's ability to adjust its future cash flows to meet its needs and opportunities, both expected and unexpected.
(Thousands of Dollars)
September 30, 2021 December 31, 2020
Cash and cash equivalents $ 135,525  $ 275,990 
Debt, net of unamortized deferred financing costs and unamortized debt discount 373,022  335,540 
(Thousands of Dollars)
Nine Months Ended September 30,
2021 2020
Net cash provided by (used in) operating activities $ (19,320) $ 82,676 
Net cash used in investing activities (155,118) (25,309)
Net cash provided by (used in) financing activities 33,540  (7,766)

Significant sources and uses of cash during the nine months ended September 30, 2021
Uses of cash:
•Operating activities:
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–Net cash used in operating activities during the nine months ended September 30, 2021 was $19.3 million which was down $102.0 million from the nine months ended September 30, 2020. The change is primarily due to a decrease in activity and pricing for our wireline and pump down services, an increase in commodity prices, additional maintenance expenses related to startup costs required for fleet re-deployments, and inflation. For further discussion, see Part I, "Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations" .
•Investing activities:
–Net cash used in investing activities during the nine months ended September 30, 2021 of $155.1 million, consisting primarily of capital expenditures, $101.8 million related to acquisition of business and payment of consideration liability, net of $34.4 million in cash received from the WSS notes and $24.5 million in proceeds from disposal of assets.
•Financing activities:
–Proceeds from the Equipment Loan for the nine months ended September 30, 2021 totaled $39.4 million.
–Cash used to repay our debt facilities, excluding leases and interest, during the nine months ended September 30, 2021 was $2.6 million.
–Cash used to repay our finance leases during the nine months ended September 30, 2021 was $1.1 million.
–Shares repurchased and retired related to payroll tax withholdings on our share-based compensation for the nine months ended September 30, 2021 totaled $1.9 million.
Significant sources and uses of cash during the nine months ended September 30, 2020
Sources of cash:
•Operating activities:
–Net cash generated by operating activities during the nine months ended September 30, 2020 of $82.7 million was the result of our thoroughness in receiving collections from our customers and controlling costs.
Uses of cash:
•Investing activities:
–Net cash used in investing activities for the nine months ended September 30, 2020 of $25.3 million, consisting primarily of capital expenditures, net of cash received as part of the sale of the Wells Support Services business segment.
•Financing activities:
–Cash used to repay our debt facilities, excluding leases and interest, during the nine months ended September 30, 2020 was $2.6 million.
–In the first quarter of 2020, the Company drew down $175 million on the 2019 ABL Facility (defined below). This borrowing was to provide the Company better flexibility while managing its cash position during the ongoing COVID-19 pandemic. The borrowing on the 2019 ABL Facility was repaid in full during the second quarter of 2020.
–Cash used to repay our finance leases during the nine months ended September 30, 2020 was $3.1 million.
–Shares repurchased and retired related to payroll tax withholdings on our share-based compensation for the nine months ended September 30, 2020 totaled $2.0 million.
Future sources and use of cash
43

The Company currently expects fourth quarter capital expenditures of approximately $50 million, comprised of maintenance capital expenditures across all product and service lines, as well as strategic investments in additional dual fuel conversions, and the continued deployment of capital for our new Power Solutions business. The Company remains committed to disciplined growth through the coming cycle. While the Company believes it is too early to provide a 2022 capital expenditures guidance, we expect a significant year-over-year capital expenditures decline, even with the inclusion of a full year of Alamo, as additional fleet upgrades will be more limited relative to 2021.
    Debt service for the year ended December 31, 2021 is projected to be $25.5 million, of which $4.8 million is related to finance leases, excluding buyout payments. We anticipate our debt service will be funded by cash flows from operations. Our leverage ratio, as calculated pursuant to the terms of our debt agreement, is 5.80x for the twelve rolling months ended September 30, 2021.
In addition, depending upon Alamo's performance during the performance period, we may be using cash to perform our obligations under the Earnout Agreement related to the Alamo Acquisition. We anticipate that any payments due under the Earnout Agreement will be funded by cash flows from operations.
    Other factors affecting liquidity
Financial position in current market. As of September 30, 2021, we had $135.5 million of cash and a total of $154.1 million available under our revolving credit facility. As of September 30, 2021, we were compliant with all financial and non-financial covenants in our bank agreements. Furthermore, our debt maturities extend over a long period of time. Despite the current uncertainty in global markets resulting from the COVID-19 pandemic, we currently believe that our cash on hand, cash flow generated from operations and availability under our revolving credit facility will provide sufficient liquidity for at least the next 12 months, including for capital expenditures, debt service, working capital investments, and contingent liabilities.
Guarantee agreements. In the normal course of business, we have agreements with financial institutions as part of our 2019 ABL Facility under which $23.2 million of letters of credit were outstanding as of September 30, 2021.
Customer receivables. In line with industry practice, we bill our customers for our services in arrears and are, therefore, subject to our customers delaying or failing to pay our invoices. The majority of our trade receivables have payment terms of 30 to 60 days. In weak economic environments, we may experience increased delays and failures to pay our invoices due to, among other reasons, a reduction in our customers' cash flow from operations and their access to the credit markets. The economic impact of the COVID-19 pandemic and the resulting actions taken to control the further spread of the virus may exacerbate these delays or failures to pay in the future. If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity, consolidated results of operations and consolidated financial condition.
    Purchase Commitments. In the normal course of business, we enter into various contractual obligations that impact or could impact our liquidity. The Company has a number of purchase commitments that primarily relate to our agreements with vendors for sand purchases, other commodities/services and deposits on equipment. The purchase commitments to these vendors include obligations to purchase a minimum amount of product/services; provided that, if the minimum purchase requirement is not met, the shortfall at the end of the applicable period is settled in cash or, in some cases, carried forward to the next period. We also have a variety of operating lease obligations related to our real estate, rail cars, and light duty vehicles. See Part II, "Item 1A. Risk Factors." for additional information on the risks related to these purchase commitments.

Long-Term Debt Arrangements
2019 ABL Facility
We, and certain of our other subsidiaries as additional borrowers and guarantors, are parties to a Second Amended and Restated Asset-Based Revolving Credit Agreement (the “2019 ABL Facility”) that matures on October 31, 2024. This facility provides for, among other things, a $450.0 million revolving credit facility (with a $100.0 million subfacility for letters of credit), subject to a borrowing base in accordance with the terms agreed between us and the lenders. As of September 30, 2021, we had no outstanding principal amounts under the 2019 ABL Facility.
The 2019 ABL Facility is subject to customary fees, guarantees of subsidiaries, events of default, restrictions and covenants, including certain restricted payments and a consolidated fixed charge coverage ratio test. As of September 30, 2021, the Company was in compliance with all covenants.
2018 Term Loan Facility
44

    We are party to a term loan facility and certain of our subsidiaries are guarantors (the "2018 Term Loan Facility") that matures on May 25, 2025.     As of September 30, 2021, there was $338.6 million principal amount of term loans outstanding (the "2018 Term Loans") at an interest rate of LIBOR plus an applicable margin, which is currently at 4.00%. The 2018 Term Loan Facility is subject to customary fees, guarantees of subsidiaries, events of default, restrictions and covenants, including certain restricted payments. As of September 30, 2021, the Company was in compliance with all covenants.
Equipment Loan
On August 20, 2021, the Company entered into the Master Loan and Security Agreement (the “Master Agreement”) with Caterpillar Financial Services Corporation. The Master Agreement provides the backdrop for the Company to enter into secured equipment financing term loans from time to time in an aggregate amount of up to $46.5 million (the “Equipment Loans”). The Equipment Loans may be drawn in multiple tranches, with each loan evidenced by a separate promissory note. On September 3, 2021, we entered into a term note for $39.4 million (the “Note”) for an equipment financing loan. The Note will bear interest at a rate of 5.25% per annum and will mature no later than June 1, 2025. The Master Agreement and the Note contain customary affirmative and negative covenants, including limitations on further encumbrance of the collateral subject to the applicable loans under the Master Agreement. As of September 30, 2021, the Company was in compliance with all covenants.

Off-Balance Sheet Arrangements
We do not have any material off-balance sheet financing arrangements, transactions or special purpose entities.
Significant Accounting Policies and Estimates    
The preparation of our unaudited condensed consolidated financial statements and related notes to the unaudited condensed consolidated financial statements included within Part I, "Item 1. Condensed Consolidated Financial Statements (Unaudited)" requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. We base these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.
A critical accounting estimate is one that requires a high level of subjective judgment by management and has a material impact to our financial condition or results of operations. This discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included within Part I, "Item 1. Condensed Consolidated Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q, as well as our consolidated and combined financial statements and related notes included in Part II, "Item 8. Financial Statements and Supplementary Data" and Part II, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K Report on Form 10-K for the year ended December 31, 2020.
New Accounting Pronouncements
For discussion on the potential impact of new accounting pronouncements issued but not yet adopted, see Note (15) New Accounting Pronouncements of Part I, "Item 1. Condensed Consolidated Financial Statements (Unaudited)."

45

Item 3. Quantitative and Qualitative Disclosure About Market Risk
Interest Rate Risk. As of March 31, 2021, we had variable-rate debt outstanding, the exposure to which we manage with our interest-rate-related derivative instrument. We held no derivative instruments that increased our exposure to market risks for foreign currency rates, commodity prices or other market price risks. We are exposed to changes in interest rates on our floating rate borrowings under our 2019 ABL Facility and 2018 Term Loan. As of September 30, 2021, we had $338.6 million aggregate principal amount outstanding under the 2018 Term Loan. The impact of a 1.0% increase in interest rates under the terms of the 2018 Term Loan would have a $0.9 million and $2.6 million impact on interest expense for the three and nine months ended September 30, 2021, respectively.
Commodity Price Risk. Our material and fuel purchases expose us to commodity price risk. Our material costs primarily include the cost of inventory consumed while performing our stimulation services such as proppant, chemicals and guar. Our fuel costs consist primarily of diesel fuel used by our various trucks and other motorized equipment. The prices for fuel and the raw materials (particularly guar and proppant) in our inventory are volatile and are impacted by changes in supply and demand, as well as market uncertainty and regional shortages. Depending on market conditions, we have generally been able to pass along price increases to our customers; however, we may be unable to do so in the future. We generally do not engage in commodity price hedging activities. However, we have purchase commitments with certain vendors to supply a majority of the proppant used in our operations. Some of these agreements are take-or-pay agreements with minimum purchase obligations. As a result of future decreases in the market price of proppants, we could be required to purchase goods and pay prices in excess of market prices at the time of purchase. For further quantitative disclosure about our market risk related to our variable-rate debt, interest-rate-related derivative instrument and purchase commitments, see Part I, "Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations".
Credit Risk. Financial instruments that potentially subject us to concentrations of credit risk are trade receivables. We extend credit to customers and other parties in the normal course of business. As a result of the COVID-19 pandemic, we have seen an increase in collection time related to trade receivables. We have established various procedures to manage our credit exposure, including credit evaluations and maintaining an allowance for doubtful accounts. For certain additional information regarding credit risk related to derivative instruments we hold, see Note (8) Derivatives of Part I, "Item 1. Condensed Consolidated Financial Statements (Unaudited)."


46

Item 4. Controls and Procedures
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's (the "SEC") rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.
As disclosed in Note (3) Alamo Acquisition in the Notes to Consolidated Financial Statements, we acquired Alamo on August 31, 2021, and its total revenues constituted approximately 9% of total revenues as shown on our consolidated financial statements for the three months ended September 30, 2021. Alamo’s total assets constituted approximately 27% of total assets as shown on our consolidated financial statements as of September 30, 2021. We excluded Alamo’s disclosure controls and procedures that are subsumed by its internal control over financial reporting from the scope of management's assessment of the effectiveness of our disclosure controls and procedures. This exclusion is in accordance with the guidance issued by the Staff of the Securities and Exchange Commission that an assessment of recent business combinations may be omitted from management's assessment of internal control over financial reporting for one year following the acquisition. As part of the Company’s ongoing integration activities, the Company’s financial reporting controls and procedures are in the process of being implemented at Alamo. The two companies will maintain separate accounting systems through December 31, 2021. The condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q were prepared using information obtained from these separate accounting systems.

Changes in Internal Control Over Financial Reporting
Except as described above, there were no changes to our internal control over financial reporting that occurred during the quarter ended September 30, 2021 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
47

PART II

Item 1. Legal Proceedings
    As is typical of the industry, the Company is, from time to time and in the ordinary course of business, involved in routine litigation or subject to disputes or claims related to its business activities. It is the Company's opinion that although the amount of liability with respect to certain of these known legal proceedings and claims cannot be ascertained at this time, any resulting liability will not have a material adverse effect individually or in the aggregate on the Company's financial condition, cash flows or results of operations; however, there can be no assurance as to the ultimate outcome of these matters.

Item 1A. Risk Factors
The statements in this section describe the known material risks to our business and should be considered carefully. There have been no material changes from the risk factors previously disclosed in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Unregistered Sales of Equity Securities
None.
(b) Use of Proceeds
None.
(c) Purchases of Equity Securities
Issuer Purchases of Equity Securities
Settlement Period
(a) Total Number of Shares Purchased(1)
(b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(d) Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1)
July 1, 2021 through July 31, 2021 44,130 $3.98 — $—
August 1, 2021 through August 31, 2021 88,780 $3.56 — $—
September 1, 2021 through September 30, 2021 7,715 $3.77 — $—
Total 140,625 $3.70 — $—
(1)    Consists of shares that were withheld by us to satisfy tax withholding obligations of employees that arose upon the vesting of restricted shares. The value of such shares is based on the closing price of our common shares on the vesting date.

Item 3. Defaults Upon Senior Securities
None.

48

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
None.


49

Item 6. Exhibits
The documents listed in the Exhibit Index of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).
Exhibit
Number 		Exhibit Description
10.1
10.2
10.3
10.4
10.5*†
31.1*
31.2*
32.1**
101.INS* XBRL Instance Document - The Instance Document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*
XBRL Taxonomy Extension Schema Document.
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Filed herewith.
** Furnished herewith.
† Indicates a management contract or compensatory plan or arrangement.

50

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 9, 2021.
NexTier Oilfield Solutions Inc.
(Registrant)
By: /s/ Phung Ngo-Burns
Phung Ngo-Burns
Principal Accounting Officer and Duly Authorized Officer

51
Execution Version EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this “Employment Agreement”) is dated as of August 4, 2021, by and among Alamo Pressure Pumping, LLC, a Texas limited liability company (the “Company”), Michael Joseph McKie, an individual (the “Employee”). The “Effective Date” of this Employment Agreement shall be the “Closing Date” as defined in that certain Purchase Agreement, by and among NexTier Completion Solutions Inc., a Delaware corporation (“NexTier”), Parent, Alamo Frac Holding, LLC, a Texas limited liability company (“Seller”), the Company and the “Owner Group” identified and defined therein, dated August 4, 2021 (the “Purchase Agreement”). This Employment Agreement is expressly conditioned upon the consummation of the “Closing” (as defined in the Purchase Agreement). Should the Closing not occur, this Employment Agreement shall be null and void and of no force and effect. Capitalized terms that are used but not defined herein shall have the respective meanings ascribed thereto in Section 7. Recitals A. The Company desires to employ the Employee as the President of Alamo Pressure Pumping, LLC (“Position”), and the Employee desires to continue to be employed by the Company, in a position involving performing services for the exclusive benefit of the Company, on the terms and subject to the conditions of this Employment Agreement. B. The Company is currently engaged in the business of integrated oil and gas well completions services, including horizontal and vertical hydraulic fracturing. C. In connection with the Employee’s employment, the Company promises to provide to the Employee during the Employment Period (as defined below), and the Company agrees that during the Employment Period, the Employee will have access to, sensitive, confidential business information and practices, as well as trade secrets of the Company and its affiliates to which the Employee otherwise would not have had access and which trade secret information the Company must protect to maintain its competitive advantage in the marketplace. D. The Employee is considered an executive or manager of the Company. E. It is understood that the protections provided to the Company in this Employment Agreement are necessary to protect the Company’s trade secrets, relationships with its clients, as well as the goodwill of the Company’s business. Agreement In consideration of the foregoing and of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1) Duties. The Employee will report directly to the Chief Executive Officer (“CEO”) of the Parent. The Employee will focus his efforts on behalf of the Company and will have such duties and responsibilities as may be delegated or assigned to him from time to time by the

 
2 CEO. The Employee shall perform his duties and responsibilities primarily from the Company’s offices in the Dallas-Fort Worth, Texas metropolitan area when not traveling for business and shall travel as necessary to perform his duties and responsibilities. The Employee will provide services hereunder on a full-time basis. The Employee understands that it shall be a violation of this Employment Agreement for the Employee to engage in any Competitive Business while employed by the Company, as set forth more fully in Section 4(c), and subject to Section 4(p). 2) Term. The Employee’s employment with the Company shall begin on the Effective Date and shall continue through until February 28, 2023, unless (a) the Employee’s employment is earlier terminated by the Company for Cause; or (b) extended through the written mutual agreement of the parties hereto. As used in this Employment Agreement, the term “Employment Period” shall mean the entire period commencing on the Effective Date and ending on the date on which the Employee’s employment by the Company is terminated in accordance with Section 2(a), or such later date if the Employment Period is extended pursuant to Section 2(b). Upon termination of the Employee’s employment for any reason, the provisions of Section 4 of this Employment Agreement will survive and remain effective, as specified herein, and the Company and the Employee shall be entitled to enforcement of its and his, as the case may be, rights hereunder. 3) Compensation and Benefits. As full compensation for all services to be rendered by the Employee to the Company during the Employment Period, the Employee shall receive the following compensation and benefits: (a) Base Salary. The Company will pay the Employee an annual base salary of $500,000.00 (“Base Salary”). All payments of Base Salary will be made in installments according to the Company’s regular payroll practice, but no less frequently than monthly, prorated monthly or weekly when appropriate, and subject to any withholdings and deductions that are required by law. (b) Bonus. The Employee shall be eligible for, but is not guaranteed, an annual performance bonus (the “Bonus”) targeted at 50% of Base Salary (the “Target Bonus”), prorated for any partial year of employment, based on achievement of annual performance criteria established by the Parent and its Board, and both the Company’s and the Parent’s overall performance and financial condition. Notwithstanding the foregoing, except as provided in Section 3(h)(ii) or 3(h)(iii), any Bonus shall be payable only if the Employee is employed by the Company on the date the Bonus is paid. (c) Paid Time Off. The Employee shall be entitled to Paid Time Off (“PTO”) in accordance with Company policies and practices in effect from time to time. In addition, the Employee shall be eligible for Company-paid holidays annually in accordance with Company policies and practices in effect from time to time. PTO must be pre-approved by the CEO and shall be requested in a timely fashion in accordance with Company policy.

 
3 (d) Long-Term Incentive. On the Effective Date, the Employee will be granted a Long- Term Incentive (“LTI”) award for 20,850 shares of the Parent’s common stock, subject to the terms of the LTI program and applicable award agreement. During the Parent’s normal LTI grant cycle in the first quarter of 2022, the Employee will, subject to approval by the Board, receive an LTI award with a target grant date value of $291,667; provided, however, that the actual grant date value of any such LTI award shall be determined in the sole discretion of the Board or the Compensation Committee of the Board at the time of grant, but shall not be less than $291,667. The Employee’s participation under the LTI program shall be subject to the terms of the LTI program and the applicable award agreement. (e) Participation in Employee Benefit Plans. The Employee shall be entitled, if and to the extent eligible, to participate in all employee benefit, welfare and other plans, practices, policies and programs generally available to other similarly situated employees of the Company, in accordance with the terms thereof. The Company may at any time or from time to time amend, modify, suspend or terminate any employee benefit plan, program or arrangement for any reason without the Employee’s consent. (f) Expenses. The Employee shall be entitled to receive reimbursement for all reasonable business expenses incurred by him in connection with his duties under this Employment Agreement in accordance with the policies of the Company as in effect from time to time, subject to the Company’s requirements with respect to reporting and documentation of such expenses. (g) Withholding of Taxes. The Employee authorizes the Company to withhold from any compensation, bonus or benefits payable under this Employment Agreement all federal, state, city and other taxes as shall be required pursuant to any law or governmental regulation or ruling. (h) Termination. (i) Upon any termination of the Employee’s employment, the Employee shall be entitled to receive the following within the amounts in clauses (A) and (C) below to be paid within thirty (30) days following the termination of the Employee’s employment (or such earlier date as may be required by applicable law): (A) the Employee’s accrued but unpaid Base Salary through the Termination Date; (B) any employee benefits that the Employee is entitled to receive pursuant to any employee benefit plan or program of the Company (other than any severance plans that would result in a duplication of benefits hereunder) in accordance with the terms of such employee benefit plan or program; and

 
4 (C) expenses reimbursable under Section 3(f) above incurred but not yet reimbursed to the Employee to the Termination Date (clauses (A) through (C), collectively, the “Accrued Benefits”). (ii) If the Employment Period is not extended beyond February 28, 2023 pursuant to Section 2(b) and the Employee terminates on such date, the Employee will be entitled to the Accrued Benefits, and, beginning on the 60th day after such termination of employment, subject to Section 6(c), but only if the Employee has executed and not revoked within the revocation period a valid release agreement in a form reasonably acceptable to the Company prior to such date, the Employee shall also be entitled to: (A) the earned but unpaid portion of any Bonus earned in respect of any completed performance period prior to the Termination Date (including, for the avoidance of doubt, any earned but unpaid Bonus in respect of the 2022 calendar year, and if a determination as to whether the Employee has earned any Bonus for the 2022 calendar year cannot be made until after the Termination Date, then within thirty (30) days immediately following the date on which a determination is made as to whether a Bonus was earned for the 2022 calendar year, the Employee will be paid such earned Bonus, if any); and (B) any awards of stock options, restricted share units, restricted stock units, restricted stock, stock appreciation rights, deferred stock and other equity-based incentives (collectively referred to as the “Equity-Based Awards”) held by the Employee, which have not vested prior to the Termination Date, shall immediately vest. (iii) If the Employee’s employment terminates due to the Employee’s death or Disability after February 28, 2023, the Employee shall be entitled to the Accrued Benefits, and, beginning on the 60th day after such termination of employment, but only if prior to such date, the Employee, or the Employee’s estate, as applicable, has executed and not revoked within the revocation period a valid and reasonable release agreement consistent with the terms of this Employment Agreement prior to such date, the Employee, or the Employee’s estate, shall also be entitled to: (A) the earned but unpaid portion of any Bonus earned in respect of any completed performance period prior to the Termination Date; and (B) any Equity-Based Awards held by the Employee which have not vested prior to the Termination Date shall immediately vest. (iv) Subject to Section 6(c) and the Employee’s execution and non-revocation of a general release agreement in a form provided by the Company, payment of any amounts described in Section 3(h)(ii) or Section 3(h)(iii) shall be

 
5 paid, or commence to be paid, as applicable, on the 60th day after the Termination Date and any payment thereof that would otherwise have been owed to the Employee prior to the 60th day after the Termination Date shall be made to the Employee on the 60th day after the Termination Date. (v) Except as specifically otherwise provided in Section 2 and in this Section 3(h), if the Employee’s employment with the Company is terminated for any reason, the Company shall no longer be obligated to pay to the Employee any compensation or benefits that would have otherwise been provided pursuant to this Employment Agreement. 4) Certain Covenants of the Employee. (a) Independent Agreement. The provisions of this Section 4 (collectively, the “Restrictive Covenants”) shall be construed as an agreement independent of any other provisions of this Employment Agreement or of any other agreement between the Employee and the Company, and the breach of any provision of this Employment Agreement or existence of any claim or cause of action of the Employee against the Company shall not constitute a defense to the enforcement by the Company of the Restrictive Covenants. (b) Confidentiality. (i) During the course of the Employee’s employment by the Company, the Employee will have access to certain trade secrets and confidential information relating to the Company and its affiliates (the “Protected Parties”) that is not readily available from sources outside the Company. The confidential and proprietary information and, in any material respect, trade secrets of the Protected Parties are among their most valuable assets, including, but not limited to, their customer, supplier and vendor lists, databases, competitive strategies, computer programs, frameworks, or models, their marketing programs, their sales, financial, marketing, training and technical information and any other information, whether communicated orally, electronically, in writing or in other tangible forms concerning the manner in which the Protected Parties create, develop, acquire or maintain their products and marketing plans, target their potential customers and operate their drilling and hydraulic fracturing services and other businesses. The Protected Parties invested, and continue to invest, considerable amounts of time and money in their process, technology, know-how, obtaining and developing the goodwill of their customers, their other external relationships, their data systems and data bases, and all the information described above (hereinafter collectively referred to as “Confidential Information”), and any misappropriation or unauthorized disclosure of Confidential Information in any form could irreparably harm the Protected Parties. The Employee acknowledges that such Confidential Information constitutes valuable, highly confidential, special and unique property of the Protected Parties. The Employee shall hold in a fiduciary

 
6 capacity for the benefit of the Protected Parties all Confidential Information relating to the Protected Parties and their businesses, which shall have been obtained by the Employee during the Employee’s employment by the Company and which shall not be or become public knowledge (other than by acts by the Employee or representatives of the Employee in violation of this Employment Agreement). The Employee agrees he shall not, during the period the Employee is employed by the Company or at any time thereafter, disclose any Confidential Information, directly or indirectly, to any Person for any reason or purpose whatsoever, nor shall the Employee use it in any way, except (A) in the course of the Employee’s employment with, and for the benefit of, the Protected Parties, (B) to enforce any rights or defend any claims hereunder or under any other agreement to which the Employee is a party, provided that such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed in the formal proceedings related thereto, (C) when required or permitted to do so by a court of law, by any governmental agency having supervisory authority over the business of any of the NexTier Companies or by any administrative or legislative body (including a committee thereof) with jurisdiction to order him to divulge, disclose or make accessible such information; provided that the Employee shall give prompt written notice to the Company of such requirement, disclose no more information than is so required and cooperate with any attempts by the Company to obtain a protective order or similar treatment, (D) as to such Confidential Information that becomes generally known to the public or trade without his violation of this Section 4(b)(i), (E) to the Owner Group (as defined in the Purchase Agreement), to the extent such disclosure relates to the operation of the Company’s business and is made in connection with, and furtherance of, the Earnout Payments in accordance with the Earnout Agreement (each as defined in the Purchase Agreement), but only if each member of the Owner Group has executed a confidentiality agreement with NexTier ahead of any such disclosures, or (F) to the Employee’s spouse, attorney and/or his personal tax and financial advisors as reasonably necessary or appropriate to advance the Employee’s tax, financial and other personal planning (each, an “Exempt Person”) and the Employee shall instruct each such Exempt Person to keep such information confidential; provided, however, that any disclosure or prohibited use of Confidential Information by an Exempt Person shall be deemed to be a breach of this Section 4(b)(i) by the Employee. The Employee shall take all reasonable steps to safeguard the Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. The Employee understands and agrees that the Employee shall acquire no rights to any such Confidential Information. (ii) All files, records, documents, drawings, specifications, data, computer programs, evaluation mechanisms and analytics and similar items relating thereto or to the Competitive Business (as defined in Section 4(c)), as well as all customer lists, specific customer information, compilations of product

 
7 research and marketing techniques of any of the NexTier Companies, whether prepared by the Employee or otherwise coming into the Employee’s possession, shall remain the exclusive property of the NexTier Companies and be returned to the Company on or promptly following the Termination Date. (c) The Employee retains rights under the U.S. Defend Trade Secrets Act of 2016 (“DTSA”), which provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (i)(A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, DTSA provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (x) files any document containing the trade secret under seal and (y) does not disclose the trade secret, except pursuant to court order. Nothing in this Employment Agreement is intended to limit any rights under DTSA. (d) Non-Competition. The Employee agrees that he will not, during his employment and during the Restricted Period in the Restricted Territory, directly or indirectly, (i) provide services that are the same or substantially similar to the services and/or duties the Employee performed for the Company for any individual, entity or company in a Competitive Business; (ii) perform duties in a position that would allow the Employee to use or disclose Confidential Information of the Company that the Employee obtained during employment with the Company for any company, individual or entity that is engaged in (or has committed plans to engaged in) a Competitive Business; or (iii) hold any direct or beneficial material economic interest in any entity that directly or indirectly engages in or proposes to engage in any Competitive Business. Notwithstanding the foregoing, nothing in this Employment Agreement shall prevent the Employee from (a) owning, for passive investment purposes not intended to circumvent this Employment Agreement, 3% or less of the publicly traded common equity securities of any company engaged in a Competitive Business or (b) if the Employee is a licensed attorney, engaging in the practice of law, to the extent such services do not violate the Employee’s other obligations hereunder or the Employee’s professional responsibilities to the Company. A “Competitive Business” is defined as well completion services and products that the Company or the Parent was engaged in during the Employee’s employment or had initiated substantial plans to engage in during the Employee’s employment (including, but not limited to, horizontal and vertical fracturing, wireline perforation and logging and engineered solutions and cementing, but excluding the processing, handling, transporting and delivery of wet sand or field gas, and any other activities incidental thereto).

 
8 The “Restricted Period” is the period commencing on the Effective Date and for a period of two (2) years following the date the Employee ceases to be employed by the Company (regardless of the reason for termination), or such longer restricted period imposed under other agreement between the Employee and the Company or as extended per the terms herein. The “Restricted Territory” is any geographic area or basin where the Employee performed services for the Company or had responsibilities related to services for the Company in a basin or geographic area during his employment. The Employee acknowledges that in the event of breach of the restrictions in this Section 4(d), or if the Company is required to file a lawsuit to enforce this Employment Agreement, the Restricted Period in this Section 4(d) will be extended for the period of time from the Termination Date to (i) the date of the filing of the lawsuit or (ii) the date of the last violation of the obligations under this Employment Agreement, whichever is latest, regardless of whether the covenants are reformed. (e) Non-Solicitation or Hire. The Employee agrees that during the Restricted Period, the Employee shall not, directly or indirectly (or directly or indirectly assist any individual or entity to): (i) solicit, divert with the intention to take away or attempt to divert with the intention to take away, the business or patronage of, or business opportunity with, any individual or entity who or which either is, or during the 12 months immediately prior to the date of the Employee’s termination of employment with the Company was, a customer or supplier of the Company with whom the Employee worked with or acquired confidential information about during employment with the Company; provided, that the Employee will not be prohibited from contacting or communicating with such customers if such contact or communication is not related to a Competitive Business; (ii) for purposes of engaging in a Competitive Business, perform services for, solicit services or business from or contact for business purposes any client or potential client with whom the Employee worked with or acquired Confidential Information about during his employment; (iii) interfere with, disrupt, attempt to interfere with or disrupt or encourage or assist others to interfere with or disrupt, the relationship, contractual or otherwise, between the Company and any of its customers, suppliers, lessors, consultants, independent contractors, agents, employees or any other person or entity with whom Employee worked with or acquired Confidential Information about during employment with the Company; or (iv) solicit, communicate regarding job placement or hiring or contact with a view toward engagement or hiring any person that is, or was during the 12 months immediately prior to the date of the Employee’s Termination Date, an employee or contractor of the Company with whom the Employee worked with, managed or who performed services with in the same division(s) as the Employee. (f) Assignment of Inventions, Corporate Opportunities, and Company Property. (i) The Employee shall promptly disclose and hereby assigns to the Company, free from any obligation to the Employee, every invention, product, process,

 
9 apparatus, concept, improvement, discovery or design, including all of the Employee’s interest therein, that the Employee directly or indirectly, individually or jointly, during the Employment Period may invent, discover, conceive, originate, develop, or reduce to practice, whether patentable, copyrightable or not, relating to the Competitive Business, the Confidential Information, the NexTier Companies or the Company’s customers’ actual or demonstrably anticipated research and development. All work product of any kind resulting from the Employee’s services and relating to the Competitive Business shall be the sole property of the Company. At no additional cost, the Company shall have the right to obtain from the Employee and to hold in its own name, copyrights, trademark registrations or patents the Company may deem appropriate for the subject matter. The Employee agrees to give the Company all assistance reasonably required to protect the rights set forth in this Section 4(f)(i). The parties intend such work product to be “works made for hire,” as defined in the United States Copyright Act, and the Company shall be deemed the author thereof. In the event and to the extent that such works are deemed not to constitute “works made for hire” as a matter of law, the Employee assigns to the Company in perpetuity the copyright to such works. The Employee shall sign and execute all reasonable assignments and other papers reasonably necessary to vest in the Company the entire right, title and interest in such works designs, inventions, concepts, improvements or discoveries. (ii) During the Employment Period, the Employee promptly shall disclose to the Company any business idea or opportunity that falls within the business engaged in by the Company, which business idea or opportunity shall become the sole property of the Company if the Company elects to pursue such idea or opportunity, provided, that the Employee shall not be required to disclose any business idea or opportunity related to the processing, handling, transporting and delivery of wet sand or field gas, and any other activities incidental thereto. (iii) At the end of the Employment Period, or at any other time upon the Company’s request, the Employee will deliver to the Company any and all Company-related property, including, without limitation, files, drawings, notes, memoranda, specifications, devices, formulas and documents, together with all paper and electronic copies thereof and any other material containing or disclosing any Confidential Information. The Employee further agrees that any property situated on the Company’s premises and owned by the Company, including communication devices, computers, disks, other storage media, filing cabinets and other work areas, is subject to inspection by Company personnel at any time, with or without notice. (iv) At the Company’s request and expense, the Employee will assist any of the NexTier Companies during the Employment Period and thereafter (but subject to reasonable notice and taking into account the Employee’s

 
10 schedule) in connection with any controversy or legal proceeding relating to this Section 4(f). (g) Cooperation. During the Employment Period and thereafter, the Employee shall cooperate fully with any investigation or inquiry by the Company or any governmental or regulatory agency or body that relates to the Company or its subsidiaries’ or affiliates’ operations during the Employment Period, for the duration of any investigation or inquiry that commenced during the statute of limitations of the claims underlying such investigation or inquiry, subject to reasonable notice and reimbursement for the Employee’s expenses. To the extent the Employee’s cooperation under this Section 4(g) occurs following the Termination Date, the Company shall compensate the Employee at an hourly rate equal to (i) the Employee’s Base Salary (at the rate in effect on the Termination Date), divided by (ii) 2,080. (h) Property. The Employee acknowledges that all equipment (e.g., cellphone, laptop, printer) provided to him by a NexTier Company and originals and copies of materials, records and documents generated by him or coming into his possession during his employment by the Company (prior to or during the Employment Period) are the sole property of such NexTier Company (“Company Property”). During the Employment Period, and at all times thereafter, the Employee shall not remove, or cause to be removed, from the premises of the NexTier Companies, copies of any record, file, memorandum, document, computer-related information or equipment or any other item relating to the business of the NexTier Companies, except in furtherance of his duties under this Employment Agreement. When the Employee’s employment with the Company terminates, or upon request of the Company at any time, the Employee shall promptly deliver to the Company all copies of Company Property in his possession or control. Notwithstanding the foregoing, the Company acknowledges that the Employee uses his personal cell phone as his primary business mobile phone, and the Employee shall be entitled to retain such cell phone at the end of the Employment Period, subject to removal of all Confidential Information stored thereon at such time. (i) Nondisparagement. The Employee agrees that he will not, during the Employment Period and at any time thereafter, publish or communicate to any Person any Disparaging (as defined below) remarks, comments or statements concerning any of the NexTier Companies and their respective present and former members, partners, directors, officers, shareholders, employees, agents, attorneys, successors and assigns. “Disparaging” remarks, comments or statements are those that impugn the character, honesty, integrity or morality in connection with any aspect of the operation of business of the Person being disparaged. Notwithstanding the foregoing, nothing in this Employment Agreement shall be construed to preclude truthful disclosures in response to lawful process as required by applicable law, regulation or order or directive of a court, governmental agency or regulatory or administrative organization or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

 
11 (j) Disclosure. Prior to commencing subsequent employment during the Restricted Period, the Employee agrees to disclose the provisions of this Section 4 to the Employee’s prospective employer. For the avoidance of doubt, such disclosure shall not be deemed to breach any provision of this Employment Agreement. (k) Covenants not in Limitation of Similar Agreements. The provisions of this Section 4 shall be in addition to, and not in limitation of, any other similar provisions or agreements to which the Employee is bound or may be bound in the future. (l) Tolling of Restricted Period. If the Employee breaches any of the Restrictive Covenants, the running of the Restricted Period shall be tolled and will not run in favor of the Employee for so long as such breach continues to the extent permitted by applicable law. (m) Severability of Covenants. If any of the Restrictive Covenants, or any part thereof, is held by a court of competent jurisdiction or any foreign, federal, state, county or local government or other governmental, regulatory, arbitral or administrative agency or authority to be invalid, void, unenforceable or against public policy for any reason, the remainder of the Restrictive Covenants shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and such court, government, agency or authority shall reform the Restrictive Covenants and/or to substitute, to the extent enforceable, provisions similar thereto or other provisions so as to provide to the Company and its affiliates, to the fullest extent permitted by applicable law, the benefits intended by such provisions. (n) Remedies; Specific Performance. The parties hereto acknowledge and agree that the Employee’s breach of any of the restrictions set forth in Section 4 may result in irreparable and continuing damage to the Protected Parties for which there may be no adequate remedy at law and that the Protected Parties shall be entitled to seek equitable relief, including specific performance and injunctive relief, as remedies for any such breach or for any threatened or attempted breach, without requiring the posting of a bond. The Employee hereby consents to the grant of an injunction (temporary or otherwise) against the Employee or the entry of any other court order against the Employee prohibiting and enjoining him from violating, or directing him to comply with any provision of this Section 4. The Employee also agrees that such remedies shall be in addition to any and all remedies, including damages, available to the Protected Parties against him for such breaches or threatened or attempted breaches. Nothing herein will be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages and the Company’s attorneys’ fees and costs incurred in seeking the injunction, or any other remedies from the Employee. (o) Enforceability in Jurisdictions. The parties hereto intend to and hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts of any jurisdiction within the geographical scope of such Restrictive Covenants. If the courts of any one or more of such jurisdictions hold the Restrictive Covenants wholly invalid or

 
12 unenforceable by reason of the breadth of such scope or otherwise, it is the intention of the parties that such determination not bar or in any way affect the Company’s right to the relief provided above in the courts of any other jurisdiction within the geographical scope of such Restrictive Covenants, as to breaches of such Restrictive Covenants in such other respective jurisdictions, such Restrictive Covenants as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants. (p) Outside Board Service. The NexTier Companies (i) acknowledge that the Employee serves, and will continue to serve, on the Board of Managers of Seller and on similar governing bodies of certain of Seller’s subsidiaries or affiliates, and (ii) agree that, so long as Seller or any such subsidiary or affiliate is not engaged in a Competitive Business, such service is not, and will not be considered to be, a direct or indirect violation of any of the Restrictive Covenants, Section 1 or any other provision of this Employment Agreement. 5) Employee Representations. The Employee hereby represents and warrants to the Company that: (a) the execution, delivery and performance of this Employment Agreement by the Employee does not and will not conflict with, breach, violate or cause a default under any contract, agreement, restrictive covenant (including, but not limited to, covenants against competition, solicitation, disclosure of confidential materials that could arguably, in any way, preclude, inhibit, impair or limit the Employee’s ability to serve in the Position) instrument, order, judgment or decree to which the Employee is a party or by which he is bound; (b) he has no proprietary or otherwise confidential information about any competitor of the Competitive Business in his possession and he has been instructed not to use any such information in connection with his employment with the Company; and (c) upon the execution and delivery of this Employment Agreement by the Company, this Employment Agreement shall be the valid and binding obligation of the Employee, enforceable in accordance with its terms. 6) No Tax Representations; Section 409A. (a) Neither the Company nor its representatives and attorneys have made, nor do they make, any promise or warranty whatsoever with regard to the tax consequences, if any, of any issuance, grant, lapse of restriction, forfeiture or other event made to or on behalf of or affecting the Employee in connection with this Employment Agreement. The Employee agrees that if he deems it necessary he has or will retain a professional tax advisor to inform the Employee regarding the tax consequences to the Employee, if any, of this Employment Agreement. The parties agree and affirm that each shall bear sole responsibility for their respective tax consequences that may arise from or relate to any payment described in this Employment Agreement. The Employee acknowledges that if applicable law requires the

 
13 Company to make any report or disclosure to any taxing authority with respect to any payment made or consideration provided to or on behalf of the Employee in connection with this Employment Agreement, the Company may do so. (b) Notwithstanding the foregoing, the intent of the parties is that payments and benefits under this Employment Agreement that constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), shall comply with Code Section 409A, and, accordingly, to the maximum extent permitted, this Employment Agreement shall be interpreted and administered to be in compliance with Code Section 409A. Any term used in this Employment Agreement which is defined in Code Section 409A or the regulations promulgated thereunder (the “Regulations”) shall have the meaning set forth therein, unless otherwise specifically defined herein. Any obligations under this Employment Agreement that arise in connection with the Employee’s “termination of employment,” “termination” or other similar references shall only be triggered if the termination of employment or termination qualifies as a “separation from service” within the meaning of §1.409A-1(h) of the Regulations. (c) Notwithstanding any other provision of this Employment Agreement, if, at the time of the termination of the Employee’s employment, the Employee is a “specified employee,” as defined in Section 409A or the Regulations, and any payments upon such termination under this Employment Agreement will result in additional tax or interest to the Employee under Code Section 409A, he will not be entitled to receive such payments until the date which is the earlier of (i) six months and one day after such separation from service and (ii) the date of the Employee’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 6(c) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) will be paid or provided to the Employee in a lump sum and any remaining payments and benefits due under this Employment Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. (d) If any expense reimbursement or in-kind benefit provided to the Employee under this Employment Agreement is determined to be “deferred compensation” within the meaning of Section 409A, then such reimbursement or in-kind benefit shall be made or provided in accordance with the requirements of Code Section 409A, including that (i) in no event shall any fees, expenses or other amounts eligible to be reimbursed by the Company under this Employment Agreement be paid later than December 31 of the year following the year during which the applicable fees, expenses or other amounts were incurred, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits that the Company is obligated to pay or provide, in any given calendar year shall not affect the expenses that the Company is obligated to reimburse, or the in-kind benefits that the Company is obligated to pay or provide, in any other calendar year, provided that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit

 
14 related to the period the arrangement is in effect; (iii) the Employee’s right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit; and (iv) in no event shall the Company’s obligations to make such reimbursements or to provide such in-kind benefits apply later than the Employee’s remaining lifetime (or, if longer, through the tenth anniversary of the Effective Date). (e) For purposes of Code Section 409A, the Employee’s right to receive any installment payments shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Employment Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company. In no event may the Employee, directly or indirectly, designate the calendar year of any payment to be made under this Employment Agreement, to the extent such payment is subject to Code Section 409A. 7) Definitions. For purposes of this Employment Agreement: (a) “Board” shall mean the Board of Directors of the Parent. (b) “Cause” shall mean (i) the willful and continued failure of the Employee to substantially perform the Employee’s duties with the Company (other than failure resulting from incapacity due to physical or mental illness); (ii) the Employee’s indictment for, conviction of, or plea of no contest to a felony or any crime involving dishonesty or theft, (iii) the Employee’s conduct in connection with the Employee’s employment duties or responsibilities that is fraudulent, unlawful or grossly negligent, (iv) the Employee’s willful misconduct, (v) the Employee’s contravention of specific lawful directions related to a material duty or responsibility which is directed to be taken by the Company, (vi) the Employee’s material breach of this Employment Agreement, including, but not limited to, a material breach of the Employee’s Restrictive Covenants set forth in Section 4 hereof and any material breach of the warranties and representations set forth in Section 5 hereof, (vii) any act of dishonesty by the Employee resulting in personal gain or enrichment at the expense of the Company, its parent, subsidiaries or affiliates, or (viii) the Employee’s failure to comply with a material written policy of the Company, its parent, subsidiaries or affiliates (provided, that such policy has previously been made available to the Employee). Prior to terminating the Employee for Cause pursuant to clauses (i), (v), (vi) or (viii), the Company shall provide the Employee with written notice of the breach, actions or omissions constituting Cause and, to the extent such breach, actions or omissions are capable of cure, a period of fifteen (15) days in which to cure breach, such actions or omissions. (c) “Disability” shall mean a determination by the Company in accordance with applicable law that, as a result of a physical or mental injury or illness, the Employee is unable to perform the essential functions of his job with or without reasonable accommodation for a period of (i) ninety (90) consecutive days

 
15 (including weekends and holidays) or (ii) one hundred twenty (120) days (including weekends and holidays), whether or not consecutive, in any one (1)-year period. (d) “NexTier Companies” shall mean the Company, its Parent and all of its subsidiaries, affiliates, successors and assigns. (e) “Parent” means NexTier Oilfield Solutions Inc., a Delaware corporation. (f) “Person” shall mean an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other organization. (g) “Termination Date” shall mean the last date of the Employee’s employment with the Company, without regard for the reason for termination. 8) Protected Rights. (a) The Employee understands that this Employment Agreement does not limit the Employee’s ability to communicate with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”), including to report possible violations of federal law or regulation or making other disclosures that are protected under the whistleblower provisions of federal law or regulation, or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. (b) In accordance with the DTSA, the Employee will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (x) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. 9) Other Provisions. (a) Notices. All notices, requests, demands and other communications that are required or may be given under this Employment Agreement shall be in writing, delivered via personal delivery, facsimile, certified or registered mail, return receipt requested or overnight delivery service, and shall be deemed to have been duly given when received. In each case, notice shall be sent to the address for the Employee as may be in the Company’s records. The Employee shall ensure that his current address shall be reflected in the Company’s records. (b) Entire Agreement. This Employment Agreement contains the entire agreement between the parties with respect to the Employee’s employment with the Company

 
16 and supersedes all prior contracts and other agreements, written or oral, with respect thereto, specifically including, but not limited to, all prior agreements between the Company and the Employee concerning the Employee’s employment. (c) Amendments. This Employment Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by both the parties or, in the case of a waiver, signed by the party waiving compliance. Any change or changes in the Employee’s duties, salary or compensation will not affect the validity or scope of this Employment Agreement. (d) Waiver. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. (e) Applicable Law. This Employment Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas, regardless of any choice of law provisions that would provide for a different governing law. (f) Venue. The Employee expressly consents to the personal jurisdiction of the state and federal courts located in Harris County, Texas, for any lawsuit arising from or relating to this Employment Agreement. (g) Jury Waiver. The parties expressly and unconditionally waive their right to a jury trial of any and all claims or causes of action arising from or relating to their relationship. The parties acknowledge that a right to a jury is a constitutional right, that they have had the opportunity to consult with independent counsel and that this jury waiver has been entered into knowingly and voluntarily by all parties to this Employment Agreement. In the event of litigation, this Employment Agreement may be filed as a written consent to trial by the court. Additionally, the parties expressly agree that all claims must be brought in the parties’ individual capacity, and not as a private attorney general, plaintiff or class member in any purported class, collective or representative proceeding and any such right to bring such class, collective or representative claims is expressly waived. (h) Binding Effect; Benefit. This Employment Agreement shall inure to the benefit of and be binding upon the parties hereto and any successors-in-interest. Nothing in this Employment Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or such successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Employment Agreement. (i) Severability. If any one or more of the provisions contained in this Employment Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other

 
17 provisions of this Employment Agreement, and this Employment Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. If, moreover, any one or more of the provisions contained in this Employment Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity, or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear. (j) Assignment. This Employment Agreement, and the Employee’s rights and obligations hereunder, may not be assigned by the Employee; provided, however, that it shall be enforceable by the Employee’s legal representatives and other successors in interest. The Company may assign this Employment Agreement and its rights, together with its obligations, hereunder to any affiliate or in connection with any sale, transfer or other disposition of all or substantially all of its assets or business, whether by merger, consolidation or otherwise. (k) Counterparts. This Employment Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. (l) Copies. An electronic or facsimile copy of this Employment Agreement or a counterpart shall be deemed, and shall have the same legal force and effect as, an original document. (m) Headings. The headings in this Employment Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Employment Agreement. (n) Acknowledgement of Full Understanding. THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS EMPLOYMENT AGREEMENT. THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HIS CHOICE BEFORE SIGNING THIS EMPLOYMENT AGREEMENT. [Signatures Appear on the Next Page]

 
Signature Page to Employment Agreement IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first above written. MICHAEL JOSEPH MCKIE /s/MICHAEL JOSEPH MCKIE ALAMO PRESSURE PUMPING, LLC By: /s/ JEFFREY HANSEN Name: Jeffrey E. Hansen Title: General Counsel

 
Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
EXCHANGE ACT RULE 13a-14(a) AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert W. Drummond, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of NexTier Oilfield Solutions Inc.;
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 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 Rules 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 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.
 
Date: November 9, 2021 By:
/s/ Robert W. Drummond
Robert W. Drummond
Chief Executive Officer and Director
(Principal Executive Officer)



Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
EXCHANGE ACT RULE 13a-14(a) AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kenneth Pucheu, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of NexTier Oilfield Solutions Inc.;
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 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 Rules 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 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.
 
Date: November 9, 2021 By:
/s/ Kenneth Pucheu
Kenneth Pucheu
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)



Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL
FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Robert W. Drummond, the Chief Executive Officer and Director of NexTier Oilfield Solutions Inc. (the “Company”), and Kenneth Pucheu, the Executive Vice President and Chief Financial Officer of the Company, hereby certify that, to their knowledge:
1. The Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 of the Company (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: November 9, 2021 By:
/s/ Robert W. Drummond
Robert W. Drummond
Chief Executive Officer and Director
(Principal Executive Officer)
Date: November 9, 2021 By:
/s/ Kenneth Pucheu
Kenneth Pucheu
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)