|
|
|
|
|
|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
to
|
|
|
|
|
|
|
|
|
|
Delaware
|
|
82-1221944
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common stock, par value $0.01 per share
|
|
New York Stock Exchange
|
Large accelerated filer
|
|
☐
|
|
Accelerated filer
|
|
☐
|
|
|
|
|
|
|
|
Non-accelerated filer
|
|
ý
|
|
Smaller reporting company
|
|
ý
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
ý
|
|
|
|
PART I
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
PART II
|
|
|
|
||
|
38
|
|
|
||
|
||
|
||
|
||
|
||
|
||
PART III
|
|
|
|
||
|
||
|
||
|
||
|
||
PART IV
|
|
|
|
||
|
||
|
|
•
|
|
our business strategy;
|
|
•
|
|
our operating cash flows, the availability of capital and our liquidity;
|
|
•
|
|
our future revenue, income and operating performance;
|
|
•
|
|
uncertainty regarding our future operating results;
|
|
•
|
|
our ability to sustain and improve our utilization, revenue and margins;
|
|
•
|
|
our ability to maintain acceptable pricing for our services;
|
|
•
|
|
our future capital expenditures;
|
|
•
|
|
our ability to finance equipment, working capital and capital expenditures;
|
|
•
|
|
competition and government regulations;
|
|
•
|
|
our ability to obtain permits and governmental approvals;
|
|
•
|
|
pending legal or environmental matters;
|
|
•
|
|
loss or corruption of our information in a cyberattack on our computer systems;
|
|
•
|
|
the supply and demand for oil and natural gas;
|
|
•
|
|
the ability of our customers to obtain capital or financing needed for exploration and production (“E&P”) operations;
|
|
•
|
|
business acquisitions;
|
|
•
|
|
general economic conditions;
|
|
•
|
|
credit markets;
|
|
•
|
|
the occurrence of a significant event or adverse claim in excess of the insurance we maintain;
|
|
•
|
|
seasonal and adverse weather conditions that can affect oil and natural gas operations;
|
|
•
|
|
our ability to successfully develop our research and technology capabilities and implement technological developments and enhancements; and
|
|
•
|
|
plans, objectives, expectations and intentions contained in this Annual Report that are not historical.
|
Item 1.
|
Business
|
|
•
|
|
personal injury or loss of life;
|
|
•
|
|
damage or destruction of property, equipment, natural resources and the environment; and
|
|
•
|
|
suspension of operations.
|
|
•
|
|
the location of wells;
|
|
•
|
|
the method of drilling and casing wells;
|
|
•
|
|
the timing of construction or drilling activities, including seasonal wildlife closures;
|
|
•
|
|
the surface use and restoration of properties upon which wells are drilled; and
|
|
•
|
|
notice to, and consultation with, surface owners and other third parties.
|
Item 1A.
|
Risk Factors
|
|
•
|
|
expected economic returns to E&P companies of new well completions;
|
|
•
|
|
domestic and foreign economic conditions and supply of and demand for oil and natural gas;
|
|
•
|
|
the level of prices, and expectations about future prices, of oil and natural gas;
|
|
•
|
|
the cost of exploring for, developing, producing and delivering oil and natural gas;
|
|
•
|
|
the level of global oil and natural gas E&P;
|
|
•
|
|
the level of domestic and global oil and natural gas inventories;
|
|
•
|
|
federal, state and local regulation of hydraulic fracturing activities, as well as oil and natural gas E&P activities, including public pressure on governmental bodies and regulatory agencies to regulate our industry;
|
|
•
|
|
U.S. federal, state and local and non-U.S. governmental taxes and regulations, including the policies of governments regarding the exploration for and production and development of their oil and natural gas reserves;
|
|
•
|
|
political and economic conditions in oil and natural gas producing countries;
|
|
•
|
|
actions by the members of the Organization of Petroleum Exporting Countries (“OPEC”) and certain non-OPEC producers, including Russia, with respect to oil production levels and announcements of potential changes in such levels;
|
|
•
|
|
moratoriums on drilling activity resulting in a cessation of operation or a failure to expand operations;
|
|
•
|
|
global weather conditions and natural disasters;
|
|
•
|
|
worldwide political, military and economic conditions;
|
|
•
|
|
lead times associated with acquiring equipment and products and availability of qualified personnel;
|
|
•
|
|
the discovery rates of new oil and natural gas reserves;
|
|
•
|
|
stockholder activism or activities by non-governmental organizations to limit certain sources of funding for the energy sector or restrict the exploration, development and production of oil and natural gas;
|
|
•
|
|
the availability of water resources, suitable proppant and chemical additives in sufficient quantities for use in hydraulic fracturing fluids;
|
|
•
|
|
advances in exploration, development and production technologies or in technologies affecting energy consumption;
|
|
•
|
|
the potential acceleration of development of alternative fuels;
|
|
•
|
|
the price and availability of alternative fuels;
|
|
•
|
|
merger and divestiture activity among oil and natural gas producers and drilling contractors;
|
|
•
|
|
uncertainty in capital and commodities markets and the ability of oil and natural gas companies to raise equity capital and debt financing;
|
|
•
|
|
any prolonged reduction in the overall level of oil and natural gas E&P activities, whether resulting from changes in oil and natural gas prices or otherwise, could adversely impact us in many ways by negatively affecting;
|
|
•
|
|
our utilization, revenues, cash flows and profitability;
|
|
•
|
|
our ability to maintain or increase borrowing capacity;
|
|
•
|
|
our ability to obtain additional capital to finance our business and the cost of that capital; and
|
|
•
|
|
our ability to attract and retain skilled personnel.
|
|
•
|
|
pay dividends and move cash;
|
|
•
|
|
incur additional liens;
|
|
•
|
|
incur additional indebtedness;
|
|
•
|
|
hedge interest rates;
|
|
•
|
|
engage in a merger, consolidation or dissolution;
|
|
•
|
|
enter into transactions with affiliates;
|
|
•
|
|
sell or otherwise dispose of assets, businesses and operations;
|
|
•
|
|
materially alter the character of our business as conducted at the closing of our IPO; and
|
|
•
|
|
make acquisitions, investments and capital expenditures.
|
|
•
|
|
disruption in operations;
|
|
•
|
|
substantial repair, restoration or remediation costs;
|
|
•
|
|
personal injury or loss of human life;
|
|
•
|
|
significant damage to or destruction of property and equipment;
|
|
•
|
|
environmental pollution, including groundwater contamination;
|
|
•
|
|
unusual or unexpected geological formations or pressures and industrial accidents;
|
|
•
|
|
impairment or suspension of operations; and
|
|
•
|
|
substantial revenue loss.
|
|
•
|
|
our indebtedness may increase our vulnerability to general adverse economic and industry conditions;
|
|
•
|
|
the covenants contained in the agreements that will govern our indebtedness limit our ability to borrow funds, dispose of assets, pay dividends and make certain investments;
|
|
•
|
|
our debt covenants will also affect our flexibility in planning for, and reacting to, changes in the economy and in our industry;
|
|
•
|
|
any failure to comply with the financial or other covenants of our indebtedness could result in an event of default, which could result in some or all of our indebtedness becoming immediately due and payable;
|
|
•
|
|
our indebtedness could impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes; and
|
|
•
|
|
our business may not generate sufficient cash flows from operations to enable us to meet our obligations under our indebtedness. If our cash flows and capital resources are insufficient to fund any debt service obligations, we may be forced to reduce or delay investments and capital expenditures, sell assets, seek additional capital or restructure or refinance indebtedness.
|
|
•
|
|
unanticipated costs and assumption of liabilities and exposure to unforeseen liabilities of acquired businesses, including environmental liabilities;
|
|
•
|
|
limitations on our ability to properly assess and maintain an effective internal control environment over an acquired business, in order to comply with public reporting requirements;
|
|
•
|
|
potential losses of key employees and customers of the acquired business;
|
|
•
|
|
inability to commercially develop acquired technologies;
|
|
•
|
|
risks of entering markets in which we have limited prior experience; and
|
|
•
|
|
increases in our expenses and working capital requirements.
|
|
•
|
|
a failure of our due diligence process to identify significant risks or issues;
|
|
•
|
|
the loss of customers of the acquired company or our company;
|
|
•
|
|
negative impact on the brands or banners of the acquired company or our company;
|
|
•
|
|
a failure to maintain or improve the quality of customer service;
|
|
•
|
|
difficulties assimilating the operations and personnel of the acquired company;
|
|
•
|
|
our inability to retain key personnel of the acquired company;
|
|
•
|
|
the incurrence of unexpected expenses and working capital requirements;
|
|
•
|
|
our inability to achieve the financial and strategic goals, including synergies, for the combined businesses;
|
|
•
|
|
difficulty in maintaining internal controls, procedures and policies;
|
|
•
|
|
mistaken assumptions about the overall costs of equity or debt; and
|
|
•
|
|
unforeseen difficulties operating in new product areas or new geographic areas.
|
|
•
|
|
an inability to retain or hire experienced crews and other personnel;
|
|
•
|
|
a lack of customer demand for the services we intend to provide;
|
|
•
|
|
an inability to secure necessary equipment, raw materials or technology to successfully execute our expansion objective;
|
|
•
|
|
shortages of water used in our hydraulic fracturing operations;
|
|
•
|
|
unanticipated delays that could limit or defer the provision of services by us and jeopardize our relationships with existing customers and adversely affect our ability to obtain new customers for such services; and
|
|
•
|
|
competition from new and existing service providers.
|
|
•
|
|
we may enter into contracts between us, on the one hand, and related parties, on the other, that are not as a result of arm’s-length transactions;
|
|
•
|
|
our executive officers and directors that hold positions of responsibility with related parties may be aware of certain business opportunities that are appropriate for presentation to us as well as to such other related parties and may present such business opportunities to such other parties; and
|
|
•
|
|
our executive officers and directors that hold positions of responsibility with related parties may have significant duties with, and spend significant time serving, other entities and may have conflicts of interest in allocating time.
|
|
•
|
|
institute a more comprehensive compliance function;
|
|
•
|
|
comply with rules promulgated by the NYSE;
|
|
•
|
|
continue to prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;
|
|
•
|
|
establish new internal policies, such as those relating to insider trading; and
|
|
•
|
|
involve and retain to a greater degree outside counsel and accountants in the above activities.
|
|
•
|
|
quarterly variations in our financial and operating results;
|
|
•
|
|
the public reaction to our press releases, our other public announcements and our filings with the SEC;
|
|
•
|
|
strategic actions by our competitors;
|
|
•
|
|
changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;
|
|
•
|
|
speculation in the press or investment community;
|
|
•
|
|
the failure of research analysts to cover our common stock;
|
|
•
|
|
sales of our common stock by us, our Principal Stockholders (as defined below) or other stockholders, or the perception that such sales may occur;
|
|
•
|
|
changes in accounting principles, policies, guidance, interpretations or standards;
|
|
•
|
|
additions or departures of key management personnel;
|
|
•
|
|
actions by our stockholders;
|
|
•
|
|
general market conditions, including fluctuations in commodity prices;
|
|
•
|
|
domestic and international economic, legal and regulatory factors unrelated to our performance; and
|
|
•
|
|
the realization of any risks described under this “Risk Factors” section.
|
•
|
permit Quintana and Archer, and their respective affiliates to conduct business that competes with us and to make investments in any kind of property in which we may make investments; and
|
•
|
provide that if Quintana or Archer or their respective affiliates, or any employee, partner, member, manager, officer or director of Quintana or Archer or their respective affiliates who is also one of our directors or officers, becomes aware of a potential business opportunity, transaction or other matter, they will have no duty to communicate or offer that opportunity to us.
|
•
|
after we cease to be a controlled company, dividing our Board of Directors into three classes of directors, with each class serving staggered three-year terms, other than directors which may be elected by holders of our preferred stock, if any;
|
•
|
after we cease to be a controlled company, providing that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of one or more series of our preferred stock, be filled only by the affirmative vote of a majority of directors then in office, even if less than a quorum (prior to such time, vacancies may also be filled by stockholders holding a majority of the outstanding shares);
|
•
|
providing that, after we cease to be a controlled company, any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders, subject to the rights of the holders of any series of our preferred stock with respect to such series;
|
•
|
providing that, after we cease to be a controlled company, our certificate of incorporation and bylaws may be amended by the affirmative vote of the holders of not less than 66% of our then outstanding common stock;
|
•
|
providing that, after we cease to be a controlled company, permitting special meetings of our stockholders to be called only by our Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the members of the board of directors serving at the time of such vote (prior to such time, a special meeting may also be called at the request of stockholders holding a majority of the then outstanding shares entitled to vote);
|
•
|
providing that, after we cease to be a controlled company, the affirmative vote of the holders of not less than 66% in voting power of all then outstanding common stock entitled to vote generally in the election of directors, voting together as a single class, is required to remove any or all of the directors from office at any time, and directors will be removable only for “cause”;
|
•
|
prohibiting cumulative voting by our stockholders on all matters;
|
•
|
establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders;
|
•
|
providing that our Board of Directors has the ability to authorize undesignated preferred stock;
|
•
|
providing that the authorized number of directors constituting our Board of Directors may be changed only by a resolution of the board of directors; and
|
•
|
providing that our Board of Directors is expressly authorized to adopt, alter or repeal our bylaws.
|
|
•
|
|
a majority of the board of directors consist of independent directors as defined under the rules of the NYSE;
|
|
•
|
|
the nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
|
|
•
|
|
the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
|
Period
|
Total Number of
Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly Announced Plans or Programs
|
|
Maximum Dollar
Value of Shares
that May Yet Be
Purchased Under the Plans or Programs (i
n thousands
)
|
||||||
October 2018
|
5,667
|
|
|
$
|
6.40
|
|
|
5,667
|
|
|
$
|
5,964
|
|
November 2018
|
47,112
|
|
|
$
|
6.26
|
|
|
47,112
|
|
|
$
|
5,669
|
|
December 2018
(1)
|
43,528
|
|
|
$
|
4.72
|
|
|
43,528
|
|
|
$
|
5,463
|
|
October to December 31, 2018 Total
|
96,307
|
|
|
|
|
96,307
|
|
|
|
Item 6.
|
Selected Financial Data
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
During 2017, we sold select pressure pumping and wireline assets for aggregate sale proceeds of $27.6 million. During 2018 we completed strategic investments of approximately $30.0 million to expand our hydraulic fracturing fleet and our fleet of Large Diameter coiled tubing units. While we expect continued growth, expansions and strategic divestitures in the future, it is likely such growth, expansions and divestitures will be economically different from the acquisitions and divestitures discussed above, and such differences in economics will impact the comparability of our future results of operations to our historical results.
|
•
|
QES is subject to U.S. federal and state income taxes as a corporation. Our Predecessor was treated as a flow-through entity for U.S. federal income tax purposes, and as such, was generally not subject to U.S. federal income tax at the entity level. Rather, the tax liability with respect to its taxable income was passed through to its partners. Accordingly, the financial data attributable to our Predecessor contains no expense for U.S. federal income taxes or income taxes in any state or locality (other than franchise tax in the State of Texas).
|
•
|
Our IPO served as a vesting event under the phantom unit awards granted under our Predecessor's 2015 and 2017 LTIP Plans. As a result, certain of our Predecessor's phantom unit awards fully vested and were settled in connection with the IPO and additional phantom unit awards will fully vest and be settled according to their vesting schedules. We recognized
$17.9 million
of stock-based compensation expense for the year ended December 31, 2018. Stock-based compensation expense of approximately $10.0 million associated with these phantom unit awards was recognized for the year ended December 31, 2018. See "Note 1 - Organization and Nature of Operations" for additional details on our IPO and related phantom unit awards.
|
•
|
As we continue to implement controls, processes and infrastructure applicable to companies with publicly traded equity securities, it is likely that we will incur additional selling, general and administrative (“G&A”), expenses relative to historical periods.
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Revenues:
|
|
$
|
604,354
|
|
|
$
|
438,033
|
|
|
$
|
210,428
|
|
Costs and expenses:
|
|
|
|
|
|
|
||||||
Direct operating costs
|
|
468,502
|
|
|
335,609
|
|
|
182,928
|
|
|||
General and administrative
|
|
97,280
|
|
|
69,856
|
|
|
73,600
|
|
|||
Depreciation and amortization
|
|
46,683
|
|
|
45,687
|
|
|
78,661
|
|
|||
Fixed asset impairment
|
|
—
|
|
|
—
|
|
|
1,380
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
15,051
|
|
|||
(Gain) loss on disposition of assets
|
|
(2,375
|
)
|
|
(2,639
|
)
|
|
5,375
|
|
|||
Operating loss
|
|
(5,736
|
)
|
|
(10,480
|
)
|
|
(146,567
|
)
|
|||
Non-operating income (expense):
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(11,825
|
)
|
|
(11,251
|
)
|
|
(8,015
|
)
|
|||
Other income
|
|
—
|
|
|
666
|
|
|
—
|
|
|||
Loss before income tax
|
|
(17,561
|
)
|
|
(21,065
|
)
|
|
(154,582
|
)
|
|||
Income tax expense
|
|
(621
|
)
|
|
(91
|
)
|
|
(167
|
)
|
|||
Net loss
|
|
$
|
(18,182
|
)
|
|
$
|
(21,156
|
)
|
|
$
|
(154,749
|
)
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Segment Adjusted EBITDA:
|
|
|
|
|
|
|
||||||
Directional Drilling
|
|
$
|
23,694
|
|
|
$
|
17,498
|
|
|
$
|
(76
|
)
|
Pressure Pumping
|
|
28,700
|
|
|
27,784
|
|
|
(19,372
|
)
|
|||
Pressure Control
|
|
18,389
|
|
|
6,539
|
|
|
(5,804
|
)
|
|||
Wireline
|
|
1,362
|
|
|
(1,794
|
)
|
|
(6,161
|
)
|
|||
Adjusted EBITDA
(1)
|
|
$
|
60,232
|
|
|
$
|
41,226
|
|
|
$
|
(36,679
|
)
|
Other Operational Data:
|
|
|
|
|
|
|
||||||
Directional Drilling rig days
(2)
|
|
18,252
|
|
|
14,407
|
|
|
7,001
|
|
|||
Average monthly Directional Drilling rigs on revenue
(3)
|
|
69
|
|
|
58
|
|
|
31
|
|
|||
Total hydraulic fracturing stages
|
|
4,179
|
|
|
2,993
|
|
|
1,567
|
|
|||
Average hydraulic fracturing revenue per stage
|
|
$
|
47,897
|
|
|
$
|
47,189
|
|
|
$
|
23,338
|
|
|
(1)
|
Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. For a definition and description of Adjusted EBITDA and reconciliations of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, please read “Adjusted EBITDA” below.
|
(2)
|
Rig days represent the number of days we are providing services to rigs and are earning revenues during the period, including days that standby revenues are earned.
|
(3)
|
Rigs on revenue represents the number of rigs earning revenues during a time period, including days that standby revenues are earned.
|
|
Year Ended
|
||||||||||
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Adjustments to reconcile Adjusted EBITDA to net loss:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(18,182
|
)
|
|
$
|
(21,156
|
)
|
|
$
|
(154,749
|
)
|
Income tax expense
|
621
|
|
|
91
|
|
|
167
|
|
|||
Interest expense
|
11,825
|
|
|
11,251
|
|
|
8,015
|
|
|||
Other income
|
—
|
|
|
(666
|
)
|
|
—
|
|
|||
Depreciation and amortization expense
|
46,683
|
|
|
45,687
|
|
|
78,661
|
|
|||
Fixed asset impairment
|
—
|
|
|
—
|
|
|
1,380
|
|
|||
Goodwill impairment
(1)
|
—
|
|
|
—
|
|
|
15,051
|
|
|||
(Gain) loss on disposition of assets, net
(2)
|
(2,375
|
)
|
|
(2,639
|
)
|
|
5,375
|
|
|||
Non-cash stock based compensation
|
17,898
|
|
|
—
|
|
|
—
|
|
|||
Transaction expense
(3)
|
—
|
|
|
977
|
|
|
4,358
|
|
|||
Rebranding expense
(4)
|
322
|
|
|
9
|
|
|
2,237
|
|
|||
Settlement expense
(5)
|
825
|
|
|
3,680
|
|
|
1,740
|
|
|||
Severance expense
(6)
|
235
|
|
|
243
|
|
|
1,075
|
|
|||
Equipment and stand-up expense
(7)
|
2,380
|
|
|
3,749
|
|
|
11
|
|
|||
Adjusted EBITDA
|
$
|
60,232
|
|
|
$
|
41,226
|
|
|
$
|
(36,679
|
)
|
1.
|
For the year ended December 31, 2016, represents a non-cash goodwill impairment charge related to Directional Drilling and the continual decline in commodity pricing and historical low rig activity in 2015, which continued in 2016.
|
2.
|
Excludes gains on disposition of assets lost in hole of $5.4 million, $7.9 million and $4.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.
|
3.
|
For the years ended December 31, 2017 and 2016, represents professional fees related to investment banking, accounting and legal services associated with entering into the Former Term Loan (as defined in Item 7 - Liquidity and Capital Resources), of which $1.0 million and $4.4 million was recorded in general and administrative expenses.
|
4.
|
Relates to expenses incurred in connection with rebranding our segments.
|
5.
|
For the year ended December 31, 2018, represents lease buyouts, legal fees for FLSA claims, expenses associated with facility closures and other non-recurring expenses that were recorded in general and administrative expenses. For the years ended December 31, 2017 and 2016 relates to the non-recurring settlement of lease termination costs associated with the 2016 market downturn, and sales tax audit accrual and retention payments in the years ended December 31, 2017 and 2016 associated with the acquisition of the U.S. pressure pumping, directional drilling. wireline and pressure control businesses of Archer. In our performance for the year ended December 31, 2017 and the year ended December 31, 2016, $0.5 million and $0.5 million was recorded in direct operating expenses, respectively, and $3.1 million and $1.2 million was recorded in general and administrative expenses, respectively.
|
6.
|
Relates to severance expenses in the years ended December 31, 2017 and 2016 incurred in connection with a program implemented to reduce headcount in connection with the industry downturn, of which $0.2 million and $0.8 million was recorded to direct operating expenses, respectively and a nominal amount was recorded to general and administrative expenses. In our performance for the year ended
December 31, 2018
,
$0.2 million
was recorded in general and administrative expenses.
|
7.
|
Relates to equipment stand-up costs incurred in connection with the mobilization and redeployment of assets. In our performance for the year ended December 31, 2018, approximately
$2.2 million
was recorded in direct operating expenses and approximately
$0.2 million
was recorded in general and administrative expenses for the deployment of our fourth hydraulic fracturing fleet and upgrades of coiled tubing units to large diameter specification For the year ended December 31, 2017, this primarily represents costs related to the deployment of our third hydraulic fracturing fleet, of which $2.2 million was recorded in direct operating expenses and $0.2 million was recorded in general and administrative expenses. For the year ended December 31, 2016, approximately $0.01 million was recorded in direct operating expenses
|
|
|
Year Ended
|
||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Revenue:
|
|
|
|
|
||||
Directional Drilling
|
|
$
|
192,491
|
|
|
$
|
145,230
|
|
Pressure Pumping
|
|
214,154
|
|
|
153,118
|
|
||
Pressure Control
|
|
122,620
|
|
|
89,912
|
|
||
Wireline
|
|
75,089
|
|
|
49,773
|
|
||
Total revenue
|
|
$
|
604,354
|
|
|
$
|
438,033
|
|
|
|
Year Ended
|
||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Direct operating expenses:
|
|
|
|
|
||||
Directional Drilling
|
|
$
|
148,272
|
|
|
$
|
111,978
|
|
Pressure Pumping
|
|
171,974
|
|
|
115,526
|
|
||
Pressure Control
|
|
88,717
|
|
|
69,483
|
|
||
Wireline
|
|
59,539
|
|
|
38,622
|
|
||
Total direct operating expenses
|
|
$
|
468,502
|
|
|
$
|
335,609
|
|
|
|
Year Ended
|
||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Revenue:
|
|
|
|
|
||||
Directional Drilling
|
|
$
|
145,230
|
|
|
$
|
75,326
|
|
Pressure Pumping
|
|
153,118
|
|
|
45,165
|
|
||
Pressure Control
|
|
89,912
|
|
|
52,388
|
|
||
Wireline
|
|
49,773
|
|
|
37,549
|
|
||
Total revenue
|
|
$
|
438,033
|
|
|
$
|
210,428
|
|
|
|
Year Ended
|
||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Direct operating expenses:
|
|
|
|
|
||||
Directional Drilling
|
|
$
|
111,978
|
|
|
$
|
58,834
|
|
Pressure Pumping
|
|
115,526
|
|
|
50,828
|
|
||
Pressure Control
|
|
69,483
|
|
|
47,926
|
|
||
Wireline
|
|
38,622
|
|
|
25,340
|
|
||
Total direct operating expenses
|
|
$
|
335,609
|
|
|
$
|
182,928
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Net cash provided by (used in) operating activities
|
|
$
|
39,939
|
|
|
$
|
(11,540
|
)
|
|
$
|
(42,835
|
)
|
Net cash provided by (used in) investing activities
|
|
(54,213
|
)
|
|
14,510
|
|
|
2,266
|
|
|||
Net cash provided by (used in) financing activities
|
|
19,327
|
|
|
(6,438
|
)
|
|
46,525
|
|
|||
Net change in cash
|
|
5,053
|
|
|
(3,468
|
)
|
|
5,956
|
|
|||
Cash balance end of period
|
|
$
|
13,804
|
|
|
$
|
8,751
|
|
|
$
|
12,219
|
|
QUINTANA ENERGY SERVICES INC.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
Item 1.
|
Financial Statements
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
||||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
13,804
|
|
|
$
|
8,751
|
|
Accounts receivable, net of allowance of $1,841 and $776
|
|
101,620
|
|
|
83,325
|
|
||
Unbilled receivables
|
|
13,766
|
|
|
9,645
|
|
||
Inventories (Note 2)
|
|
23,464
|
|
|
22,693
|
|
||
Prepaid expenses and other current assets
|
|
7,481
|
|
|
9,520
|
|
||
Total current assets
|
|
160,135
|
|
|
133,934
|
|
||
Property, plant and equipment, net
|
|
153,878
|
|
|
128,518
|
|
||
Intangible assets, net
|
|
9,019
|
|
|
10,832
|
|
||
Other assets
|
|
1,517
|
|
|
2,375
|
|
||
Total assets
|
|
$
|
324,549
|
|
|
$
|
275,659
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
51,568
|
|
|
$
|
36,027
|
|
Accrued liabilities (Note 5)
|
|
37,533
|
|
|
33,825
|
|
||
Current portion of debt and capital lease obligations (Note 6)
|
|
422
|
|
|
79,443
|
|
||
Total current liabilities
|
|
89,523
|
|
|
149,295
|
|
||
Long-term debt, net of deferred financing costs of $0 and $1,709 (Note 6)
|
|
29,500
|
|
|
37,199
|
|
||
Long-term capital lease obligations (Note 6)
|
|
3,451
|
|
|
3,829
|
|
||
Deferred tax liability
|
|
130
|
|
|
185
|
|
||
Other long-term liabilities
|
|
125
|
|
|
183
|
|
||
Total liabilities
|
|
122,729
|
|
|
190,691
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
||||
Shareholders’ and members’ equity:
|
|
|
|
|
||||
Members’ equity
|
|
—
|
|
|
212,630
|
|
||
Preferred shares, $0.01 par value, 10,000,000 authorized; none issued and outstanding
|
|
—
|
|
|
—
|
|
||
Common shares, $0.01 par value, 150,000,000 authorized; 33,774,053 issued; 33,541,161 outstanding
|
|
344
|
|
|
—
|
|
||
Additional paid-in-capital
|
|
349,080
|
|
|
—
|
|
||
Treasury stock, at cost, 232,892 common shares
|
|
(1,821
|
)
|
|
—
|
|
||
Accumulated deficit
|
|
(145,783
|
)
|
|
(127,662
|
)
|
||
Total shareholders’ and members’ equity
|
|
201,820
|
|
|
84,968
|
|
||
Total liabilities, shareholders’ and members’ equity
|
|
$
|
324,549
|
|
|
$
|
275,659
|
|
|
|
Years Ended
|
||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Revenues:
|
|
$
|
604,354
|
|
|
$
|
438,033
|
|
|
$
|
210,428
|
|
Costs and expenses:
|
|
|
|
|
|
|
||||||
Direct operating costs
|
|
468,502
|
|
|
335,609
|
|
|
182,928
|
|
|||
General and administrative
|
|
97,280
|
|
|
69,856
|
|
|
73,600
|
|
|||
Depreciation and amortization
|
|
46,683
|
|
|
45,687
|
|
|
78,661
|
|
|||
Fixed asset impairment
|
|
—
|
|
|
—
|
|
|
1,380
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
15,051
|
|
|||
(Gain) loss on disposition of assets
|
|
(2,375
|
)
|
|
(2,639
|
)
|
|
5,375
|
|
|||
Operating loss
|
|
(5,736
|
)
|
|
(10,480
|
)
|
|
(146,567
|
)
|
|||
Non-operating income (expense):
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(11,825
|
)
|
|
(11,251
|
)
|
|
(8,015
|
)
|
|||
Other income
|
|
—
|
|
|
666
|
|
|
—
|
|
|||
Loss before income tax
|
|
(17,561
|
)
|
|
(21,065
|
)
|
|
(154,582
|
)
|
|||
Income tax expense
|
|
(621
|
)
|
|
(91
|
)
|
|
(167
|
)
|
|||
Net loss
|
|
(18,182
|
)
|
|
(21,156
|
)
|
|
(154,749
|
)
|
|||
Net loss attributable to predecessor
|
|
(1,546
|
)
|
|
(21,156
|
)
|
|
(154,749
|
)
|
|||
Net loss attributable to Quintana Energy Services Inc.
|
|
$
|
(16,636
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Net loss per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(0.50
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Diluted
|
|
$
|
(0.50
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
||||||
Basic
|
|
33,573
|
|
|
—
|
|
|
—
|
|
|||
Diluted
|
|
33,573
|
|
|
—
|
|
|
—
|
|
|
|
Common
Unitholders
Number of
Units
|
|
Members’
Equity
|
|
Common
Shareholders
Number of
Shares
Outstanding
|
|
Common
Stock
|
|
Additional
Paid in
Capital
|
|
Treasury
Stock
|
|
Retained
Deficit
|
|
Total
Shareholders’
Equity
|
||||||||||||||
Balance at December 31, 2016
|
|
417,441
|
|
|
$
|
212,630
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(106,506
|
)
|
|
$
|
106,124
|
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,156
|
)
|
|
(21,156
|
)
|
||||||
Balance at December 31, 2017
|
|
417,441
|
|
|
$
|
212,630
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(127,662
|
)
|
|
$
|
84,968
|
|
|
Effect of reorganization transactions
|
|
(417,441
|
)
|
|
(212,630
|
)
|
|
23,598
|
|
|
238
|
|
|
246,023
|
|
|
—
|
|
|
—
|
|
|
33,631
|
|
||||||
Issuance of common stock sold in initial public offering, net of offering costs
|
|
—
|
|
|
—
|
|
|
9,632
|
|
|
96
|
|
|
90,446
|
|
|
—
|
|
|
—
|
|
|
90,542
|
|
||||||
Net loss prior to reorganization transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,546
|
)
|
|
(1,546
|
)
|
||||||
Cost incurred for stock issuance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,277
|
)
|
|
—
|
|
|
—
|
|
|
(5,277
|
)
|
||||||
Equity-based compensation
|
|
—
|
|
|
—
|
|
|
544
|
|
|
10
|
|
|
17,888
|
|
|
—
|
|
|
—
|
|
|
17,898
|
|
||||||
Tax withholding on stock vesting
|
|
—
|
|
|
—
|
|
|
(137
|
)
|
|
—
|
|
|
—
|
|
|
(1,284
|
)
|
|
—
|
|
|
(1,284
|
)
|
||||||
Stock buyback plan activity
|
|
—
|
|
|
—
|
|
|
(96
|
)
|
|
—
|
|
|
—
|
|
|
(537
|
)
|
|
—
|
|
|
(537
|
)
|
||||||
Opening deferred tax adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
61
|
|
||||||
Net loss subsequent to reorganization transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,636
|
)
|
|
(16,636
|
)
|
||||||
Balance at December 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
33,541
|
|
|
$
|
344
|
|
|
$
|
349,080
|
|
|
$
|
(1,821
|
)
|
|
$
|
(145,783
|
)
|
|
$
|
201,820
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(18,182
|
)
|
|
$
|
(21,156
|
)
|
|
$
|
(154,749
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
46,683
|
|
|
45,687
|
|
|
78,661
|
|
|||
(Gain) loss on disposition of assets
|
|
(7,785
|
)
|
|
(10,500
|
)
|
|
1,268
|
|
|||
Non-cash interest expense
|
|
1,032
|
|
|
5,960
|
|
|
845
|
|
|||
Fixed asset impairment
|
|
—
|
|
|
—
|
|
|
1,380
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
15,051
|
|
|||
Loss on debt extinguishment
|
|
8,594
|
|
|
—
|
|
|
—
|
|
|||
Provision for doubtful accounts
|
|
1,103
|
|
|
289
|
|
|
142
|
|
|||
Deferred income tax expense
|
|
92
|
|
|
50
|
|
|
(42
|
)
|
|||
Stock-based compensation
|
|
17,898
|
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(19,398
|
)
|
|
(46,869
|
)
|
|
9,688
|
|
|||
Unbilled receivables
|
|
(4,121
|
)
|
|
(1,953
|
)
|
|
(4,213
|
)
|
|||
Inventories
|
|
(770
|
)
|
|
(3,144
|
)
|
|
1,559
|
|
|||
Prepaid expenses and other current assets
|
|
1,442
|
|
|
1,812
|
|
|
3,894
|
|
|||
Other noncurrent assets
|
|
(3
|
)
|
|
(1,439
|
)
|
|
632
|
|
|||
Accounts payable
|
|
10,647
|
|
|
6,969
|
|
|
8,842
|
|
|||
Accrued liabilities
|
|
2,767
|
|
|
12,810
|
|
|
(5,778
|
)
|
|||
Other long-term liabilities
|
|
(60
|
)
|
|
(56
|
)
|
|
(15
|
)
|
|||
Net cash provided by (used in) operating activities
|
|
39,939
|
|
|
(11,540
|
)
|
|
(42,835
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
|
(64,957
|
)
|
|
(21,244
|
)
|
|
(7,340
|
)
|
|||
Proceeds from sale of property, plant and equipment
|
|
10,744
|
|
|
35,754
|
|
|
9,606
|
|
|||
Net cash (used in) provided by investing activities
|
|
(54,213
|
)
|
|
14,510
|
|
|
2,266
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from revolving debt
|
|
41,500
|
|
|
11,035
|
|
|
35,159
|
|
|||
Payments on revolving debt
|
|
(91,071
|
)
|
|
(21,964
|
)
|
|
(22,000
|
)
|
|||
Proceeds from term loans
|
|
—
|
|
|
5,000
|
|
|
28,600
|
|
|||
Proceeds from warrants, net of issuance costs
|
|
—
|
|
|
—
|
|
|
5,961
|
|
|||
Payments on term loans
|
|
(11,225
|
)
|
|
—
|
|
|
—
|
|
|||
Payments on capital lease obligations
|
|
(380
|
)
|
|
(315
|
)
|
|
(317
|
)
|
|||
Payments on financed payables
|
|
(2,139
|
)
|
|
—
|
|
|
—
|
|
|||
Issuance of units
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|||
Payment of deferred financing costs
|
|
(1,564
|
)
|
|
(194
|
)
|
|
(1,878
|
)
|
|||
Prepayment premiums on early debt extinguishment
|
|
(1,346
|
)
|
|
—
|
|
|
—
|
|
|||
Payments for treasury shares
|
|
(1,816
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from new shares issuance, net of underwriting commissions
|
|
90,542
|
|
|
—
|
|
|
—
|
|
|||
Costs incurred for stock issuance
|
|
(3,174
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
|
19,327
|
|
|
(6,438
|
)
|
|
46,525
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
5,053
|
|
|
(3,468
|
)
|
|
5,956
|
|
|||
Cash and cash equivalents beginning of period
|
|
8,751
|
|
|
12,219
|
|
|
6,263
|
|
|||
Cash and cash equivalents end of period
|
|
$
|
13,804
|
|
|
$
|
8,751
|
|
|
$
|
12,219
|
|
Supplemental cash flow information
|
|
|
|
|
|
|
||||||
Cash paid for interest
|
|
$
|
2,087
|
|
|
$
|
5,755
|
|
|
$
|
5,935
|
|
Income taxes paid, net of refund
|
|
105
|
|
|
77
|
|
|
198
|
|
|||
Supplemental non-cash investing and financing activities
|
|
|
|
|
|
|
||||||
Non-cash proceeds from sale of assets held for sale
|
|
—
|
|
|
3,990
|
|
|
—
|
|
|||
Fixed asset purchases in accounts payable and accrued liabilities
|
|
4,900
|
|
|
934
|
|
|
93
|
|
|||
Financed payables
|
|
2,994
|
|
|
1,666
|
|
|
950
|
|
|||
Non-cash capital lease additions
|
|
53
|
|
|
70
|
|
|
—
|
|
|||
Non-cash payment for property, plant and equipment
|
|
3,279
|
|
|
711
|
|
|
—
|
|
|||
Equity issued as payment for professional services
|
|
—
|
|
|
—
|
|
|
2,000
|
|
|||
Debt conversion of Former Term Loan to equity
|
|
33,631
|
|
|
—
|
|
|
—
|
|
|||
Conversion of accrued interest to debt
|
|
—
|
|
|
4,202
|
|
|
126
|
|
|||
Issuance of common shares for members’ equity
|
|
$
|
212,630
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fee type
|
|
Revenue Recognition
|
Day rate
|
|
Revenue is recognized based on the day rates earned as it relates to the level of service provided for each day throughout the contract.
|
Initial mobilization
|
|
Revenue is estimated at contract inception and included in the transaction price to be recognized ratably over contract term.
|
Demobilization
|
|
Unconstrained demobilization revenue is estimated at contract inception, included in the transaction price, and recognized ratably over the contract term.
|
Reimbursement
|
|
Recognized (gross of costs incurred) at the amount billed to the customer.
|
1)
|
QES occasionally pays commissions to its sales staff for successfully obtaining a contract. The commission payment is incremental costs of obtaining a contract and should be capitalized and amortized over the contract period. However, ASC 340-40-25-4 provides a practical expedient, which states that “an entity may recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.” Management has elected to use this practical expedient as most of the Company’s service contracts are less than a month. Accordingly, the Company expenses the commission expense as incurred.
|
2)
|
In May 2016, the FASB issued ASU 2016-12 that allows an entity to make an accounting policy election to exclude from the transaction price certain types of taxes collected from a customer (i.e. present revenue net of these taxes), including sales, use, value-added and some excise taxes.
|
|
|
Balance at beginning of period
|
|
Charged to costs and expenses
|
|
Deductions
(1)
|
|
Balance at end of period
|
||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
776
|
|
|
$
|
1,103
|
|
|
$
|
(38
|
)
|
|
$
|
1,841
|
|
2017
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
880
|
|
|
289
|
|
|
(393
|
)
|
|
776
|
|
||||
2016
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
994
|
|
|
$
|
142
|
|
|
$
|
(256
|
)
|
|
$
|
880
|
|
|
Level 1
|
Quoted prices are available in active markets for identical assets or liabilities;
|
|
Level 2
|
Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; or
|
|
Level 3
|
Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations.
|
•
|
Transitional practical expedients package: An entity may elect to apply the listed practical expedients as a package to all the leases that commenced before the effective date. The practical expedients are:
|
◦
|
The entity need not reassess whether any expired or existing contracts are or contains leases;
|
◦
|
The entity need not reassess the lease classification for expired or existing contracts;
|
◦
|
The entity need not reassess initial direct costs for any existing leases.
|
•
|
Use of portfolio approach: An entity can apply this guidance to a portfolio of leases with similar characteristics if the entity reasonably expects that the application of the lease model to the portfolio would not differ materially from the application of the lease model to the individual leases in that portfolio. This approach can also be applied to other aspects of the leases guidance for which lessees/lessors need to make judgments and estimates, such as determining the discount rate and determining and reassessing the lease term.
|
•
|
Lease and non-lease components: As a practical expedient, a lessor may combine lease and non-lease components where the revenue recognition pattern is the same and where the lease component, when accounted for separately, would be considered an operating lease.
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
|||||
Consumables and materials
|
|
$
|
7,566
|
|
|
$
|
7,085
|
|
|
6,056
|
|
Spare parts
|
|
15,898
|
|
|
15,608
|
|
|
13,493
|
|
||
Inventories
|
|
$
|
23,464
|
|
|
$
|
22,693
|
|
|
19,549
|
|
|
|
Estimated
|
|
As of December 31,
|
||||||||||
|
|
Useful Lives
|
|
2018
|
|
2017
|
|
2016
|
||||||
Land
|
|
Indefinite
|
|
$
|
3,740
|
|
|
$
|
3,999
|
|
|
$
|
4,050
|
|
Service equipment
|
|
3-10 years
|
|
298,782
|
|
|
262,795
|
|
|
250,435
|
|
|||
Machinery and equipment
|
|
7-15 years
|
|
70,749
|
|
|
51,333
|
|
|
55,897
|
|
|||
Buildings and leasehold improvements
|
|
5-39 years
|
|
24,648
|
|
|
27,061
|
|
|
27,290
|
|
|||
Software
|
|
3-5 years
|
|
2,348
|
|
|
2,012
|
|
|
1,123
|
|
|||
Office furniture and equipment
|
|
3-10 years
|
|
2,792
|
|
|
2,376
|
|
|
3,098
|
|
|||
|
|
|
|
403,059
|
|
|
349,576
|
|
|
341,893
|
|
|||
Less: Accumulated depreciation
|
|
|
|
(255,843
|
)
|
|
(224,764
|
)
|
|
(193,985
|
)
|
|||
|
|
|
|
147,216
|
|
|
124,812
|
|
|
147,908
|
|
|||
Construction in progress
|
|
|
|
6,662
|
|
|
3,706
|
|
|
2,798
|
|
|||
Property, plant and equipment, net
|
|
|
|
$
|
153,878
|
|
|
$
|
128,518
|
|
|
$
|
150,706
|
|
|
|
Estimated
|
|
As of December 31,
|
||||||||||
|
|
Useful Lives
|
|
2018
|
|
2017
|
|
2016
|
||||||
Machinery and equipment
|
|
3 Years
|
|
$
|
233
|
|
|
$
|
181
|
|
|
$
|
—
|
|
Buildings and leasehold improvements
|
|
20 Years
|
|
2,252
|
|
|
2,252
|
|
|
2,252
|
|
|||
|
|
|
|
2,485
|
|
|
2,433
|
|
|
2,252
|
|
|||
Less: Accumulated amortization
|
|
|
|
(676
|
)
|
|
(415
|
)
|
|
(193
|
)
|
|||
|
|
|
|
$
|
1,809
|
|
|
$
|
2,018
|
|
|
$
|
2,059
|
|
|
|
Trademarks
|
|
Customer Relationships
|
|
Non-compete Agreement
|
|
Total
|
||||||||
Estimated useful life (years)
|
|
3
|
|
|
13
|
|
|
5
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||||
Gross Amount as of December 31, 2016
|
|
$
|
1,750
|
|
|
$
|
11,710
|
|
|
$
|
4,560
|
|
|
$
|
18,020
|
|
Accumulated Amortization
|
|
(1,166
|
)
|
|
(1,802
|
)
|
|
(1,824
|
)
|
|
(4,792
|
)
|
||||
Net Balance as of December 31, 2016
|
|
584
|
|
|
9,908
|
|
|
2,736
|
|
|
13,228
|
|
||||
Gross Amount as of December 31, 2017
|
|
$
|
1,750
|
|
|
$
|
11,710
|
|
|
$
|
4,560
|
|
|
$
|
18,020
|
|
Accumulated Amortization
|
|
(1,750
|
)
|
|
(2,702
|
)
|
|
(2,736
|
)
|
|
(7,188
|
)
|
||||
Net Balance as of December 31, 2017
|
|
—
|
|
|
9,008
|
|
|
1,824
|
|
|
10,832
|
|
||||
Gross Amount as of December 31, 2018
|
|
$
|
1,750
|
|
|
$
|
11,710
|
|
|
$
|
4,560
|
|
|
$
|
18,020
|
|
Accumulated Amortization
|
|
(1,750
|
)
|
|
(3,603
|
)
|
|
(3,648
|
)
|
|
(9,001
|
)
|
||||
Net Balance as of December 31, 2018
|
|
—
|
|
|
8,107
|
|
|
912
|
|
|
9,019
|
|
Year Ending December 31,
|
|
Total
|
||
2019
|
|
$
|
1,813
|
|
2020
|
|
901
|
|
|
2021
|
|
901
|
|
|
2022
|
|
901
|
|
|
Thereafter
|
|
4,503
|
|
|
|
|
$
|
9,019
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Current accrued liabilities
|
|
|
|
|
||||
Accrued payables
|
|
$
|
12,943
|
|
|
$
|
11,905
|
|
Payroll and payroll taxes
|
|
7,051
|
|
|
6,089
|
|
||
Bonus
|
|
6,117
|
|
|
6,019
|
|
||
Workers compensation insurance premiums
|
|
1,532
|
|
|
1,760
|
|
||
Sales tax
|
|
2,599
|
|
|
2,923
|
|
||
Ad valorem tax
|
|
581
|
|
|
728
|
|
||
Health insurance claims
|
|
921
|
|
|
913
|
|
||
Other accrued liabilities
|
|
5,789
|
|
|
3,488
|
|
||
Total accrued liabilities
|
|
$
|
37,533
|
|
|
$
|
33,825
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
New ABL revolving credit facility due February 2023
|
|
$
|
29,500
|
|
|
$
|
—
|
|
Revolving credit facility
|
|
—
|
|
|
79,071
|
|
||
2017 term loan facility
|
|
—
|
|
|
44,328
|
|
||
Less: deferred financing costs
|
|
—
|
|
|
(1,709
|
)
|
||
Less: discount on term loan
|
|
—
|
|
|
(5,420
|
)
|
||
Total debt obligations, net of discounts and deferred financing
|
|
29,500
|
|
|
116,270
|
|
||
Capital leases
|
|
3,873
|
|
|
4,200
|
|
||
Less: current portion of debt and capital lease obligation
|
|
(422
|
)
|
|
(79,443
|
)
|
||
Long-term debt and capital lease obligations
|
|
$
|
32,951
|
|
|
$
|
41,027
|
|
Years Ending December 31,
|
|
||
2019
|
$
|
721
|
|
2020
|
687
|
|
|
2021
|
640
|
|
|
2022
|
630
|
|
|
2023
|
630
|
|
|
Thereafter
|
1,937
|
|
|
|
$
|
5,245
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current income tax (expense) benefit
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
(22
|
)
|
|
$
|
(40
|
)
|
|
$
|
(244
|
)
|
State
|
|
(507
|
)
|
|
(1
|
)
|
|
35
|
|
|||
Total current income tax (expense)
|
|
(529
|
)
|
|
(41
|
)
|
|
(209
|
)
|
|||
Deferred income tax (expense) benefit
|
|
|
|
|
|
|
||||||
Federal
|
|
—
|
|
|
(45
|
)
|
|
37
|
|
|||
State
|
|
(92
|
)
|
|
(5
|
)
|
|
5
|
|
|||
Total deferred income tax (expense) benefit
|
|
(92
|
)
|
|
(50
|
)
|
|
42
|
|
|||
|
|
$
|
(621
|
)
|
|
$
|
(91
|
)
|
|
$
|
(167
|
)
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Income tax provision computed at the statutory federal rate
|
|
21.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
State income taxes, net of federal tax benefit
|
|
(3.7
|
)
|
|
—
|
|
|
—
|
|
Non-deductible wages
|
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
Non-deductible meals and entertainment
|
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
Stock based compensation
|
|
(6.5
|
)
|
|
—
|
|
|
—
|
|
Valuation allowance
|
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
Flow through income not taxable
|
|
—
|
|
|
(34.4
|
)
|
|
(34.2
|
)
|
Other differences
|
|
(0.2
|
)
|
|
—
|
|
|
0.1
|
|
Effective tax rate
|
|
(3.9
|
)%
|
|
(0.4
|
)%
|
|
(0.1
|
)%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Deferred tax assets:
|
|
|
|
|
|
|
||||||
Reserves & accruals
|
|
$
|
1,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Stock based compensation
|
|
1,844
|
|
|
—
|
|
|
—
|
|
|||
Intangible assets
|
|
60,978
|
|
|
—
|
|
|
—
|
|
|||
Net operating loss carryforwards
|
|
40,987
|
|
|
—
|
|
|
—
|
|
|||
Other
|
|
56
|
|
|
—
|
|
|
—
|
|
|||
Total deferred tax assets
|
|
105,563
|
|
|
—
|
|
|
—
|
|
|||
Valuation allowance
|
|
(90,027
|
)
|
|
—
|
|
|
—
|
|
|||
Net deferred tax assets
|
|
15,536
|
|
|
—
|
|
|
—
|
|
|||
Deferred tax liability:
|
|
|
|
|
|
|
||||||
Prepaid expenses
|
|
(180
|
)
|
|
—
|
|
|
—
|
|
|||
Property plant and equipment
|
|
(15,486
|
)
|
|
(185
|
)
|
|
(135
|
)
|
|||
Total deferred tax liabilities
|
|
(15,666
|
)
|
|
(185
|
)
|
|
(135
|
)
|
|||
Net deferred tax liability
|
|
$
|
(130
|
)
|
|
$
|
(185
|
)
|
|
$
|
(135
|
)
|
Valuation allowance as of the beginning of January 1, 2018
|
|
$
|
(379
|
)
|
Charged to equity
|
|
(68,908
|
)
|
|
Charged to income tax provision for current year activity
|
|
(20,740
|
)
|
|
Valuation allowance as of December 31, 2018
|
|
$
|
(90,027
|
)
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Accounts payable to affiliates of Quintana Capital Group
|
|
$
|
—
|
|
|
$
|
81
|
|
Accounts payable to affiliates of Archer Well Company Inc.
|
|
$
|
40
|
|
|
$
|
9
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating expenses from affiliates of Quintana Capital Group
|
|
$
|
384
|
|
|
$
|
529
|
|
|
$
|
1,628
|
|
Operating expenses from affiliates of Archer Well Company Inc.
|
|
$
|
81
|
|
|
$
|
10
|
|
|
$
|
2,095
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Directional Drilling
|
|
$
|
23,694
|
|
|
$
|
17,498
|
|
|
$
|
(76
|
)
|
Pressure Pumping
|
|
28,700
|
|
|
27,784
|
|
|
(19,372
|
)
|
|||
Pressure Control
|
|
18,389
|
|
|
6,539
|
|
|
(5,804
|
)
|
|||
Wireline
|
|
1,362
|
|
|
(1,794
|
)
|
|
(6,161
|
)
|
|||
Corporate and Other
|
|
(33,573
|
)
|
|
(17,459
|
)
|
|
(14,687
|
)
|
|||
Income tax expense
|
|
(621
|
)
|
|
(91
|
)
|
|
(167
|
)
|
|||
Interest expense
|
|
(11,825
|
)
|
|
(11,251
|
)
|
|
(8,015
|
)
|
|||
Depreciation and amortization
|
|
(46,683
|
)
|
|
(45,687
|
)
|
|
(78,661
|
)
|
|||
Fixed asset impairment
|
|
—
|
|
|
—
|
|
|
(1,380
|
)
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
(15,051
|
)
|
|||
Gain on disposition of assets, net
|
|
2,375
|
|
|
2,639
|
|
|
(5,375
|
)
|
|||
Other income
|
|
—
|
|
|
666
|
|
|
—
|
|
|||
Net loss
|
|
$
|
(18,182
|
)
|
|
$
|
(21,156
|
)
|
|
$
|
(154,749
|
)
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Directional Drilling
|
|
$
|
105,942
|
|
|
$
|
82,789
|
|
Pressure Pumping
|
|
121,824
|
|
|
111,322
|
|
||
Pressure Control
|
|
70,401
|
|
|
52,884
|
|
||
Wireline
|
|
28,039
|
|
|
28,988
|
|
||
Total
|
|
$
|
326,206
|
|
|
$
|
275,983
|
|
Corporate & Other
|
|
7,344
|
|
|
7,695
|
|
||
Eliminations
|
|
(9,001
|
)
|
|
(8,019
|
)
|
||
Total assets
|
|
$
|
324,549
|
|
|
$
|
275,659
|
|
|
|
Year Ended December 31, 2018
|
||||||||||||||||||
|
|
Directional
Drilling
|
|
Pressure
Pumping
|
|
Pressure
Control
|
|
Wireline
|
|
Total
|
||||||||||
Revenues
|
|
$
|
192,491
|
|
|
$
|
214,154
|
|
|
$
|
122,620
|
|
|
$
|
75,089
|
|
|
$
|
604,354
|
|
Depreciation and amortization
|
|
10,849
|
|
|
22,571
|
|
|
9,207
|
|
|
4,056
|
|
|
46,683
|
|
|||||
Capital expenditures
|
|
$
|
13,003
|
|
|
$
|
29,235
|
|
|
$
|
20,125
|
|
|
$
|
2,594
|
|
|
$
|
64,957
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Year Ended December 31, 2017
|
||||||||||||||||||
|
|
Directional
Drilling |
|
Pressure
Pumping |
|
Pressure
Control |
|
Wireline
|
|
Total
|
||||||||||
Revenues
|
|
$
|
145,230
|
|
|
$
|
153,118
|
|
|
$
|
89,912
|
|
|
$
|
49,773
|
|
|
$
|
438,033
|
|
Depreciation and amortization
|
|
11,994
|
|
|
22,867
|
|
|
6,560
|
|
|
4,266
|
|
|
45,687
|
|
|||||
Capital expenditures
|
|
$
|
9,038
|
|
|
$
|
5,268
|
|
|
$
|
6,446
|
|
|
$
|
492
|
|
|
$
|
21,244
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||||||
|
|
Directional
Drilling |
|
Pressure
Pumping |
|
Pressure
Control |
|
Wireline
|
|
Total
|
||||||||||
Revenues
|
|
$
|
75,326
|
|
|
$
|
45,165
|
|
|
$
|
52,388
|
|
|
$
|
37,549
|
|
|
$
|
210,428
|
|
Depreciation and amortization
|
|
21,585
|
|
|
37,876
|
|
|
11,391
|
|
|
7,809
|
|
|
78,661
|
|
|||||
Capital expenditures
|
|
$
|
6,465
|
|
|
$
|
101
|
|
|
$
|
741
|
|
|
$
|
33
|
|
|
$
|
7,340
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Restricted stock awards
|
|
$
|
438
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted stock units
|
|
16,293
|
|
|
—
|
|
|
—
|
|
|||
Performance stock units
|
|
1,167
|
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation expense
|
|
$
|
17,898
|
|
|
$
|
—
|
|
|
$
|
—
|
|
i.
|
Restricted Stock Awards
|
|
|
Number of Shares
(in thousands)
|
|
Grant Date Fair
Value per Share
|
|
Weighted Average
Remaining Life
(in years)
|
|||
Outstanding at December 31, 2017
|
|
1,627
|
|
|
17.73
|
|
|
3.46
|
|
Granted
|
|
476
|
|
|
8.92
|
|
|
2.11
|
|
Forfeited
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
Vested
|
|
(544
|
)
|
|
—
|
|
|
—
|
|
Outstanding at December 31, 2018
|
|
1,551
|
|
|
15.74
|
|
|
2.36
|
|
|
|
Number of Shares
(in thousands)
|
|
Grant Date Fair
Value per Share
|
|
Weighted Average
Remaining Life
(in years)
|
||||
Outstanding at December 31, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Granted
|
|
425
|
|
|
$
|
5.49
|
|
|
2.11
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Vested
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Outstanding at December 31, 2018
|
|
425
|
|
|
$
|
5.49
|
|
|
2.11
|
|
|
|
Year Ended December 31, 2018
|
||
Numerator:
|
|
|
||
Net loss attributed to common share holders
|
|
$
|
(16,636
|
)
|
Denominator:
|
|
|
||
Weighted average common shares outstanding - basic
|
|
33,573
|
|
|
Weighted average common shares outstanding - diluted
|
|
33,573
|
|
|
Net loss per common share:
|
|
|
||
Basic
|
|
$
|
(0.50
|
)
|
Diluted
|
|
$
|
(0.50
|
)
|
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Revenue
|
|
$
|
141,268
|
|
|
$
|
152,536
|
|
|
$
|
150,897
|
|
|
$
|
159,653
|
|
Cost and Expenses:
|
|
|
|
|
|
|
|
|
||||||||
Direct operating Expenses
|
|
106,492
|
|
|
116,581
|
|
|
118,525
|
|
|
126,904
|
|
||||
General and administrative expenses
|
|
29,917
|
|
|
22,500
|
|
|
22,540
|
|
|
22,323
|
|
||||
Depreciation and amortization
|
|
11,078
|
|
|
11,155
|
|
|
12,033
|
|
|
12,417
|
|
||||
Gain on disposition of assets, net
|
|
(106
|
)
|
|
(594
|
)
|
|
(629
|
)
|
|
(1,046
|
)
|
||||
Operating (loss) income
|
|
(6,113
|
)
|
|
2,894
|
|
|
(1,572
|
)
|
|
(945
|
)
|
||||
Interest expense, net
|
|
(10,192
|
)
|
|
(433
|
)
|
|
(574
|
)
|
|
(626
|
)
|
||||
(Loss) income before income taxes
|
|
(16,305
|
)
|
|
2,461
|
|
|
(2,146
|
)
|
|
(1,571
|
)
|
||||
Income tax (expense) benefit
|
|
(51
|
)
|
|
(326
|
)
|
|
(207
|
)
|
|
(37
|
)
|
||||
Net (loss) income
|
|
(16,356
|
)
|
|
2,135
|
|
|
(2,353
|
)
|
|
(1,608
|
)
|
||||
Net loss attributable to Predecessor
|
|
(1,546
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income attributable to Quintana Energy Services Inc.
|
|
$
|
(14,810
|
)
|
|
$
|
2,135
|
|
|
$
|
(2,353
|
)
|
|
$
|
(1,608
|
)
|
|
|
Year Ended December 31, 2017
|
||||||||||||||
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Revenue
|
|
$
|
85,439
|
|
|
$
|
108,457
|
|
|
$
|
113,274
|
|
|
$
|
130,863
|
|
Cost and Expenses:
|
|
|
|
|
|
|
|
|
||||||||
Direct operating Expenses
|
|
67,429
|
|
|
81,667
|
|
|
89,910
|
|
|
96,603
|
|
||||
General and administrative expenses
|
|
17,150
|
|
|
16,025
|
|
|
18,613
|
|
|
18,068
|
|
||||
Depreciation and amortization
|
|
11,594
|
|
|
11,432
|
|
|
11,238
|
|
|
11,423
|
|
||||
Gain on disposition of assets, net
|
|
(1,657
|
)
|
|
(332
|
)
|
|
(310
|
)
|
|
(340
|
)
|
||||
Operating (loss) income
|
|
(9,077
|
)
|
|
(335
|
)
|
|
(6,177
|
)
|
|
5,109
|
|
||||
Interest expense, net
|
|
(2,601
|
)
|
|
(2,788
|
)
|
|
(2,901
|
)
|
|
(2,961
|
)
|
||||
Other income (expense), net
|
|
—
|
|
|
—
|
|
|
724
|
|
|
(58
|
)
|
||||
(Loss) income before income taxes
|
|
(11,678
|
)
|
|
(3,123
|
)
|
|
(8,354
|
)
|
|
2,090
|
|
||||
Income tax (expense) benefit
|
|
6
|
|
|
9
|
|
|
(84
|
)
|
|
(22
|
)
|
||||
Net (loss) income
|
|
$
|
(11,672
|
)
|
|
$
|
(3,114
|
)
|
|
$
|
(8,438
|
)
|
|
$
|
2,068
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Revenue
|
|
$
|
61,786
|
|
|
$
|
40,771
|
|
|
$
|
49,619
|
|
|
$
|
58,252
|
|
Cost and Expenses:
|
|
|
|
|
|
|
|
|
||||||||
Direct operating Expenses
|
|
58,902
|
|
|
35,722
|
|
|
42,047
|
|
|
46,257
|
|
||||
General and administrative expenses
|
|
20,673
|
|
|
17,387
|
|
|
16,502
|
|
|
19,038
|
|
||||
Depreciation and amortization
|
|
21,269
|
|
|
18,603
|
|
|
19,565
|
|
|
19,224
|
|
||||
Fixed asset impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,380
|
|
||||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
15,051
|
|
|
—
|
|
||||
Loss (gain) on disposition of assets, net
|
|
(210
|
)
|
|
(63
|
)
|
|
53
|
|
|
5,595
|
|
||||
Operating loss
|
|
(38,848
|
)
|
|
(30,878
|
)
|
|
(43,599
|
)
|
|
(33,242
|
)
|
||||
Interest expense, net
|
|
(1,460
|
)
|
|
(1,674
|
)
|
|
(2,405
|
)
|
|
(2,476
|
)
|
||||
Loss before income taxes
|
|
(40,308
|
)
|
|
(32,552
|
)
|
|
(46,004
|
)
|
|
(35,718
|
)
|
||||
Income tax (expense) benefit
|
|
34
|
|
|
(81
|
)
|
|
20
|
|
|
(140
|
)
|
||||
Net loss
|
|
$
|
(40,274
|
)
|
|
$
|
(32,633
|
)
|
|
$
|
(45,984
|
)
|
|
$
|
(35,858
|
)
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Index to Exhibits
|
2.1†
|
|
2.2†
|
|
3.1
|
|
3.2
|
|
4.1
|
|
4.2
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
|
10.7
|
|
10.8
|
|
10.9+
|
|
10.10+
|
|
10.11+
|
|
10.12+
|
|
10.13+
|
10.14+
|
|
10.15+
|
|
10.16+
|
|
10.17+
|
|
10.18+
|
|
10.19+
|
|
10.20+
|
|
10.21+
|
|
10.22†**
|
|
10.23+
|
|
10.24+
|
|
10.25+
|
|
10.26†*
|
|
10.27†*
|
|
10.28†*
|
|
10.29†*
|
|
10.30†*
|
|
10.31†*
|
|
21.1
|
|
23.1**
|
|
31.1*
|
|
31.2*
|
|
32.1**
|
|
32.2**
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
The schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the Securities and Exchange Commission upon request.
|
+
|
Management contract or compensatory plan or arrangement
|
Item 16.
|
Form 10-K Summary
|
QUINTANA ENERGY SERVICES INC.
|
||
|
|
|
By:
|
|
/s/ D. Rogers Herndon
|
|
|
D. Rogers Herndon
|
|
|
President, Chief Executive Officer and Director
|
|
||
Date:
|
March 7, 2019
|
Signature
|
|
Title
|
|
|
|
/s/ D. Rogers Herndon
|
|
President, Chief Executive Officer, and Director (Principal Executive Officer)
|
D. Rogers Herndon
|
|
|
|
|
|
/s/ Keefer M. Lehner
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
Keefer M. Lehner
|
|
|
|
|
|
/s/ Geoffrey C. Stanford
|
|
Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
Geoffrey C. Stanford
|
|
|
|
|
|
/s/ Corbin J. Robertson, Jr.
|
|
Chairman of the Board of Directors
|
Corbin J. Robertson, Jr.
|
|
|
|
|
|
/s/ Dalton Boutté, Jr.
|
|
Director and Chairman of the Compensation Committee
|
Dalton Boutté, Jr.
|
|
|
|
|
|
/s/ Rocky L. Duckworth
|
|
Director and Chairman of the Audit Committee
|
Rocky L. Duckworth
|
|
|
|
|
|
/s/ Gunnar Eliassen
|
|
Director
|
Gunnar Eliassen
|
|
|
|
|
|
/s/ Bobby S. Shackouls
|
|
Director
|
Bobby S. Shackouls
|
|
|
|
|
|
/s/ Dag Skindlo
|
|
Director
|
Dag Skindlo
|
|
|
Participant:
|
________________
|
Date of Grant:
|
________________
|
Award Type and Description:
|
Other Stock-Based Award granted pursuant to Section 6(h) of the Plan. This Award represents the right to receive shares of Stock in an amount up to ___% of the Target PSUs (defined below), subject to the terms and conditions set forth herein and in the Agreement.
Following the Committee’s certification of the level of achievement with respect to the Performance Goals (defined below), a portion of the Target PSUs ranging from ___% to ___% of the Target PSUs shall be deemed “
Earned PSUs
.” Thereafter, your right to receive settlement of the Earned PSUs shall vest and become nonforfeitable upon your satisfaction of the continued employment or service requirements described below under “Service Requirement
.
”
|
Target Number of PSUs:
|
________________ (the “
Target PSUs
”).
|
Performance Period:
|
______________ (the “
Performance Period Commencement Date
”) through _____________ (the “
Performance Period End Date
”).
|
Performance Goals:
|
The “
Performance Goals
” are based on (i) the Company’s achievement with respect to relative total stockholder return and (ii) the Company’s achievement with respect to absolute total stockholder return, in each case, as described in
Exhibit B
attached hereto.
|
Service Requirement:
|
Except as expressly provided in
Section 3
of the Agreement, you must remain continuously employed by, or continuously provide services to, the Company or an Affiliate, as applicable, from the Date of Grant through the following dates in order to receive settlement of the specified number of Earned PSUs: __________________________.
|
Settlement:
|
Settlement of the Earned PSUs shall be made solely in shares of Stock, which shall be delivered to you in accordance with
Section 4
of the Agreement.
|
COMPANY
Quintana Energy Services Inc.
By:
Name: Rogers Herndon
Its: Chief Executive Officer and President
|
|
|
|
Participant:
|
________________
|
Date of Grant:
|
________________
|
Award Type and Description:
|
Other Stock-Based Award granted pursuant to Section 6(h) of the Plan. This Award represents the right to receive shares of Stock in an amount up to ___% of the Target PSUs (defined below), subject to the terms and conditions set forth herein and in the Agreement.
Following the Committee’s certification of the level of achievement with respect to the Performance Goals (defined below), a portion of the Target PSUs ranging from ___% to ___% of the Target PSUs shall be deemed “
Earned PSUs
.” Thereafter, your right to receive settlement of the Earned PSUs shall vest and become nonforfeitable upon your satisfaction of the continued employment or service requirements described below under “Service Requirement
.
”
|
Target Number of PSUs:
|
________________ (the “
Target PSUs
”).
|
Performance Period:
|
______________ (the “
Performance Period Commencement Date
”) through _____________ (the “
Performance Period End Date
”).
|
Performance Goals:
|
The “
Performance Goals
” are based on (i) the Company’s achievement with respect to relative total stockholder return and (ii) the Company’s achievement with respect to absolute total stockholder return, in each case, as described in
Exhibit B
attached hereto.
|
Service Requirement:
|
Except as expressly provided in
Section 3
of the Agreement, you must remain continuously employed by, or continuously provide services to, the Company or an Affiliate, as applicable, from the Date of Grant through the following dates in order to receive settlement of the specified number of Earned PSUs: ________________.
|
Settlement:
|
Settlement of the Earned PSUs shall be made solely in shares of Stock, which shall be delivered to you in accordance with
Section 4
of the Agreement.
|
COMPANY
Quintana Energy Services Inc.
By:
Name: Rogers Herndon
Its: Chief Executive Officer and President
|
|
|
|
Participant:
|
________________
|
Date of Grant:
|
________________
|
Award Type and Description:
|
Other Stock-Based Award granted pursuant to Section 6(h) of the Plan. This Award represents the right to receive shares of Stock in an amount up to ___% of the Target PSUs (defined below), subject to the terms and conditions set forth herein and in the Agreement.
Following the Committee’s certification of the level of achievement with respect to the Performance Goals (defined below), a portion of the Target PSUs ranging from ___% to ___% of the Target PSUs shall be deemed “
Earned PSUs
.” Thereafter, your right to receive settlement of the Earned PSUs shall vest and become nonforfeitable upon your satisfaction of the continued employment or service requirements described below under “Service Requirement
.
”
|
Target Number of PSUs:
|
________________ (the “
Target PSUs
”).
|
Performance Period:
|
________________ (the “
Performance Period Commencement Date
”) through ________________ (the “
Performance Period End Date
”).
|
Performance Goals:
|
The “
Performance Goals
” are based on (i) the Company’s achievement with respect to relative total stockholder return and (ii) the performance of management and the Company as determined in the sole discretion of the Committee, in each case, as described in
Exhibit B
attached hereto.
|
Service Requirement:
|
Except as expressly provided in
Section 3
of the Agreement, you must remain continuously employed by, or continuously provide services to, the Company or an Affiliate, as applicable, from the Date of Grant through the following dates in order to receive settlement of the specified number of Earned PSUs: ________________.
|
Settlement:
|
Settlement of the Earned PSUs shall be made solely in shares of Stock, which shall be delivered to you in accordance with
Section 4
of the Agreement.
|
COMPANY
Quintana Energy Services Inc.
By:
Name: Rogers Herndon
Its: Chief Executive Officer and President
|
|
|
|
Participant:
|
________________
|
Date of Grant:
|
________________
|
Total Number of Restricted Stock Units:
|
________________
|
Vesting Commencement Date:
|
________________
|
Vesting Schedule:
|
Except as expressly provided in
Section 3
of the Agreement, the RSUs shall vest in accordance with the following schedule: ________________.
|
|
|
COMPANY
Quintana Energy Services Inc.
By:
Name: Rogers Herndon
Its: Chief Executive Officer and President
|
|
|
|
|
|
|
|
|
PARTICIPANT
Name:
|
Participant:
|
________________
|
Date of Grant:
|
________________
|
Total Number of Restricted Stock Units:
|
________________
|
Vesting Commencement Date:
|
________________
|
Vesting Schedule:
|
Except as expressly provided in
Section 3
of the Agreement, the RSUs shall vest in accordance with the following schedule: ________________.
|
|
|
COMPANY
Quintana Energy Services Inc.
By:
Name: Rogers Herndon
Its: Chief Executive Officer and President
|
|
|
|
|
|
|
|
|
PARTICIPANT
Name:
|
Participant:
|
________________
|
Date of Grant:
|
________________
|
Total Number of Restricted Stock Units:
|
________________
|
Vesting Commencement Date:
|
________________
|
Vesting Schedule:
|
Except as expressly provided in
Section 3
of the Agreement, the RSUs shall vest in accordance with the following schedule: ________________.
|
|
|
COMPANY
Quintana Energy Services Inc.
By:
Name: Rogers Herndon
Its: Chief Executive Officer and President
|
|
|
|
|
|
|
|
|
PARTICIPANT
Name:
|
Subsidiaries of Quintana Energy Services Inc.
|
|
|
|
|
|
|
|
|
Entity
|
|
State of Formation
|
Quintana Energy Services LLC
|
|
Delaware
|
QES Pressure Pumping, LLC
|
|
Delaware
|
QES Pressure Control LLC
|
|
Oklahoma
|
Great White Well Control LLC
|
|
Delaware
|
QES Wireline LLC
|
|
Texas
|
QES Directional Drilling, LLC
|
|
Delaware
|
Centerline Trucking, LLC
|
|
Delaware
|
Twister Drilling Tools, LLC
|
|
Delaware
|
QES Management LLC
|
|
Delaware
|
Consolidated OWS Management, Inc.
|
|
Delaware
|
Q Directional MGMT, Inc.
|
|
Delaware
|
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Quintana Energy Services Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act 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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
|
Date: March 7, 2019
|
|
|
|
|
|
/s/ D. Rogers Herndon
|
|
|
|
|
|
|
D. Rogers Herndon
|
|
|
|
|
|
|
Chief Executive Officer, President and Director
|
1.
|
I have reviewed this Annual Report on Form 10-K of Quintana Energy Services Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act 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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
|
|
Date: March 7, 2019
|
|
|
|
|
|
/s/ Keefer M. Lehner
|
|
|
|
|
|
|
Keefer M. Lehner
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
the Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
|
Date: March 7, 2019
|
|
|
|
|
|
/s/ D. Rogers Herndon
|
|
|
|
|
|
|
D. Rogers Herndon
|
|
|
|
|
|
|
Chief Executive Officer, President and Director
|
(1)
|
the Periodic Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
|
Date: March 7, 2019
|
|
|
|
|
|
/s/ Keefer M. Lehner
|
|
|
|
|
|
|
Keefer M. Lehner
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|