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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Pioneer Energy Services Corp | NYSE:PES | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.1589 | 0 | 01:00:00 |
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FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TEXAS
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74-2088619
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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1250 N.E. Loop 410, Suite 1000
San Antonio, Texas
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78209
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.10 par value
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NYSE
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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general economic and business conditions and industry trends;
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levels and volatility of oil and gas prices;
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the continued demand for drilling services or production services in the geographic areas where we operate;
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decisions about exploration and development projects to be made by oil and gas exploration and production companies;
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the highly competitive nature of our business;
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technological advancements and trends in our industry, and improvements in our competitors’ equipment;
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the loss of one or more of our major clients or a decrease in their demand for our services;
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future compliance with covenants under our term loan, ABL facility and senior notes;
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operating hazards inherent in our operations;
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the supply of marketable drilling rigs, well servicing rigs, coiled tubing units and wireline units within the industry;
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the continued availability of new components for drilling rigs, well servicing rigs, coiled tubing units and wireline units;
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the continued availability of qualified personnel;
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the success or failure of our acquisition strategy;
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the occurrence of cybersecurity incidents;
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the political, economic, regulatory and other uncertainties encountered by our operations, and
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changes in, or our failure or inability to comply with, governmental regulations, including those relating to the environment.
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ITEM 1.
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BUSINESS
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Drilling Services—
From 1999 to 2011, we significantly expanded our fleet through acquisitions and the construction of new drilling rigs.
As our industry changed with the evolution of shale drilling, we began a transformation process in 2011 by selectively disposing of our older, less capable rigs, while we continued to invest in our rig building program to construct more technologically advanced, pad-optimal rigs to meet the changing needs of our clients.
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Rig Count
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Domestic drilling:
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Marcellus/Utica
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6
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Permian Basin and Eagle Ford
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8
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Bakken
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2
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International drilling
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8
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24
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•
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Production Services—
In 2008, we acquired two production services companies which significantly expanded our service offerings to include well servicing and wireline services, and at the end of 2011, we acquired a coiled tubing services business to further expand our production services offerings. Since the acquisitions of these businesses, we continued to invest in their organic growth and significantly expanded all our production services fleets. Although we temporarily suspended organic growth during the recent downturn, we continue to selectively update our fleets.
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Well Servicing
. A range of services are required in order to establish production in newly-drilled wells and to maintain production over the useful lives of active wells. We use our well servicing rig fleet to provide these necessary services, including the completion of newly-drilled wells, maintenance and workover of active wells, and plugging and abandonment of wells at the end of their useful lives.
As of
December 31, 2018
,
we have a fleet of
113
rigs with 550 horsepower
and
12
rigs with 600 horsepower
with operations in
10
locations, mostly in the Gulf Coast states, as well as in North Dakota and Colorado.
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•
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Wireline Services
. Oil and gas exploration and production companies require wireline services to better understand the reservoirs they are drilling or producing, and use logging services to accurately characterize reservoir rocks and fluids. To complete a cased-hole well, the production casing must be perforated to establish a flow path between the reservoir and the wellbore. We use our fleet of wireline units to provide these important logging and perforating services in addition to a range of other mechanical services that are needed in order to place equipment in or retrieve equipment or debris from the wellbore, install bridge plugs and control pressure.
As of
December 31, 2018
,
we have a fleet of
105
wireline units, which are deployed through
13
operating locations in the Gulf Coast, Mid-Continent and Rocky Mountain states.
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•
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Coiled Tubing Services.
Coiled tubing is another important element of the well servicing industry that allows operators to continue production during service operations on a well under pressure without shutting in the well, thereby reducing the risk of formation damage. Coiled tubing services involve the use of a continuous flexible metal pipe which is spooled on a large reel and inserted into the wellbore to perform a variety of oil and natural gas well applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, formation stimulation utilizing acid, chemical treatments and fracturing. Coiled tubing is also used for a number of horizontal well applications, such as milling temporary plugs between frac stages.
As of
December 31, 2018
,
we have a current fleet of
nine
coiled tubing units, the majority of which offer larger diameter coil (larger than two inches), deployed through
two
operating locations that provide services in Texas, Wyoming and surrounding areas.
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Modern Fleets Designed for Optimal Performance.
Our fleets are predominantly comprised of equipment designed to optimize recovery from and servicing of the unconventional wells which are most desirable in our industry today. Our current drilling rig fleet is
100%
pad-capable and offers the latest advancements in pad drilling
.
We have
16
AC rigs in the US and
eight
SCR rigs in Colombia,
all
of which have 1,500 horsepower or greater drawworks
,
and we are
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A Leading Provider in Domestic Shale Regions
.
Our drilling and production services fleets operate in many of the most attractive producing regions in the United States, including the
Utica, Marcellus, Eagle Ford, Niobrara, multiple shales in the Permian Basin, SCOOP/STACK and Bakken
. We believe our drilling rigs are particularly well suited to these areas where the optimal rig configuration is dictated by local geology and market conditions, and we have focused the expansion of our production services fleets to these regions with the most opportunity for growth. All our fleet equipment is mobile between domestic regions, diversifying our geographic exposure and limiting the impact of any regional slowdown.
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Provide Services Throughout the Well Life Cycle
. By offering our clients both drilling and production services, we capture revenue throughout the life cycle of a well and diversify our business. Our drilling services business performs work prior to initial production, and our production services business provides services such as logging, completion, perforation, workover and maintenance throughout the productive life of a well. We also provide certain end-of-well-life activities such as plugging and abandonment. Drilling and production services activity have historically exhibited different degrees of demand fluctuation, and we believe the diversity of our services reduces our exposure to decreases in demand for any single service activity. Further, the diversity of our service offerings enables us to cross-sell our services, which has allowed us to generate more business from existing clients and increase our profits as we expand our services within existing markets.
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Industry-Leading Safety Record.
Our safety program called “LiveSafe” focuses on creating an environment where everyone is committed to and recognizes the possibility of always working without incident or injury. The commitment to LiveSafe helps keep our employees safe and reduces our business risk.
In 2018, our domestic drilling business achieved record safety results and based on currently available industry data, was ranked first among the top 10 most active contractors. In addition, our well servicing segment achieved its lowest total recordable incident rate in its history. As a result, for the second year in a row, our consolidated total recordable incident rate was below 1.0 and we lowered our lost time incident rates for the fifth consecutive year, achieving the lowest in our company’s history
.
Our excellent safety record and reputation are critical to winning new business and expanding our relationships with existing clients.
We are proud of each of our employees’ daily and personal commitments to a culture of dignity, respect and safety.
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Skilled Management Team.
We believe that an important competitive factor in managing our business successfully and achieving long-term client relationships includes having an experienced and skilled management team. Our leadership team has operated through numerous oilfield services cycles and provides us with valuable long-term experience that enables us to manage our business through continually changing industry and market conditions. Our operations managers are knowledgeable about the various operational and regional challenges our clients face and we believe their skill and expertise enhances the value we are able to provide our clients and strengthens those relationships. To build and preserve the value of our experienced management team,
we seek to minimize employee turnover, invest in the growth of our employees, and recruit new talent through our focus on employee training and development, safety and competitive compensation.
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Longstanding and Diversified Clients.
We maintain long-standing, high quality client relationships with a diverse group of oil and gas exploration and production companies. Our largest three clients,
Gran Tierra Energy, Inc.
,
Apache Corporation
and
QEP Energy Company
, accounted for approximately
8%
,
6%
and
6%
, respectively, of our
2018
consolidated revenues. We believe our relationships with our clients are strong and the diversity of our client base offers numerous opportunities for growth.
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Performance in our Core Businesses.
We maintain a continual focus on our relationships with our clients and vendors, and our commitment to safety and service quality goals.
In 2018, our domestic drilling business achieved record safety results and based on currently available industry data, was ranked first among the top 10 most active contractors. In addition, our well servicing segment achieved its lowest total recordable incident rate in its history. As a result, for the second year in a row, our consolidated total recordable incident rate was below 1.0 and we lowered our lost time incident rates for the fifth consecutive year, achieving the lowest in our company’s history
.
Our excellent safety record and reputation are critical to winning new business and expanding our relationships with existing clients.
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Investments in Our Business.
We have historically invested in the growth and technological advancement of our business by engaging in select rig building opportunities and acquisitions, strategically upgrading our existing assets and disposing of assets which use older technology. From 2011 to 2016, we constructed 15 walking AC drilling rigs and removed all non-AC drilling rigs from our domestic fleet.
Our current drilling rig fleet is
100%
pad-capable and offers the latest advancements in pad drilling
.
We have
16
AC rigs in the US and
eight
SCR rigs in Colombia,
all
of which have 1,500 horsepower or greater drawworks
,
and we are currently completing construction of a 17
th
AC drilling rig with a three-year term contract, which we expect to deploy in early 2019 to the Permian Basin
.
The removal of older, less capable rigs from our fleet and investments in the construction of new drilling rigs has transformed our fleet into a highly capable, pad optimal fleet focused on the horizontal drilling market.
Since the beginning of 2010, we have added significant capacity to our production services offerings through the addition of
42
wireline units,
51
well servicing rigs and
9
coiled tubing units, all of which are net of various dispositions and replacements which were made to continuously rejuvenate our fleet with new equipment using the latest advancements in technologies.
We believe this positions us to compete well, grow our presence in the significant shale basins in the US, and improve profitability.
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A Leading Provider in Domestic Shale Regions
.
The investments we’ve made in our business have been focused on increasing our presence in regions where demand benefits from shale development. Shale plays are increasingly important to domestic hydrocarbon production, and not all rigs are capable of successfully working in these unconventional producing regions.
Our domestic drilling and production services fleets are highly capable and designed for operation in today’s long lateral, pad-oriented environment.
We are currently operating in the
Utica, Marcellus, Eagle Ford, Niobrara, multiple shales in the Permian Basin, SCOOP/STACK and Bakken
. We continue to allocate our resources to the markets with the best opportunities for increased activity, and to upgrade / reactivate previously idle units in areas with increasing demand.
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•
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Adapting our Business.
During 2015 and 2016, we took various actions to reduce costs and preserve cash, including a significant reduction in headcount, reduced wage rates, incentive compensation and employment benefits, the closure of field office locations, and we limited our capital spending to primarily routine expenditures that were necessary to maintain our equipment. With increasing activity and pricing during 2017 and 2018, we resumed our efforts to build value in our core businesses to fit the current and anticipated market trends by redeploying assets to areas with improving demand, selectively upgrading our fleets and executing limited strategic growth.
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Improving Liquidity and Financial Flexibility.
In December 2016, we sold
12.1 million
shares of common stock in a public offering, and applied the net proceeds to reduce our outstanding debt under our revolving credit facility. In
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•
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Liquidating Nonstrategic Assets.
Since the beginning of 2015, we have sold
39
non-AC domestic drilling rigs,
33
of our older wireline units,
seven
of our smaller diameter coiled tubing units and various other drilling and coiled tubing equipment for aggregate net proceeds of over
$75 million
. At
December 31, 2018
, we have
$3.6 million
of assets remaining held for sale, including
two
domestic drilling rigs,
three
coiled tubing units
and other drilling equipment. We continue to evaluate our domestic and international fleets for additional drilling rigs or equipment for which a near term sale would be favorable.
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•
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Selectively Optimizing our Fleets.
As our vendors and competitors experienced financial pressure resulting from the industry downturn, we took advantage of favorable asset pricing conditions to enhance our production services fleets, including the exchange of
20
older well servicing rigs for
20
new-model rigs in 2017 and the purchase of
seven
new wireline units and
two
new large diameter coiled tubing units in 2017 and 2018.
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•
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Redeploying our Leadership Talent
. Effective January 1, 2019, several of our executive leaders are taking on expanded roles to further leverage their existing talents to the entire organization. A Chief Operating Officer has been appointed to centralize operational and sales leadership for all business segments, and a Chief Strategy Officer has been appointed to lead a team designed to identify market opportunities, execute strategic initiatives and enhance our fleet performance across all business units.
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Multi-well, Pad-capable
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SCR rigs
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AC rigs
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Total
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Domestic drilling
|
—
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16
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16
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International drilling
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8
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—
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8
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24
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550 HP
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600 HP
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Total
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Well servicing rigs, by horsepower (HP) rating
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113
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12
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125
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Total
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Wireline services units
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105
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Coiled tubing services units
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9
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•
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Well Servicing
. Our well servicing rig fleet provides a range of services, including the completion of newly-drilled wells, maintenance and workover of existing wells, and plugging and abandonment of wells at the end of their useful lives.
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Wireline Services
. Wireline trucks, like well servicing rigs, are utilized throughout the life of a well. Wireline trucks are often used in place of a well servicing rig when there is no requirement to remove tubulars from the well in order to make repairs. Wireline services typically utilize a single truck equipped with a spool of wireline that is used to lower and raise a variety of specialized tools in and out of the wellbore.
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•
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Coiled Tubing Services.
Coiled tubing is another important element of the well servicing industry that allows operators to continue production during service operations on a well under pressure without shutting in the well, thereby reducing the risk of formation damage. Coiled tubing services involve the use of a continuous flexible metal pipe which is spooled on a large reel and inserted into the wellbore to perform a variety of oil and natural gas well applications, such as wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, formation stimulation utilizing acid, chemical treatments and fracturing. Coiled tubing is also used for a number of horizontal well applications, such as milling temporary plugs between frac stages.
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Total Revenue
Percentage
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|
Year ended December 31, 2018
|
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Gran Tierra Energy, Inc.
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8.1
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%
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Apache Corporation
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5.9
|
%
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QEP Energy Company
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5.8
|
%
|
|
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|
Year ended December 31, 2017
|
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Apache Corporation
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7.5
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%
|
Extraction Oil & Gas, LLC
|
6.4
|
%
|
Whiting Petroleum Corporation
|
6.3
|
%
|
|
|
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Year ended December 31, 2016
|
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Apache Corporation
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11.9
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%
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Whiting Petroleum Corporation
|
10.1
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%
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PDC Energy, Inc
|
4.4
|
%
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the type, capability and condition of each of the competing drilling rigs, well servicing rigs, wireline units and coiled tubing units;
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the mobility and efficiency of the equipment;
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the quality of service and experience of the crews;
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the reputation and safety record of the company providing the services;
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the offering of integrated and/or ancillary services; and
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the ability to provide drilling and production services equipment adaptable to, and personnel familiar with, new technologies and drilling and production techniques.
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Domestic and International Drilling.
Our principal domestic drilling competitors are Helmerich & Payne, Inc., Precision Drilling Corporation, Patterson-UTI Energy, Inc. and Nabors Industries Ltd. In Colombia, we primarily compete with Helmerich & Payne, Inc., Nabors Industries Ltd., Weatherford International plc, Petrex S.A., Tuscany International Drilling, and Estrella International Energy Services Ltd. Our current drilling rig fleet is
100%
pad-capable and offers the latest advancements in pad drilling
, which we believe positions us well to compete and expand our presence in predominant shale regions.
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Well Servicing.
The largest well servicing providers that we compete with are Key Energy Services, Basic Energy Services, C&J Energy Services, Superior Energy Services and Forbes Energy Services. As compared to the other large competitors in this industry, we believe our fleet is one of the youngest, most uniform fleets, which in addition to our safety performance and service quality, has historically allowed us to operate at utilization and hourly rates that are among the highest of our peers.
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Wireline.
The wireline market in the United States is dominated by a small number of companies, including ourselves. These competitors include Allied-Horizontal Wireline Services, Renegade Services, C&J Energy Services, Nine Energy Services, and Quintana Energy Services. Additional competitors include Schlumberger Ltd., Halliburton Company and other independents. The market for wireline services is very competitive, but historically we have competed effectively with our competitors because of the diversified services we provide, our performance and strong client service.
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Coiled Tubing.
The market for coiled tubing has expanded within the oilfield services market over recent years due to technological advances that increased the variety of applications for the coiled tubing unit and due to the increase in deep well and horizontal drilling. Our primary competitors in the coiled tubing services market currently include C&J Energy Services, Superior Energy Services, Key Energy Services, Schlumberger Ltd., Halliburton Company, Quintana Energy Services and RPC, Inc.
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better withstand industry downturns;
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compete more effectively on the basis of price and technology;
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retain skilled personnel; and
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build new rigs or acquire and refurbish existing rigs and place them into service more quickly than us in periods of high drilling demand.
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•
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blowouts;
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cratering;
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fires and explosions;
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loss of well control;
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collapse of the borehole;
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damaged or lost drilling equipment; and
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damage or loss from natural disasters.
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suspension of operations;
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damage to, or destruction of, our property and equipment and that of others;
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personal injury and loss of life;
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damage to producing or potentially productive oil and gas formations through which we drill; and
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environmental damage.
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environmental quality;
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pollution control;
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remediation of contamination;
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preservation of natural resources;
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transportation; and
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worker safety.
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ITEM 1A.
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RISK FACTORS
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We derive all our revenues from companies in the oil and gas exploration and production industry, a historically cyclical industry with levels of activity that are significantly affected by the levels and volatility of oil and gas prices.
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the worldwide supply and demand for oil and gas;
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the cost of exploring for, producing and delivering oil and gas;
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•
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the discovery rate of new oil and gas reserves;
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the rate of decline of existing and new oil and gas reserves;
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•
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available pipeline and other oil and gas transportation capacity;
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•
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the levels of oil and gas storage;
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•
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the ability of oil and gas exploration and production companies to raise capital;
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economic conditions in the United States and elsewhere;
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•
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actions by the Organization of Petroleum Exporting Countries, which we refer to as OPEC;
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political instability in oil and gas producing regions;
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•
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governmental regulations, both domestic and foreign;
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•
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domestic and foreign tax policy;
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•
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weather conditions in the United States and elsewhere;
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the pace adopted by foreign governments for the exploration, development and production of their national reserves, or their investments in oil and gas reserves located in other countries; and
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the price of foreign imports of oil and gas.
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Oil and natural gas prices, and market expectations of potential changes in these prices, significantly impact the level of worldwide drilling and production services activities.
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•
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our revenues, cash flows and profitability;
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the fair market value of our drilling and production services fleets;
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our ability to maintain or increase our borrowing capacity;
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our ability to obtain additional capital to finance our business or make acquisitions, and the cost of that capital;
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•
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the collectability of our receivables; and
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•
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our ability to retain skilled operations personnel.
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•
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Reduced demand for or excess capacity of drilling services or production services could adversely affect our profitability.
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•
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We operate in a highly competitive, fragmented industry in which price competition could reduce our profitability.
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•
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the type, capability and condition of each of the competing drilling rigs, well servicing rigs, wireline units and coiled tubing units;
|
•
|
the mobility and efficiency of the equipment;
|
•
|
the quality of service and experience of the crews;
|
•
|
the reputation and safety record of the company providing the services;
|
•
|
the offering of integrated and/or ancillary services; and
|
•
|
the ability to provide drilling and production services equipment adaptable to, and personnel familiar with, new technologies and drilling and production techniques.
|
•
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We face competition from many competitors with greater resources.
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•
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better withstand industry downturns;
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•
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compete more effectively on the basis of price and technology;
|
•
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retain skilled personnel; and
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•
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build new rigs or acquire and refurbish existing rigs and place them into service more quickly than us in periods of high drilling demand.
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•
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Technological advancements and trends in our industry also affect the demand for certain types of equipment, and can affect the overall demand for the services our industry provides.
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•
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We derive a significant portion of our revenue from a limited number of major clients, and our business, financial condition and results of operations could be materially adversely affected if we are unable to maintain relationships with these clients, or if their demand for our services decreases.
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•
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Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions.
|
•
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limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to make principal and interest payments on our indebtedness;
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•
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making us more vulnerable to a downturn in our business, our industry or the economy in general as a substantial portion of our operating cash flow could be required to make principal and interest payments on our indebtedness, making it more difficult to react to changes in our business, industry and market conditions;
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•
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limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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•
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impairing our ability to make investments and obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes;
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•
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limiting our ability to obtain additional financing that may be necessary to operate or expand our business;
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•
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putting us at a competitive disadvantage to competitors that have less debt; and
|
•
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increasing our vulnerability to rising interest rates.
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•
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conditions in the oil and gas industry;
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•
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general economic and financial conditions;
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•
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competition in the markets where we operate;
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•
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the impact of legislative and regulatory actions on how we conduct our business; and
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•
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other factors, all of which are beyond our control.
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•
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refinancing or restructuring our debt;
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•
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selling assets;
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•
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reducing or delaying acquisitions or capital investments, such as refurbishments of our rigs and related equipment; and/or
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•
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seeking to raise additional capital.
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•
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Our Term Loan, ABL Facility, and Senior Notes impose significant covenants on us that may affect our ability to successfully operate our business.
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•
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incur additional debt;
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•
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incur or permit liens on assets;
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make investments and acquisitions;
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•
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consolidate or merge with another company;
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engage in asset sales; and
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•
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pay dividends or make distributions.
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declare dividends and make other distributions;
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•
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issue or sell certain equity interests;
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•
|
optionally prepay, redeem or repurchase certain of our subordinated indebtedness;
|
•
|
make loans or investments (including acquisitions);
|
•
|
incur additional indebtedness or modify the terms of permitted indebtedness;
|
•
|
grant liens;
|
•
|
change our business or the business of our subsidiaries;
|
•
|
merge, consolidate, reorganize, recapitalize, or reclassify our equity interests;
|
•
|
sell our assets, and
|
•
|
enter into certain types of transactions with affiliates.
|
•
|
pay dividends on stock, repurchase stock, redeem subordinated indebtedness or make other restricted payments and investments;
|
•
|
incur, assume or guarantee additional indebtedness or issue preferred or disqualified stock;
|
•
|
create liens on our or their assets
;
|
•
|
enter into sale and leaseback transactions;
|
•
|
sell or transfer assets;
|
•
|
borrow, pay dividends, or transfer other assets from certain of our subsidiaries;
|
•
|
consolidate with or merge with or into, or sell all or substantially all of our properties to any other person;
|
•
|
enter into transactions with affiliates; and
|
•
|
enter into new lines of business.
|
•
|
Our operations involve operating hazards, which, if not insured or indemnified against, could adversely affect our results of operations and financial condition.
|
•
|
blowouts;
|
•
|
cratering;
|
•
|
fires and explosions;
|
•
|
loss of well control;
|
•
|
collapse of the borehole;
|
•
|
damaged or lost drilling equipment; and
|
•
|
damage or loss from natural disasters.
|
•
|
suspension of operations;
|
•
|
damage to, or destruction of, our property and equipment and that of others;
|
•
|
personal injury and loss of life;
|
•
|
damage to producing or potentially productive oil and gas formations through which we drill; and
|
•
|
environmental damage.
|
•
|
We could be adversely affected if shortages of equipment, supplies or personnel occur.
|
•
|
Our long-term strategy for growth through acquisitions could expose us to various risks, including those relating to difficulties in identifying suitable acquisition opportunities and integrating businesses, assets and personnel, as well as difficulties in obtaining financing for targeted acquisitions and the potential for increased leverage or debt service requirements.
|
•
|
unanticipated costs and assumption of liabilities and exposure to unforeseen liabilities of acquired businesses, including environmental liabilities;
|
•
|
difficulties in integrating the operations and assets of the acquired business and the acquired personnel;
|
•
|
limitations on our ability to properly assess and maintain an effective internal control environment over an acquired business in order to comply with applicable periodic reporting requirements;
|
•
|
potential losses of key employees and clients of the acquired businesses;
|
•
|
risks of entering markets in which we have limited prior experience; and
|
•
|
increases in our expenses and working capital requirements.
|
•
|
Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.
|
•
|
Our international operations are subject to political, economic and other uncertainties not generally encountered in our domestic operations.
|
•
|
risks of war, terrorism, civil unrest and kidnapping of employees;
|
•
|
employee strikes, work stoppages, labor disputes and other slowdowns;
|
•
|
expropriation, confiscation or nationalization of our assets;
|
•
|
renegotiation or nullification of contracts;
|
•
|
foreign taxation,
such as the tax for equality and the net-worth tax in Colombia;
|
•
|
the inability to repatriate earnings or capital due to laws limiting the right and ability of foreign subsidiaries to pay dividends and remit earnings to affiliated companies;
|
•
|
changing political conditions and changing laws and policies affecting trade and investment;
|
•
|
trade and economic sanctions or other restrictions imposed by the United States or other countries;
|
•
|
concentration of clients;
|
•
|
regional economic downturns;
|
•
|
the overlap of different tax structures;
|
•
|
the burden of complying with multiple and potentially conflicting laws;
|
•
|
the risks associated with the assertion of foreign sovereignty over areas in which our operations are conducted;
|
•
|
the risks associated with any lack of compliance with the Foreign Corrupt Practices Act of 1977 (“FCPA”) or other anti-corruption laws;
|
•
|
the risks associated with fluctuating currency values, hard currency shortages and controls of foreign currency exchange, and higher rates of inflation as compared to our domestic operations;
|
•
|
difficulty in collecting international accounts receivable; and
|
•
|
potentially longer payment cycles.
|
•
|
Our operations are subject to various laws and governmental regulations that could restrict our future operations and increase our operating costs.
|
•
|
environmental quality;
|
•
|
pollution control;
|
•
|
remediation of contamination;
|
•
|
preservation of natural resources;
|
•
|
transportation; and
|
•
|
worker safety.
|
•
|
Federal and state legislative and regulatory initiatives related to hydraulic fracturing could result in operating restrictions or delays in the completion of oil and natural gas wells that may reduce demand for our drilling and well servicing activities and could adversely affect our financial position, results of operations and cash flows.
|
•
|
Our operations are subject to cybersecurity risks.
|
•
|
loss, corruption, or misappropriation of intellectual property, or other proprietary or confidential information (including client, supplier, or employee data);
|
•
|
disruption or impairment of our and our customers’ business operations and safety procedures;
|
•
|
loss or damage to our worksite data delivery systems; and
|
•
|
increased costs to prevent, respond to or mitigate cybersecurity events.
|
•
|
Our ability to use our net operating loss and tax credit carryforwards might be limited.
|
•
|
If we implement an enterprise resource planning system, such implementation could expose us to certain risks commonly associated with the conversion of existing data and processes to a new system.
|
•
|
We do not intend to pay dividends on our common stock in the foreseeable future, and therefore only appreciation of the price of our common stock will provide a return to our shareholders.
|
•
|
We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.
|
•
|
Provisions in our organizational documents could delay or prevent a change in control of our company even if that change would be beneficial to our shareholders.
|
•
|
provisions regulating the ability of our shareholders to nominate candidates for election as directors or to bring matters for action at annual meetings of our shareholders;
|
•
|
limitations on the ability of our shareholders to call a special meeting and act by written consent;
|
•
|
provisions dividing our board of directors into three classes elected for staggered terms; and
|
•
|
the authorization given to our board of directors to issue and set the terms of preferred stock.
|
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
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
Year ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||||||
Statement of Operations Data
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
590,097
|
|
|
$
|
446,455
|
|
|
$
|
277,076
|
|
|
$
|
540,778
|
|
|
$
|
1,055,223
|
|
Income (loss) from operations
|
(9,059
|
)
|
|
(51,230
|
)
|
|
(113,448
|
)
|
|
(166,700
|
)
|
|
23,984
|
|
|||||
Loss before income taxes
|
(47,103
|
)
|
|
(79,321
|
)
|
|
(139,123
|
)
|
|
(192,719
|
)
|
|
(49,322
|
)
|
|||||
Loss applicable to common shareholders
|
(49,011
|
)
|
|
(75,118
|
)
|
|
(128,391
|
)
|
|
(155,140
|
)
|
|
(38,018
|
)
|
|||||
Loss per common share-basic
|
$
|
(0.63
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.96
|
)
|
|
$
|
(2.41
|
)
|
|
$
|
(0.60
|
)
|
Loss per common share-diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.96
|
)
|
|
$
|
(2.41
|
)
|
|
$
|
(0.60
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Financial Data
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
39,656
|
|
|
$
|
(5,817
|
)
|
|
$
|
5,131
|
|
|
$
|
142,719
|
|
|
$
|
233,041
|
|
Net cash used in investing activities
|
(60,202
|
)
|
|
(47,364
|
)
|
|
(24,767
|
)
|
|
(101,656
|
)
|
|
(151,918
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(538
|
)
|
|
118,635
|
|
|
15,670
|
|
|
(61,827
|
)
|
|
(73,584
|
)
|
|||||
Capital expenditures
|
72,854
|
|
|
61,447
|
|
|
32,556
|
|
|
142,907
|
|
|
188,121
|
|
|
As of December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
$
|
110,266
|
|
|
$
|
130,645
|
|
|
$
|
47,944
|
|
|
$
|
45,226
|
|
|
$
|
121,882
|
|
Property and equipment, net
|
524,858
|
|
|
549,623
|
|
|
584,080
|
|
|
702,585
|
|
|
856,541
|
|
|||||
Long-term debt, excluding current portion, debt issuance costs and discount
|
475,000
|
|
|
475,000
|
|
|
346,000
|
|
|
395,000
|
|
|
455,053
|
|
|||||
Shareholders’ equity
|
165,058
|
|
|
210,096
|
|
|
281,398
|
|
|
342,643
|
|
|
495,064
|
|
|||||
Total assets
|
741,550
|
|
|
766,869
|
|
|
700,102
|
|
|
821,975
|
|
|
1,171,589
|
|
(1)
|
The statement of operations and other financial data reflect the impact of impairment charges as follows:
|
|
Year ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Property and equipment
|
$
|
4,422
|
|
|
$
|
1,902
|
|
|
$
|
12,815
|
|
|
$
|
114,813
|
|
|
$
|
73,025
|
|
Intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
14,339
|
|
|
—
|
|
ITEM
7
.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Drilling Services—
Our current drilling rig fleet is
100%
pad-capable and offers the latest advancements in pad drilling
.
We have
16
AC rigs in the US and
eight
SCR rigs in Colombia,
all
of which have 1,500 horsepower or greater drawworks
.
We provide a comprehensive service offering which includes the drilling rig, crews, supplies and most of the ancillary equipment needed to operate our drilling rigs
which are deployed through our division offices in the following regions:
|
|
|
Rig Count
|
|
Domestic drilling:
|
|
|
|
Marcellus/Utica
|
|
6
|
|
Permian Basin and Eagle Ford
|
|
8
|
|
Bakken
|
|
2
|
|
International drilling
|
|
8
|
|
|
|
24
|
|
•
|
Production Services—
Our
production services business segments provide a range of well, wireline and coiled tubing services
to a diverse group of exploration and production companies, with our operations concentrated in the major domestic onshore oil and gas producing regions in the Gulf Coast, Mid-Continent and Rocky Mountain states.
As of
December 31, 2018
,
the fleet count for each of our production services business segments are as follows:
|
|
550 HP
|
|
600 HP
|
|
Total
|
|
Well servicing rigs, by horsepower (HP) rating
|
113
|
|
12
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Wireline services units
|
|
105
|
|
|||
Coiled tubing services units
|
|
9
|
|
|
Spot Market Contracts
|
|
|
|
Term Contract Expiration by Period
|
|||||||||||||||
|
|
Total Term Contracts
|
|
Within
6 Months |
|
6 Months
to 1 Year |
|
1 Year to
18 Months |
|
18 Months
to 2 Years |
|
2 to 4 Years
|
||||||||
Domestic rigs
|
3
|
|
|
13
|
|
|
2
|
|
|
9
|
|
|
1
|
|
|
1
|
|
|
—
|
|
International rigs
|
1
|
|
|
6
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
19
|
|
|
4
|
|
|
10
|
|
|
3
|
|
|
1
|
|
|
1
|
|
•
|
total cash and cash equivalents
(
$54.6 million
as of
December 31, 2018
);
|
•
|
cash generated from operations
(
$39.7 million
during the
year
ended
December 31, 2018
);
|
•
|
proceeds from sales of assets
(
$5.9 million
during the
year
ended
December 31, 2018
); and
|
•
|
the availability under our asset-based lending facility
(
$49.0 million
as of
December 31, 2018
).
|
•
|
capital expenditures;
|
•
|
debt service; and
|
•
|
working capital needs.
|
|
Year ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Drilling services business:
|
|
|
|
||||
Routine
|
$
|
12,738
|
|
|
$
|
16,793
|
|
Discretionary
|
7,723
|
|
|
4,010
|
|
||
Fleet additions and major components
|
5,345
|
|
|
7,337
|
|
||
|
25,806
|
|
|
28,140
|
|
||
Production services business:
|
|
|
|
||||
Routine
|
18,723
|
|
|
13,185
|
|
||
Discretionary
|
9,442
|
|
|
7,826
|
|
||
Fleet additions
|
13,177
|
|
|
14,126
|
|
||
|
41,342
|
|
|
35,137
|
|
||
Net cash used for purchases of property and equipment
|
67,148
|
|
|
63,277
|
|
||
Net impact of accruals
|
5,706
|
|
|
(1,830
|
)
|
||
Total capital expenditures
|
$
|
72,854
|
|
|
$
|
61,447
|
|
|
December 31,
2018 |
|
December 31,
2017 |
|
Change
|
||||||
Cash and cash equivalents
|
$
|
53,566
|
|
|
$
|
73,640
|
|
|
$
|
(20,074
|
)
|
Restricted cash
|
998
|
|
|
2,008
|
|
|
(1,010
|
)
|
|||
Receivables:
|
|
|
|
|
|
||||||
Trade, net of allowance for doubtful accounts
|
76,924
|
|
|
79,592
|
|
|
(2,668
|
)
|
|||
Unbilled receivables
|
24,822
|
|
|
16,029
|
|
|
8,793
|
|
|||
Insurance recoveries
|
23,656
|
|
|
13,874
|
|
|
9,782
|
|
|||
Other receivables
|
5,479
|
|
|
3,510
|
|
|
1,969
|
|
|||
Inventory
|
18,898
|
|
|
14,057
|
|
|
4,841
|
|
|||
Assets held for sale
|
3,582
|
|
|
6,620
|
|
|
(3,038
|
)
|
|||
Prepaid expenses and other current assets
|
7,109
|
|
|
6,229
|
|
|
880
|
|
|||
Current assets
|
215,034
|
|
|
215,559
|
|
|
(525
|
)
|
|||
Accounts payable
|
34,134
|
|
|
29,538
|
|
|
4,596
|
|
|||
Deferred revenues
|
1,722
|
|
|
905
|
|
|
817
|
|
|||
Accrued expenses:
|
|
|
|
|
|
||||||
Payroll and related employee costs
|
24,598
|
|
|
21,023
|
|
|
3,575
|
|
|||
Insurance premiums and deductibles
|
5,482
|
|
|
6,742
|
|
|
(1,260
|
)
|
|||
Insurance claims and settlements
|
23,593
|
|
|
13,289
|
|
|
10,304
|
|
|||
Interest
|
6,148
|
|
|
6,624
|
|
|
(476
|
)
|
|||
Other
|
9,091
|
|
|
6,793
|
|
|
2,298
|
|
|||
Current liabilities
|
104,768
|
|
|
84,914
|
|
|
19,854
|
|
|||
Working capital
|
$
|
110,266
|
|
|
$
|
130,645
|
|
|
$
|
(20,379
|
)
|
•
|
Cash and cash equivalents
—
The change in cash and cash equivalents during
2018
is primarily due to
$67.1 million
of cash used for the purchase of property and equipment, partially offset by
$39.7 million
of cash from operating activities,
$5.9 million
of proceeds from the sale of property and equipment, and
$1.1 million
of proceeds from insurance recoveries. Cash provided by operations during
2018
was primarily from the recent increase in activity.
|
•
|
Restricted cash
—
Our restricted cash balance reflects the
portion of net proceeds from the issuance
of our Term Loan, which
are currently held in a restricted account until the completion of certain administrative tasks related to providing access rights to certain of our real property.
During 2018, a portion of these restricted funds were released and made available for general corporate use.
|
•
|
Trade and Unbilled receivables
—
The net
increase
in our total trade and unbilled receivables during
2018
is primarily due to the
12%
increase
in our revenues during the quarter ended
December 31, 2018
, as compared to the quarter ended
December 31, 2017
, as well as the timing of billing and collection cycles for long-term drilling contracts in Colombia.
Our domestic trade receivables generally turn over within 60 days, and our Colombian trade receivables generally turn over within 120 days.
|
•
|
Insurance recoveries
and
Insurance claims and settlements
—
The
increase
during
2018
in both our insurance recoveries receivables and our accrued liability for insurance claims and settlements is primarily due to very high costs incurred on one significant workers’ compensation claim in excess of our
$500,000
deductible, which are covered by our workers compensation insurance policy.
|
•
|
Other receivables
—
The
increase
in other receivables during
2018
is primarily due to an increase in recoverable income tax receivables attributable to the increase in activity for our international operations, partially offset by the collection of a short-term note receivable from the sales of two mechanical drilling rigs that were sold during the third quarter of 2017.
|
•
|
Inventory
—
The
increase
in inventory during
2018
is primarily associated with the increase in activity for our international drilling operations and an increase in large diameter pipe inventory for our coiled tubing operations.
|
•
|
Assets held for sale
—
As of
December 31, 2018
, our
consolidated
balance sheet reflects assets held for sale of
$3.6 million
, which primarily represents the fair value of
two
domestic SCR drilling rigs
,
spare drilling equipment that would support these rigs
and
three
coiled tubing units
. As of
December 31, 2017
, our
consolidated
balance sheet reflects assets held for sale of
$6.6 million
, which primarily represents the fair value of
three
domestic SCR drilling rigs,
one
domestic mechanical drilling rig,
spare drilling equipment that would support these rigs
,
two
wireline units,
one
coiled tubing unit and other spare equipment. For additional information, see Note
3
,
Property and Equipment
of the Notes to
Consolidated
Financial Statements, included in
Part II, Item 8
,
Financial Statements and Supplementary Data
, of this
Annual
Report on
Form 10-K
.
|
•
|
Prepaid expenses and other current assets
—
The
increase
in prepaid expenses and other current assets during
2018
is primarily due to an increase in software subscription renewals and partially due to the increase in international deferred mobilization costs associated with the deployment of
five
international rigs during 2018. For additional information about rig mobilization revenue and cost recognition, see Note
2
,
Revenue from Contracts with Customers
of the Notes to
Consolidated
Financial Statements, included in
Part II, Item 8
,
Financial Statements and Supplementary Data
, of this
Annual
Report on
Form 10-K
.
|
•
|
Accounts payable
—
Our accounts payable generally turn over within 90 days. The
increase
in accounts payable during
2018
is primarily due to the
13%
increase
in our operating costs for the quarter ended
December 31, 2018
as compared to the quarter ended
December 31, 2017
, resulting from an increase in activity, as well as an
increase
of
$5.7 million
in our accruals for capital expenditures.
|
•
|
Accrued payroll and related employee costs —
The
increase
in accrued payroll and related employee costs during
2018
is primarily due to the movement of the
$3.2 million
accrued liability for our 2016 phantom stock unit awards from noncurrent to current, as these awards are scheduled to vest in April 2019.
|
•
|
Accrued insurance premiums and deductibles
—
The
decrease
in insurance premiums and deductibles during
2018
is primarily due to the decrease in our accrual for workers compensation and automobile liability costs resulting from a decrease in the estimated liability for the deductibles under these policies.
|
•
|
Other accrued expenses
—
The
increase
in other accrued expenses during
2018
is primarily related to an increase in our accrued liability for sales tax obligations, as well as an increase in accrued taxes associated with the increase in revenues for our international drilling operations.
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Within 1 Year
|
|
2 to 3 Years
|
|
4 to 5 Years
|
|
Beyond 5 Years
|
||||||||||
Debt
|
$
|
475,000
|
|
|
$
|
—
|
|
|
$
|
175,000
|
|
|
$
|
300,000
|
|
|
$
|
—
|
|
Interest on debt
|
127,050
|
|
|
36,225
|
|
|
72,450
|
|
|
18,375
|
|
|
—
|
|
|||||
Purchase commitments
|
10,278
|
|
|
10,278
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
11,326
|
|
|
3,318
|
|
|
3,753
|
|
|
2,517
|
|
|
1,738
|
|
|||||
Incentive compensation
|
14,301
|
|
|
8,296
|
|
|
6,005
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
637,955
|
|
|
$
|
58,117
|
|
|
$
|
257,208
|
|
|
$
|
320,892
|
|
|
$
|
1,738
|
|
•
|
Debt
—
Debt obligations at
December 31, 2018
consisted of
$300 million
of principal amount outstanding under our Senior Notes which mature on
March 15, 2022
and
$175 million
of principal amount outstanding under our Term Loan, which is expected to mature on
December 14, 2021
. As of
December 31, 2018
, we had no debt outstanding under our ABL Facility.
|
•
|
Interest on debt
—
Interest payment obligations on our Senior Notes are calculated based on the coupon interest rate of
6.125%
due semi-annually in arrears on
March 15
and
September 15
of each year until maturity on
March 15, 2022
. Interest payment obligations on our Term Loan were estimated based on (1) the
10.2%
interest rate that was in effect at
December 31, 2018
, and (2) the principal balance of
$175 million
at
December 31, 2018
, and assuming repayment of the outstanding balance occurs at
December 14, 2021
.
|
•
|
Purchase commitments
—
Purchase commitments generally relate to capital projects for the repair, upgrade and maintenance of our equipment, the construction or purchase of new equipment, and purchase orders for various job and inventory supplies. At
December 31, 2018
,
our purchase commitments primarily pertain to
$2.4 million
of service
|
•
|
Operating leases
—
Our operating leases consist of lease agreements for office space, operating facilities, field personnel housing, and office equipment.
|
•
|
Incentive compensation
—
Incentive compensation is payable to our employees, generally contingent upon their continued employment through the date of each respective award’s payout. A portion of our long-term incentive compensation is performance-based and therefore the final amount will be determined based on our actual performance relative to a pre-determined peer group over the performance period.
|
|
Year ended December 31,
|
||||||||||||
|
2018
|
|
2017
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
145,676
|
|
|
25
|
%
|
|
$
|
129,276
|
|
|
29
|
%
|
International drilling
|
84,161
|
|
|
14
|
%
|
|
41,349
|
|
|
9
|
%
|
||
Drilling services
|
229,837
|
|
|
39
|
%
|
|
170,625
|
|
|
38
|
%
|
||
Well servicing
|
93,800
|
|
|
16
|
%
|
|
77,257
|
|
|
17
|
%
|
||
Wireline services
|
215,858
|
|
|
36
|
%
|
|
163,716
|
|
|
37
|
%
|
||
Coiled tubing services
|
50,602
|
|
|
9
|
%
|
|
34,857
|
|
|
8
|
%
|
||
Production services
|
360,260
|
|
|
61
|
%
|
|
275,830
|
|
|
62
|
%
|
||
Consolidated revenues
|
$
|
590,097
|
|
|
100
|
%
|
|
$
|
446,455
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
||||||
Operating costs:
|
|
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
86,910
|
|
|
20
|
%
|
|
$
|
83,122
|
|
|
25
|
%
|
International drilling
|
64,074
|
|
|
15
|
%
|
|
31,994
|
|
|
10
|
%
|
||
Drilling services
|
150,984
|
|
|
35
|
%
|
|
115,116
|
|
|
35
|
%
|
||
Well servicing
|
67,554
|
|
|
16
|
%
|
|
56,379
|
|
|
17
|
%
|
||
Wireline services
|
167,337
|
|
|
39
|
%
|
|
128,137
|
|
|
39
|
%
|
||
Coiled tubing services
|
44,038
|
|
|
10
|
%
|
|
31,248
|
|
|
9
|
%
|
||
Production services
|
278,929
|
|
|
65
|
%
|
|
215,764
|
|
|
65
|
%
|
||
Consolidated operating costs
|
$
|
429,913
|
|
|
100
|
%
|
|
$
|
330,880
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
||||||
Gross margin:
|
|
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
58,766
|
|
|
37
|
%
|
|
$
|
46,154
|
|
|
40
|
%
|
International drilling
|
20,087
|
|
|
13
|
%
|
|
9,355
|
|
|
8
|
%
|
||
Drilling services
|
78,853
|
|
|
50
|
%
|
|
55,509
|
|
|
48
|
%
|
||
Well servicing
|
26,246
|
|
|
16
|
%
|
|
20,878
|
|
|
18
|
%
|
||
Wireline services
|
48,521
|
|
|
30
|
%
|
|
35,579
|
|
|
31
|
%
|
||
Coiled tubing services
|
6,564
|
|
|
4
|
%
|
|
3,609
|
|
|
3
|
%
|
||
Production services
|
81,331
|
|
|
50
|
%
|
|
60,066
|
|
|
52
|
%
|
||
Consolidated gross margin
|
$
|
160,184
|
|
|
100
|
%
|
|
$
|
115,575
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
||||||
Consolidated:
|
|
|
|
|
|
|
|
||||||
Net loss
|
$
|
(49,011
|
)
|
|
|
|
$
|
(75,118
|
)
|
|
|
||
Adjusted EBITDA
(1)
|
$
|
89,655
|
|
|
|
|
$
|
49,873
|
|
|
|
|
Year ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(amounts in thousands)
|
||||||
Net loss
|
$
|
(49,011
|
)
|
|
$
|
(75,118
|
)
|
Depreciation and amortization
|
93,554
|
|
|
98,777
|
|
||
Impairment
|
4,422
|
|
|
1,902
|
|
||
Interest expense
|
38,782
|
|
|
27,039
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
1,476
|
|
||
Income tax expense (benefit)
|
1,908
|
|
|
(4,203
|
)
|
||
Adjusted EBITDA
|
89,655
|
|
|
49,873
|
|
||
General and administrative
|
74,117
|
|
|
69,681
|
|
||
Bad debt expense
|
271
|
|
|
53
|
|
||
Gain on dispositions of property and equipment, net
|
(3,121
|
)
|
|
(3,608
|
)
|
||
Other income
|
(738
|
)
|
|
(424
|
)
|
||
Consolidated gross margin
|
$
|
160,184
|
|
|
$
|
115,575
|
|
•
|
Drilling
Services
—
Our drilling services revenues
increased
by
$59.2 million
, or
35%
,
during 2018
as compared to
2017
, while operating costs
increased
by
$35.9 million
, or
31%
. The increases in our drilling services revenues and operating costs primarily resulted from a
17%
increase
in revenue days
during 2018
as compared to
2017
, primarily attributable to a
67%
increase in utilization of our international drilling fleet. The following table provides operating statistics for each of our drilling services segments:
|
|
Year ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Domestic drilling:
|
|
|
|
||||
Average number of drilling rigs
|
16
|
|
|
16
|
|
||
Utilization rate
|
99
|
%
|
|
95
|
%
|
||
Revenue days
|
5,808
|
|
|
5,524
|
|
||
|
|
|
|
||||
Average revenues per day
|
$
|
25,082
|
|
|
$
|
23,403
|
|
Average operating costs per day
|
14,964
|
|
|
15,047
|
|
||
Average margin per day
|
$
|
10,118
|
|
|
$
|
8,356
|
|
|
|
|
|
||||
International drilling:
|
|
|
|
||||
Average number of drilling rigs
|
8
|
|
|
8
|
|
||
Utilization rate
|
77
|
%
|
|
46
|
%
|
||
Revenue days
|
2,258
|
|
|
1,345
|
|
||
|
|
|
|
||||
Average revenues per day
|
$
|
37,272
|
|
|
$
|
30,743
|
|
Average operating costs per day
|
28,376
|
|
|
23,787
|
|
||
Average margin per day
|
$
|
8,896
|
|
|
$
|
6,956
|
|
•
|
Production Services
—
Our revenues from production services
increased
by
$84.4 million
, or
31%
,
during 2018
as compared to
2017
, while operating costs
increased
by
$63.2 million
, or
29%
, respectively. The increases in revenues and operating costs in our production services segments are a result of the increased demand for our services, particularly those that perform completion-related activities. The following table provides operating statistics for each of our production services segments:
|
|
Year ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Well servicing:
|
|
|
|
||||
Average number of rigs
|
125
|
|
|
125
|
|
||
Utilization rate
|
49
|
%
|
|
43
|
%
|
||
Rig hours
|
171,851
|
|
|
150,240
|
|
||
Average revenue per hour
|
$
|
546
|
|
|
$
|
514
|
|
|
|
|
|
||||
Wireline services:
|
|
|
|
||||
Average number of units
|
107
|
|
|
115
|
|
||
Number of jobs
|
10,943
|
|
|
11,139
|
|
||
Average revenue per job
|
$
|
19,726
|
|
|
$
|
14,698
|
|
|
|
|
|
||||
Coiled tubing services:
|
|
|
|
||||
Average number of units
|
12
|
|
|
16
|
|
||
Revenue days
|
1,472
|
|
|
1,529
|
|
||
Average revenue per day
|
$
|
34,376
|
|
|
$
|
22,797
|
|
|
Year ended December 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
129,276
|
|
|
29
|
%
|
|
$
|
112,399
|
|
|
41
|
%
|
International drilling
|
41,349
|
|
|
9
|
%
|
|
6,808
|
|
|
2
|
%
|
||
Drilling services
|
170,625
|
|
|
38
|
%
|
|
119,207
|
|
|
43
|
%
|
||
Well servicing
|
77,257
|
|
|
17
|
%
|
|
71,491
|
|
|
26
|
%
|
||
Wireline services
|
163,716
|
|
|
37
|
%
|
|
67,419
|
|
|
24
|
%
|
||
Coiled tubing services
|
34,857
|
|
|
8
|
%
|
|
18,959
|
|
|
7
|
%
|
||
Production services
|
275,830
|
|
|
62
|
%
|
|
157,869
|
|
|
57
|
%
|
||
Consolidated revenues
|
$
|
446,455
|
|
|
100
|
%
|
|
$
|
277,076
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
||||||
Operating costs:
|
|
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
83,122
|
|
|
25
|
%
|
|
$
|
63,686
|
|
|
31
|
%
|
International drilling
|
31,994
|
|
|
10
|
%
|
|
9,465
|
|
|
5
|
%
|
||
Drilling services
|
115,116
|
|
|
35
|
%
|
|
73,151
|
|
|
36
|
%
|
||
Well servicing
|
56,379
|
|
|
17
|
%
|
|
53,208
|
|
|
26
|
%
|
||
Wireline services
|
128,137
|
|
|
39
|
%
|
|
57,634
|
|
|
28
|
%
|
||
Coiled tubing services
|
31,248
|
|
|
9
|
%
|
|
19,956
|
|
|
10
|
%
|
||
Production services
|
215,764
|
|
|
65
|
%
|
|
130,798
|
|
|
64
|
%
|
||
Consolidated operating costs
|
$
|
330,880
|
|
|
100
|
%
|
|
$
|
203,949
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
||||||
Gross margin:
|
|
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
46,154
|
|
|
40
|
%
|
|
$
|
48,713
|
|
|
67
|
%
|
International drilling
|
9,355
|
|
|
8
|
%
|
|
(2,657
|
)
|
|
(4
|
)%
|
||
Drilling services
|
55,509
|
|
|
48
|
%
|
|
46,056
|
|
|
63
|
%
|
||
Well servicing
|
20,878
|
|
|
18
|
%
|
|
18,283
|
|
|
25
|
%
|
||
Wireline services
|
35,579
|
|
|
31
|
%
|
|
9,785
|
|
|
13
|
%
|
||
Coiled tubing services
|
3,609
|
|
|
3
|
%
|
|
(997
|
)
|
|
(1
|
)%
|
||
Production services
|
60,066
|
|
|
52
|
%
|
|
27,071
|
|
|
37
|
%
|
||
Consolidated gross margin
|
$
|
115,575
|
|
|
100
|
%
|
|
$
|
73,127
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
||||||
Consolidated:
|
|
|
|
|
|
|
|
||||||
Net loss
|
$
|
(75,118
|
)
|
|
|
|
$
|
(128,391
|
)
|
|
|
||
Adjusted EBITDA
(1)
|
$
|
49,873
|
|
|
|
|
$
|
14,237
|
|
|
|
|
Year ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(amounts in thousands)
|
||||||
Net loss
|
$
|
(75,118
|
)
|
|
$
|
(128,391
|
)
|
Depreciation and amortization
|
98,777
|
|
|
114,312
|
|
||
Impairment
|
1,902
|
|
|
12,815
|
|
||
Interest expense
|
27,039
|
|
|
25,934
|
|
||
Loss on extinguishment of debt
|
1,476
|
|
|
299
|
|
||
Income tax expense (benefit)
|
(4,203
|
)
|
|
(10,732
|
)
|
||
Adjusted EBITDA
|
49,873
|
|
|
14,237
|
|
||
General and administrative
|
69,681
|
|
|
61,184
|
|
||
Bad debt expense (recovery)
|
53
|
|
|
156
|
|
||
Gain on dispositions of property and equipment, net
|
(3,608
|
)
|
|
(1,892
|
)
|
||
Other (income) expense
|
(424
|
)
|
|
(558
|
)
|
||
Consolidated gross margin
|
$
|
115,575
|
|
|
$
|
73,127
|
|
•
|
Drilling Services
—
Our drilling services revenues increased by $51.4 million, or 43%, during 2017, as compared to 2016, while operating costs increased by $42.0 million, or 57%. The increases in our drilling services revenues and operating costs primarily resulted from a 42% increase in revenue days due to the increasing demand in our industry, especially in Colombia. The following table provides operating statistics for each of our drilling services business segments:
|
|
Year ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Domestic drilling:
|
|
|
|
||||
Average number of drilling rigs
|
16
|
|
|
23
|
|
||
Utilization rate
|
95
|
%
|
|
55
|
%
|
||
Revenue days
|
5,524
|
|
|
4,628
|
|
||
|
|
|
|
||||
Average revenues per day
|
$
|
23,403
|
|
|
$
|
24,287
|
|
Average operating costs per day
|
15,047
|
|
|
13,761
|
|
||
Average margin per day
|
$
|
8,356
|
|
|
$
|
10,526
|
|
|
|
|
|
||||
International drilling:
|
|
|
|
||||
Average number of drilling rigs
|
8
|
|
|
8
|
|
||
Utilization rate
|
46
|
%
|
|
7
|
%
|
||
Revenue days
|
1,345
|
|
|
218
|
|
||
|
|
|
|
||||
Average revenues per day
|
$
|
30,743
|
|
|
$
|
31,229
|
|
Average operating costs per day
|
23,787
|
|
|
43,417
|
|
||
Average margin per day
|
$
|
6,956
|
|
|
$
|
(12,188
|
)
|
|
Year ended December 31,
|
||||
|
2017
|
|
2016
|
||
Daywork contracts (not terminated early)
|
100
|
%
|
|
89
|
%
|
Daywork contracts terminated early
|
—
|
%
|
|
11
|
%
|
•
|
Production Services
—
Our revenues from production services increased by $118.0 million, or 75%, during 2017, as compared to 2016, while operating costs increased by $85.0 million, or 65%, respectively. The increases in revenues and operating costs in our production services segments are a result of the increased demand for our services, particularly those that perform completion-related activities. The following table provides operating statistics for each of our production services business segments:
|
|
Year ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Well servicing:
|
|
|
|
||||
Average number of rigs
|
125
|
|
|
125
|
|
||
Utilization rate
|
43
|
%
|
|
41
|
%
|
||
Rig hours
|
150,240
|
|
|
144,151
|
|
||
Average revenue per hour
|
$
|
514
|
|
|
$
|
496
|
|
|
|
|
|
||||
Wireline services:
|
|
|
|
||||
Average number of units
|
115
|
|
|
122
|
|
||
Number of jobs
|
11,139
|
|
|
8,169
|
|
||
Average revenue per job
|
$
|
14,698
|
|
|
$
|
8,253
|
|
|
|
|
|
||||
Coiled tubing services:
|
|
|
|
||||
Average number of units
|
16
|
|
|
17
|
|
||
Revenue days
|
1,529
|
|
|
1,352
|
|
||
Average revenue per day
|
$
|
22,797
|
|
|
$
|
14,023
|
|
•
|
wage rates for our operations personnel which increase when the availability of personnel is scarce;
|
•
|
materials and supplies used in our operations;
|
•
|
equipment repair and maintenance costs;
|
•
|
costs to upgrade existing equipment; and
|
•
|
costs to construct new equipment.
|
•
|
In accordance with ASC Topic 606,
Revenue from Contracts with Customers
, we estimate certain variable revenues associated with the demobilization of our drilling rigs under daywork drilling contracts. We also make estimates of the applicable amortization periods for deferred mobilization costs, and for mobilization revenues related to cancelable term contracts which represent a material right to our clients. These estimates and assumptions are described in more detail in Note
2
,
Revenue from Contracts with Customers
. In order to make these estimates, management considers all the facts and circumstances pertaining to each particular contract, our past experience and knowledge of current market conditions.
|
•
|
In accordance with ASC Topic 360,
Property, Plant and Equipment
, we monitor all indicators of potential impairments, and
we evaluate for potential impairment of long-lived assets when indicators of impairment are present, which may include, among other things, significant adverse changes in industry trends (including revenue rates, utilization rates,
|
•
|
As of
December 31, 2018
, we had
$96.8 million
and
$9.6 million
of deferred tax assets related to domestic and foreign net operating losses, respectively, that are available to reduce future taxable income.
In assessing the realizability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
As a result,
we have a valuation allowance that fully offsets our foreign and domestic federal deferred tax assets
as of
December 31, 2018
.
The valuation allowance
is the primary factor causing our effective tax rate to be significantly lower than the statutory rate
. For more information,
see Note
6
,
Income Taxes
, of the Notes to
Consolidated
Financial Statements, included in
Part II, Item 8
,
Financial Statements and Supplementary Data
, of this
Annual
Report on
Form 10-K
.
|
•
|
We use a combination of self-insurance and third-party insurance for various types of coverage.
We have stop-loss coverage of
$200,000
per covered individual per year under our health insurance and a deductible of
$500,000
per occurrence under our workers’ compensation insurance. We have a deductible of
$250,000
per occurrence and an additional
$250,000
annual aggregate deductible under both our general liability insurance and auto liability insurance. At
December 31, 2018
, our accrued insurance premiums and deductibles include approximately
$1.8 million
of accruals for costs incurred under the self-insurance portion of our health insurance and approximately
$3.0 million
of accruals for costs associated with our workers’ compensation insurance. We accrue for these costs as claims are incurred
using an actuarial calculation that is based on industry and our company’s historical claim development data, and we accrue the cost of administrative services associated with claims processing
.
|
•
|
Our compensation expense includes estimates for certain of our long-term incentive compensation plans which have performance-based award components dependent upon our performance over a set performance period, as compared to the performance of a pre-defined peer group. The accruals for these awards include estimates which affect our compensation expense, employee related accruals and equity. The accruals are adjusted based on actual achievement levels at the end of the pre-determined performance periods. Additionally, our phantom stock unit
awards are classified as liability awards under ASC Topic 718,
Compensation—Stock Compensation
, because we expect to settle the awards in cash when they vest, and are remeasured at fair value at the end of each reporting period until they vest. The change in fair value is recognized as a current period compensation expense in our
consolidated
statements of operations.
Therefore, changes in the inputs used to measure fair value can result in volatility in our compensation expense. This volatility increases as the phantom stock awards approach the vesting date.
For more information, see Note
9
,
Equity Transactions and Stock-Based Compensation Plans
, of the Notes to
Consolidated
Financial Statements, included in
Part II, Item 8
,
Financial Statements and Supplementary Data
, of this
Annual
Report on
Form 10-K
.
|
ITEM
7A
.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
|
(in thousands, except share data)
|
||||||
ASSETS
|
|
||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
53,566
|
|
|
$
|
73,640
|
|
Restricted cash
|
998
|
|
|
2,008
|
|
||
Receivables:
|
|
|
|
||||
Trade, net of allowance for doubtful accounts
|
76,924
|
|
|
79,592
|
|
||
Unbilled receivables
|
24,822
|
|
|
16,029
|
|
||
Insurance recoveries
|
23,656
|
|
|
13,874
|
|
||
Other receivables
|
5,479
|
|
|
3,510
|
|
||
Inventory
|
18,898
|
|
|
14,057
|
|
||
Assets held for sale
|
3,582
|
|
|
6,620
|
|
||
Prepaid expenses and other current assets
|
7,109
|
|
|
6,229
|
|
||
Total current assets
|
215,034
|
|
|
215,559
|
|
||
Property and equipment, at cost
|
1,118,215
|
|
|
1,093,635
|
|
||
Less accumulated depreciation
|
593,357
|
|
|
544,012
|
|
||
Net property and equipment
|
524,858
|
|
|
549,623
|
|
||
Other noncurrent assets
|
1,658
|
|
|
1,687
|
|
||
Total assets
|
$
|
741,550
|
|
|
$
|
766,869
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
34,134
|
|
|
$
|
29,538
|
|
Deferred revenues
|
1,722
|
|
|
905
|
|
||
Accrued expenses:
|
|
|
|
||||
Payroll and related employee costs
|
24,598
|
|
|
21,023
|
|
||
Insurance claims and settlements
|
23,593
|
|
|
13,289
|
|
||
Insurance premiums and deductibles
|
5,482
|
|
|
6,742
|
|
||
Interest
|
6,148
|
|
|
6,624
|
|
||
Other
|
9,091
|
|
|
6,793
|
|
||
Total current liabilities
|
104,768
|
|
|
84,914
|
|
||
Long-term debt, less unamortized discount and debt issuance costs
|
464,552
|
|
|
461,665
|
|
||
Deferred income taxes
|
3,688
|
|
|
3,151
|
|
||
Other noncurrent liabilities
|
3,484
|
|
|
7,043
|
|
||
Total liabilities
|
576,492
|
|
|
556,773
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, 10,000,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock $.10 par value; 200,000,000 shares authorized; 78,214,550 and 77,719,021 shares outstanding at December 31, 2018 and December 31, 2017, respectively
|
7,900
|
|
|
7,835
|
|
||
Additional paid-in capital
|
550,548
|
|
|
546,158
|
|
||
Treasury stock, at cost; 789,532 and 630,688 shares at December 31, 2018 and December 31, 2017, respectively
|
(4,965
|
)
|
|
(4,416
|
)
|
||
Accumulated deficit
|
(388,425
|
)
|
|
(339,481
|
)
|
||
Total shareholders’ equity
|
165,058
|
|
|
210,096
|
|
||
Total liabilities and shareholders’ equity
|
$
|
741,550
|
|
|
$
|
766,869
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands, except per share data)
|
||||||||||
|
|
|
|
|
|
||||||
Revenues
|
$
|
590,097
|
|
|
$
|
446,455
|
|
|
$
|
277,076
|
|
|
|
|
|
|
|
||||||
Costs and expenses:
|
|
|
|
|
|
||||||
Operating costs
|
429,913
|
|
|
330,880
|
|
|
203,949
|
|
|||
Depreciation
|
93,554
|
|
|
98,777
|
|
|
114,312
|
|
|||
General and administrative
|
74,117
|
|
|
69,681
|
|
|
61,184
|
|
|||
Bad debt expense
|
271
|
|
|
53
|
|
|
156
|
|
|||
Impairment
|
4,422
|
|
|
1,902
|
|
|
12,815
|
|
|||
Gain on dispositions of property and equipment, net
|
(3,121
|
)
|
|
(3,608
|
)
|
|
(1,892
|
)
|
|||
Total costs and expenses
|
599,156
|
|
|
497,685
|
|
|
390,524
|
|
|||
Loss from operations
|
(9,059
|
)
|
|
(51,230
|
)
|
|
(113,448
|
)
|
|||
|
|
|
|
|
|
||||||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense, net of interest capitalized
|
(38,782
|
)
|
|
(27,039
|
)
|
|
(25,934
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
(1,476
|
)
|
|
(299
|
)
|
|||
Other income, net
|
738
|
|
|
424
|
|
|
558
|
|
|||
Total other expense, net
|
(38,044
|
)
|
|
(28,091
|
)
|
|
(25,675
|
)
|
|||
|
|
|
|
|
|
||||||
Loss before income taxes
|
(47,103
|
)
|
|
(79,321
|
)
|
|
(139,123
|
)
|
|||
Income tax (expense) benefit
|
(1,908
|
)
|
|
4,203
|
|
|
10,732
|
|
|||
Net loss
|
$
|
(49,011
|
)
|
|
$
|
(75,118
|
)
|
|
$
|
(128,391
|
)
|
|
|
|
|
|
|
||||||
Loss per common share - Basic
|
$
|
(0.63
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.96
|
)
|
|
|
|
|
|
|
||||||
Loss per common share - Diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.96
|
)
|
|
|
|
|
|
|
||||||
Weighted average number of shares outstanding—Basic
|
77,957
|
|
|
77,390
|
|
|
65,452
|
|
|||
|
|
|
|
|
|
||||||
Weighted average number of shares outstanding—Diluted
|
77,957
|
|
|
77,390
|
|
|
65,452
|
|
|
Shares
|
|
Amount
|
|
Additional Paid In Capital
|
|
Accumulated
Deficit
|
|
Total Shareholders’ Equity
|
||||||||||||||||
Common
|
|
Treasury
|
Common
|
|
Treasury
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||
Balance as of December 31, 2015
|
64,956
|
|
|
(458
|
)
|
|
$
|
6,496
|
|
|
$
|
(3,759
|
)
|
|
$
|
475,823
|
|
|
$
|
(135,917
|
)
|
|
$
|
342,643
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(128,391
|
)
|
|
(128,391
|
)
|
|||||
Sale of common stock, net of offering costs
|
12,075
|
|
|
—
|
|
|
1,208
|
|
|
—
|
|
|
64,222
|
|
|
—
|
|
|
65,430
|
|
|||||
Exercise of options and related income tax effect
|
46
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
178
|
|
|
—
|
|
|
183
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(124
|
)
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|||||
Income tax effect of restricted stock vesting
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,023
|
)
|
|
—
|
|
|
(1,023
|
)
|
|||||
Income tax effect of stock option forfeitures and expirations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,264
|
)
|
|
—
|
|
|
(1,264
|
)
|
|||||
Issuance of restricted stock
|
586
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,944
|
|
|
—
|
|
|
3,944
|
|
|||||
Balance as of December 31, 2016
|
77,663
|
|
|
(516
|
)
|
|
$
|
7,766
|
|
|
$
|
(3,883
|
)
|
|
$
|
541,823
|
|
|
$
|
(264,308
|
)
|
|
$
|
281,398
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75,118
|
)
|
|
(75,118
|
)
|
|||||
Purchase of treasury stock
|
—
|
|
|
(115
|
)
|
|
—
|
|
|
(533
|
)
|
|
—
|
|
|
—
|
|
|
(533
|
)
|
|||||
Issuance of restricted stock
|
687
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,404
|
|
|
(55
|
)
|
|
4,349
|
|
|||||
Balance as of December 31, 2017
|
78,350
|
|
|
(631
|
)
|
|
$
|
7,835
|
|
|
$
|
(4,416
|
)
|
|
$
|
546,158
|
|
|
$
|
(339,481
|
)
|
|
$
|
210,096
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49,011
|
)
|
|
(49,011
|
)
|
|||||
Exercise of options
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
(159
|
)
|
|
—
|
|
|
(549
|
)
|
|
—
|
|
|
—
|
|
|
(549
|
)
|
|||||
Cumulative-effect adjustment due to adoption of ASC Topic 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
67
|
|
|||||
Issuance of restricted stock
|
651
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,444
|
|
|
—
|
|
|
4,444
|
|
|||||
Balance as of December 31, 2018
|
79,005
|
|
|
(790
|
)
|
|
$
|
7,900
|
|
|
$
|
(4,965
|
)
|
|
$
|
550,548
|
|
|
$
|
(388,425
|
)
|
|
$
|
165,058
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(49,011
|
)
|
|
$
|
(75,118
|
)
|
|
$
|
(128,391
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
93,554
|
|
|
98,777
|
|
|
114,312
|
|
|||
Allowance for doubtful accounts, net of recoveries
|
271
|
|
|
53
|
|
|
156
|
|
|||
Write-off of obsolete inventory
|
—
|
|
|
—
|
|
|
101
|
|
|||
Gain on dispositions of property and equipment, net
|
(3,121
|
)
|
|
(3,608
|
)
|
|
(1,892
|
)
|
|||
Stock-based compensation expense
|
4,444
|
|
|
4,349
|
|
|
3,944
|
|
|||
Phantom stock compensation expense
|
46
|
|
|
1,609
|
|
|
1,971
|
|
|||
Amortization of debt issuance costs and discount
|
2,900
|
|
|
1,548
|
|
|
1,776
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
1,476
|
|
|
299
|
|
|||
Impairment
|
4,422
|
|
|
1,902
|
|
|
12,815
|
|
|||
Deferred income taxes
|
538
|
|
|
(5,030
|
)
|
|
(11,608
|
)
|
|||
Change in other noncurrent assets
|
565
|
|
|
(1
|
)
|
|
662
|
|
|||
Change in other noncurrent liabilities
|
(426
|
)
|
|
385
|
|
|
(1,493
|
)
|
|||
Changes in current assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(8,644
|
)
|
|
(49,750
|
)
|
|
16,341
|
|
|||
Inventory
|
(4,841
|
)
|
|
(4,397
|
)
|
|
(630
|
)
|
|||
Prepaid expenses and other current assets
|
(1,139
|
)
|
|
744
|
|
|
310
|
|
|||
Accounts payable
|
(1,272
|
)
|
|
12,409
|
|
|
1,969
|
|
|||
Deferred revenues
|
420
|
|
|
(348
|
)
|
|
(3,985
|
)
|
|||
Accrued expenses
|
950
|
|
|
9,183
|
|
|
(1,526
|
)
|
|||
Net cash provided by (used in) operating activities
|
39,656
|
|
|
(5,817
|
)
|
|
5,131
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(67,148
|
)
|
|
(63,277
|
)
|
|
(32,381
|
)
|
|||
Proceeds from sale of property and equipment
|
5,864
|
|
|
12,569
|
|
|
7,577
|
|
|||
Proceeds from insurance recoveries
|
1,082
|
|
|
3,344
|
|
|
37
|
|
|||
Net cash used in investing activities
|
(60,202
|
)
|
|
(47,364
|
)
|
|
(24,767
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Debt repayments
|
—
|
|
|
(120,000
|
)
|
|
(71,000
|
)
|
|||
Proceeds from issuance of debt
|
—
|
|
|
245,500
|
|
|
22,000
|
|
|||
Debt issuance costs
|
—
|
|
|
(6,332
|
)
|
|
(819
|
)
|
|||
Proceeds from exercise of options
|
11
|
|
|
—
|
|
|
183
|
|
|||
Proceeds from issuance of common stock, net of offering costs of $4,001
|
—
|
|
|
—
|
|
|
65,430
|
|
|||
Purchase of treasury stock
|
(549
|
)
|
|
(533
|
)
|
|
(124
|
)
|
|||
Net cash provided by (used in) financing activities
|
(538
|
)
|
|
118,635
|
|
|
15,670
|
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(21,084
|
)
|
|
65,454
|
|
|
(3,966
|
)
|
|||
Beginning cash, cash equivalents and restricted cash
|
75,648
|
|
|
10,194
|
|
|
14,160
|
|
|||
Ending cash, cash equivalents and restricted cash
|
$
|
54,564
|
|
|
$
|
75,648
|
|
|
$
|
10,194
|
|
|
|
|
|
|
|
||||||
Supplementary disclosure:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
36,624
|
|
|
$
|
25,082
|
|
|
$
|
24,516
|
|
Income tax paid
|
$
|
3,556
|
|
|
$
|
1,431
|
|
|
$
|
671
|
|
Noncash investing and financing activity:
|
|
|
|
|
|
||||||
Change in capital expenditure accruals
|
$
|
5,706
|
|
|
$
|
(1,830
|
)
|
|
$
|
175
|
|
|
Multi-well, Pad-capable
|
||||||
|
AC rigs
|
|
SCR rigs
|
|
Total
|
||
Domestic drilling
|
16
|
|
|
—
|
|
|
16
|
International drilling
|
—
|
|
|
8
|
|
|
8
|
|
|
|
|
|
24
|
|
550 HP
|
|
600 HP
|
|
Total
|
|
Well servicing rigs, by horsepower (HP) rating
|
113
|
|
12
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Wireline services units
|
|
105
|
|
|||
Coiled tubing services units
|
|
9
|
|
•
|
Revenue Recognition.
In May 2014, the FASB issued ASU No. 2014-09, a comprehensive new revenue recognition standard that supersedes nearly all pre-existing revenue recognition guidance. The standard, and its related amendments, collectively referred to as ASC Topic 606, outlines a single comprehensive model for revenue recognition based on the core principle that a company will recognize revenue when promised goods or services are transferred to clients, in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.
|
•
|
Leases.
In February 2016, the FASB issued ASU No. 2016-02,
Leases
, which among other things, requires lessees to recognize substantially all leases on the balance sheet, with expense recognition that is similar to the current lease standard, and aligns the principles of lessor accounting with the principles of the FASB’s new revenue guidance (referenced above).
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at beginning of year
|
$
|
1,224
|
|
|
$
|
1,678
|
|
|
$
|
2,254
|
|
Increase (decrease) in allowance charged to expense
|
271
|
|
|
(197
|
)
|
|
404
|
|
|||
Accounts charged against the allowance
|
(72
|
)
|
|
(257
|
)
|
|
(980
|
)
|
|||
Balance at end of year
|
$
|
1,423
|
|
|
$
|
1,224
|
|
|
$
|
1,678
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Daywork drilling contracts in progress
|
$
|
24,365
|
|
|
$
|
15,254
|
|
Production services
|
457
|
|
|
775
|
|
||
|
$
|
24,822
|
|
|
$
|
16,029
|
|
|
December 31, 2018
|
|
January 1, 2018
|
||||
Current deferred revenues
|
$
|
1,722
|
|
|
$
|
1,287
|
|
Current deferred costs
|
1,543
|
|
|
1,072
|
|
||
|
|
|
|
||||
Noncurrent deferred revenues
|
$
|
437
|
|
|
$
|
564
|
|
Noncurrent deferred costs
|
679
|
|
|
1,177
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Amortization of deferred revenues
|
$
|
2,961
|
|
|
$
|
2,400
|
|
|
$
|
1,566
|
|
Amortization of deferred costs
|
2,855
|
|
|
4,953
|
|
|
2,813
|
|
|
|
|
As of December 31,
|
||||||
|
|
|
2018
|
|
2017
|
||||
|
Lives
|
|
Cost (amounts in thousands)
|
||||||
Drilling rigs and equipment
|
3 - 25
|
|
$
|
590,148
|
|
|
$
|
594,743
|
|
Well servicing rigs and equipment
|
3 - 20
|
|
252,589
|
|
|
244,747
|
|
||
Wireline units and equipment
|
1 - 10
|
|
144,171
|
|
|
142,224
|
|
||
Coiled tubing units and equipment
|
1 - 7
|
|
25,689
|
|
|
18,141
|
|
||
Vehicles
|
3 - 10
|
|
50,317
|
|
|
47,932
|
|
||
Office equipment
|
3 - 10
|
|
11,606
|
|
|
12,717
|
|
||
Buildings and improvements
|
3 - 40
|
|
23,610
|
|
|
24,013
|
|
||
Property and equipment not yet placed in service
|
—
|
|
17,718
|
|
|
6,751
|
|
||
Land
|
—
|
|
2,367
|
|
|
2,367
|
|
||
|
|
|
$
|
1,118,215
|
|
|
$
|
1,093,635
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Senior secured term loan
|
$
|
175,000
|
|
|
$
|
175,000
|
|
Senior notes
|
300,000
|
|
|
300,000
|
|
||
|
475,000
|
|
|
475,000
|
|
||
Less unamortized discount (based on imputed interest rate of 10.46%)
|
(2,668
|
)
|
|
(3,387
|
)
|
||
Less unamortized debt issuance costs
|
(7,780
|
)
|
|
(9,948
|
)
|
||
|
$
|
464,552
|
|
|
$
|
461,665
|
|
•
|
incur additional debt;
|
•
|
incur or permit liens on assets;
|
•
|
make investments and acquisitions;
|
•
|
consolidate or merge with another company;
|
•
|
engage in asset sales; and
|
•
|
pay dividends or make distributions.
|
•
|
payment defaults;
|
•
|
covenant defaults;
|
•
|
material breaches of representations or warranties;
|
•
|
event of default under, or acceleration of, other material indebtedness;
|
•
|
bankruptcy or insolvency;
|
•
|
material judgments against us;
|
•
|
failure of any security document supporting the Term Loan; and
|
•
|
change of control.
|
•
|
declare dividends and make other distributions;
|
•
|
issue or sell certain equity interests;
|
•
|
optionally prepay, redeem or repurchase certain of our subordinated indebtedness;
|
•
|
make loans or investments (including acquisitions);
|
•
|
incur additional indebtedness or modify the terms of permitted indebtedness;
|
•
|
grant liens;
|
•
|
change our business or the business of our subsidiaries;
|
•
|
merge, consolidate, reorganize, recapitalize, or reclassify our equity interests;
|
•
|
sell our assets, and
|
•
|
enter into certain types of transactions with affiliates.
|
•
|
pay dividends on stock, repurchase stock, redeem subordinated indebtedness or make other restricted payments and investments;
|
•
|
incur, assume or guarantee additional indebtedness or issue preferred or disqualified stock;
|
•
|
create liens on our or their assets
;
|
•
|
enter into sale and leaseback transactions;
|
•
|
sell or transfer assets;
|
•
|
borrow, pay dividends, or transfer other assets from certain of our subsidiaries;
|
•
|
consolidate with or merge with or into, or sell all or substantially all of our properties to any other person;
|
•
|
enter into transactions with affiliates; and
|
•
|
enter into new lines of business.
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Domestic
|
$
|
(53,230
|
)
|
|
$
|
(76,078
|
)
|
|
$
|
(122,277
|
)
|
Foreign
|
6,127
|
|
|
(3,243
|
)
|
|
(16,846
|
)
|
|||
Loss before income taxes
|
$
|
(47,103
|
)
|
|
$
|
(79,321
|
)
|
|
$
|
(139,123
|
)
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(183
|
)
|
|
$
|
(81
|
)
|
|
$
|
(219
|
)
|
State
|
586
|
|
|
146
|
|
|
(95
|
)
|
|||
Foreign
|
967
|
|
|
978
|
|
|
1,189
|
|
|||
|
1,370
|
|
|
1,043
|
|
|
875
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
—
|
|
|
(5,417
|
)
|
|
(12,500
|
)
|
|||
State
|
537
|
|
|
143
|
|
|
902
|
|
|||
Foreign
|
1
|
|
|
28
|
|
|
(9
|
)
|
|||
|
538
|
|
|
(5,246
|
)
|
|
(11,607
|
)
|
|||
|
|
|
|
|
|
||||||
Income tax expense (benefit)
|
$
|
1,908
|
|
|
$
|
(4,203
|
)
|
|
$
|
(10,732
|
)
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Expected tax expense (benefit)
|
$
|
(9,892
|
)
|
|
$
|
(27,762
|
)
|
|
$
|
(48,693
|
)
|
Valuation allowance:
|
|
|
|
|
|
||||||
Valuation allowance on operations
|
5,885
|
|
|
24,265
|
|
|
38,324
|
|
|||
Impact of tax law changes on valuation allowance
|
(1,692
|
)
|
|
(25,564
|
)
|
|
—
|
|
|||
Change in tax rate
|
1,692
|
|
|
20,147
|
|
|
516
|
|
|||
State income taxes
|
972
|
|
|
339
|
|
|
(3,033
|
)
|
|||
Foreign currency translation loss
|
1,038
|
|
|
599
|
|
|
838
|
|
|||
Net tax benefits and nondeductible expenses in foreign jurisdictions
|
1,412
|
|
|
1,493
|
|
|
407
|
|
|||
GILTI tax
|
634
|
|
|
—
|
|
|
—
|
|
|||
Incentive stock options
|
757
|
|
|
1,297
|
|
|
97
|
|
|||
Nondeductible expenses for tax purposes
|
829
|
|
|
796
|
|
|
386
|
|
|||
Expiration of capital loss
|
—
|
|
|
—
|
|
|
641
|
|
|||
Other, net
|
273
|
|
|
187
|
|
|
(215
|
)
|
|||
Income tax expense (benefit)
|
$
|
1,908
|
|
|
$
|
(4,203
|
)
|
|
$
|
(10,732
|
)
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Continuing operations
|
$
|
1,908
|
|
|
$
|
(4,203
|
)
|
|
$
|
(10,732
|
)
|
Shareholders’ equity
|
—
|
|
|
—
|
|
|
2,287
|
|
|||
|
$
|
1,908
|
|
|
$
|
(4,203
|
)
|
|
$
|
(8,445
|
)
|
|
Year ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Domestic net operating loss carryforward
|
$
|
96,777
|
|
|
$
|
94,598
|
|
Interest expense deduction limitation carryforward
|
2,495
|
|
|
—
|
|
||
Foreign net operating loss carryforward
|
9,582
|
|
|
11,619
|
|
||
Intangibles
|
14,875
|
|
|
18,058
|
|
||
Property and equipment
|
5,291
|
|
|
9,280
|
|
||
Employee benefits and insurance claims accruals
|
5,374
|
|
|
5,652
|
|
||
Employee stock-based compensation
|
3,271
|
|
|
3,753
|
|
||
Accounts receivable reserve
|
325
|
|
|
284
|
|
||
Inventory
|
236
|
|
|
295
|
|
||
Accrued expenses
|
190
|
|
|
—
|
|
||
Deferred revenue
|
560
|
|
|
316
|
|
||
|
138,976
|
|
|
143,855
|
|
||
Valuation allowance
|
(62,639
|
)
|
|
(59,766
|
)
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Accrued expenses
|
(419
|
)
|
|
(112
|
)
|
||
Property and equipment
|
(79,606
|
)
|
|
(87,128
|
)
|
||
|
|
|
|
||||
Net deferred tax liabilities
|
$
|
(3,688
|
)
|
|
$
|
(3,151
|
)
|
7
.
|
Fair Value of Financial Instruments
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Hierarchy Level
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Senior notes
|
2
|
|
$
|
296,988
|
|
|
$
|
186,750
|
|
|
$
|
296,181
|
|
|
$
|
243,948
|
|
Senior secured term loan
|
3
|
|
167,564
|
|
|
$
|
175,875
|
|
|
165,484
|
|
|
171,613
|
|
|||
|
|
|
$
|
464,552
|
|
|
$
|
362,625
|
|
|
$
|
461,665
|
|
|
$
|
415,561
|
|
8
.
|
Earnings (Loss) Per Common Share
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator (both basic and diluted):
|
|
|
|
|
|
||||||
Net loss
|
$
|
(49,011
|
)
|
|
$
|
(75,118
|
)
|
|
$
|
(128,391
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares (denominator for basic earnings (loss) per share)
|
77,957
|
|
|
77,390
|
|
|
65,452
|
|
|||
Dilutive effect of outstanding stock options, restricted stock and restricted stock unit awards
|
—
|
|
|
—
|
|
|
—
|
|
|||
Denominator for diluted earnings (loss) per share
|
77,957
|
|
|
77,390
|
|
|
65,452
|
|
|||
Loss per common share - Basic
|
$
|
(0.63
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.96
|
)
|
Loss per common share - Diluted
|
$
|
(0.63
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.96
|
)
|
Potentially dilutive securities excluded as anti-dilutive
|
4,722
|
|
|
5,116
|
|
|
4,953
|
|
|
Vesting Period
|
|
Number of Shares or Units
|
|
Restricted stock unit awards
|
3 years
|
|
870,648
|
|
Performance-based phantom stock unit awards
|
39 months
|
|
2,467,776
|
|
Time-based phantom stock unit awards
|
3 years
|
|
810,648
|
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Stock option awards
|
$
|
443
|
|
|
$
|
974
|
|
|
$
|
766
|
|
Restricted stock awards
|
460
|
|
|
461
|
|
|
421
|
|
|||
Restricted stock unit awards
|
3,541
|
|
|
2,914
|
|
|
2,757
|
|
|||
|
$
|
4,444
|
|
|
$
|
4,349
|
|
|
$
|
3,944
|
|
|
|
|
|
|
|
||||||
Phantom stock unit awards
|
$
|
46
|
|
|
$
|
1,609
|
|
|
$
|
1,971
|
|
|
Weighted-Average Period Remaining
|
|
Unrecognized Compensation Cost
|
||
Stock options
|
0.26
|
|
$
|
156
|
|
Restricted stock awards
|
0.38
|
|
174
|
|
|
Restricted stock unit awards
|
1.11
|
|
3,132
|
|
|
Phantom stock unit awards (based on fair value as of December 31, 2018)
|
2.65
|
|
1,484
|
|
|
|
|
|
$
|
4,946
|
|
|
Year ended December 31,
|
||||
|
2017
|
|
2016
|
||
Expected volatility
|
76
|
%
|
|
70
|
%
|
Risk-free interest rates
|
2.1
|
%
|
|
1.5
|
%
|
Expected life in years
|
5.86
|
|
|
5.70
|
|
Grant-date fair value
|
$4.28
|
|
$0.80
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Aggregate intrinsic value of stock options exercised
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
Number of
Shares
|
|
Weighted-Average Grant-Date
Fair Value Per Share
|
Nonvested stock options as of December 31, 2017
|
981,447
|
|
$1.91
|
Vested
|
(500,662)
|
|
1.76
|
Nonvested stock options as of December 31, 2018
|
480,785
|
|
$2.07
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Grant-date fair value of awards granted (per share)
|
$
|
5.85
|
|
|
$
|
2.75
|
|
|
$
|
2.76
|
|
Aggregate fair value of awards vested (in thousands)
|
$
|
979
|
|
|
$
|
483
|
|
|
$
|
137
|
|
|
Number of
Shares
|
|
Weighted-Average
Grant-Date
Fair Value per Share
|
Nonvested restricted stock as of December 31, 2017
|
167,272
|
|
$2.75
|
Granted
|
78,632
|
|
5.85
|
Vested
|
(167,272)
|
|
2.75
|
Nonvested restricted stock as of December 31, 2018
|
78,632
|
|
$5.85
|
|
Time-Based Award
|
|
Performance-Based Award
|
||||||||
|
Number of
Time-Based
Award Units
|
|
Weighted-Average
Grant-Date
Fair Value
per Unit
|
|
Number of
Performance-Based
Award Units
|
|
Weighted-Average
Grant-Date Fair Value per Unit |
||||
Nonvested restricted stock units as of
December 31, 2017 |
251,886
|
|
|
$3.24
|
|
986,117
|
|
|
$6.91
|
||
Granted
|
788,377
|
|
|
3.85
|
|
—
|
|
|
—
|
|
|
Achieved performance adjustment
|
—
|
|
|
—
|
|
|
25,807
|
|
|
5.82
|
|
Vested
|
(124,286)
|
|
|
3.04
|
|
(448,455
|
)
|
|
5.82
|
|
|
Forfeited
|
(28,508)
|
|
|
3.65
|
|
—
|
|
|
—
|
|
|
Nonvested restricted stock units as of
December 31, 2018 |
887,469
|
|
|
$3.80
|
|
563,469
|
|
|
$7.73
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Time-based RSUs:
|
|
|
|
|
|
||||||
Grant-date fair value of awards granted (per share)
|
$
|
3.85
|
|
|
$
|
5.61
|
|
|
$
|
1.47
|
|
Aggregate intrinsic value of awards vested (in thousands)
|
$
|
424
|
|
|
$
|
1,206
|
|
|
$
|
314
|
|
Performance-based RSUs:
|
|
|
|
|
|
||||||
Grant-date fair value of awards granted (per share)
|
$
|
—
|
|
|
$
|
7.75
|
|
|
$
|
—
|
|
Aggregate intrinsic value of awards vested (in thousands)
|
$
|
1,547
|
|
|
$
|
969
|
|
|
$
|
609
|
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Workers’ compensation
|
$
|
2,992
|
|
|
$
|
3,689
|
|
Health insurance
|
1,834
|
|
|
2,046
|
|
||
General liability and auto liability
|
656
|
|
|
1,007
|
|
||
|
$
|
5,482
|
|
|
$
|
6,742
|
|
11
.
|
Segment Information
|
|
As of and for the year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
145,676
|
|
|
$
|
129,276
|
|
|
$
|
112,399
|
|
International drilling
|
84,161
|
|
|
41,349
|
|
|
6,808
|
|
|||
Drilling services
|
229,837
|
|
|
170,625
|
|
|
119,207
|
|
|||
Well servicing
|
93,800
|
|
|
77,257
|
|
|
71,491
|
|
|||
Wireline services
|
215,858
|
|
|
163,716
|
|
|
67,419
|
|
|||
Coiled tubing services
|
50,602
|
|
|
34,857
|
|
|
18,959
|
|
|||
Production services
|
360,260
|
|
|
275,830
|
|
|
157,869
|
|
|||
Consolidated revenues
|
$
|
590,097
|
|
|
$
|
446,455
|
|
|
$
|
277,076
|
|
|
|
|
|
|
|
||||||
Operating costs:
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
86,910
|
|
|
$
|
83,122
|
|
|
$
|
63,686
|
|
International drilling
|
64,074
|
|
|
31,994
|
|
|
9,465
|
|
|||
Drilling services
|
150,984
|
|
|
115,116
|
|
|
73,151
|
|
|||
Well servicing
|
67,554
|
|
|
56,379
|
|
|
53,208
|
|
|||
Wireline services
|
167,337
|
|
|
128,137
|
|
|
57,634
|
|
|||
Coiled tubing services
|
44,038
|
|
|
31,248
|
|
|
19,956
|
|
|||
Production services
|
278,929
|
|
|
215,764
|
|
|
130,798
|
|
|||
Consolidated operating costs
|
$
|
429,913
|
|
|
$
|
330,880
|
|
|
$
|
203,949
|
|
|
|
|
|
|
|
||||||
Gross margin:
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
58,766
|
|
|
$
|
46,154
|
|
|
$
|
48,713
|
|
International drilling
|
20,087
|
|
|
9,355
|
|
|
(2,657
|
)
|
|||
Drilling services
|
78,853
|
|
|
55,509
|
|
|
46,056
|
|
|||
Well servicing
|
26,246
|
|
|
20,878
|
|
|
18,283
|
|
|||
Wireline services
|
48,521
|
|
|
35,579
|
|
|
9,785
|
|
|||
Coiled tubing services
|
6,564
|
|
|
3,609
|
|
|
(997
|
)
|
|||
Production services
|
81,331
|
|
|
60,066
|
|
|
27,071
|
|
|||
Consolidated gross margin
|
$
|
160,184
|
|
|
$
|
115,575
|
|
|
$
|
73,127
|
|
|
|
|
|
|
|
||||||
Identifiable Assets:
|
|
|
|
|
|
||||||
Domestic drilling
(1)
|
$
|
373,370
|
|
|
$
|
404,144
|
|
|
$
|
415,953
|
|
International drilling
(1) (2)
|
43,213
|
|
|
36,403
|
|
|
36,337
|
|
|||
Drilling services
|
416,583
|
|
|
440,547
|
|
|
452,290
|
|
|||
Well servicing
|
118,923
|
|
|
125,951
|
|
|
126,917
|
|
|||
Wireline services
|
87,912
|
|
|
92,081
|
|
|
80,502
|
|
|||
Coiled tubing services
|
37,326
|
|
|
30,254
|
|
|
26,062
|
|
|||
Production services
|
244,161
|
|
|
248,286
|
|
|
233,481
|
|
|||
Corporate
|
80,806
|
|
|
78,036
|
|
|
14,331
|
|
|||
Consolidated identifiable assets
|
$
|
741,550
|
|
|
$
|
766,869
|
|
|
$
|
700,102
|
|
|
|
|
|
|
|
||||||
Depreciation:
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
41,289
|
|
|
$
|
45,243
|
|
|
$
|
53,900
|
|
International drilling
|
5,628
|
|
|
5,718
|
|
|
6,869
|
|
|||
Drilling services
|
46,917
|
|
|
50,961
|
|
|
60,769
|
|
|||
Well servicing
|
19,578
|
|
|
19,943
|
|
|
22,925
|
|
|||
Wireline services
|
17,945
|
|
|
18,451
|
|
|
20,707
|
|
|||
Coiled tubing services
|
7,987
|
|
|
8,181
|
|
|
8,661
|
|
|||
Production services
|
45,510
|
|
|
46,575
|
|
|
52,293
|
|
|||
Corporate
|
1,127
|
|
|
1,241
|
|
|
1,250
|
|
|||
Consolidated depreciation
|
$
|
93,554
|
|
|
$
|
98,777
|
|
|
$
|
114,312
|
|
|
|
|
|
|
|
|
As of and for the year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Capital Expenditures:
|
|
|
|
|
|
||||||
Domestic drilling
|
$
|
23,598
|
|
|
$
|
19,219
|
|
|
$
|
19,118
|
|
International drilling
|
6,309
|
|
|
6,319
|
|
|
678
|
|
|||
Drilling services
|
29,907
|
|
|
25,538
|
|
|
19,796
|
|
|||
Well servicing
|
10,002
|
|
|
17,776
|
|
|
5,274
|
|
|||
Wireline services
|
15,247
|
|
|
11,883
|
|
|
3,499
|
|
|||
Coiled tubing services
|
16,558
|
|
|
5,496
|
|
|
3,548
|
|
|||
Production services
|
41,807
|
|
|
35,155
|
|
|
12,321
|
|
|||
Corporate
|
1,140
|
|
|
754
|
|
|
439
|
|
|||
Consolidated capital expenditures
|
$
|
72,854
|
|
|
$
|
61,447
|
|
|
$
|
32,556
|
|
(1)
|
Identifiable assets for our drilling segments include the impact of a
$40.1 million
,
$27.0 million
, and
$10.8 million
intercompany balance, as of
December 31, 2018
,
2017
, and
2016
, respectively, between our domestic drilling segment (intercompany receivable) and our international drilling segment (intercompany payable).
|
(2)
|
Identifiable assets for our international drilling segment include
five
drilling rigs that are owned by our Colombia subsidiary and
three
drilling rigs that are owned by one of our domestic subsidiaries and leased to our Colombia subsidiary.
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Consolidated gross margin
|
$
|
160,184
|
|
|
$
|
115,575
|
|
|
$
|
73,127
|
|
Depreciation
|
(93,554
|
)
|
|
(98,777
|
)
|
|
(114,312
|
)
|
|||
General and administrative
|
(74,117
|
)
|
|
(69,681
|
)
|
|
(61,184
|
)
|
|||
Bad debt expense
|
(271
|
)
|
|
(53
|
)
|
|
(156
|
)
|
|||
Impairment
|
(4,422
|
)
|
|
(1,902
|
)
|
|
(12,815
|
)
|
|||
Gain on dispositions of property and equipment, net
|
3,121
|
|
|
3,608
|
|
|
1,892
|
|
|||
Loss from operations
|
$
|
(9,059
|
)
|
|
$
|
(51,230
|
)
|
|
$
|
(113,448
|
)
|
12
.
|
Commitments and Contingencies
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
144,478
|
|
|
$
|
154,782
|
|
|
$
|
149,332
|
|
|
$
|
141,505
|
|
|
$
|
590,097
|
|
Income (loss) from operations
|
(842
|
)
|
|
(8,803
|
)
|
|
4,338
|
|
|
(3,752
|
)
|
|
(9,059
|
)
|
|||||
Income tax (expense) benefit
|
(1,288
|
)
|
|
249
|
|
|
(258
|
)
|
|
(611
|
)
|
|
(1,908
|
)
|
|||||
Net loss
|
(11,139
|
)
|
|
(18,152
|
)
|
|
(5,233
|
)
|
|
(14,487
|
)
|
|
(49,011
|
)
|
|||||
Loss per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.14
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.63
|
)
|
Diluted
|
$
|
(0.14
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.63
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
95,757
|
|
|
$
|
107,130
|
|
|
$
|
117,281
|
|
|
$
|
126,287
|
|
|
$
|
446,455
|
|
Loss from operations
|
(18,873
|
)
|
|
(12,729
|
)
|
|
(10,892
|
)
|
|
(8,736
|
)
|
|
(51,230
|
)
|
|||||
Income tax (expense) benefit
|
(48
|
)
|
|
(1,135
|
)
|
|
(17
|
)
|
|
5,403
|
|
|
4,203
|
|
|||||
Net loss
|
(25,124
|
)
|
|
(20,209
|
)
|
|
(17,227
|
)
|
|
(12,558
|
)
|
|
(75,118
|
)
|
|||||
Loss per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.33
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.97
|
)
|
Diluted
|
$
|
(0.33
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.97
|
)
|
14
.
|
Guarantor/Non-Guarantor Condensed Consolidating Financial Statements
|
|
December 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
50,350
|
|
|
$
|
—
|
|
|
$
|
3,216
|
|
|
$
|
—
|
|
|
$
|
53,566
|
|
Restricted cash
|
998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
998
|
|
|||||
Receivables, net of allowance
|
436
|
|
|
95,030
|
|
|
35,219
|
|
|
196
|
|
|
130,881
|
|
|||||
Intercompany receivable (payable)
|
(27,245
|
)
|
|
67,098
|
|
|
(39,853
|
)
|
|
—
|
|
|
—
|
|
|||||
Inventory
|
—
|
|
|
9,945
|
|
|
8,953
|
|
|
—
|
|
|
18,898
|
|
|||||
Assets held for sale
|
—
|
|
|
3,582
|
|
|
—
|
|
|
—
|
|
|
3,582
|
|
|||||
Prepaid expenses and other current assets
|
1,743
|
|
|
3,197
|
|
|
2,169
|
|
|
—
|
|
|
7,109
|
|
|||||
Total current assets
|
26,282
|
|
|
178,852
|
|
|
9,704
|
|
|
196
|
|
|
215,034
|
|
|||||
Net property and equipment
|
2,022
|
|
|
494,376
|
|
|
28,460
|
|
|
—
|
|
|
524,858
|
|
|||||
Investment in subsidiaries
|
574,695
|
|
|
25,370
|
|
|
—
|
|
|
(600,065
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
42,585
|
|
|
—
|
|
|
—
|
|
|
(42,585
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
596
|
|
|
511
|
|
|
551
|
|
|
—
|
|
|
1,658
|
|
|||||
Total assets
|
$
|
646,180
|
|
|
$
|
699,109
|
|
|
$
|
38,715
|
|
|
$
|
(642,454
|
)
|
|
$
|
741,550
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
1,093
|
|
|
$
|
26,795
|
|
|
$
|
6,246
|
|
|
$
|
—
|
|
|
$
|
34,134
|
|
Deferred revenues
|
—
|
|
|
95
|
|
|
1,627
|
|
|
—
|
|
|
1,722
|
|
|||||
Accrued expenses
|
14,020
|
|
|
49,640
|
|
|
5,056
|
|
|
196
|
|
|
68,912
|
|
|||||
Total current liabilities
|
15,113
|
|
|
76,530
|
|
|
12,929
|
|
|
196
|
|
|
104,768
|
|
|||||
Long-term debt, less unamortized discount and debt issuance costs
|
464,552
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
464,552
|
|
|||||
Deferred income taxes
|
—
|
|
|
46,273
|
|
|
—
|
|
|
(42,585
|
)
|
|
3,688
|
|
|||||
Other noncurrent liabilities
|
1,457
|
|
|
1,611
|
|
|
416
|
|
|
—
|
|
|
3,484
|
|
|||||
Total liabilities
|
481,122
|
|
|
124,414
|
|
|
13,345
|
|
|
(42,389
|
)
|
|
576,492
|
|
|||||
Total shareholders’ equity
|
165,058
|
|
|
574,695
|
|
|
25,370
|
|
|
(600,065
|
)
|
|
165,058
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
646,180
|
|
|
$
|
699,109
|
|
|
$
|
38,715
|
|
|
$
|
(642,454
|
)
|
|
$
|
741,550
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
70,377
|
|
|
$
|
—
|
|
|
$
|
3,263
|
|
|
$
|
—
|
|
|
$
|
73,640
|
|
Restricted cash
|
2,008
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,008
|
|
|||||
Receivables, net of allowance
|
7
|
|
|
93,866
|
|
|
19,174
|
|
|
(42
|
)
|
|
113,005
|
|
|||||
Intercompany receivable (payable)
|
(22,955
|
)
|
|
49,651
|
|
|
(26,696
|
)
|
|
—
|
|
|
—
|
|
|||||
Inventory
|
—
|
|
|
7,741
|
|
|
6,316
|
|
|
—
|
|
|
14,057
|
|
|||||
Assets held for sale
|
—
|
|
|
6,620
|
|
|
—
|
|
|
—
|
|
|
6,620
|
|
|||||
Prepaid expenses and other current assets
|
1,238
|
|
|
3,193
|
|
|
1,798
|
|
|
—
|
|
|
6,229
|
|
|||||
Total current assets
|
50,675
|
|
|
161,071
|
|
|
3,855
|
|
|
(42
|
)
|
|
215,559
|
|
|||||
Net property and equipment
|
2,011
|
|
|
521,080
|
|
|
26,532
|
|
|
—
|
|
|
549,623
|
|
|||||
Investment in subsidiaries
|
596,927
|
|
|
20,095
|
|
|
—
|
|
|
(617,022
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
38,028
|
|
|
—
|
|
|
—
|
|
|
(38,028
|
)
|
|
—
|
|
|||||
Other noncurrent assets
|
496
|
|
|
788
|
|
|
403
|
|
|
—
|
|
|
1,687
|
|
|||||
Total assets
|
$
|
688,137
|
|
|
$
|
703,034
|
|
|
$
|
30,790
|
|
|
$
|
(655,092
|
)
|
|
$
|
766,869
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
286
|
|
|
$
|
24,174
|
|
|
$
|
5,078
|
|
|
$
|
—
|
|
|
$
|
29,538
|
|
Deferred revenues
|
—
|
|
|
97
|
|
|
808
|
|
|
—
|
|
|
905
|
|
|||||
Accrued expenses
|
12,504
|
|
|
37,814
|
|
|
4,195
|
|
|
(42
|
)
|
|
54,471
|
|
|||||
Total current liabilities
|
12,790
|
|
|
62,085
|
|
|
10,081
|
|
|
(42
|
)
|
|
84,914
|
|
|||||
Long-term debt, less unamortized discount and debt issuance costs
|
461,665
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
461,665
|
|
|||||
Deferred income taxes
|
—
|
|
|
41,179
|
|
|
—
|
|
|
(38,028
|
)
|
|
3,151
|
|
|||||
Other noncurrent liabilities
|
3,586
|
|
|
2,843
|
|
|
614
|
|
|
—
|
|
|
7,043
|
|
|||||
Total liabilities
|
478,041
|
|
|
106,107
|
|
|
10,695
|
|
|
(38,070
|
)
|
|
556,773
|
|
|||||
Total shareholders’ equity
|
210,096
|
|
|
596,927
|
|
|
20,095
|
|
|
(617,022
|
)
|
|
210,096
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
688,137
|
|
|
$
|
703,034
|
|
|
$
|
30,790
|
|
|
$
|
(655,092
|
)
|
|
$
|
766,869
|
|
|
Year ended December 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
505,936
|
|
|
$
|
84,161
|
|
|
$
|
—
|
|
|
$
|
590,097
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating costs
|
—
|
|
|
365,848
|
|
|
64,065
|
|
|
—
|
|
|
429,913
|
|
|||||
Depreciation
|
1,127
|
|
|
86,799
|
|
|
5,628
|
|
|
—
|
|
|
93,554
|
|
|||||
General and administrative
|
22,506
|
|
|
49,231
|
|
|
2,800
|
|
|
(420
|
)
|
|
74,117
|
|
|||||
Bad debt expense
|
—
|
|
|
271
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|||||
Impairment
|
—
|
|
|
4,422
|
|
|
—
|
|
|
—
|
|
|
4,422
|
|
|||||
Gain (loss) on dispositions of property and equipment, net
|
1
|
|
|
(3,068
|
)
|
|
(54
|
)
|
|
—
|
|
|
(3,121
|
)
|
|||||
Intercompany leasing
|
—
|
|
|
(4,860
|
)
|
|
4,860
|
|
|
—
|
|
|
—
|
|
|||||
Total costs and expenses
|
23,634
|
|
|
498,643
|
|
|
77,299
|
|
|
(420
|
)
|
|
599,156
|
|
|||||
Income (loss) from operations
|
(23,634
|
)
|
|
7,293
|
|
|
6,862
|
|
|
420
|
|
|
(9,059
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
8,966
|
|
|
5,669
|
|
|
—
|
|
|
(14,635
|
)
|
|
—
|
|
|||||
Interest expense, net of interest capitalized
|
(38,765
|
)
|
|
(16
|
)
|
|
(1
|
)
|
|
—
|
|
|
(38,782
|
)
|
|||||
Other income (expense)
|
578
|
|
|
867
|
|
|
(287
|
)
|
|
(420
|
)
|
|
738
|
|
|||||
Total other income (expense)
|
(29,221
|
)
|
|
6,520
|
|
|
(288
|
)
|
|
(15,055
|
)
|
|
(38,044
|
)
|
|||||
Income (loss) before income taxes
|
(52,855
|
)
|
|
13,813
|
|
|
6,574
|
|
|
(14,635
|
)
|
|
(47,103
|
)
|
|||||
Income tax (expense) benefit
1
|
3,844
|
|
|
(4,847
|
)
|
|
(905
|
)
|
|
—
|
|
|
(1,908
|
)
|
|||||
Net income (loss)
|
$
|
(49,011
|
)
|
|
$
|
8,966
|
|
|
$
|
5,669
|
|
|
$
|
(14,635
|
)
|
|
$
|
(49,011
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Year ended December 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
405,106
|
|
|
$
|
41,349
|
|
|
$
|
—
|
|
|
$
|
446,455
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating costs
|
—
|
|
|
298,898
|
|
|
31,982
|
|
|
—
|
|
|
330,880
|
|
|||||
Depreciation
|
1,242
|
|
|
91,817
|
|
|
5,718
|
|
|
—
|
|
|
98,777
|
|
|||||
General and administrative
|
22,869
|
|
|
45,387
|
|
|
1,922
|
|
|
(497
|
)
|
|
69,681
|
|
|||||
Bad debt expense
|
—
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|||||
Impairment
|
—
|
|
|
1,902
|
|
|
—
|
|
|
—
|
|
|
1,902
|
|
|||||
Gain (loss) on dispositions of property and equipment, net
|
2
|
|
|
(3,454
|
)
|
|
(156
|
)
|
|
—
|
|
|
(3,608
|
)
|
|||||
Intercompany leasing
|
—
|
|
|
(4,860
|
)
|
|
4,860
|
|
|
—
|
|
|
—
|
|
|||||
Total costs and expenses
|
24,113
|
|
|
429,743
|
|
|
44,326
|
|
|
(497
|
)
|
|
497,685
|
|
|||||
Income (loss) from operations
|
(24,113
|
)
|
|
(24,637
|
)
|
|
(2,977
|
)
|
|
497
|
|
|
(51,230
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
4,317
|
|
|
(3,936
|
)
|
|
—
|
|
|
(381
|
)
|
|
—
|
|
|||||
Interest expense, net of interest capitalized
|
(27,061
|
)
|
|
20
|
|
|
2
|
|
|
—
|
|
|
(27,039
|
)
|
|||||
Loss on extinguishment of debt
|
(1,476
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,476
|
)
|
|||||
Other income (expense)
|
54
|
|
|
896
|
|
|
(29
|
)
|
|
(497
|
)
|
|
424
|
|
|||||
Total other expense, net
|
(24,166
|
)
|
|
(3,020
|
)
|
|
(27
|
)
|
|
(878
|
)
|
|
(28,091
|
)
|
|||||
Loss before income taxes
|
(48,279
|
)
|
|
(27,657
|
)
|
|
(3,004
|
)
|
|
(381
|
)
|
|
(79,321
|
)
|
|||||
Income tax (expense) benefit
1
|
(26,839
|
)
|
|
31,974
|
|
|
(932
|
)
|
|
—
|
|
|
4,203
|
|
|||||
Net income (loss)
|
$
|
(75,118
|
)
|
|
$
|
4,317
|
|
|
$
|
(3,936
|
)
|
|
$
|
(381
|
)
|
|
$
|
(75,118
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
1
The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.
|
|
Year ended December 31, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
270,268
|
|
|
$
|
6,808
|
|
|
$
|
—
|
|
|
$
|
277,076
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating costs
|
—
|
|
|
194,515
|
|
|
9,434
|
|
|
—
|
|
|
203,949
|
|
|||||
Depreciation
|
1,250
|
|
|
106,193
|
|
|
6,869
|
|
|
—
|
|
|
114,312
|
|
|||||
General and administrative
|
21,657
|
|
|
38,564
|
|
|
1,515
|
|
|
(552
|
)
|
|
61,184
|
|
|||||
Bad debt expense
|
—
|
|
|
156
|
|
|
—
|
|
|
—
|
|
|
156
|
|
|||||
Impairment
|
—
|
|
|
12,260
|
|
|
555
|
|
|
—
|
|
|
12,815
|
|
|||||
Loss on dispositions of property and equipment, net
|
—
|
|
|
(1,838
|
)
|
|
(54
|
)
|
|
—
|
|
|
(1,892
|
)
|
|||||
Intercompany leasing
|
—
|
|
|
(4,860
|
)
|
|
4,860
|
|
|
—
|
|
|
—
|
|
|||||
Total costs and expenses
|
22,907
|
|
|
344,990
|
|
|
23,179
|
|
|
(552
|
)
|
|
390,524
|
|
|||||
Loss from operations
|
(22,907
|
)
|
|
(74,722
|
)
|
|
(16,371
|
)
|
|
552
|
|
|
(113,448
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of subsidiaries
|
(63,374
|
)
|
|
(17,835
|
)
|
|
—
|
|
|
81,209
|
|
|
—
|
|
|||||
Interest expense, net of interest capitalized
|
(25,845
|
)
|
|
(88
|
)
|
|
(1
|
)
|
|
—
|
|
|
(25,934
|
)
|
|||||
Loss on extinguishment of debt
|
(299
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(299
|
)
|
|||||
Other income (expense), net
|
18
|
|
|
1,430
|
|
|
(338
|
)
|
|
(552
|
)
|
|
558
|
|
|||||
Total other expense, net
|
(89,500
|
)
|
|
(16,493
|
)
|
|
(339
|
)
|
|
80,657
|
|
|
(25,675
|
)
|
|||||
Loss before income taxes
|
(112,407
|
)
|
|
(91,215
|
)
|
|
(16,710
|
)
|
|
81,209
|
|
|
(139,123
|
)
|
|||||
Income tax (expense) benefit
1
|
(15,984
|
)
|
|
27,841
|
|
|
(1,125
|
)
|
|
—
|
|
|
10,732
|
|
|||||
Net Loss
|
$
|
(128,391
|
)
|
|
$
|
(63,374
|
)
|
|
$
|
(17,835
|
)
|
|
$
|
81,209
|
|
|
$
|
(128,391
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
1
The income tax (expense) benefit reflected in each column does not include any tax effect of the equity in earnings (losses) of subsidiaries.
|
|
Year ended December 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities
|
$
|
(51,947
|
)
|
|
$
|
84,663
|
|
|
$
|
6,940
|
|
|
$
|
—
|
|
|
$
|
39,656
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(1,077
|
)
|
|
(59,478
|
)
|
|
(6,593
|
)
|
|
—
|
|
|
(67,148
|
)
|
|||||
Proceeds from sale of property and equipment
|
—
|
|
|
5,826
|
|
|
38
|
|
|
—
|
|
|
5,864
|
|
|||||
Proceeds from insurance recoveries
|
—
|
|
|
1,066
|
|
|
16
|
|
|
—
|
|
|
1,082
|
|
|||||
|
(1,077
|
)
|
|
(52,586
|
)
|
|
(6,539
|
)
|
|
—
|
|
|
(60,202
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of options
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Purchase of treasury stock
|
(549
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(549
|
)
|
|||||
Intercompany contributions/distributions
|
32,525
|
|
|
(32,077
|
)
|
|
(448
|
)
|
|
—
|
|
|
—
|
|
|||||
|
31,987
|
|
|
(32,077
|
)
|
|
(448
|
)
|
|
—
|
|
|
(538
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net decrease in cash, cash equivalents and restricted cash
|
(21,037
|
)
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(21,084
|
)
|
|||||
Beginning cash, cash equivalents and restricted cash
|
72,385
|
|
|
—
|
|
|
3,263
|
|
|
—
|
|
|
75,648
|
|
|||||
Ending cash, cash equivalents and restricted cash
|
$
|
51,348
|
|
|
$
|
—
|
|
|
$
|
3,216
|
|
|
$
|
—
|
|
|
$
|
54,564
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Year ended December 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities
|
$
|
(41,185
|
)
|
|
$
|
26,609
|
|
|
$
|
8,759
|
|
|
$
|
—
|
|
|
$
|
(5,817
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(745
|
)
|
|
(56,556
|
)
|
|
(6,407
|
)
|
|
431
|
|
|
(63,277
|
)
|
|||||
Proceeds from sale of property and equipment
|
—
|
|
|
12,768
|
|
|
232
|
|
|
(431
|
)
|
|
12,569
|
|
|||||
Proceeds from insurance recoveries
|
—
|
|
|
3,344
|
|
|
—
|
|
|
—
|
|
|
3,344
|
|
|||||
|
(745
|
)
|
|
(40,444
|
)
|
|
(6,175
|
)
|
|
—
|
|
|
(47,364
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt repayments
|
(120,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(120,000
|
)
|
|||||
Proceeds from issuance of debt
|
245,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
245,500
|
|
|||||
Debt issuance costs
|
(6,332
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,332
|
)
|
|||||
Purchase of treasury stock
|
(533
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(533
|
)
|
|||||
Intercompany contributions/distributions
|
(13,454
|
)
|
|
13,835
|
|
|
(381
|
)
|
|
—
|
|
|
—
|
|
|||||
|
105,181
|
|
|
13,835
|
|
|
(381
|
)
|
|
—
|
|
|
118,635
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase in cash, cash equivalents and restricted cash
|
63,251
|
|
|
—
|
|
|
2,203
|
|
|
—
|
|
|
65,454
|
|
|||||
Beginning cash, cash equivalents and restricted cash
|
9,134
|
|
|
—
|
|
|
1,060
|
|
|
—
|
|
|
10,194
|
|
|||||
Ending cash, cash equivalents and restricted cash
|
$
|
72,385
|
|
|
$
|
—
|
|
|
$
|
3,263
|
|
|
$
|
—
|
|
|
$
|
75,648
|
|
|
|
|
Year ended December 31, 2016
|
||||||||||||||||||
|
Parent
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash flows from operating activities
|
$
|
(34,496
|
)
|
|
$
|
40,187
|
|
|
$
|
(560
|
)
|
|
$
|
—
|
|
|
$
|
5,131
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property and equipment
|
(452
|
)
|
|
(31,049
|
)
|
|
(880
|
)
|
|
—
|
|
|
(32,381
|
)
|
|||||
Proceeds from sale of property and equipment
|
—
|
|
|
7,523
|
|
|
54
|
|
|
—
|
|
|
7,577
|
|
|||||
Proceeds from insurance recoveries
|
—
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|||||
|
(452
|
)
|
|
(23,489
|
)
|
|
(826
|
)
|
|
—
|
|
|
(24,767
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt repayments
|
(71,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(71,000
|
)
|
|||||
Proceeds from issuance of debt
|
22,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,000
|
|
|||||
Debt issuance costs
|
(819
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(819
|
)
|
|||||
Proceeds from exercise of options
|
183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183
|
|
|||||
Proceeds from common stock, net of offering costs
|
65,430
|
|
|
—
|
|
|
|
|
|
—
|
|
|
65,430
|
|
|||||
Purchase of treasury stock
|
(124
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(124
|
)
|
|||||
Intercompany contributions/distributions
|
16,803
|
|
|
(16,698
|
)
|
|
(105
|
)
|
|
—
|
|
|
—
|
|
|||||
|
32,473
|
|
|
(16,698
|
)
|
|
(105
|
)
|
|
—
|
|
|
15,670
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net decrease in cash and cash equivalents
|
(2,475
|
)
|
|
—
|
|
|
(1,491
|
)
|
|
—
|
|
|
(3,966
|
)
|
|||||
Beginning cash and cash equivalents
|
11,609
|
|
|
—
|
|
|
2,551
|
|
|
—
|
|
|
14,160
|
|
|||||
Ending cash and cash equivalents
|
$
|
9,134
|
|
|
$
|
—
|
|
|
$
|
1,060
|
|
|
$
|
—
|
|
|
$
|
10,194
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM
9A
.
|
CONTROLS AND PROCEDURES
|
ITEM
9B
.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM
15
.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1*
|
-
|
|
|
|
|
3.2*
|
-
|
|
|
|
|
4.1*
|
-
|
|
|
|
|
4.2*
|
-
|
|
|
|
|
4.3*
|
-
|
|
|
|
|
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+*
|
-
|
|
|
|
|
21.1**
|
-
|
|
|
|
|
23.1**
|
-
|
|
|
|
|
31.1**
|
-
|
|
|
|
|
31.2**
|
-
|
|
|
|
|
ITEM
16
.
|
FORM 10-K SUMMARY
|
|
|
PIONEER ENERGY SERVICES CORP.
|
|
|
|
February 19, 2019
|
|
/
S
/ W
M
. S
TACY
L
OCKE
|
|
|
Wm. Stacy Locke
Chief Executive Officer and President
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
/
S
/ D
EAN
A. B
URKHARDT
|
|
Chairman
|
|
February 19, 2019
|
Dean A. Burkhardt
|
|
|
|
|
/
S
/ W
M
. S
TACY
L
OCKE
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 19, 2019
|
Wm. Stacy Locke
|
|
|
|
|
/
S
/ L
ORNE
E
.
P
HILLIPS
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
February 19, 2019
|
Lorne E. Phillips
|
|
|
|
|
/
S
/ C. J
OHN
T
HOMPSON
|
|
Director
|
|
February 19, 2019
|
C. John Thompson
|
|
|
|
|
/
S
/ J
OHN
M
ICHAEL
R
AUH
|
|
Director
|
|
February 19, 2019
|
John Michael Rauh
|
|
|
|
|
/
S
/ S
COTT
D. U
RBAN
|
|
Director
|
|
February 19, 2019
|
Scott D. Urban
|
|
|
|
|
1 Year Pioneer Energy Services Chart |
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